In Other News (May 14)

Farm Bill Confrontation Looms as President Balks at Legislation

Prospects for a new farm bill that, among other arguably more controversial provisions, trims the federal subsidies for some forms of ethanol, remained uncertain at week's end because of continued criticism from President Bush.

That was despite support from a variety of leading lawmakers and interest groups ranging from House Speaker Nancy Pelosi to the American Farm Bureau Federation.  Both issued statements endorsing the legislation that emerged earlier this week out of congressional negotiations and appeared headed for votes in both the House and Senate (see Pelosi statement here; Farm Bureau statement here).

Sen. Tom Harkin, the Iowa Democrat who chairs the Senate Agriculture Committee and the House-Senate conference panel that came up with the compromise bill, announced the agreement on a bill Thursday (access statement here). 

According to news reports, the bill includes provisions calling on the federal government to buy surplus sugar and sell it to ethanol producers, where it would be used in a mixture with corn. It also would cut a 51-cent-per-gallon ethanol tax credit that supports blending fuel with the corn-based additive to 45 cents. It would favor putting additional money into cellulosic ethanol, which is made from material such as grasses and woody plants (see Associated Press dispatch here).

Those latter provisions were the same or similar to earlier versions of the bill (see Climate Law Update story here).


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Wind Installations Up, Industry Group Says Subsidies Needed to Sustain Progress

Wind power developers in the United States built new installations at a fast rate during the first quarter of 2008, according to an industry group. But the American Wind Energy Association, which issued the report, also warned that the boom could go bust if Congress doesn't move to renew tax credits.

The association documented installations of 1,400 megawatts of new capacity, or about $3 billion worth, in its quarterly market report (see press statement here; text of report here). In its statement, the group said the industry was working at a "breakneck pace." The new installations were enough to serve 400,000 homes, according to the group. However, executive director, Randall Swisher, issued some caveats:

"But if Congress does not act quickly, this momentum could be derailed at the worst possible time for the economy, placing 76,000 jobs and over $11.5 billion in investment at risk. While 2008 is shaping up to be another great year, we could see a very different story in 2009 as uncertainty looms over investment in wind power projects and manufacturing due to continuing delay in extending the production tax credit (PTC).”

The tax credit for the production of energy from renewable sources is the primary federal incentive program for wind power, the association said in its public statement. The credit expires at the end of the year, along with other federal incentives for alternative energy.  

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In Other News (May 8)

Energy Department Pours Money into Carbon Sequestration, 'Clean Coal'

Coal may be a fossil but apparently it isn't dead.

The U.S. Department of Energy looks to be backing carbon sequestration projects and clean coal in a big way, despite some setbacks for the fuel in recent months (see Climate Law Update stories here and here). The Bush administration acted just as some environmentalists have raised new concerns about the technology.

The department announced this week it was supporting sequestration research efforts, which also could be used for capturing carbon from non-coal sources, in California and the Midwest to the tune of more than $126 million (see press statement here). An executive of the company where the California project will be located said the technology would be useful for many fuels. 

Then on Wednesday the department outlined the separate restructuring of its "FutureGen" program, which could help underwrite "clean coal" projects using carbon sequestration technology to the tune of  many more hundreds of millions of dollars (see press release here).

While neither of the two newest sequestration projects appeared to rely on coal as a primary fuel source, coal clearly wasn't far from the minds of Bush administration energy  officials. The energy department's announcement earlier this week said that "advancing carbon sequestration is a key component of the Bush administration's comprehensive efforts to commercially advance clean coal technology" to meet the nation's energy needs. 

In a statement, California Energy Commission Vice Chair James Boyd waxed enthusiastic about the $65.6 million headed toward the state (see press release here):

"By demonstrating how greenhouse gas emissions can be safely contained through carbon sequestration, we make strides to curb the effects of global warming. Using the newest carbon capture and storage technology, California can show how environmental and industrial concerns are working together for the same cause."

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In Other News (May 7)

In Other News (May 6)

Winners, Losers in Cap-and-Trade Scenarios Seen in New Report

This saving the planet stuff just isn't complicated enough, it seems.

Underscoring the importance of the finer points involved in establishing a market-based approach to controlling greenhouse gas emissions, a new report (accessible here) sponsored by a fascinating collection of interests shows how huge sums are at stake depending on how such a program is structured.

The most intriguing part of the document examines one of the most controversial parts of a cap-and-trade scenario: the distribution of emissions credits or "allowances" that will determine how many tons of heat-trapping gases that, say, a power plant can emit over a year. It looks at the differences in formulas contemplated by two bills now before Congress, the Lieberman-Warner Climate Security Act and the Bingaman-Specter Low Carbon Economy Act. The document also adds another twist, such as examining what would happen if credits were allocated based on each company's electricity output, versus its share of emissions.

