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Commentary
Back in July, the EPA released its Advance Notice of Proposed Rulemaking on GHG regulation; the ANPR was accompanied by statements by the EPA Administrator and several other agencies emphasizing that the Clean Air Act is an ill-suited vehicle for such regulation. However, all of these comments assume such regulation is still subject to EPA discretion. Many NGOs are asserting that EPA's regulatory obligations already have been triggered under the statute. They have filed challenges in multiple for a claiming that EPA must set emission limits for new and modified power plants and other "major stationary sources" of GHG emissions. These challenges bear watching. Should they succeed, they would set into motion a rather massive regulatory program – the numerical threshold for regulation in the Clean Air Act is, in the context of GHG emissions, exceedingly low. As a result, if EPA were required to regulate sources of GHG emissions, its regulatory net would catch countless small fish . . . At the Ghana meetings for negotiating a "post-Kyoto" treaty, Japan will introduce a new proposal on how to create emission limits of some sort for major developing countries. The issue is a delicate one. On an absolute basis, countries like China, India, Brazil, and others are now major emitters. However, these countries argue that their per-capita emissions remain well below the OECD countries and that they are still rising out of poverty. One approach in play for such countries would to eschew "hard caps" for commitments based on a steady decrease in emission intensity (measured as emissions per unit GDP).
Administration
- EPA Brief Says CO2 Emission Limits Are
not Required for Power Plant Permit. In an August 8
brief to EPA's Environmental Appeals Board (EAB),
EPA's Region 8 said it does not have to determine if
a waste-coal-fired power plant is a major source for which
CO2 emission limits must be set. In the case
In re: Deseret Power Electric Cooperative,
environmental groups challenged the prevention of significant
deterioration (PSD) permit. The Clean Air Act (CAA) requires
air permits to contain emission limits for all
"regulated pollutants"; thus, the issue is whether
CO2 emissions have that status. Both the NGOs and
EPA acknowledge the holding in the U.S. Supreme
Court's 2007 ruling in Massachusetts v. EPA
that CO2 is a "pollutant" under the CAA,
but the parties differ as to whether CO2 is
"regulated." The NGOs have pointed to provisions in
the 1990 Clean Air Act Amendments requiring power plants to
monitor CO2 emissions, claiming that these
requirements are regulations. The EAB heard oral arguments in
the case in May and on June 16, issued an order asking EPA to
address the enforceability of the CO2 monitoring
requirements. In the past, EPA has argued that monitoring
requirements do not mean that a pollutant is subject to
regulation. Environmental groups have challenged a number of
new permits for coal-fired power plants on similar grounds.
In June, a lower Georgia state court ruled in favor of NGO
claimants in such a challenge, determining that the
state's environmental agency must require
CO2 emissions limit for a new power plant. This
week, the state's appeals court granted a review of
this decision.
- EPA Working on Rules for Measuring GHG Emissions
from Biofuels. By the spring or summer of 2009, EPA
plans to issue a final rule on measuring the lifecycle GHG
emissions associated with biofuels. A proposed rule is
expected before the end of 2008. The Energy Independence and
Security Act (H.R. 6) passed by Congress in 2007 requires EPA
to set baseline lifecycle GHG emission limits for all
biofuels. The agency met privately with industry
representatives this week to discuss the measurement methods
that EPA is considering.
States and Cities
- Wisconsin Considers Advanced Renewable
Tariffs. A climate change
task force providing strategic advice on climate change
policy to Wisconsin Governor Jim Doyle (D) proposed the
adoption of advanced renewable tariffs (ARTs), or
"feed-in tariffs," to curb the state's
CO2 emissions. Feed-in tariffs guarantee a market
for renewables produced by small power generators to
encourage their development. Under the Wisconsin proposal,
the state would guarantee a fixed price for power sold by
renewable projects smaller than 15 MWs. Also, utilities would
be required to enter into long-term, fixed-price contracts to
purchase all electricity produced by renewable projects. It
is unclear whether Wisconsin would need to adopt additional
legislation to create ARTs, but it is one of several
Midwestern states considering the approach. Michigan and
Minnesota are considering ART legislation, California
recently approved a similar, smaller program, and numerous
European countries and Ontario, Canada have feed-in
tariffs.
- Virginia Develops CCS Test Project. On
August 18, Virginia initiated its first carbon capture and
sequestration (CCS) test project in one of the
state's unminable coal seams. The initial injection
of 1,000 tons of CO2 could grow to 100,000 tons by
2017, at an eventual cost of $100 million, if the test is
successful. Rep. Boucher (D-VA), Chairman of the Energy and
Air Quality Subcommittee of the House Energy and Commerce
Committee and a strong supporter of CCS, endorsed the
project, which is a jointly funded effort by the U.S.
