Proposal to Handicap EPA's Regulation of Greenhouse Gases Evaporates in Senate
Earlier this week, Senate Republicans failed in their attempts to limit the Environmental Protection Agency’s regulatory authority over carbon dioxide and other greenhouse gases under the Clean Air Act. While this is a short term victory for the Obama administration, the nature of the vote raises questions about the EPA’s congressional support in the not so distant future.
Republican leader Mitch McConnell (R., KY.) and Sen. James Inhofe (R., OK.), introduced an ambitious measure that would reject the EPA’s finding that climate change is a threat to public health and welfare, and rein in the Obama administration’s environmental policies. Ultimately the proposal failed with only four Democrats joining the ranks of Republicans seeking to restrict the EPA’s authority. A companion measure in the Republican-held House passed 255-172 the next day, but was more a symbolic vote given the lack of Senate support and promised presidential veto.
Senate Democratic leadership countered the Republican proposal with a handful of less comprehensive measures to restrict the EPA’s plan of action. This tactic allowed moderate Democrats to cast votes against the EPA on proposals that were meant to be defeated, and provided them with the necessary political cover to eventually block the McConnell and Inhofe rider.
In total, 17 Democratic Senators voted for at least one of the four measures, and a majority of the Senate is now on record supporting some type of restriction to the EPA’s authority. Coupled with the passing of the doomed-yet-symbolic House bill that sought to nullify the EPA’s scientific findings and resulting greenhouse gas regulations, the outlook for the Obama administration’s climate policies may be cloudy.
The EPA had taken the stance that greenhouse gas emissions pose a threat to human health, and in 2009 began to assert its power under the Clean Air Act to set standards for power plants, refiners and other major emitters. But, with an additional 17 Democrats supporting the House measure, and the 2012 Campaign season fast approaching, one wonders if the White House will be able to rally the support needed to continue its climate initiatives.
What now on Climate Legislation?
While faint glimmers of hope remain alive that the Senate will pass climate change legislation this Fall or during a lame duck session of Congress, most observers anticipate that cap-and-trade will have to wait for the future in terms of federal action. Two particularly interesting perspectives on the “What Now” question have emerged in the past week that deserve attention and analysis.
Megan McGowan suggests http://solveclimate.com/blog/20100818/are-moderate-republicans-obamas-leadership-keys-federal-climate-law that a lack of Presidential leadership and no support from moderate Republicans are to blame for failures on cap-and-trade legislation and these dynamics will need to change for future success. The article quotes Republicans and environmentalists who think Obama needs to stop listening to nervous political advisors, get out of listening mode, get bipartisan agreement on principles, lock the door with moderates and come out when there is a deal. Similarly, McGowan notes the reality of climate change and the likely change of margins in the next Congressional session will require moderate Republicans to come to the table, as simple party opposition will no longer be a politically feasible position.
An alternative “what now” analysis comes from Michael Brune, the new head of the Sierra Club, the nation’s largest conservation organization. In an interview with Yale Environment 360 http://e360.yale.edu/content/feature.msp?id=2303, Brune suggests the path forward is a multi-pronged attack on climate change. This alternative path would put less emphasis on one-single bill and moderate deal-making, and emphasize:
· Less environmental ngo-corporate collaboration on cap-and-trade policy replaced in part by a more adversarial approach until corporations make clear commitments to change their operations and public policy positions.
· Grassroots campaigns to prevent the building of new coal-fired power plants,
· Public support for EPA actions to reduce pollutants in the air,
· Scaling up renewable energy support, and
· Scaling up production and demand for natural gas.
Both perspectives share a common goal of creating political space in Washington, D.C. to create meaningful action on climate change. At the core of McGowan’s article is an implicit deal-making that involves grand concessions to traditionally intensive ghg sectors such as coal and oil, whereas there is likely less room for such concessions in the path suggested by Brune. It remains to be seen if a political path forward can accommodate both perspectives.
A Time for Action
President Obama's first Oval Office address was highly anticipated, as there is mounting criticism of the Administration's management of the BP oil spill. Supporters of climate and clean energy legislation eagerly gathered around their televisions in hopes that the President would provide the much needed road map detailing how this tragedy should transform American thinking on energy policy going forward.
However, many were left disappointed as the President did not answer some key questions nor did he set forth specific expectations for the Senate's summer session. There was considerable rhetoric about the country's oil addiction and the need for compelling and immediate clean energy legislation, but President Obama offered few specifics, although he seemed to provide some support for combining elements of several bills. However, the President, did not go so far as to mention a price on carbon, raising the tax on gasoline, or placing a cap on greenhouse gas emissions.
While the President's remarks could be seen as a big blow to Senators. John Kerry (D-Massashusetts) and Joe Lieberman (I-Connecticut), co-authors of a Senate cap-and-trade bill, in a joint statement they said that Obama has joined their fight.
"There can be no doubt that the president is rolling up his sleeves to ensure we establish a market mechanism to tackle carbon pollution, create hundreds of thousands of new jobs each year, strengthen energy independence, and improve the quality of the air we breathe," the two senators said.
In addition to the Kerry-Lieberman package, other legislative potentials include the Energy and Natural Resources Chairman Jeff Bingaman's (D-New Mexico) bill (S. 1462) which includes a renewable energy standard; a more ambitious renewable energy target found in bill co-sponsored by Senators Amy Klobuchar (D-Minnesota) and Senator Snowe (R-Maine) S. 862, an alternative to the traditional ideas on pricing carbon (S. 2877) from Senators Maria Cantwell (D-Washington) and Susan Collins (R-Maine); and a bill (S. 3464) promoting energy efficiency from Senators Richard Lugar (R-Indiana) and Lindsey Graham (R-South Carolina).
Prior to the speech, Senator Lieberman indicated that he hoped President Obama would emphasize the need for a market mechanism for pricing carbon.