The report generally seems to side with Lieberman-Warner. That bill would require selling more of the credits initially and it would also allocate some credits for sale to benefit the public.

The document also finds that some utilities, such as those with relatively cleaner technologies, would fare vastly better under a system in which credits were distributed on the basis of power output. However, both bills so far propose to allocate the allowances to electric providers based on their historic carbon dioxide emissions. 

The bills are named for their sponsors, Sens. Joe Lieberman, I-Conn., John Warner, R-Va., Jeff Bingaman, D-New Mexico, and Arlen Specter, R-Pa.

 

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Maryland Governor Signs Energy Bills, Including New Portfolio Standards

Maryland's Gov. Martin O'Malley has signed a package of energy bills to among other things beef up renewable portfolio standards in that state, set goals for reducing energy consumption and funnel proceeds from the sale of greenhouse gas credits to clean energy projects.

The governor (pictured) also signed a measure, SB 1013, that ratifies a settlement of a dispute with Constellation Energy Group and ends ratepayer obligations for decommissioning nuclear power plants in the future. The settlement, according to the Baltimore Sun newspaper, also gives the state some assurances a nuclear power plant will be built (see article here). 

In a statement, O'Malley, a Democrat, held out high hopes for the a package of bills on energy and other environmental issues (see text here):

"With today’s bills, we are creating a sustainable energy policy, securing relief for thousands of Maryland ratepayers through a global settlement with Constellation Energy, protecting our environment and helping to restore the Chesapeake Bay for future generations.” 

Among the bills signed by O'Malley was a measure that, according to various reports, about doubles the state's renewable power mandate. The new law, HB 375, requires 20 percent of Maryland's electricity to come from renewable sources by 2022. That's a more modest goal than some other states, including California, which is prodding utilities to meet the 20 percent goal by 2010 and is considering imposing a 33 percent goal by 2020 (see background on California mandate here). 

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In Other News (May 1)

New Economic Impact Report on Lieberman-Warner Fails to Settle Debate

A new federal economic analysis of the Lieberman-Warner Climate Security Act shows that the measure wouldn't impede strong growth in the United States; whereas a new federal study of the bill forecasts a gloomy future of  higher energy prices and problems for industry.

It's the same document. Just depends on who's looking at it.

Produced by the Department of Energy's statistical arm, the Energy Information Administration, the new report seems to have done little to foster agreement between the warring sides in the battle over the greenhouse gas reduction bill. The Senate is poised to take up the bill, sponsored by Sens. Joe Lieberman, I-Conn., and John Warner, R-Va., in June.

Like a previous government analysis of the bill, which would cap emissions and establish a trading program, the new report shows some economic impacts but it also predicts by mid-century the legislation would produce better than 50 percent cuts in the production of heat-trapping gases (see text of report here). 

According to the new study, the drag on the gross domestic product between 2009 to 2030 would be between 0.2 percent and 0.6 percent. The bill's impacts would fall more heavily on industry than on other parts of the economy, the report predicted. While comparing the two analyses is difficult because of differences between them, the overall economic effects forecast by the new document appear to be generally smaller than those found by the U.S. Environmental Protection Agency in its  analysis put forward earlier this year (see Climate Law Update story here).  

Perhaps not surprisingly, supporters and opponents of congressional action to address climate change saw the energy department report dramatically differently. Oklahoma Sen. James Inhofe, a leading Republican global warming skeptic (pictured), said the analysis showed the bill "is wrong for America." Environmental groups and congressional supporters of the legislation saw it as confirming the bill as economically benign.

    

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Farm Bill Faces Uncertainty, Would Cut Ethanol Subsidies

A compromise farm bill that reportedly includes some sharp reductions in subsidies for some forms of ethanol underwent heavy criticism Tuesday from President Bush. At a news conference, he called the overall multi-billion-dollar measure a “massive, bloated” bill that would do little to solve the problem of rising food prices (see White House transcript here).

That cast uncertainty on the legislation, which emerged with some fanfare late last week from behind-the-scenes negotiations between key lawmakers. Among the notable features in the bill, according to news reports (see Reuters story here), was a 6-cent-per-gallon cut in federal tax credits for ethanol. That would take the incentive down from 51 cents to 45 cents. However, Reuters reported the bill would also create a $1.01-a-gallon subsidy for ethanol distilled from cellulose, found in grasses, woody plants and crop residue.

