American Clean Energy and Security Act of 2009

 The Waxman-Markey Bill (also known as the American Clean Energy and Security Act) hearings ended with a bang, featuring Former Vice President and Nobel Laureate Al Gore, former Senator John Warner and former Speaker of the House Newt Gingrich. The testimony they gave was no surprise, but it underlined the deep divisions that exist, at least at the political level, and the uphill battle that this Bill faces.

Gore’s Testimony

Former Vice President Gore was first in the witness chair. He gave his standard (and very effective) stump speech about climate change: the country is at risk on three fronts: economy, national security and climate. He likened the Waxman-Markey bill to a civil rights bill: “the most important of our lives. It is a moral imperative.” He stated that it is an environmental Marshall Plan, which is what he called for (and outlined) in his book “Earth in the Balance.” Gore then started talking about “tipping points,” his belief that the levels of CO2 in the air and other factors that might tip the balance to a point that it is irreparable. He ended his statement with “the USA is the world’s leader. Once we find the courage to take on this issue the world will also act. We need to act.” 

The Climate Change skeptics on the Committee sought to discredit Gore, but were largely unsuccessful. First, Rep. Fred Upton (R.-Mich.) tried to paint Gore as being anti-nuclear. Gore responded that he is not anti-nuclear, it is just his belief that the problems associated with nuclear energy, i.e., waste, accidents, size, fuel sources, weapons issues, are not easily addressed. Rep. Steve Scalise (R.-La.) took a shot at Gore accusing him of conspiring with Ken Lay of Enron for setting up insider trading deals that are contained in the cap-and-trade portion of the Bill. Gore responded with the respect that such a comment deserves: “there are people that still think the moon landing was staged in a Hollywood studio.” Rep. Marsha Blackburn (R.-Tenn.) also attempted an ad hominem attack, asking whether Gore personally profited “from this push towards a cap-and-trade system?” She specifically referred to Gore’s presence on the Board of the firm Kliner Perkins. Gore responded incredulously “are you serious? Do you think I have devoted the past 30 years of my life to this cause just so I could benefit from a bill that is up for debate right now?” In all, the attacks on Gore did not move the skeptic’s agenda forward.

Warner’s Testimony

Former Sen. Warner, a Republican from Virginia, who was the co-author of last year’s Warner-Lieberman Bill which covered much of the same ground as this bill, echoed Gore.  Warner stated that “energy independence, global climate change and national security are very interwoven.” Warner recognized that there will be costs to industry and to the people, but that “if we keep on with business as usual, we will reach a point where the worst effects are inevitable.”

Gingrich’s Testimony

By contrast, former Speaker of House Newt Gingrich’s testimony focused on his proposal that instead of clean energy, the U.S. ought to expand off-shore drilling, oil shale, oil refineries, “green” coal, and nuclear energy to resolve its energy security issues. Gingrich heightened the rhetoric by calling the EPA economic analysis “intellectually dishonest” in not presenting both sides of the story. This tactic, reminiscent of the debate over evolution, seeks to paint one side as presenting something that is not certain and claiming that that side is not releasing all of the facts. 

The Democrats ripped into Gingrich. Chairman Henry Waxman (D.-Calif.) excoriated Gingrich for using scare tactics and talking in circles, ending by asking “if you are scared to work with us, what are doing here?” Likewise, Rep. Jay Inslee (D.-Wash.) asked Gingrich “you were asked in 2007 if you supported a cap on carbon. You responded ‘frankly, it is something I would strongly support.’ What happened?” Indeed, Gingrich appeared in ads for Gore’s “We” campaign promoting the reduction of greenhouse gas emissions. Gingrich did not have a reply.

Industry and Regulator Testimony

In the afternoon, various industry officials paraded before the Committee to ask for specific changes to the Bill that would benefit their industry and regulators stating that those changes should not be made. For example, Dr.  Dan Sperling from the University of California at Davis stated that the California Air Resources Board voted for a Low Carbon Fuel Standard, and the U.S. should follow California’s lead. On the other hand, Charles Drevna, President of the National Petrochemical and Refiners Association testified that Low Carbon Fuel Standard is redundant, costly and punitive. There were a few good points made, though. Ian Bowles, from the Massachusetts Office of Energy and Environmental Affairs, updated the Committee on Massachusetts’ experience with 100% auctions, concluding that auctions work and they work “brilliantly.”