"The truth is, trying to make America energy independent without creating a market mechanism to price carbon, would be the equivalent of President Kennedy launching our national effort to put a man on the moon without building a rocket," Lieberman said. "It's that important, and any alternative legislation being proposed -- including some that has some good stuff in it -- that doesn't do something to price carbon, will not unleash the billions and billions of dollars in the private sector that are waiting for that signal to put their money into clean alternative energy sources for our society."
The President stated that "the one approach I will not accept is inaction." The President is correct in this regard, as there has been a lot of talk for a long time. Yet, some specifics from the White House would be useful right now.
Achieving Fast Mitigation: Kerry-Lieberman and UnSNAPing a Mobile Refrigerant
It's easy to overlook crucial provisions of the Senate climate bill that address strategies to reduce non-CO2 climate-forcing that accounts for almost half of the warming effect our activities cause. In the brouhaha the bill caused, it was also easy to overlook the significance of a petition from NGOs to EPA asking it to end the privileged status of the most widely used mobile air conditioning refrigerant, which has a global warming potential (GWP) up at 1,400. Yet these two closely-related actions, despite having nothing to do with CO2 emissions from the power plants targeted by the Senate bill, may well provide the most significant climate protections the US achieves in the near term.
The Senate climate bill unveiled on May 12th by Senators John Kerry and Joe Lieberman contains a section titled “Achieving Fast Mitigation” to address non-CO2 climate forcers, including black carbon soot, methane, and hydrofluorocarbons (HFCs). When combined with other similar sources like ground-level ozone, these non-CO2 greenhouse gases and pollutants make up 40 to 50 percent of total climate forcing.
Why is this called Fast Mitigation? The non-CO2 forcers are short-lived in the atmosphere -- a few days to about fifteen years -- meaning reductions will produce benefits fast and help to avoid the tipping points for abrupt climate change. Reductions in CO2 of course are essential but will not produce cooling for centuries.
We addressed controls over HFC greenhouse gases with hundreds to thousands the global warming potential of CO2 19 months ago here. Both the Senate bill and the House's Waxman-Markey bill now address HFCs and thus complement the proposal by the US, Canada, and Mexico under the Montreal Protocol ozone treaty which, if the Parties reach agreement in November, would result in avoided emissions of at least 100 billion tonnes of CO2-equivalent.
Studies show that technology is already available to address the non-CO2 pollutants and gases. Expanding biochar production is one such strategy but the hugest GWP reductions can be made in HFC refrigeration and air conditioning applications. That's where the NGO petition on HFC 134a comes in.
The NRDC, joined by the Institute for Governance & Sustainable Development (IGSD) and the Environmental Investigation Agency, filed the petition to withdraw EPA approval for use of HFC-134a in mobile air conditioning installed in new cars. HFC-134a has a GWP 1,400 times greater than CO2, while replacements such as soon-to-be approved HFC 1234yf (GWP: 4), already-approved HFC-152a (GWP of ~140), hydrocarbons (GWP: 5), and CO2 (GWP: 1) have comparatively tiny GWPs.
Durwood Zaelke of the IGSD, one of the groups filing the petition, says that “reducing all HFCs can produce a planet-saving 100 billion tonnes or more of CO2-equivalent in climate mitigation. We can get 30 percent of this by outlawing high GWP HFCs in mobile air conditioning, as the European Union is already doing, starting with new models in 2011. And we can do it fast—easily in seven years for new cars as required in Europe, or in as little as three years if automakers get serious about improving their cars.”
Kerry-Lieberman (Minus Graham) Release "The American Power Act"
Talking Points
- Senators Kerry (D-Massachusetts) and Lieberman (I-Connecticut) have released the much anticipated discussion draft of the American Power Act (APA). Originally the bill was to include Senator Graham (R-South Carolina) as a co-sponsor as he played an integral role in the development of the legislation. However, Senator Graham withdrew from co-sponsoring prior to public release of the legislation, citing perceived Democratic shifting of priorities towards immigration reform as an act of bad faith by Senate Majority Leader Harry Reid (D-Nevada) and the White House.
- The bill has been released and is undergoing economic modeling by the Environmental Protection Agency and the Energy Information Agency. Senator Reid has indicated the bill will only go to the floor for a Senate vote if it has a real shot at passing. 60 votes necessary to overcome a likely filibuster are not yet secured. The bill could reach the floor in June or July.
- The APA has significant stakeholder support with endorsements from a range private sector interests including Dow, Florida Light & Power, General Electric and American Electric Power. The US Chamber of Commerce and the American Petroleum Institute both released statements welcoming the legislation but stopped short of specific endorsements. Several leading environmental groups including the Environmental Defense Fund support the bill.
- The bill is framed around 5 central themes: 1) Benefits to Consumers, 2) Energy Independence, 3) US Competitiveness and Job Creation, 4) Reducing Emissions differently for power plants, heavy industry and transportation, and 5) Regulatory Predictability.
- The APA takes a significantly different approach from the House-passed Waxman-Markey bill approach of economy wide cap on emissions; instead adopting a unique sector by sector approach.
- The key lynchpin of the bill is a mandatory 17 percent reduction in greenhouse gas emissions below 2005 levels by the year 2020. The power sector will fall under the cap in 2013, with industrial manufacturing sectors entering the system in 2016. The refining sector for transportation fuels will be required to purchase a set number of allowances each year but will not be engaged in carbon trading of allowances and offsets, resulting in what amounts to a fixed price carbon tax for the sector.
- Carbon markets, a key component of a cap-and-trade policy, remain part of the equation within this bill, but the market will be highly regulated in terms of trading and pricing of carbon. In addition, there will be significant distribution of allowances in early years coupled with allowance auctioning that will expand over time. Some key details of allowance allocation remain to be negotiated.
- Provisions for expanded offshore oil drilling promise to be controversial but are a key component of reaching the necessary 60 votes to pass the bill. Protections allowing states to maintain or establish bans on drilling are included.
- Provisions for scaled-up financial support for nuclear energy, transportation and carbon capture & storage are integrated into the bill. Corresponding national renewable energy standards and incentives for the industry are not in the bill, but are anticipated to be incorporated in consultation with the Senate Energy & Natural Resources Committee. The bill does, however endorse and seek to support state-level renewable energy programs.