Last week, the bill, which also contains incentives for public nutrition programs, took life with a boost from Senate Agriculture Committee Chairman Tom Harkin, D-Iowa. He said the compromise legislation, among other things, "invests heavily in renewable energy and will help bring the promise of cellulosic biofuels to reality by providing grants and loans to move from corn ethanol to other renewable feedstocks." Access the full text of Harkin's statement here.

 

  

  

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In Other News (April 29)

In Other News (April 28)

Earth Day Green -- The Color of Money

On Earth Day, attention naturally turns to all things green – as in money.

Pocketbook issues are at the center of a number of new reports that assess the impact of efforts to combat climate change and promote the development of renewable sources of energy. One report shows government subsidies taking a big jump in recent years with renewables such as solar and wind getting a proportionately large share of the money.

The Environmental Defense Fund has come out with a document that studies the studies out there on the economic cost of a cap-and-trade system to cut emissions of greenhouse gases. Perhaps coming as no shock, the organization concludes that “a clear consensus” among the models demonstrates such a market system “is consistent with long-term economic growth.” The overall cost of capping the gases would amount to less than 1 percent of household budgets over the coming two decades, according to the EDF, which supports market approaches to the problem (see press statement here; text of study here).

Release of the analysis comes as the U.S. Senate is readying to take up the Lieberman-Warner Climate Security Act, which would establish a cap-and-trade system in the country. It also comes against a background of other reports issued by the government and business organizations showing potentially significant  economic impacts from such a system (see Climate Law Update story here).

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FERC Approves Request Related to West Coast Renewable Transmission Project

The Federal Energy Regulatory Commission has partially approved Pacific Gas and Electric Company's request that allows the company to recover from customers at least some of the costs related to a 1,000-mile transmission project intended to deliver power from renewable sources.

In the words of a statement from the federal agency, it gave partial approval to the Northern California utility's "petition for a declaratory order for recovery of prudently incurred pre-commercial and abandonment costs" related to the effort (see text of statement here; see full text of decision here). The $3.2 billion project would deliver up to 3,000 megawatts of new renewable power to California from Canada's British Columbia and from states in the Pacific Northwest.

The project will also be designed to take advantage of the fact that demands in the region peak at different times of the year, according to a statement from one of the commissioners. 

The Energy Policy Act of 2005 gave the commission authority to encourage greater investment in the power grid, including granting incentives allowing the recovery through rates of the costs associated with the projects. Barbara Connors, a spokeswoman for the commission, declined to put a dollar figure on the items so far approved by the panel.

     

 

 

 

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Bush Weighs in on Greenhouse Gas Reductions, Critics Rip Effort

President Bush Wednesday set a goal of halting the increase in the nation’s greenhouse gas emissions by 2025, a significantly less ambitious objective than that established by some of the states, including California.

But in a speech in the White House Rose Garden, Bush also opened the door to a binding international agreement on cutting emissions.

In his speech, the president warned against raising taxes or imposing mandates or demands for “sudden and drastic emissions cuts that have no chance of being realized and every chance of hurting our economy.” He also argued in favor of promoting “emission-free nuclear power” and encouraging investments needed to produce electricity from coal without releasing carbon (see full text of statement here; see White House fact sheet here).

Bush called the new goal to stop the growth of U.S. greenhouse emissions by 2025 “a major step forward in America’s efforts to address climate change.” Yet he outlined few specific steps, beyond some already taken such as requiring better automobile fuel efficiency, to achieve the target. Among his goals, he said, was to create a new incentive to make the development, commercialization and use of new lower-emission technologies more competitive.

By contrast, California’s anti-global warming law, AB 32, requires the state to roll back its emissions of heat-trapping gases to 1990 levels by 2020, an estimated 25 percent reduction. Even further cuts would be required later under an order issued by Gov. Arnold Schwarzenegger (see text here). Additionally, all three major presidential candidates have endorsed emissions limits and trading programs.

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California Utility Regulators OK $600M Customer-funded GHG Research Effort

California utility regulators have voted to commit more than a half-billion dollars – paid for by the ratepayers of the state’s privately owned utilities -- to a research and development effort devoted to finding new technologies to reduce greenhouse gas emissions and getting them to market.

The five members of the California Public Utilities Commission, meeting at the commission's San Francisco headquarters (pictured) unanimously approved the proposal creating the California Institute for Climate Solutions. However, not all of them were fully pleased with the result. Commissioner John Bohn said the decision pushed the boundaries of the commission’s jurisdiction almost to the breaking point and he questioned charging ratepayers for investigating new technologies that might never be successful.

