Climate Law Update: Climate Change & Sustainable Energy News : Thelen Reid Law Firm : Renewable Energy, Construction, Project Finance Lawyers & Attorneys

California's approaches to cleaning up automobile greenhouse gas emissions are better than those recently proposed by the federal government -- according to California.

The California Air Resources Board this week released a new study that it said "conclusively demonstrates" that the state's mandate for cutting tailpipe emissions believed to contribute to global warming achieved more than 40 percent greater reductions than new federal mileage standards announced last month (see press statement here; full report here).

The document constituted the latest salvo in the continuing war of words -- and lawyers -- between the state and federal government over how best to address potentially climate-changing pollution from cars and other sources. California is currently in court challenging the Bush administration's refusal to allow the state's vehicle standards to proceed (see Climate Law Update story here). State officials have also reacted negatively to the new federal plan, seeing in it a poison pill that would prevent California and other states from moving forward with stricter controls (see Climate Law Update story here).

Release of the new report came as automobile executives and Gov. Arnold Schwarzenegger met at the state Capitol on the issue. According to some press reports, the leaders discussed some cooperative approaches to reducing emissions, even as they appeared to give little ground elsewhere (see San Diego Union-Tribune story here).   

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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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A new lawsuit filed by environmentalists challenges Arctic oil and gas exploration efforts the groups contend threaten marine mammals such as whales.

Plaintiffs include organizations that have already sought to force new federal protections for polar bears and other animals because of alleged threats from climate change, a move that could also have implications for oil development in the region.

Filed in U.S. District Court in Alaska on Monday the lawsuit asks a judge to rule that federal authorizations allowing the explorations in the Beaufort and Chukchi seas by Shell  and BP were issued before proper environmental reviews were conducted and that the actions could seriously harm marine mammals. The plaintiffs also asked for a preliminary injunction blocking the activities, at least some of which were planned for this summer (see lawsuit text here; motion for preliminary injunction here).

Seismic surveys planned by the companies "will result in excessive noise pollution in Arctic waters that have not been subjected to such levels of concurrent seismic noise pollution for at least 15 years, if ever," claimed the documents filed by the groups. The plaintiffs, which also include a native village, focused primarily on concerns for the health of such animals as whales and seals. Polar bears are only briefly mentioned in the lawsuit, as inhabitants of both of the seas year-round. 

Officials of the federal Minerals Management Service, which issued the seismic survey permits, and the National Marine Fisheries Service, which was also named as a defendant, told Climate Law Update they would have no immediate comment on the case.  Both oil companies, neither of which was named in the lawsuit, also declined comment specifically on the case but they each defended the environmental soundness of their exploration practices.   

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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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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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A federal judge in California late Monday gave the federal government barely two weeks to make a final decision on protecting the polar bear under the Endangered Species Act, a move that could have significant implications for regulatory efforts to combat climate change.

Environmentalists pushing for protections for the iconic animals have accused the Bush administration of dragging its feet on the matter in order to avoid interfering with plans to explore for oil in parts of the bears' far northern home. Federal officials had concluded that oil and gas development would not pose a threat to the bears throughout their range. 

U.S. District Judge Claudia Wilken (access biography here), in a 10-page decision, told the Interior Department to issue a final ruling on the matter by no later than May 15 (see text of order here). The judge also required that whatever decision the government makes would take effect immediately at the time it is issued. Additionally, she wrote that she did not need to have the parties come to court to argue the matter because "timeliness is essential, the issues are not complex and the parties are generally in agreement" on the issue.

The ruling was a win for the environmental groups including the Center for Biological Diversity, which has been pushing since 2005 to list the polar bear as an endangered species because of the effects of global warming on the bears' icy habitat. The interior department's U.S. Fish and Wildlife Service, as part of a prior court agreement, had proposed to list the bear as a threatened species last year (see text of proposal here) but then took no final action (see Climate Law Update stories here and here).

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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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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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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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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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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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A legal action led by Massachusetts and supported by 17 other states and nearly a dozen environmental organizations was launched Wednesday to force the Environmental Protection Agency to issue a critical document that would trigger nationwide regulation of greenhouse gases.

The new move, in the form of a petition for a writ of mandamus, was filed in the U.S. Court of Appeals for the District of Columbia Circuit. It sought to require the EPA to put forward its formal determination of whether emissions of the climate-changing gases endanger the public’s health or welfare. Such an “endangerment” finding, the filing  charged, has already been made but it is being withheld (see text).

“It is a necessary and critical step, which is why the administration is making its stand there,” said David Bookbinder, chief climate attorney for the Sierra Club, one of the groups filing the action, during a nationwide conference call with reporters. “They know once the endangerment finding is made they’re obligated to begin controlling greenhouse gases.”

He acknowledged that no final regulation was likely to be in place until after a new administration comes into office. However, he and others said that it was important to move forward now to get the process started.

“Time is not on our side,” said James Milkey, chief of the environmental protection division under Massachusetts Attorney General Martha Coakley (pictured).

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No surprise in this, except perhaps for the quick timing, but last week’s decision by the U.S. Environmental Protection Agency to go slow on regulating greenhouse gases looks like it's landing the agency back in court.

California Attorney General Jerry Brown, along with attorneys representing the state of Massachusetts, the Sierra Club and others are expected to announce Wednesday new legal action to force the EPA to move forward. The action coincides with the one-year anniversary of the U.S. Supreme Court’s decision in Massachusetts v. EPA, which held that the agency had the authority to regulate greenhouse gas emissions as pollutants under the Clean Air Act. In a statement, Brown’s office said Tuesday the legal maneuver would be taken to force the EPA “to obey” the decision.    