- The natural gas industry will face new regulations for public disclosure of hydraulic fracturing chemical fluid ingredients. These provisions seek to increase public confidence and support of the industry with respect to environmental, health and safety concerns.
- Programs directed towards bilateral and multilateral funds for international climate mitigation and adaptation measures are established under the bill. However, sustainable funding for these efforts through a set-aside of emission allowances is uncertain leaving these efforts more vulnerable and requiring annual Congressional appropriation processes.
- Fast Action Mitigation provisions for reducing GHG emissions from hydroflurocarbons, black carbon, enhanced soil sequestration and methane.
Jobs or Litigation?
It is now well-documented that Senator Graham has pulled back from co-sponsorship of a climate and energy bill. Whether Senator Graham gets assurances regarding sequencing of climate and energy before an immigration bill going to the Senate floor, and comes back into the fold over the next few days remains to be seen. But its fairly clear that a tough political hurdle to climb is now even more difficult than ever as a bipartisan vote that brings a few more Republicans on board becomes problematic without the Senator from South Carolina working his colleagues on that side of the aisle. If this is not turned around, the promise of green jobs in the US will make way to a season of litigation.
Based on best estimates of E & E, if one subtracts Senator Graham’s vote, there are at best 38 Democratic votes in favor of a climate/energy bill in the Senate. If one assumes a strictly partisan vote there are 19 Democratic “fence sitters.” If every single one of those Democrats actually voted for the bill that would result in 57 votes in favor of the bill, not the 60 necessary to overcome a Republican filibuster. There are only two other Democrats remaining after that 57, Evan Bayh (Indiana) and Blanche Lincoln (Arkansas). While Senator Bayh might be persuaded to vote for the bill given he is retiring after this session, Senator Lincoln is doubtful.
There are many tripwires on the way to this supposed 58 votes with offshore oil drilling provisions and a stripping of EPA regulatory authority under the Clean Air Act the most contentious issues for some potential Democratic votes. So even under the best of scenarios, a few Republicans led by Senator Graham are necessary to get this bill through the Senate.
Senator Graham has stuck his neck out on this climate and energy bill. But immigration reform will do more for the Democrats in turning out a base in the fall election and keeping their margins in Congress. The White House and Senator Reid face a tough decision in the next few days if they want to keep the climate and energy bill alive. Immigration is no doubt a hugely important issue and a political hot button. But if we fail to move forward now, the clean energy jobs of tomorrow will be in China while the US will be embroiled in endless climate litigation that will do nothing to reduce greenhouse gas emissions.
Another Go At Climate Consensus in the United States Senate
The much anticipated energy and climate bill from Senators Graham (R-SC), Kerry (D-MA) and Lieberman (I-CT) appears close to a public unveiling. So far there is an 8-page outline of the legislation that was reportedly provided to captains of industry such as the US Chamber of Commerce in a recent closed-door meeting, but this document has not as of yet been made public. A bill should be released to the public within days. There are a wide variety of issues that will make or break this bill in terms of achieving enough votes to pass the Senate. Here are 3 key issues to watch while assessing political feasibility:
1. A Cap Here, A Tax There
All reports indicate that the bill will take a sector-by-sector approach to the energy and climate challenge. The sector approach is a departure from the House bill passed last year that set an economy-wide cap on emissions. Electric utilities and the manufacturing sectors will undoubtedly still fall under some revised version carbon emissions limits. The political challenge will be ensuring that the emission caps are indeed hard caps while providing ample incentives to ensure industry buy-in. Other sectors will face different strategies to reduce emissions. Recognizing complaints from oil & gas constituents with a cap and trade approach, a carbon tax on transportation fuels is the likely alternative for this greenhouse gas intensive sector. A key political challenge will be finding the right approach for setting the price of such a tax based on factors including price of carbon in other sectors and carbon content of fuel. It is safe to say that a sector approach may bring on more votes. However, the corresponding environmental integrity of the US approach to reducing carbon emissions will be under close watch.
2. Avoiding Fears of “The Big Short”
The cap and trade approach found in the Waxman-Markey bill allowed for limited but generally unfettered trading of carbon allowances and offsets in the capital markets. Given the current economic crisis precipitated in large part by unregulated Wall Street derivatives trading, there is angst in the Senate with unwieldy carbon markets. At the same time, the flexible carbon market approach would allow regulated entities an efficient cost-containment strategy. It will be a challenge to thread this needle in a manner that meets both concerns and maintains environmental integrity. It is anticipated that limited carbon market trading will be part of the bill but that elements of the “cap and dividend” model put forward by Senators Cantwell (D-WA) and Collins (R-ME) will also be incorporated. Under “cap and dividend,” only regulated entities (not Wall Street traders or speculators) are allowed to participate in the auctioning of allowances, and a certain percentage of the auction revenue goes directly to consumers in the form or rebates.
3. Clean Energy: Eye of the Beholder
There will be separate sections/titles in the bill that advance an energy security agenda for the United States. These sections will include coal, renewable energy, nuclear energy, offshore and onshore oil & gas drilling, agriculture and oil refining. Some of the real tough political challenges will fall into this part of the bill. Vastly increasing offshore oil drilling may bring on board some Senators, but will certainly alienate others with environmental constituents. Likewise setting renewable energy targets might set the United States on a lower carbon path, but if the bill avoids adequate complementary incentives for natural gas, nuclear and carbon capture & storage, it will undoubtedly face regional opposition from Southeast and the Midwest Senators. As an example, Senator Graham has floated a “Clean Energy Standard” in place of a national “Renewable Energy Standard,” but it remains to be seen where the trio of Senators land on this issue.
Memo to Senator Murkowski: Legislate for Logical Solution
Sen. Lisa Murkowski (R-Alaska) has a point. There are many, if not a vast majority of policymakers, who agree with the senator that reducing greenhouse gas emissions is best left to thoughtful Congressional legislation, not EPA regulation under the Clean Air Act. Thus her looming threats to introduce amendments or resolutions or other procedural maneuverings to “take a time out,” slowing down EPA rulemaking procedures aimed at addressing climate change.