Click on "Continue Reading" for a Witness List with links to their prepared testimony as well as links to video of the session.


Continue Reading Day Four of Waxman-Markey Bill Hearings: Al Gore, John Warner and Newt Gingrich Steal the Show

On Day Three of the Waxman-Markey Bill (also known as the American Clean Energy and Security Act) hearings, perhaps the best place to begin is with Rep. Edward Markey’s (D-Mass) closing remarks, where he asked the panelists "do you think we can construct a cap-and-trade system?"  All of the panelists replied in the affirmative.  This session, without the Administration headliners of yesterday and the Pop culture icons that are scheduled for tomorrow (Al Gore and Newt Gingrich), was noticeably less on point and more meandering.  There were, however, several central themes:  cap-and-trade, Carbon Capture and Storage, and renewable energy.

Cap-and-trade

Although this topic was discussed extensively yesterday, the first panel consisted of representatives of various utility groups and consumer groups.  The electric utilities all seemed to want the same thing:  free allowances instead of having to pay for them at auctions.  They claim that this will allow the utilities to keep their prices down.  There is no surprise there.  The only interesting quote from a Congressman came, once from Rep. Joe Barton (R. Texas), who told the witnesses that "hybrid cars never pay off and American won’t drive them unless forced by the government, backed by the Army."  How dead was it in the Committee room?  One report indicated that "the Chairman is reading a paper and only about 3 Reps are paying attention to these guys begging for handouts."

Carbon Capture and Storage/Clean Coal

During the hearings there has been talk about "Carbon Capture and Storage."  Carbon capture and storage (CCS) is an approach to mitigating the contribution of fossil fuel emissions to global warming, based on capturing carbon dioxide (CO2) from large point sources such as fossil fuel power plants and storing it away from the atmosphere.  The utilities and the coal industry believe that CCS is the way to go because it will allow them to go on using coal without producing CO2.  However, the technology is not there yet, and there is a fear that the development of CCS would draw needed dollars away from the development of other sources of energy.  Interestingly, David Hawkins of the Natural Resources Defense Council stated that CCS can happen if it has adequate policy support.

Renewable Energy

On the other hand you have the advocates for "renewable energy."  Although most people think of solar and wind power when they think of renewable energy, there are other sources.  Geothermal energy is one such source.  Dan Reicher of Google (yes, that Google) testified that "engineered geothermal energy potential in Texas could provide 100% of Texas’ electricity needs."  Supporters of renewable energy also came from unlikely sources, Jim Robo, President and COO of Florida Power & Light told the Committee that "we’ve barely begun to tap renewable energy . . . Unchecked climate change will cost us tens of billions of dollars."  This thinking leads to the Waxman-Markey Bill’s call for a goal to be set that a certain percentage of energy be from renewable sources.  This has also led to various Representatives to call for the definition of renewable energy to include nuclear energy, biomass, and "clean coal."

In the end, there was a chorus among the last panel, calling for a strong legislation to deal with climate change and energy.   One can hope that the last day of the hearings, with some heavy hitters taking the witness chair, the questioning will be a little more interesting.

Click on "continue reading" for a complete Witness List with links to the witnesses written testimony and links to the video of the Hearing.

Continue Reading Day Three of Waxman-Markey Bill Hearings: No Headliners, Just Lots of Talk

Day Two of the Hearings on the American Clean Energy and Security Act, also known as the Waxman-Markey bill, proved to be as contentious as expected.  There was much evidence that the Bill would not have an easy road ahead of it, since the Committee is deeply divided.  Although there were a few forays into the ridiculous, (Rep. John Shimkus (R.-Ill.:  "I think this is the greatest assault on democracy and freedom that I’ve ever seen in Congress;" Energy Secretary Steven Chu comparing the Bill to Wayne Gretsky’ famous comment that "I was good because I skated to where the puck will be" (upon reflection, that comparison does work)), the Committee focused its questions to Panels (which featured EPA Administrator Lisa Jackson, Energy Secretary Steven Chu and Transportation Secretary Ray LaHood) on the issues of jobs, allowances, energy costs, and American leadership in the world.