EPA Administrator Stephen L. Johnson (pictured) sparked the ire of Democrats and environmentalists – and the praise of industry groups – by announcing that he wanted to avoid “rushing to judgment” on the issue. He laid out an administrative process to study the matter, citing the fact the EPA’s decision could have widespread ramifications beyond automobiles, which had been the immediate focus of the Supreme Court decision (see previous Climate Law Update stories here and here).

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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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The coal war, it seems, is heating up by the day. And the battlegrounds are not always in places commonly associated with aggressive environmentalism

Take Kansas and Utah, for instance.

The Kansas City star reports that lawmakers are trying to revive a modified version of a bill vetoed last week by Kansas Gov. Kathleen Sebelius that would have allowed construction of two new coal-fired plants over the greenhouse gas-related opposition of a state regulator.  Among her objections was the lack of support for wind power in the legislation (see text of vetoed bill and Sebelius press release with attached veto message). 

Farther west, a dispute over a proposed new coal plant in Utah is creating a legal vortex drawing industry, environmentalists and other states, including California, into a debate over the extent of the U.S. Environmental Protection Agency’s authority to regulate emissions blamed for climate change.

All of this comes against a background of work in Congress on greenhouse legislation that would establish a market system for reducing emissions (cited by Sebelius), and more coal-specific developments, including a recent decision by a federal agency to back away from funding such projects (see recent Climate Law Update story). Lawmakers are also working on other federal legislation that would allow new coal plants to move forward only if they can capture and store the vast majority of their carbon emissions (see press release and text of bill).

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Legislation in Congress to reduce the country’s greenhouse gas emissions might carry a hefty economic price tag, according to a new analysis released Friday by the U.S. Environmental Protection Agency. But sponsors of the bill, Sen. Joseph Lieberman, I-Conn., and Sen. John Warner, R-Va., said the report actually demonstrates that the country could accomplish the cuts without sacrificing its prosperity.

Even as the costs of addressing climate change sparked discussion,  there were new signs global warming itself could prove economically destructive. Earlier in the week, another government study suggested potentially dire consequences from unchecked climate change on the nation's Gulf Coast, a vital part of the nation's shipping and petroleum infrastructure.

EPA's forecasts covered a variety of possible impacts. The agency predicted the economy might feel a drag on growth of less than 1 percent by 2030, but that the punch could also be nearly four times as strong. Among the "many uncertainties" it cited were the availability of new technologies and what other countries do regarding climate change.   

The EPA’s report followed by a day another set of estimates – this one prepared by the National Association of Manufacturers and the American Council for Capital Formation – showing the bill dragging on the economy to the tune of millions of fewer jobs and slowing the growth of the gross domestic product (see press release). The Environmental Defense Fund, an environmental group, immediately attacked the business groups’ findings, noting they did not analyze the costs of doing nothing to stop climate change.

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The U.S. Department of Energy recently announced it had worked out a cooperative arrangement with the Electric Power Research Institute, a nonprofit whose research is supported by electric utilities, to look at ways to promote energy efficiency.

One primary goal of the agreement was to promote widespread adoption of  "demand response" programs to curtail energy use during peak periods. Officials also drew connections between the agreement and efforts to deal with climate change.   

A memorandum of understanding between EPRI and the energy department called on them to coordinate efforts to support research related to demand response and energy efficiency in buildings and on other projects, such as developing ways for utilities to account for carbon dioxide reductions. The document notes that the private institute has launched an initiative to gain the support of up to 50 utilities "to enable expansion of programs, activities and technologies to encourage greater energy efficiency and widespread adoption of electric demand response."

In a DOE statement announcing the initiative, EPRI Senior Vice President Michael W. Howard said the pact, which the memorandum described as non-binding, would "facilitate the development of energy efficiency technologies needed to help slow, stop and ultimately reverse the nation's carbon footprint."

(Department of Energy photo showing March 6 signing ceremony: L-R: Kevin Kolevar, assistant secretary for electricity delivery and energy reliability, DOE; Alexander Karsner, assistant secretary for energy efficiency and renewable energy, DOE; Michael Howard, senior vice president of research and development, EPRI)

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Northern California utility Pacific Gas and Electric Company on Tuesday (Feb. 26) announced it had entered into a large carbon offset deal amounting to 214,000 metric tons of greenhouse gas emissions. A Wall Street Journal Web site reported the company was spending more than $2 million on the initiative, or about $10 per ton. The action was praised by officials as a needed example of a verifiable offset.

The announcement came on the same day as some groups called for greater accountability for offset programs, warning that bad press about them could harm legitimate reduction efforts. "Without credibility, it becomes a shell game," Janet Peace, senior economist of the nonprofit Pew Center on Global Climate Change, told a gathering at a conference in San Francisco. The conference, Carbon Forum America, drew more than 1,000 people from businesses, government and non-governmental organizations to discuss issues surrounding the burgeoning emissions trading market.

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Renewable energy advocates are prodding Congress to extend tax credits, the loss of which they warned could threaten 42,000 megawatts of planned developments and put billions of dollars of potential investments at risk.

As part of the lobbying campaign, in a letter to congressional leaders of both parties, the American Council On Renewable Energy, a nonprofit representing hundreds of companies and groups involved in or advocating the development of wind, solar and other forms of sustainable energy, demanded quick action on investment and production tax credits. Those include a 30 percent investment tax credit for solar projects and about a 2-cent per kilowatt hour income tax credit for qualifying facilities, such as wind. 

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