But failing to seize her moment in the spotlight and put forward a specific legislative solution is where her logic falls apart and observers note the senator’s ear to certain greenhouse-gas-intensive industries that oppose action on climate change. This leaves me to believe that if we take climate change seriously, then perhaps EPA action is in fact better than no action at all.
Sen. Murkowski says that she doesn’t want a “gun to the Senate’s head” and claims that choosing between Waxman-Markey or Kerry-Boxer bills and EPA regulation is a “false choice.” While she acknowledges the science of climate change and notes the impacts in Alaska, the senator’s stated intent is to ensure that EPA regulations don’t come into place prior to Congress finishing its deliberations because she fears significant economic hardship from an EPA approach to the climate challenge.
The senator emphasizes that Congress must pass a bill to reduce greenhouse gas emissions — she’s on record as being in favor of passing legislation to reduce emissions. Her position that the Senate needs to pass legislation based on sound policy that takes into account environmental integrity, economic impacts and job creation is absolutely appropriate.
What is lacking, however, from Sen. Murkowski’s foray into the fire, are a sense of urgency and a positive solution. Urgency is a scientific and economic necessity. Peer-reviewed science notes that the Intergovernmental Panel on Climate Change’s worst-case scenario forecasts are increasingly likely without immediate action, which is why so many are eager to see the EPA move forward.
The Senate is tied up in its predictably partisan politics all with an eye toward mid-term elections. Meanwhile, EPA is following its mandate and the law, and is trying to urgently tackle the problem. As logical as Sen. Murkowski may be in her desire to find a congressional solution to climate change, so is EPA Administrator Lisa Jackson in her intent to urgently solve a problem that economist Sir Nicholas Stern has called “the greatest market failure the world has ever seen.”
The senator from Alaska has made her point and has everyone’s attention. But now is the moment for real leadership and putting forward a concise legislative option that places a science-based cap on greenhouse gas emissions. Otherwise, Sen. Murkowski is open to critiques of just playing politics.
Washington
Published in The Hill (January 19, 2010).
A Moving Climate Storm on the Gulf Coast. Plaintiffs Move Forward, While Senate Deliberates
When the fury of Hurricane Katrina ravaged the Gulf Coast, many saw this as a tipping point in US public perception towards the reality of climate change. Levees broke, people died, clean water was not available, valuable property flooded, buildings were left hazardous and roads were destroyed. As Chairman Edward Markey (D-MA), Select Committee on Energy Independence and Global Warming has stated, “Perhaps no weather disaster highlights our weakness to climate challenges than our inadequate response to Katrina, which still haunts us several years later.” Not coincidentally, President Obama took the opportunity in his recent trip to New Orleans to plead for bipartisan approaches to passing comprehensive energy and climate change legislation.
While the Senate continues to deliberate and debate, a growing class of people claiming harm from the impacts of climate change continue to take more decisive action. Last week the 5th Circuit of the US Court of Appeals ruled that residents of the Mississippi Gulf Coast, including property and land owners, have standing to pursue their complaint against US energy and chemical companies including Peabody Coal and Massey Energy for their contribution to greenhouse gas emissions and climate change which in turn contributed to the catastrophic wreck left in the wake of Hurricane Katrina. Comer v. Murphy Oil USA, et. al. The plaintiffs seek compensatory and punitive damages under Mississippi common law and constitutional provisions.
Importantly, the 5th Circuit overruled lower district court determinations that the plaintiffs’ claim was “non-justiciable” due to the defendants failure to demonstrate “any exclusive commitment of the issues in this case to a particular federal branch. Nor have they shown the absence of judicially discoverable or manageable standards with which to decide the case.” The 5th Circuit went further stating that,"(e)ven if Congress does eventually enact a federal comprehensive law concerning greenhouse gas emissions, it might very well preserve state common law remedies, as the Clean Water Act did."
The 5th Circuit decision, coupled with ongoing efforts by the EPA to regulate greenhouse gas emissions as pollutants under existing Clean Air Act authority, contributes to increased pressure for Senate action to provide a clear and certain roadmap for managing climate risks. Federal intent on the appropriateness of common law actions related to climate change will be closely monitored as rulemaking and legislative streams of work continue to develop.
Meanwhile back in Congress, Senators Landrieu (D-LA), Vitter (R-LA) Cochran (R-MS), and Vickers (R-MS) represent the residents of Mississippi and Louisiana harmed by Hurricane Katrina. They also represent many of the interests that are defendants in this case or other climate based lawsuits emerging. To date, all four Senators are firmly in the “no” camp when it comes to renewable energy portfolio standards and cap-and-trade legislation. Senator Cochran did support a 2007 sense of the Senate resolution for an international climate agreement. The same week the 5th Circuit decision came down, Senator Landrieu expressed guarded optimism for the new Graham-Kerry bipartisan partnership that seeks a climate package, and the Senator subsequently convened a natural gas caucus with a view to feeding policies into that effort.
A balanced, bipartisan approach from these four Senators would serve their constituencies and the lessons of Hurricane Katrina well.
Climate Legislation and The Redskins
Its fall in Washington, DC and there are two things most have agreed upon this season: the Redskins football squad looks bad as do any hopes of the Senate passing climate legislation prior to UN negotiations in Copenhagen. While the Redskins offense continues to lack a passing game, a new playbook focused on corporate leadership and bipartisanship may be turning things around in the Senate. Yet pessimism remains as some observers believe one key political gap is a quarterback in the White House who will engage and make it a legislative priority.
First we have seen a string of corporate defections from the US Chamber of Commerce over their negative stance on mandatory GHG reductions. Notable departures from the Chamber have included utilities PG & E, PNM, Exelon and computer giant Apple, Inc. all of whom favor cap-and-trade legislation.
Next came a wave of corporate advocacy through the “We Can Lead” coalition. On October 6th and 7th hundreds of business leaders including technology innovators, investors, manufacturers and energy providers descended upon the halls of Congress demanding action. Participants included Duke Energy, Starbucks, Applied Materials and Nike.
