Weekly Climate Change Policy Update - August 2, 2010

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Commentary

Sen. Majority Leader Reid introduced his svelte energy bill, the Clean Energy Jobs and Oil Spill Accountability Act, which would remove the liability cap on offshore drilling companies. Greeted with little enthusiasm by both Democrats and Republicans, the bill is currently scheduled for a cloture vote on Wednesday . . . 27 Senators sent Reid a letter urging inclusion of a renewable electricity standard . . . Sen. Sam Brownback (R-KS) has pledged to introduce an amendment to include a 15% RES . . . Oil spill liability bill that removes the cap on liability passes the House . . . The White House Press Secretary suggested that a cap-and-trade program might emerge from a House-Senate conference on energy legislation. Republican Sen. Mike Johanns (NE) will file an amendment to the small business jobs bill attempting to block such an outcome . . . EPA denied petitions seeking reconsideration of the endangerment finding . . . The Western Climate Initiative published a design document for its cap-and-trade program . . . A meeting of the BASIC countries revealed substantial disparities in views among the countries.

Executive Branch

• Obama Vows Continued Effort to Pass Climate Legislation. President Barack Obama addressed the Senate’s failure to take up comprehensive climate change legislation, saying that he intends “to keep pushing for broader reform” than the narrow package of energy-related measures introduced on July 27 by Senate Majority Leader Harry Reid (D-NV). The President called the Senate energy bill a “step in the right direction” but said it was “only the first step.” At a separate press conference last week, White House Press Secretary Robert Gibbs said there was a possibility that a cap-and-trade program for greenhouse gases (GHGs) could be incorporated into a final bill in a House-Senate conference.
• Administration Officials Testify on Financing for Climate Mitigation. Testifying before the Asia, Pacific, and Global Environment Subcommittee of the House Committee on Foreign Affairs, Treasury Under Secretary for International Affairs Lael Brainard said that private funding would be required to supply the majority of assistance to developing countries that was promised at the recent climate change summit in Copenhagen. Under the Copenhagen Accord, the United States and other developed countries committed to provide $100 billion per year in mitigation and adaptation assistance for developing countries by 2020. Brainard did not specify how these levels of private investment would be mobilized. At the same hearing, Deputy Special Envoy for Climate Change Jonathan Pershing noted that total global spending to mitigate climate change would probably reach $10 trillion over the next two decades. As a result, Pershing said, the promised assistance for developing countries is “quite a small share of the total effort.”

Congress

• Reid Introduces Oil Spill-Energy Bill. Senator Majority Leader Harry Reid (D-NV) introduced the Clean Energy Jobs and Oil Spill Accountability Act, which contains provisions that would make offshore oil drilling companies fully liable for spills, restructure federal oversight of offshore drilling, provide rebates for energy efficiency retrofits of homes, support deployment of plug-in electric vehicles, and create incentives for use of natural gas in the transportation sector. As expected, the bill does not contain a renewable energy standard or controls on GHG emissions. A spokesperson for Sen. Lisa Murkowski (R-AK), ranking minority member of the Energy and Natural Resources Committee, said that Republicans have about 10 amendments prepared, including a Republican alternative to the Reid bill that was introduced last week. Sen. Joseph Lieberman (D-CT), a leader of efforts to craft a Senate climate bill, told reporters that climate legislation is “alive but not moving forward,” and that the stripped-down oil-energy bill had “put aside” a more ambitious effort at least until after the elections.
• House Passes Oil Spill Bill. The House of Representatives voted 209 to 193 to pass H.R. 3534, the Consolidated Land, Energy, and Aquatic Resources Act of 2010. The bill would remove the limit on the dollar amount of potential liability faced by companies that drill offshore, impose new fees on oil production, reorganize the Minerals Management Service, strengthen offshore oil drilling safety standards, and provide funding for the Land and Water Conservation Fund. The House bill could be conferenced with the Reid oil spill bill if that bill is passed by the Senate.
• Senators Press Reid to Include “Strongest Possible” RES. Twenty-seven senators wrote to Senate Maj. Leader Reid to ask that “the strongest possible” Renewable Electricity Standard be included in energy legislation brought to the floor this summer. The letter commends Sen. Jeff Bingaman (D-NM) for including an RES in the energy bill voted out of the Senate Energy and Natural Resources (SENR) committee, but argues that passage of a more aggressive RES is necessary to create hundreds of thousands of jobs and position the U.S. to “win the clean energy race.” The letter’s signatories included Democratic senators Byron Dorgan (ND), Tom Udall (NM), Mark Udall (CO), Amy Klobuchar (MN), Ron Wyden (OR), Al Franken (MN), Jeanne Shaheen (NH), Arlen Specter (PA), Tim Johnson (SD), Russ Feingold (WI), Kent Conrad (ND), Kirsten Gillibrand (NY), Dianne Feinstein (CA), Jon Tester (MT), Jeffrey Merkley (OR), Maria Cantwell (WA), Patty Murray (WA), Frank Lautenberg (NJ), John Kerry (MA), Chris Dodd (CT), Tom Harkin (IA), Edward Kaufman (DE), Mark Begich (AK), Tom Carper (DE), and Patrick Leahy (VT), as well as Bernie Sanders (I-VT). Sen. Udall told reporters that approximately 62 senators would vote for an RES requiring utilities to obtain 15 percent of their energy generation from renewable resources by 2020, similar to the RES included in the SENR bill. Maj. Leader Reid disagreed, saying he did not have the votes. Sen. Sam Brownback (R-KS) has promised to offer an amendment to the Reid bill that would insert a 15 percent by 2020 RES.
• Johanns Files Amendment to Bar Cap-and-Trade from Energy Bill Conference. Senator Mike Johanns (R-NE) introduced legislation that would require an affirmative vote by 67 senators before the Senate could consider a conference package with cap-and-trade provisions unless the Senate has previously passed legislation with such a program. The bill is intended to prevent the possibility of conferencing a limited energy bill passed by the Senate with the comprehensive energy-climate legislation passed by the House and a subsequent vote on the conference package (incorporating a cap-and-trade program) in the Senate. Sen. Johanns has filed the legislation as an amendment to the small business jobs bill under consideration in the Senate, but Senate Democrats recently failed to find the 60 votes needed to proceed on the jobs bill.