Commission President Michael Peevey, who carried the proposal, said California had long been a leader in environmental issues and that it was again time “to take bold and immediate action.”

The plan (see CPUC press statement here; full text of decision here) calls for $60 million a year for 10 years in ratepayer funds to go toward the institute. Most of that money, at least 85 percent, would be used to fund grants for applied research intended to support greenhouse gas reductions, as demanded by California’s landmark law, AB 32.

The institute was charged with targeting research focused on “practical and commercially viable technologies that will reduce" greenhouse gas emissions, as well as the means of adapting to the impacts of climate change that may now be inevitable. It is also intended to speed "the transfer of these technologies from the laboratory to market place," according to the lengthy decision approved by the commission Thursday. 

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Senate Passes Extensions for Renewable Incentives; House Future Uncertain

The U.S. Senate Thursday moved forward with its version of an extension of tax credits for renewable energy. But it did so without identifying how to pay for the estimated $6 billion in incentives for wind, solar and other projects.

Introduced by Sens. Maria Cantwell, D-Washington, and John Ensign, R-Nevada (pictured), only a week ago (see Climate Law Update story), the Clean Energy Tax Stimulus Act (see text here) was grafted as an amendment onto a housing bill before the Senate. Lawmakers adopted the energy amendment on an 88-8 voted and passed the entire bill 84-12.

In many ways, the Senate bill is roughly similar to a measure the House passed earlier in the year extending incentives known as the investment tax credit and the production tax credit. The renewable industry has been pushing hard for Congress to adopt some kind of legislation extending credits which expire at the end of the year.

Both bills provide short-term extensions of credits for producing electricity from renewable sources and for a longer period, until 2016, for business investment tax credits for solar and fuel cell projects. Residential solar and energy efficiency projects would also benefit under the Senate bill.

But the major difference in the Senate legislation lies in the fact that bill avoided the House approach of funding the incentives through reducing tax breaks for the oil industry. Instead, the Senate bill contains no identified funding mechanism. That could give the bill a difficult road in the House.

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IPCC Expert Sees Need, As Do Others, for Government Backing of Energy Research

A key member of the international body that has done much to warn the world of the dangers of climate change says that a needed part of the solution – government support for research into new technologies – is falling ominously short.

In a recent presentation in San Francisco sponsored by the California Public Utilities Commission, Bert Metz, co-chairman of a key group of researchers within the Intergovernmental Panel on Climate Change, added his voice to what appears to be a growing chorus calling for major new public investments into energy technology research and development. While other measures, such as market systems to promote energy efficiency and greenhouse gas reductions can help, they may not be enough, according to these experts.

In his presentation to an auditorium filled with energy experts and members of the public, Metz (pictured) foresaw the need for society "to rely on technologies that are not yet on the marketplace today. So that brings us to the area of how can we get them into the marketplace later. That means sufficient [research and development] investment." But there is a problem, he noted: 

“One sobering fact from the IPCC assessment was that energy R&D has gone down significantly since 1980. It’s now about half the level that we saw in the 80s. I’m talking about government, public R&D. That has not been taken over by the private sector. So we are worse off than we were 25 years ago. That is, of course, completely counter to the messages in this report.” 

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British Columbia Moves Toward Cap-and-Trade Amid Larger Auction Debates

British Columbia is moving forward with a cap-and-trade system to reduce greenhouse gases, laying the groundwork for the province's involvement in a Western North American regional trading system.

The development occurs as one new report strikes a cautionary note about how to establish a market, warning that free allocation of emissions credits has helped produce large windfall profits in Europe (see full document here). But the Western Climate Initiative, the regional system to which British Columbia and a number of states belong, is contemplating at least a partial sale of credits (see text here). 

British Columbia officials recently announced the introduction of the Greenhouse Gas Reduction Act, also known as the Cap and Trade Act. They said it would put British Columbia out front of other Canadian provinces as it prepares for the onset of the new trading system (see press statement here, see text of legislation here).

“The Cap and Trade Act will make British Columbia the first Canadian province to introduce legislation authorizing hard caps on greenhouse gas emissions,” said Environment Minister Barry Penner (pictured) in a statement. A “hard” cap means that each emitter will face a set target, regardless of the growth of its operations, according to a report in the Canadian newspaper the Globe and Mail (see story here).

One expert quoted by the paper said no one in North America has done what the province is proposing. Officials from the petroleum production industry and elsewhere also expressed some concerns about the measure and how it might mesh with regulations set by other provinces and the nation’s government, as well as the province’s own newly introduced carbon tax.