It is no coincidence that in the wake of these efforts, Senators Lindsey Graham (R-South Carolina) and John Kerry (D-Massachusetts) announced a new bipartisan effort to pass climate legislation ideally before Copenhagen. Together they authored an op-ed in the New York Times warning that business needs a market-based system that will create millions of jobs in the US rather than EPA command and control style regulation. In short, it makes business sense for the Senate to act now.
Nobody expects the Redskins to turn it around because owner Dan Snyder is in charge, the offensive line is weak and fans have lost faith. Yet, if there is any hope for the US Government to throw the hail mary pass on climate change legislation before Copenhagen, it definitely won't happen unless President Obama comes off the bench and leads us to victory.
Climate Week In New York: Hope Over Pessimism?
As President Obama spoke at the United Nations today and now heads to the G-20, international skepticism is obvious. The United States still has not taken definitive action to reduce greenhouse gas emissions. The lack of movement in the Senate on a climate bill is now cited as the primary reason that the US cannot make the level of concrete commitments necessary to forge a global agreement. This lack of Senate action does not bode well for Obama to position the US as a global leader on climate change. As Politico reported yesterday, the European Union’s ambassador to the US, John Bruton, is not happy about Senate delay stating that “(i)f this were to happen, it would open the United States to the charge that it does not take its international commitments seriously, and that these commitments will always take second place to domestic politics. I submit that asking an international Conference to sit around looking out the window for months, while one chamber of the legislature of one country deals with its other business, is simply not a realistic political position.”
Yet despite the growing gloom in climate policy circles, signs of optimism are there.
First, President Obama signaled some willingness to get out ahead of the Senate. In his speech at the UN Climate Change Summit today he indicated that the US will be “slashing our emissions to reach the targets we set for 2020 and our long-term goal for 2050." While the President still faces the Senate as well as international expectations on the specifics of this goal, the US does appear at least open to an outcome in Copenhagen that includes mid-range targets.
President Obama also expressed a desire to phase out fossil fuel subsidies in the context of the upcoming G-20 negotiation. In a recent New York Times article, Steve Kretzmann of NGO Oil Change International noted that "If the Obama administration is serious about eliminating all fossil fuel subsidies, that is wonderful and would go a long way toward correcting what Nicholas Stern called the greatest market failure of all time, which is climate change.” The details of how these subsidies are defined and what the President could agree upon internationally without requiring domestic political action remains to be seen. Nevertheless, these statements at the UN do suggest some willingness of the Administration to demonstrate positive leadership on the international stage with a view to working with Congress on the details.
With China also making a suite of commitments in New York this week, the pressure for US action continues to grow and the rationales for inaction continue to diminish.
Swing Votes in the Senate on Climate Change
As the Senate prepares to consider energy and climate legislation this Fall, the vote counting begins again on cap & trade. Assuming a cap & trade bill moves forward, 60 votes are necessary for a procedural vote (cloture) to cut off debate on a motion to proceed on a floor vote. Reaching this filibuster proof 60 vote count threshold remains a steep hill to climb despite 59-60 Democratic votes in the Senate. Climate positions don’t fall along party lines. Further, the challenge has just grown harder with Senator Kennedy’s death and no replacement likely until January 2010.
Climate Change Insights takes a look at three swing Senate votes that are indicative of the political landscape and substantive policy issues in play. There are different accounts of how various Senators might vote but it is fair to say that the following 3 Senators are representative of the key issues under consideration: the level of ambition for greenhouse gas (GHG) reduction targets, industry specific allowances, protections and incentives, a priori limits on the price of carbon and pure politics.
Senator Evan Bayh (D-Indiana). Indiana is among the highest energy consumption per capita States and is responsible for approximately 5 percent of US annual GHG emissions. Almost all of Indiana’s electricity generation comes from coal. As one of the nation’s top corn-producing States, Indiana has significant ethanol production potential, and the state has immense wind energy opportunities. Energy and steel industries are among Mr. Bayh’s top campaign contributors and he is facing a tight re-election campaign in the fall of 2010. The BP Products refinery in Whiting has the largest processing capacity of any refinery outside of the Gulf Coast region. Senator Bayh is weighing these considerations deliberatively. A suite of cost-containment provisions for regulated industries, clean energy incentives for emerging technologies and international competitiveness protections that have direct benefit to Indiana are considerations, as are political prospects in a conservative State.
Senator George Voinovich (R-Ohio). Energy consumption in Ohio’s industrial sector ranks among the highest in the Nation. Ohioans are still haunted by a 2003 transmission failure that led to the largest blackout in North American history, affecting over 50 million people. Coal fuels about nine-tenths of net electricity generation in Ohio. Senator Voinovich is set to retire in 2010. On climate change, Voinovich has stated, “There is a lot of work to be done, but it’s still open…I think there is a possibility in getting something done that is meaningful.” In the past few years, Voinovich has introduced and supports energy bills that focus on incentives for clean energy technology deployment both domestically and internationally including the "Incentives-Based Climate Policy Act," and the “21st Century Energy Technology Deployment Act.” He is on record saying that there is “too much crap” in the House-passed “American Clean Energy Security Act” (Waxman-Markey), his main concern being the 2020 greenhouse reduction targets under the bill are too ambitious.
Ohio’s current unemployment rate (11.1%) is higher than the national average (9.7%) as of July 2009. There is significant angst in the State of losing jobs overseas due to issues such as lower labor and environmental standards. Accordingly, one can anticipate Voinovich desiring price controls on the cost of carbon and protections against overseas industries that don’t take sectoral or economy-wide carbon cap.
Senator Arlen Specter (D-PA). Pennsylvania ranks second in the Nation in nuclear power generating capacity, is a major coal production State and sells approximately 50 percent of its coal to other States. Pennsylvania is also the leading petroleum refining State in the Northeast. At an August meeting of Netroots Nation, Senator Specter hinted that he “expected” to vote for cloture on a climate bill and stated that he joined the Senate Environment & Public Works Committee after switching to the Democratic Party with a view to shaping the climate legislation and he “expects a strong bill.” In the past Specter co-sponsored with Sen. Jeff Bingaman, the “Low-Carbon Economy Act,” which had weaker GHG emission targets than Waxman-Markey and established so-called “automatic off ramps” allowing the US to weaken its targets if key developing countries don’t adopt their own caps.