Judicial

• EPA Denies Petitions for Reconsideration of its Endangerment Finding. The Environmental Protection Agency (EPA) denied ten separate petitions requesting reconsideration of the agency’s December 2009 finding that GHG emissions from motor vehicles contribute to an endangerment of public health and welfare. The petitions – filed by various conservative advocacy organizations, industry associations, the states of Texas and Virginia, and one private citizen –argued that an unauthorized release of e-mails from the Climate Research Unit at the University of East Anglia called the integrity of the endangerment finding into question. The petitions also pointed to alleged errors in the latest Assessment Report of the Intergovernmental Panel on Climate Change, the findings of which are cited in the endangerment finding. EPA’s 583-page response found that the petitions are based on “selectively edited, out-of-context data and a manufactured controversy” and “provide no evidence” that would warrant reconsideration. As a result of the agency’s decision, the United States Court of Appeals for the District of Columbia Circuit is likely to consider several petitions for review of the endangerment finding that have been stayed pending EPA’s decision. The decision is available at http://epa.gov/climatechange/endangerment/petitions.html.

States and Cities

• WCI Releases Final Cap-and-Trade Design Recommendations. The Western Climate Initiative (WCI) published its final design recommendations for a western cap-and-trade program. The recommendations provide guidelines for WCI jurisdictional states and provinces in the development of their implementing statutes and rules. Most elements of the design recommendations previously have been addressed in a series of WCI white papers. Beginning in 2012, the cap will cover utilities and large industrial sectors, and will expand by 2015 to cover transportation fuels, and commercial and residential fuels. Key issues addressed in the WCI plan are cost containment, compliance flexibility, allowance allocation and offset credits. The WCI was originally comprised of seven Western states and four Canadian provinces. However, assuming California’s cap-and-trade plan survives a challenge at the polls this November, the WCI is expected to begin in 2012 with only California, New Mexico and the Canadian provinces of British Columbia, Quebec, and Ontario participating. The recommendations are available at http://www.westernclimateinitiative.org/news-and-updates/121-wci-partners-release-their-comprehensive-strategy-to-address-climate-change-and-spur-a-clean-energy-economy.

Industry and NGOs

• NERC Assesses Reliability Impacts of Climate Change Policies. The North American Electric Reliability Corporation (NERC), the entity charged by the Federal Energy Regulatory Commission (FERC) with maintaining the reliability of the electric grid, issued a report providing a framework for evaluating the impact of climate change policies on the reliability of electric service. The report notes that under the Waxman-Markey climate change bill, substantial portions of the nation’s coal-fired generating capacity would retire over a relatively short period, and intermittent resources such as wind and solar would provide a greater share of supply. To manage the reliability implications of this shift, the report argues that upgraded transmission capacity, energy storage and balancing resources, and grid operations flexibility must be developed. The report is available at http://www.nerc.com/files/RICCI_2010.pdf.
• AWEA Calls for RES, Noting Climate Benefits. Citing a 71% decline in new wind turbine deployments relative to 2009, the American Wind Energy Association (AWEA) publicly urged the Senate to include a federal Renewable Energy Standard (RES) in a pending energy bill. AWEA claimed that a 15% RES would generate approximately 25% of the GHG emission reductions that were expected within the power sector under recent legislative proposals on climate change, and stated that at least 60 Senators would support such a measure. A spokesman for AWEA said that the RES was a matter of “survival as an industry” for wind power.

Studies and Reports

• State of the Climate in 2009 Report Released. More than 300 scientists contributed to the 2009 State of the Climate report released by the National Oceanic and Atmospheric Administration in the Bulletin of the American Meteorological Society. The report noted that atmospheric GHG concentrations continue to rise, and that 2008’s global ocean CO₂ uptake flux was the lowest estimated uptake in the past 27 years. The report cites data indicating reduced summer ice in the Arctic, shorter snow seasons in boreal forests, loss of glacial mass, rising permafrost temperatures in northern climates, and earlier tundra green-up in the High Arctic. The report found that global average surface and lower-troposphere temperatures during the last three decades have been warmer than all earlier decades, and the 2000s was the warmest decade in the instrumental record. NOAA describes the evidence that the earth is warming as “unmistakable.” The report is available at http://www.noaanews.noaa.gov/stories2010/20100728_stateoftheclimate.html.

International

• BASIC Nations’ Search for Equitable Distribution of Climate Burdens Falls Short at Brazilian Summit. Meeting in Rio de Janiero, Brazil, the BASIC nations (Brazil, South Africa, India and China) made little progress toward their goal of agreeing on an equitable distribution of climate change burdens under a new international climate treaty. With Brazil and South Africa advocating an emissions reduction approach based on historic GHG emissions and the capacity of nations to reduce their emissions, China and India held firm to their positions that any future treaty should be based on per capita emission reductions. The failures of the four nations to reach agreement amongst themselves bodes poorly for the chances of reaching agreement when the parties to the United Nations Framework Convention on Climate Change hold a major climate change meeting in Cancun, Mexico later this year.

Harold Bulger, Van Smith and Doug Rhorer, Summer Associates at the firm, contributed to this Update.