Jobs

In these times of economic uncertainty, no issue pulls at the hearts of politicians than jobs, especially when it can be used to hammer a point home.  Rep. Joe Barton (R.-Texas) led the way citing statistics from the National Association of Manufacturers, the Heritage Foundation, and Charles Rivers Associate claiming that the bill would result in anywhere from 1.8 to 7 million jobs "destroyed."  Rep. Shimkus made his statement about jobs in a more theatrical way, stating that "those of us who want jobs are going to try to defeat this bill" while hoisting a small lump of coal for the panelists to see.

On the other hand, the proponents of the Bill were not about to concede that the Bill would cause mass unemployment.  Rep. Waxman asked EPA Administrator Jackson, Secretary Chu, and Secretary LaHood if they believed that the Bill would create jobs.  Administrator Jackson replied that she believed the Bill is a "jobs bill."  Secretary LaHood added that the legislation would create jobs, "especially green jobs."  Secretary Chu agreed that the Bill would create millions of jobs and reduce America’s dependence on foreign oil.

Cap-And-Trade and Allowances

The part of the Bill that drew the most fire were the allowances:  should they be given away or should be they auctioned or should there be some sort of hybrid.  Administrator Jackson stated for the record that the Obama Administration supported the idea that 100 percent of the allowances should be auctioned.  In response to Rep. Jay Inslee’s (D.-Wash.) statement that we have to multiple approaches to addressing the problem through EPA regulations and a cap passed by Congress, Administrator Jackson stated that she "could not agree more."  A cap-and-trade law, she continued, was "powerful and necessary," but we need other regulations as well.

Understandably, the energy company officials who testified were not so eager to embrace a 100% auction.  They wanted at least some free allowances, while various scientists ad economists stated that a cap-and-trade with an auction is the only way to go.  Rep. Cliff Stearns (R.-Fla.) stated that "free carbon credits were windfall profits in Europe."  Contrast that statement with  Rep. Ralph Hall’s (R.-Texas) statement that "we’ll be in a weakened position if adopt cap-and-trade."  Thus, there is much work to get to a point where there can be agreement on whether there should be a cap-and-trade, let alone whether it should be a 100% auction of allowances or something else.

Energy Costs

The other big issue at the Hearing, particularly with respect to the later panels, was energy costs.  Rep. Barton told the Committee that "the debate is not about whether cap-and-trade legislation will raise energy costs; the only dispute is by how much." He then went on to cite "findings" that the Bill would increase household energy costs up to $3,128 per year and that "filling your gas tank will cost anywhere from 60 to 144 percent more.  The cost of home heating oil and natural gas will nearly double."  Rep. Fred Upton (R.-Mich.) commented that this was not a "cap-and-trade," this was a "cap-and-tax."

The response to this onslaught was a little more nuanced.  Secretary Chu responded that "it would be unwise to want to increase the price of gasoline" and then went on to outline the plans to lower transportation costs with electric cars, and low-carbon fuels, among other things.  In response to a question from Rep. Jane Harman (D.-Calif.) Secretary Chu indicated that refrigerators use one quarter the amount of energy they used in 1975 and these are real savings seen by households.  He then concluded by stating his belief that the "overall costs of living . . . can be held constant."  Even the ConocoPhilips Executive Red Cavaney stated that although there will be costs "the benefits to the overall American economy will outweigh these costs."

American Leadership

Another area of concern addressed at the Hearing was the wisdom of the United States regulating climate change when there are no assurances that the number one and two emitters in the world – China and India – will also take steps to reduce their emissions.  Rep. Ed Whitfield (R-Ky.) asked Secretary Chu:  "If we unilaterally move to take steps and China and India and other countries are not, how do we deal with that?"  Chu responded that that he believed that the United States should take a leadership role on this issue.  This sentiment was echoed by Rep. Diana DeGette (D-Colo.) who stated that she believed that America should lead and not wait for India and China to get their act together.

Compromise

Outside the Committee Room Rep. Rick Boucher (D.Va.) and Rep. Jim Matheson (D.Utah) stated that they would meet with Chairman Waxman to discuss a comprehensive amendment that could be presented on Thursday.  Rep. Boucher stated that the Bill’s schedule was "achievable" but it would depend on whether an agreement could be quickly reached on issues including how to allocate credits to existing industries, the schedule for reducing carbon emissions and flexibility in meeting renewable electricity requirements.

Click on "continue reading" for a complete Witness List with links to the witnesses written testimony and links to the video of the Hearing.