Therein lies the conundrum of getting a robust climate change bill through the Senate and signed into law. The route to political success relies upon GHG targets that may not match the level of ambition required by science, a further expansion of allowances to regulated entities, and trade protectionist measures as a stick for developing country commitments. Such provisions are a long way from the Obama Administration goals of science driving policy, 100 percent auction of allowances and emphasizing bilateral clean tech cooperation with China. Yet, it appears to be the only pathway to move the issue forward in the Senate this political season.
Don't Yank the Tariff Provisions from the House Climate Change Bill
President Obama deserves a share of the credit for the historic vote by the House June 26 to pass the first climate change bill. The bill is far from perfect, but it is an important step in the right direction. In comments following the House vote, however, President Obama took a step in the wrong direction. In urging the Senate to swiftly pass their counterpart to the House bill, President Obama raised questions about a provision that would impose a tariff on the import of goods from countries where the cost of such good benefits from weaker climate change laws:
"At a time when the economy worldwide is still deep in recession and we've seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals out there….I think we're going to have to do a careful analysis to determine whether the prospects of tariffs are necessary, given all the other stuff that was done and had been negotiated on behalf of energy-intensive industries."
Removing the tariff provision from the bill would give its opponents a strong argument for its defeat. Opponents argue that by imposing what they classify as an exorbitant energy tax on products such as steel, cement and chemicals the climate bill would simply force manufacturers to shift production to foreign countries with more favorable energy costs, resulting in no net reduction of greenhouse gas emissions AND loss of jobs in the US.
This is a potent argument which, if left unanswered, could doom the bill in the Senate. Although President Obama suggested that there may be better alternatives to the "protectionist" provision in the House bill he did not elaborate on them. One alternative that has received some favorable press is the so-called "sectoral approach" in which certain energy-intensive industries seek to reach agreement on a global standard for GHG emissions from facilities in the sector.
Although the sectoral approach is arguably sound in principle, the fear is that in practice the affected sectors would be able to push through weak standards which undermine the battle against global warming. It is almost like begging the fox to guard the henhouse. Another alternative would allow the United States to scrap its cap-and-trade system if China and India do not adopt similar programs. This avoids the fox/henhouse problem, but creates a bigger one: in effect, it cedes to foreign countries the decision of whether WE should combat climate change. The House approach avoids both problems, and should be followed in the Senate.
The Importance of Incentivizing the Agricultural Industry to Participate in Climate Change Response (and How Did We Forget About Biochar)?
There has been plenty of criticism - some warranted, some not - of new language, pushed by the farm lobby, governing carbon offsets in the climate change legislation. Prior to this amendment, precisely what qualified as an offset was unstated. EPA would be given responsibility for promulgating rules that would define offsets, within broad parameters set forth in the legislation. By contrast, Title V - "Agricultural and Forestry Related Offsets" - identifies an "initial list" of specific types of agricultural and forestry practices that would qualify as offsets, and gives the Department of Agriculture authority to establish a program governing the generation of offset credits from agricultural and forestry-based sources.
One critic asserts that the farming lobby is overreaching. Having already gotten a "free pass" as the "one major source" of carbon emissions not covered by the House climate bill, this critic chastises the farm lobby for demanding another "that they be allowed to earn some extra cash by reducing their carbon footprint on their farms and selling these 'offsets' to factories and power plants unlucky enough to be subject to the carbon cap regime." This is the classic example of cutting off one's nose to spite one's face. Offsets represent a critical tool in our arsenal for battling climate change. Thankfully, the climate change bill already recognizes that by expressly authorizing regulated entities to reduce their emission allowance requirements through development or acquisition of offsets. The new language simply clarifies that if farms invest in carbon-reducing activities, the resulting carbon offsets could be sold to regulated entities for use in meeting GHG emission obligations under the climate bill. This is precisely what we should be doing - facilitating achievement of the GHG reduction targets specified in the bill.
My only criticism is that sponsors of the ag offset amendment omitted from the list of qualifying offsets a very important one: biochar. Biochar is a charcoal-like product that is produced by heating crop residues, animal manure and many other organic wastes in an oxygen-depleted environment. Heating agricultural wastes in this manner generates an off-gas, which can be used for fuel, and a solid -- biochar -- which effectively sequesters carbon. If biochar is placed in soil, the carbon it contains will remain in place for hundreds of years without releasing carbon dioxide (CO2). Thus, instead of the crop residues and animal manure being broken down by biological processes that release CO2 into the atmosphere immediately or within a matter of weeks, the carbon is sequestered and will not be released into the atmosphere for centuries. As a result of this practice, agriculture can become "carbon negative" -- which is better than "carbon neutral." Acknowledged experts such as Durwood Zaelke have demonstrated that widespread adoption of this practice by agriculture could as big an impact on reducing atmospheric CO2 levels as renewable energy. Let's hope the Senate corrects the omission of biochar from the list of accepted agricultural offsets.
The US's Existing Climate Protection Laws: Will They Work?
Less than a decade has passed since the accepted wisdom was that the US would enact a greenhouse gas control regime to implement the framework climate treaty and the Kyoto Protocol, which the Senate would have ratified after much debate. Yet today it appears that our national climate strategies are going off in unanticipated directions that would have astonished the climate pundits of ten years ago.
Last December, Congress enacted a fuel, vehicle mileage, and overall energy efficiency law that will clearly help lower carbon emissions. The Senate will vote on a comprehensive climate bill in June, if the sponsors have their way, but that bill is a far cry from implementing legislation for Kyoto. The states may soon have blanketed a large part of the nation with regional and state climate initiatives that will be so pervasive that they will set the bar for the key components of over-arching federal legislation – and preserve a major role for state and local governments. There is even talk of bilateral climate agreements with India and China, and also a totally new international approach that would target greenhouse gas emissions sector-by-sector across the economies of the developed nations.
