cap-and-trade

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A recent poll of registered voters in California concerning the new State “Cap and Trade” auction program, initiated Wednesday, November 14, 2012, and aimed at reducing greenhouse gas (“GHG”) emissions found strong public support for the program.  As set forth in more detail in the Aviation & Airport Development Law News blog of November 13, 2012, the Cap and Trade program assigns “caps” to carbon emissions (euphemistically called “allowances”) for various industries, including utilities and refineries.  It then allows those companies who have not used the full allotment of allowances to sell their unused allowances to companies that have expended their own allowances.  Effectively, the program would create industry-wide caps on emissions, with flexibility within industry groups as to the way in which to utilize the allowances within the constraint of the caps.  The political significance of the Cap and Trade program as one of the first of its kind in the nation goes well beyond the simplicity of its procedure. Continue Reading Public Strongly Favors “Cap and Trade” Carbon Emissions Program

Once again taking a forefront position in innovative environmental programs, California, for good or ill, is poised to launch the first of its kind and scope in the nation greenhouse gas (“GHG”) emissions trading system (“Cap and Trade”). 

On November 14, 2012, the California Air Resources Board (“CARB”) will hold an auction mandated by California’s 2006 “Climate Change” law, AB32, in which pollution permits (“Allowances”) will be bartered to more than 350 businesses, including utilities and refineries.  The concept behind Cap and Trade is that polluters must either cut carbon emissions to the level of a specific emission cap placed on individual types of pollutants by AB32, or buy allowances for each metric ton of carbon discharged over cap limits from other companies whose emissions did not reach cap levels.  Through the Cap and Trade program, excess carbon polluters can achieve up to 8% of emissions reductions needed. 
 Continue Reading “Cap and Trade” in Greenhouse Gas Emissions Launched in California

On October 20, 2011, the California Air Resources Board (“CARB”) adopted a new set of rules, called “cap-and-trade,” implementing the requirements of AB32, California’s groundbreaking climate change law. Enacted in 2006, AB32 requires reduction in carbon emissions, usually credited as the cause of “global warming,” to 1990 levels by the year 2020. The new cap-and-trade regulations will be implemented in phases, with the State’s largest emitters required to meet the caps beginning in 2013; and remaining emitters, collectively about 85%, required to begin compliance in 2015.Continue Reading “Cap-and-Trade” Caps California’s Climate Change Regulations

When the U.S. Environmental Protection Agency issued its final finding that emission of six greenhouse gases endangered the public’s health and the environment because of their effect on climate change, the business community wondered how it should respond to the news.  At first glance, there seems to be blinding maze of legal and policy issues that will affect business decisions.  Although far from clear, there is a way out of the maze – although businesses with significant greenhouse gas emissions should be prepared to tackle the important issues that the Endangerment Finding raises.

Businesses Need to Take a Deep Breath (Irony Intended)

The road to the endangerment finding began in 2007, when the U.S. Supreme Court decided in Massachusetts v. EPA that carbon dioxide and other greenhouse gases constituted “air pollutants” under the Clean Air Act.  To most savvy businessmen this was a clear signal to start planning how their businesses would cope with the establishment of limits on emission of greenhouse gases.  Although the Bush Administration EPA successfully sat on the issue, when the Obama Administration took office, most companies recognized that an endangerment finding would top the EPA’s list of major environmental actions.  Thus, EPA’s announcement this past April of its proposed finding and its announcement of the final endangerment finding should have come as no surprise to anyone who has been monitoring this issue.

The key thing for businesses to remember is that the endangerment finding by itself does not regulate the emission of greenhouse gases from any source, large or small.  That being said, it does have a direct impact on mobile sources (because of section 202(a) of the Clean Air Act), with the EPA planning on issuing its final “light-duty vehicle” greenhouse gas emissions rule some time in Spring 2010.

Continue Reading What Does EPA’s Finding that Greenhouse Gas Emissions Endanger Public Health and the Environment Mean to Business?