Department of Energy and industry partners.
- New York City Mayor Calls for Renewable Energy
Development in New York City. New York City Mayor
Michael Bloomberg discussed his vision for creating
alternative energy projects in his city. At the 2008 National
Clean Energy Summit in Las Vegas, the mayor suggested
offshore wind farms and the placement of solar panels and
wind turbines on city buildings and bridges. In conjunction,
the New York City Economic Development Corporation called on
the business community to help the city develop sources of
renewable energy. In November 2007, the city launched PlaNYC
2030, an initiative to reduce GHG emissions 30 percent below
2005 levels by 2030.
- California Smart Growth Plan Ties Regional
Planning to GHG Emissions. The California
legislature considered SB 375 this week, a bill that links
regional planning for housing and transportation with
California's goals to reduce GHG emissions to 1990
levels by 2020. The legislation provides metropolitan regions
with incentives to engage in smart growth plans that fight
sprawl such as denser housing closer to downtown and
transportation hubs to reduce emissions. Areas that do not
adopt smart growth plans could see reductions in
transportation funding.
Studies and Reports
- Study Finds Shareholders Resolutions on Climate
Change Continue to Increase, Gain Effectiveness.
According to a special report issued by the environmental
news service BNA, shareholder resolutions on climate change
have continued to increase and have garnered more support in
2008 than in previous years. The report found as many as 57
such resolutions have been filed to date in 2008, up from a
total of 42 filed in all of 2007 and 30 in 2006. According to
reports from Ceres, a coalition of investors and
environmental groups, and RiskMetrics, a financial risk
analyst, average support for climate change resolutions
increased from 10.8 percent in 2005 to 19.4 percent in 2007.
Ceres estimates that in 2008, average support for climate
resolutions has been 23.5 percent. The number of resolutions
that have been withdrawn after successful negotiations also
has been on the rise in recent years.
Emissions Trading
- Chicago Climate Futures Exchange Begins Trading
in RGGI Allowance Contracts. On August 15, the
exchange, a wholly-owned subsidiary of the Chicago Climate
Exchange (CCX), began trading in futures contracts and
options on futures contracts that represent 1,000 allowances
under the Northeast Regional Greenhouse Gas Initiative
(RGGI). The first RGGI allowance auction is scheduled for
September 25. The New York Mercantile Exchange also plans to
begin trading in futures and options contracts on August 25
and August 26.
International
- World Bank Releases Climate Change
Strategy. The World Bank Group announced an
initiative to boost investment for renewable energy projects
by 30 percent per year from 2009 – 2012, and to
screen all new energy and transportation projects for climate
change impacts. This is the first time that the bank has
considered climate change as an element of its development
mission, which is outlined in a 91-page draft report,
"Development and Climate Change: A Strategic Framework
for the World Bank Group." However, the bank will
continue to fund fossil fuel and other large carbon projects
as part of its commitment to increase energy access for
poorer countries at an affordable cost.
- UNFCC Meeting to Focus on Forestry. At
the United Nations Framework Convention on Climate Change
(UNFCCC) meetings in Accra, Ghana, the main focus will be on
reducing GHG emissions from deforestation and degradation,
known as REDD. Most participants are in agreement that forest
protection is a vital part of the strategy for addressing
climate change, but disagreements exist over the specifics of
how to approach this matter. Some nations, such as New
Guinea, support using carbon markets to protect forest
resources, while other heavily-forested nations such as
Brazil oppose that strategy in favor of an international
forest protection fund. The UNFCCC meeting is expected to
conclude without any major agreements, but parties are
expected to narrow down the range of options for addressing
climate change.
- Japan to Propose New GHG Reduction
Initiative. At the UNFCCC meetings, Japan proposed
new initiatives to link GHG emission reductions to a
country's economic growth to accommodate the
participation of China, India, Brazil, and the U.S. in a
post-Kyoto Protocol emissions-reduction regime. Under the
proposal, countries that were considered to be
"developing" at the 1990 signing of Kyoto but are
now developed – such as South Korea and Mexico
– would observe the same GHG emission reduction
rules as developed countries. Still-developing countries,
including China and India, would be classified into several
categories using indicators based on gross domestic product
and overall GHG emissions. The proposal would divide
industrial sectors into three categories based on how they
can achieve GHG reductions to mitigate developed
countries' concerns about "carbon leakage":
the potential exodus of energy-intensive factories to
developing countries without mandatory GHG reduction
targets.
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