Furthermore, while all this is taking place, it appears that the Environmental Protection Agency and the environmental community have discovered – with the help of the Supreme Court – that the US has had a greenhouse gas regulation law in place for decades, well before Kyoto. By ruling a year ago that greenhouse gases are “air pollutants” under the motor vehicle emissions control provision of the Clean Air Act, the Court made the entire Act a little pregnant with the potential for federal regulation of all manner of greenhouse gas sources – the thousands of sources controlled under state implementation plans to achieve federal ambient standards, new and modified stationary sources, emitters of air toxics, sources in clear-air areas of the country, and others regulated under the Act. The particular trigger for new motor vehicle emissions regulation is a statutory determination that greenhouse emissions may reasonably be found to endanger public health or welfare, but other Clean Air Act provisions contain the same or a similar trigger for greenhouse “air pollutants” as well.
The key Clean Air Act provisions involved were rather elegantly analyzed for a House subcommittee on April 10, 2008 by the EPA’s air program administrator Robert Meyers in 19 pages of testimony, which he prefaced by saying that a full explanation “could easily fill a text book.” The relevant sections, most of which are covered in the seven petitions states and private organizations have filed, are an alphabet soup of the Clean Air Act specialists favorite programs: NAAQS, SIPs, PSD BACT, Non-attainment RACT, NSPS, HAPS MACT, aircraft, ship, and locomotive emissions provisions, and the welter of road and non-road vehicle and equipment engine and fuel emissions requirements that the Act authorizes.
To plunge into the greenhouse ramifications of any one of these programs is to plunge deep. Our Ports and Harbors Practice, for example, is considering the myriad of greenhouse gas controls that may be relevant to shippers, port authorities, transportation networks, and others on, or on the way to or from, the nation’s ports and harbors.
The EPA has tried to put off the reckoning, but the Clean Air Act has been held to be applicable to greenhouse emissions. The question is, can we live with it – can we make it work as a climate statute? States and environmental groups appear at first to be saying yes, we can, but the EPA is skeptical and has initiated a national head-scratching over the issue. The groups are pressing for a court order for EPA to come clean and issue the endangerment finding, which the groups say they have conclusive evidence that the Agency has already made. The EPA has come to the brink of making the endangerment finding more than once, only to recoil from taking the first fateful step toward conscripting the Clean Air Act into the federal climate arsenal.
Recently, the Agency has contrived to prolong its agony. It announced that it would issue an advanced notice of proposed rule making this spring inviting the public to offer its comments on climate science (endangerment) and “the broader ramifications” to “many relevant sections of the Clean Air Act” of using it as the primary policy tool for controlling greenhouse emissions. These comments would then help the Agency issue a second proposed rule that would set forth the Agency’s views on how to comply with last year’s Court decision.
The environmental plaintiffs are pressing hard for a court order requiring EPA to make the endangerment finding. They argue that the Supreme Court’s decision leaves no room for the EPA to organize a national town hall meeting on the advantages and disadvantages of using the Clean Air Act to control greenhouse gases. They reason that the Court required the agency to make an endangerment finding or give cogent scientific reasons why it could not. No other paths lie open, they say.
The Agency’s invitation for public comment seems designed to resurrect its view, rejected by the Court, that the Act would provide only an “inefficient, piecemeal approach” to controlling emissions and that a regulatory scheme that included “all significant sources and sinks” would be best. Perhaps. But an agency rule making is not the place for this legislative debate, one which Congress has already initiated and seems inclined to bring to a conclusion in a time frame that may turn out to be less protracted than EPA’s two-step rule-making process is likely to be.
In fairness to EPA, regulating greenhouse emissions through the Clean Air Act is likely to be a bit like opening Pandora’s Box to find a Trojan Horse inside. The statute may reach greenhouse “air pollutants,” but just barely, and its extensive implementing provisions were not designed with climate protection in the front of the congressional mind. The Agency appears to have concluded, we think correctly, that if it regulates motor vehicle greenhouse emissions as the states and environmental groups demand, they have to act favorably on petitions that the groups have also already filed to regulate the greenhouse emissions from a full Mother Hubbard’s cupboard of emitter bones and snacks already alluded to – airplanes, ocean vessels, off-road and recreational vehicles, sources in mining, agriculture, and construction, outdoor power equipment, and the like. This may not be the systematic, finely tuned, and comprehensive solution the nation deserves to the climate challenge, but such is the logic of the situation in which US climate policy is now mired.
It may well be that the states and environmental plaintiffs are forcing the issue on the Clean Air Act, not actually expecting or even wanting to remake it as a climate protection statute. Their purpose may be to force Congress to reach the same conclusion EPA has reached and thus pressure Congress into enacting a comprehensive climate law before the courts turn the Clean Air Act into a greenhouse gas nightmare. Chairman John Dingell appears to have fallen hard for the strategy, recently calling for federal cap-and-trade legislation to correct the “hideous mistake” the Supreme Court made. But in the meantime, the EPA is obliged to try to reconcile existing law with demands for piecemeal greenhouse regulation under the welter of Clean Air Act provisions that various groups have lined up like dominoes, ready to ask the courts to tip over.
EPA’s strategy has been dismissed by state and environmental groups as one of delay until the Administration comes to an end January 20, 2009. Listening to the skillful but beleaguered EPA Administrator at press conferences on the President’s program lends some support to this view. But Administrator Johnson does make a point that while the Clean Air Act Endangerment Stew is simmering, Congress has enacted – in important part with Administration endorsement – a law that actually may lower vehicle and other carbon emissions below the steep upward trajectory they were on only a couple of years ago. The Energy Independence and Security Act (EISA) of 2007 specifies a national mandatory fuel economy standard, a “CAFE standard,” of 35 miles per gallon by 2020, which should, the White House says, increase vehicle efficiency by 40 percent. The new law also hikes the renewable fuels mandate passed in 2005 to 36 billion gallons by the year 2022 (although plenty of pundits have begun to point out the climate and air quality downside of corn ethanol.) The new Act includes a lighting efficiency requirement for phasing out incandescent bulbs by 2014 and lighting efficiency improvements of up to 70 percent by 2020. There are also significant appliance and federal operations energy efficiency requirements in the legislation.