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Ethanol Takes a Media Hit, Industry Punches Back; Algae, Wind, Solar Soar

By any measure, it’s been a tough few weeks in the spotlight for biofuels such as corn-based ethanol and other alternative sources for transportation energy, including hydrogen.

A Time Magazine cover story not-so-subtly titled: “The Clean Energy Scam,” set the tone for the criticism. But it was met by a spirited rejoinder from the biofuels industry, which sees itself as helping to lead the way toward sustainability.  

The scrutiny focused on biofuels didn't stop with the magazine. 

Recently, reports have emerged that American biofuel subsidies have, in the characterization of the Wall Street Journal’s Environmental Capital, been “boomeranging” across the Atlantic (see story here). Meanwhile, the Los Angeles Times reported a California biofuels manufacturer was “short on cash and suffering from higher corn and plant construction costs” which threaten the company. The paper also noted a number of other plants that have been put on hold across the country, citing narrowing margins between the cost of production and the selling price of ethanol (see story at newspaper's Web site here).

Then, late last week, reports began emerging that corn had hit a record $6 a bushel, prompting the food industry to pin the blame rising prices squarely on government encouragement of ethanol production. The Grocery Manufacturers Association said the "ripple effects" are being "felt throughout the economy" (see statement here).  

On the hydrogen front, the San Jose Mercury News tweaked California Gov. Arnold Schwarzenegger, who four years ago proclaimed the creation of a “hydrogen highway” that would allow motorists to fill up fuel cell cars. So far, however, the newspaper reported (see story here), “not a single hydrogen fueling station has been built under the program.” The article cited a number of possible reasons, from economics to politics, for the failure. The paper also reported that Mary Nichols, the chairwoman of the California Air Resources Board, believes up to 100 stations will be built by 2015, five years later than expected.

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Senators Introduce New Renewable, Energy Efficiency Tax Credit Bill

Legislation extending tax credits for renewable energy including wind, geothermal and solar for at least a year was introduced Thursday in the U.S. Senate by a bipartisan group of lawmakers. The move drew immediate praise from the solar industry.

Senate authors of the measure, who left out a controversial hit on the oil industry that was contained in a recent House bill, hoped to break a logjam that has blocked progress on keeping incentives for renewable energy in place. Backers stressed the need to act quickly, with billions of dollars in projects possibly on the line. The bill also includes financial encouragements for energy efficient buildings, homes and appliances.

Introduction of the Clean Energy Tax Stimulus Act of 2008 in the Senate (see bill summary and text), comes more than a month after the House passed its own multi-year extension measure. The Senate legislation is sponsored by Sen. Maria Cantwell, D-Washington (pictured), and Sen. John Ensign, R-Nevada. It has 21 other co-sponsors. Cantwell urged swift action (see full statement):

“Critical tax incentives are set to expire this year. If both houses of Congress don’t pass a bill, and the president doesn't ’t sign it into law within the next one to two months, we will start to see as much as $20 billion of anticipated investments in 2008 delayed or canceled. This could result in more than 100,000 U.S. jobs lost at a time when the country is skidding into a recession, and energy prices keep getting higher.”

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Manufacturers Agree with EPA Go-Slow Approach

Stephen L. Johnson, the administrator of the U.S. Environmental Protection Agency, might be feeling a bit besieged after the reaction to his decision to go slow on regulating greenhouse gases. But he’s still got friends in the industrial community and elsewhere.

“I think he made a very sensible move,” Hank Cox, a spokesman for the National Association of Manufacturers, told Climate Law Up date Friday. The association, headed by former Michigan Gov. John Engler (pictured), has itself been urging a cautious approach to addressing climate change and it recently released a study warning of major economic and employment losses if Congress enacts legislation such as the Lieberman-Warner bill (see recent Climate Law Update story), which would establish a national emissions cap-and-trade system.

Johnson provoked outrage among Democrats and environmental organizations when he informed lawmakers he was going to take more time to study the regulation of greenhouse gases before acting. Some critics accused the Bush administration of acting according to an “industry script” on the issue.

Johnson’s action came nearly a year after a 2007 U.S. Supreme Court decision, Massachusetts v. EPA, which said the agency had the authority to regulate the emissions believed to contribute to global warming as pollutants, and it ordered its officials to look into such questions as whether the gases pose a threat to people. Critics threatened a new round of legal action to force the EPA to move on the issue (see Thursday’s Climate Law Update story).

Cox said he believed his organization made its views known to the EPA before Johnson announced his decision Thursday.

“I’m sure we did,” Cox said.

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