Continue Reading Day Two of Waxman-Markey Hearings: EPA, Energy and Transportation All Show Up

On Day One of a planned four days of hearings on the American Clean Energy and Security Act of 2009, also known as the Waxman-Markey bill, there were no surprises.  This day was devoted to "opening statements" by the members of the Committee, before the Administration’s heavy hitters take the stage tomorrow. With a resounding

Over two years ago, on April 2, 2007, the Supreme Court in Massachusetts v. EPA, 549 U.S. 497 (2007), directed the EPA Administrator to determine whether or not emissions of greenhouse gases from new motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare, or whether the science is too uncertain to make a reasoned decision.  Finally, after two years and much hand-wringing, EPA Administrator Lisa Jackson issued her proposed finding that carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride may endanger public health or welfare.

In actuality, the EPA proposed two findings:  (1) an endangerment finding, that the six GHG endanger public health and welfare; and (2) a “cause and contribute finding” that the combined emissions of carbon dioxide, methane, nitrous oxide, and hydrofluorocarbons from new motor vehicles and motor vehicle engines contribute to the atmospheric concentrations of these key greenhouse gases and hence add to the threat of climate change.

EPA characterizes its proposed Endangerment Finding as follows:

This is not a close case in which the magnitude of the harm is small and the probability great, or the magnitude large and the probability small. In both magnitude and probability, climate change is an enormous problem. The greenhouse gases that are responsible for it endanger public health and welfare within the meaning of the Clean Air Act.

The EPA, however, was careful to walk a fine line between complying with the dictates of Massachusetts and actually regulating GHG.  While this proposed rule does not actually regulate GHG,  it does propose defining greenhouse gases as “air pollutants” under the Clean Air Act. EPA proposes defining the six GHG as a single pollutant, rather the defining them individually – similar to the approach the EPA took with ozone years ago. EPA explained its decision as follows:

It is the Administrator’s judgment that this collective approach for the contribution test is most consistent with the treatment of greenhouse gases by those studying climate change science and policy, where it has become common practice to evaluate greenhouse gases on a collective CO2-equivalent basis

Although the EPA usually issues emission control standards concurrently with an endangerment finding, in this case, the EPA indicated that the emission standards would be issued “several months from now.”   This bifurcation of the normal process has been taken by observers to mean that these rules are meant to goad the Congress into action, rather than a serious proposal that EPA regulate GHG.  Indeed, the EPA’s Press Release on the Endangerment finding specifically stated that “[n]otwithstanding this required regulatory process, both President Obama and Administrator Jackson have repeatedly indicated their preference for comprehensive legislation to address this issue and create the framework for a clean energy economy.”

And Congressional leadership seems ready to oblige.  Rep. Edward Markey (D.Mass.), Chair of the Energy and Environment Subcommittee, had this to say about the EPA’s Endangerment Ruling:

This decision is a game-changer. It is now no longer a choice between doing a bill or doing nothing. It is now a choice between regulation and legislation. EPA will have to act if Congress does not act.

Markey and Rep. Henry Waxman (D-Calif.) have introduced the American Clean Energy and Security Act of 2009 (ACES) to set up a system for reducing emissions from all sources and creating a financial incentive for companies to stay within emission limits.   See, “U.S. House Energy and Commerce Committee Releases Draft Climate Change Act,” posted April 2, 2009.  Waxman wants to pass the bill from his Energy and Commerce Committee by the end of May, but its fate is uncertain in the Senate.

Aircraft and other aviation sources seem to have received a pass with respect to these regulations:

EPA has received a petition under the Act to consider the regulation of 64 aircraft emissions (water vapor and NOx) that lead to formation of contrails (in addition to aircraft greenhouse gas emissions), and EPA plans to evaluate this issue further. At this time, the Administrator is not proposing to include aircraft-related contrails or emissions that are not greenhouse gases within the definition of air pollution for purposes of section 202(a).

This does not mean, however, that once the emission control standards are promulgated (if they are promulgated), aviation sources will not also be regulated.  Likewise, the Waxman-Markey bill may affect aviation sources as well.

A 60-day comment period will follow publication of the proposed rule in Federal Register, which has not yet occurred.  There will be public hearings in Arlington, Virginia, and Seattle, Washington in May, 2009.   Click on Continue Reading at the bottom of this post for details about written comments and public hearings.

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Continue Reading EPA Finally Issues Endangerment Finding for Six Greenhouse Gases, Including Carbon Dioxide