Update 09/30/09 The Boxer-Kerry bill introduced at the press conference this morning – also known as Clean Energy Jobs and American Power Act – dropped the provision requiring the EPA Administrator to promulgate standards for aircraft and aircraft engines.  Instead, it includes a more general provision that

. . . the Administrator may establish provisions for

…

John M. Broder, a columnist for the New York Times, writes that:

The changing global climate will pose profound strategic challenges to the United States in coming decades, raising the prospect of military intervention to deal with the effects of violent storms, drought, mass migration and pandemics, military and intelligence analysts say.

Such climate-induced crises could topple governments, feed terrorist movements or destabilize entire regions, say the analysts, experts at the Pentagon and intelligence agencies who for the first time are taking a serious look at the national security implications of climate change.

Against this backdrop, the U.S. Senate Committee on Environment and Public Works held hearing on Thursday, August 6, 2009, on the climate change bill currently under consideration by Senate after being passed by the House earlier this summer.  According to Chairman Barbara Boxer (D-Cal.),  "the hearing will focus "on ensuring that America leads the clean energy transformation as we address the threat posed by climate change.

The battlelines were drawn in the opening statements.  The Democrats emphasized the national security aspects of the failure of the United States to address climate change adequately.  Sen Lautenberg (D-N.J.) said in his opening remarks:

We have also heard from our military leaders that global warming is a serious threat to our national security.  As many as 800 million people are going to face water and cropland scarcity in the next 15 years, setting the stage for conflict and breeding the conditions for terrorism.

These sentiments were echoed by Sen. Cardin (D-Md.) who stated that addressing climate change was "important for national security."

The Republicans seemed to acknowledge the fact that movement on climate change is necessary, but that the energy policy of the United States should focus first and foremost on the economy.  This resulted in Sen. Bond (R-Mo.) calling for off-shore drilling for natural gas and oil, Sens. Voinovich (R-Ohio) and Alexander (R-Tenn.) calling for more nuclear energy, and all of them calling for "Clean Coal," describing the United States the "Saudia Arabia" of coal.  Nuclear energy, in particular because of its "no carbon emissions," is high on the Republican’s agenda.

The basic issue between the two parties seems to be this:  the Republicans believe that the status quo should be protected, because the alternative proposed by the Democrats is too costly and uncertain.  The Democrats, on the other hand, believe that while the costs will be high in some sectors, other sectors will pick up the slack.  While Sen. Voinovich is correct that the economy must be protects, Sen. Whitehouse (D-R.I.) is also correct in stating that to

move the government’s hands in a way that supports a better clean energy future is not a distrubance in the "state of nature" . . . it’s actually making better decisions with the same power we use now.

Panel One:  Views From the Obama Administration

Putting aside for the moment the prepared testimony by the witnesses, the nuclear question was addressed through a question from Sen. Boxer to panel by stating "under the analysis of the House Bill, 161 new 1000 megawatt nuclear power plants would result from that bill."  The panelists confirmed that the cap-and-trade system sets up the market mechanisms that would allow the power and energy companies to move forward with the development of nuclear power plants in addition to solar and wind.

Sen. Inhofe attempted to move the discussion away from climate change and toward the issue of reliance on foreign oil.  His point was that we need to develop our oil reserves that we have here, presumably instead of developing solar, wind and nuclear resources.  Hon. Strickland, from the Interior Department, replied that the Interior Department is moving toward developing all of the natural resources of the United States in "responsible manner."  But that should not mean that we should not also develop "renewable" resources.

Panel Two:  Industry and Environmental Group Representatives

The second panel of the day concentrated a little more on reductions of carbon emissions.  Interestingly enough, Mr. Fehrman of the Mid-American Energy seemed to support a hard cap, without any trading of allowances.  His belief is that introducing market mechanisms only raise the costs for energy companies.  In addition, he believes that carbon capture and sequestration will be "commericially available" in 5 to 10 years. 

On the other hand, Mr. Krupp advocated in favor of cap-and-trade to achieve real emission reductions in the nation.  Mr. Krupp also noted that "carbon capture is ready to roll" – in Norway.  The reason why?  Because there is a price on carbon and the rechonology was developed as a result.

Shortly after the hearing was over, the Senate recessed for the rest of the month of August, leaving the big questions regarding climate change until the Fall.

The witness list and a link to the video webcast of the hearing after the jump.Continue Reading Climate Change and Clean Energy Headline U.S. Senate Committee Hearing

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