Based on the President’s “20 in 10” program set out in his 2007 State of the Union message (20 percent reduction in gasoline use by 2010), the Administration’s other energy savings and “green” source programs, and the EISA, the EPA has argued, somewhat logically, that all these measures are more effective than – or at the least the functional equivalent of – the command-and-control regulations that may in time be served up from the Clean Air Endangerment Stew. In fact, EPA has suggested in the past that these steps comply legally with the Supreme Court’s decision in Massachusetts v. EPA. This is what the national town hall advanced notice of proposed rule making is all about. It is also the current version of the rule making that EPA once wanted to launch, i.e., a multi-departmental rule that would involve several statutes (including the Clean Air Act) and implement the President’s 20-in-10 agenda.
More fundamentally, the Clean Air Endangerment Stew has now locked the courts, the EPA, and Congress in a struggle over how tripartite constitutional government should approach climate policy, a classic separation of powers issue that only lacks the states to make this a battle over federalism as well. As we move forward on climate in Congress, it might be wise to heed the admonition of Chancellor Bismarck. “Do not ask how legislation and sausages are made.”
Congress in 2008
Federal climate change legislation may be on the way. The Senate has targeted a vote in June, and the House by the end of the year, although a bill both chambers can agree upon is unlikely until 2009, if then. It would be a great mistake, however, to view 2008 as a lost year on the climate front. The fundamental elements of Senate and House bills will be debated and accessible to all who probe beneath the surface. The fundamental regulatory structure and economic impact of climate legislation will have been thrashed over thoroughly by the end of the year. To interested stakeholders, the time to weigh in is now. [summary]
While the candidates count delegates, key Senators and Members count votes and try to predict how far toward climate legislation the Congress will progress this year. The short answer: final legislation is not likely this year, although both chambers may come very close. Because the Senate has targeted a vote in June, and the House by the end of the year, it would be a great mistake to view 2008 as a lost year on the climate front, however. To get to these votes, or even to try to get legislation in shape for a vote, means that the fundamental elements of the Senate and House bills will be debated and visible to all who probe beneath the surface. Passage is quite likely in 2009, but the fundamental regulatory structure and economic impact of climate legislation will have been thrashed over thoroughly. The Congress in 2009 will not by any means be writing on a clean slate. To interested stakeholders, the time to weigh in is now – if not already past.
In the Senate, Senator Lieberman optimistically reports that he believes a vote would be veto-proof at sixty votes if the June vote occurs after the Lieberman-Warner bill reaches the Senate floor soon after the Memorial Day recess. But approval may falter if the many amendments Senators are likely to seek come into play. To reach the 60-vote total, the co-sponsors may have to agree to amendments that, while attracting support from fence-sitting senators, may cause others thought safely on board to fall off the fence. Thus, for the US Senate to approve a strong bill this year, the managers will have to walk a fine line from here on out.
Does Senator John McCain support the bill? His support for decisive action on climate is well-documented. But his desire and determination for a role for nuclear power in addressing the climate challenge may place a serious obstacle in the path of approval, because many "climate senators," including the Chair of the Committee on Environment and Public Works that has favorably reported out the Lieberman-Warner bill, Barbara Boxer of California, have expressed opposition to inclusion of incentives for nuclear power. When other ticklish issues are added to the long list of amendment-prone provisions, the prospects for passage this session look decidedly less optimistic.
In the House, Speaker Nancy Pelosi (D-CA) and special climate committee chair Edward Markey (D-MA) were not joking when on April Fools Day they expressed their determination to have climate legislation pass the House by the end of the year. But they have complicated their own task by stressing the importance of including India and China in climate solutions. Strictly speaking, there is no role for addressing these two nations' large GHG emissions totals in domestic US climate legislation; Pelosi and Markey are hoping that India and China will be addressed either through the Kyoto agreement process or through the time-tried pathway of bilateral agreements. But bringing up India and China, the twin Achilles' Heels of climate action, the two members appeared to be drawing attention to their critics' strongest reason for avoiding unilateral US action until the largest global emitters are brought into some sort of accord on joint action.
The issues to be addressed in a domestic climate law are truly daunting, and suggest that next calendar year, after the presidential election, is a more likely time to expect climate legislation for the US. Even then, the challenge cannot be overstated. The issues include negotiating out provisions to cover caps and baselines fairly and effectively, with key decisions to be made about how each plant, company, sector, and state will be expected to comply, not to mention vital assumptions going into a domestic framework regarding the limits to be placed on GHG emissions for the nation and the planet. Baselines need to be set, and the effects of mergers, acquisitions, and corporate reorganizations taken fairly into account. These issues exist even before taking up the much-discussed topic of the role trading/banking/offsets will play, especially vis-a-vis Clean Air Act-California AB 32-style performance standards. One of the very largest and most contentious areas will cover congressional decisions – no doubt after fierce lobbying – of the impact of legislation on different economic sectors (transportation, chemicals, manufacturing, not to mention electrical utilities and fuels production and consumption). In this connection, legislation can be made (or derailed) by proposed provisions regarding phase-in, byes and safety valves, and cost-spreading.
Allocating emissions allowances is about as controversial as the new legislation can possibly become, with major debate about the grandfathering existing sources, whether to auction all or just some of the rights to emit, and allowance retirement. After both creating enormous value in the form of legislative permission to emit GHGs, and auctioning or allocating the newly-minted rights to emit, already it is clear that a large federal direct and indirect subsidy program will be launched, that may favor green technology and conservation and disfavor existing unaltered high-GHG emitting technologies. Early action credits will certainly receive attention, but to what extent and in what form? This has yet to be fully resolved, nor has the point at which allowance purchase may finally be set to occur: upstream/downstream, at the point of energy use or the point of carbon release.
