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

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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• The Asian Development Bank's head announces a new fund to combat damage caused by climate change, writes The Economic Times of India. 
• Scientists suggest species living in the tropics may be in more serious danger than those living near the Arctic, reports the CBC.
• The world can reach a significant new climate change agreement by the end of next year, if current talks keep up their momentum, the head of the United Nations climate panel says, according to Reuters.
• A connection between rising shark attacks and global warming? Perhaps, the Guardian newspaper writes.
• A new book that offers "a profound academic, spiritual, theological, exegetical, politically grounded and energizing rendering of the global climate and sustainability crisis" is positively reviewed by The Christian Century. 
• Sempra Energy Chairman Donald E. Felsinger says there is enough scientific evidence in place that "we need to take action" to mitigate the effects of climate change, according to an interview with the New York Times appearing over the weekend
• The Bush administration literally chose to "add more fuel to the global warming fire" by moving ahead to open the Chukchi Sea to drilling, argues the Audubon Magazine.
• Ethanol mandates "are just an appetizer for a much larger big business feast should a liberal Congress be paired with a liberal White House," argues a posting on the Heritage Foundation's blog, The Foundry.   
  
  

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• The Arctic and the Antarctic experience similar greenhouse gas levels and solar radiation but are responding in dramatically different ways, according to the National Oceanic and Atmospheric Administration, which reported on a new study soon to be published in EOS, a publication of the American Geophysical Union.
• Consumers who reduce the amount of meat and dairy in their diets will do more to reduce their carbon footprint than buying all local all the time, writes Science Times, reporting on a new study of the issue.
• The United Nation's new top adviser on food is urging a freeze on investments in biofuels, reports the BBC.
• Great Britain is experiencing a boom in installations of  "green roofs" and rainwater harvesting technologies in response to a changing climate, reports The Times of London. 
• A company called OptiSolar wants to build the largest solar farm in the world about 100 miles north of Los Angeles, says a report on C-Net's news.com.
• Shell's decision to drop out of a large offshore wind project has caused an uproar in the United Kingdom, according to the Guardian.
• Kleiner Perkins Caufield & Byers has raised $1.2 billion in two distinct funds, one of them entirely "to help speed mass-market adoption of solutions to the world's climate crisis," the San Jose Mercury News reports.  
• Hawaii's Legislature has voted to require all new homes to have solar water heaters installed starting in 2010, says the Associated Press in a story appearing in the Houston Chronicle.  
  
  
  
  
  

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• Methane coming from a landfill near San Francisco could soon fuel the garbage trucks serving the site, under a plan to be announced by Waste Management, the San Francisco Chronicle reports.  
• European leaders on climate change say they do not expect much from President Bush on the issue but they have hopes a new administration will be different, writes Reuters. 
• Rising demand for food and biofuels that prompted farmers to plant more crops has helped produce a shortage of fertilizer, according to the New York Times. 
• Australian government officials and representatives of that country's agriculture community have been discussing the industry's role in climate change policy, Sky News reports.
• Global warming could take a break in the next decade, thanks to a natural shift in ocean circulations, but long-term the planet's temperature will rise as previously expected, according to an AFP report on a study in the British journal Nature.
• Miami-Dade County government should invest in a wide range of actions to prepare for climate change, including high-tech mapping and financing fuel-efficient taxis, an advisory task force recommends, reports Miami Today.
  

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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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Chinese government officials may have produced a startling new goal for wind power in the giant country -- 100,000 megawatts by 2020. That represents a big step beyond more near-term figures the country floated just earlier this year (see Climate Law Update story here).

According to a story in the Shanghai Daily (see article here), an official with the Chinese Wind Energy Association (Chinese language site) said that the country's top economic planning agency, the National Development and Reform Commission recently discussed increasing wind power capacity to the 100,000-megawatt level. Previously, the country's leaders had announced a goal of installing 10,000 megawatts by 2010, so the new objective represents a 10-fold increase over the succeeding decade.

The country had set an objective of supplying 10 percent of its electricity from renewable sources by 2010, which would include wind, hydropower, bio-energy and solar.  According to the Shanghai Daily story it now wants to achieve 15 percent of its power consumption from renewable sources by 2020.  

Environmental Capital, the Wall Street Journal's online site that monitors such developments, sees new business opportunities in the Chinese move (see full posting here):

"Despite the recent tax reform meant to limit wind-turbine imports, China’s more ambitious goals could also open the doors for more joint ventures and local business for wind turbine makers like Vestas of Denmark, Suzlon of India, and Gamesa of Spain—all of whom have made China a key part of their global growth plans. And of course, General Electric hopes to make its energy business one of the group’s driving forces."

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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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• Widespread concerns are surfacing that Africa, despite being less culpable for climate change than other regions, could be among the worst affected, reports Voice of America.
• Industrial companies fear that European efforts to combat climate change could drive them from doing business there, Reuters discloses in a story in the International Herald Tribune.
• Musician Paul McCartney advocates vegetarianism as a way of battling global warming, notes gigwise.com.
• A leader of Canada's natives says governments must engage indigenous populations on the issue of climate change, according to CTV.ca.
• Rising food prices, partly as a result of biofuel production, could ease acceptance of genetically engineered crops, says a story in the New York Times.
• Both Al Gore and a new poll suggest the public reaction to warnings about climate change is underwhelming, reports a New York Times blog, thelede.

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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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It’s not billed as picking winners and losers but a new report issued by consultants to a multi-agency effort planning California’s transmission infrastructure gives some idea of what types of renewable energy projects have a bright future, at least when it comes to getting access to the grid.

The document in effect recommends that for some technologies, including anaerobic digestion and landfill gas, no further planning should be done on access to transmission lines. But it is much more favorable toward technologies such as biomass, solar (both thermal and photovoltaic), small hydro, wind and geothermal. Wave and marine current energy fell into a gray area, with the consultants recommending no further planning right now but instead keeping an eye on further developments.

Prepared by Black & Veatch Corporation, a large international consulting and contracting firm, the report, dated March 14, could be significant because it constitutes a first step in the state’s Renewable Energy Transmission Initiative, which is often known by its acronym, RETI. The project is designed to take a strategic and unified approach to siting transmission lines to serve renewable generation resources located in California or elsewhere in the West. The next phase of the process involves ranking the cost-effectiveness of delivering power from specific interconnection points.

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For some time, countries such as Germany have adopted "feed-in tariffs" as a way of providing an incentive to develop new renewable generation. Renewable energy advocates have pushed for a similar boost in the United States for some time. Now, the California Public Utilities Commission has granted the wish, at least in a small way.

The CPUC recently gave the green light to the tariffs, a long-term pricing structure for renewable power that utilities purchase from their customers. In an action Feb. 14, the rate-setting agency approved a tiered program involving seven utilities. For two of them, Southern California Edison and Pacific Gas and Electric Company, the tariffs apply to power purchased from any customer. For the others, however, the tariffs are limited to water and wastewater customers. The tariffs apply to renewable generators sized up to 1.5 megawatts.

As described in a CPUC statement, the tariffs offer a simple mechanism for small generators to sell power at predefined terms and conditions, without contract negotiations.

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