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

"Two separate government analyses have now come to the same conclusion," Lieberman said in a statement (see text here).  "Our bill curbs global warming without harming the U.S. economy."

Lieberman said the new study predicted impacts "below even the modest figures" cited by the EPA He said the energy department also found that the bill would benefit wind and solar, as well as carbon capture and storage technology.       

The Environmental Defense Fund, which supports using markets to tackled climate change, also lauded the study's conclusions, as did the Natural Resources Defense Council (see press statements here and here). Environmental Defense recently released its own analysis of Lieberman-Warner, concluding that economic models showed cap-and-trade "consistent with long-term economic growth (see Climate Law Update story here).”

Both environmental groups characterized the economic pull of the legislation as virtually unnoticeable.

"It's like two cars driving different routes from New York to L.A. and predicting one will get there at noon and the other will arrive at 12:45," said Environmental Defense's climate campaign director Steve Cochran in the group's statement. NRDC said bill's impact would be equivalent to a two-month delay in growth.

Environmental Defense also again noted, as it has in the past with other studies, that the document didn't look at the price of doing nothing, including higher insurance costs, damage from droughts and more intense storms.

But not so fast. Inhofe, the ranking minority member of the Senate Environment and Public Works Committee, had his own take on the study, which also foresaw potentially higher prices for coal and natural gas. Inhofe focused the study's predictions of higher energy costs for households, and the consequences for industry. He also said the energy department analysts also based some assumptions on a "massive and unrealistic" boom in the construction of new nuclear plants (see statement here). Said Inhofe:

"Only in Washington could higher energy prices be characterized as not negatively impacting the U.S. economy. If Democrats have their way, Americans will pay significantly more at the pump, in their homes and in many cases, with their jobs, all to accomplish an undetectable impact on the climate."

The EDF's Cochran might have had Inhofe in mind when he declared the debate over:

“Anyone claiming the Lieberman-Warner bill will bring economic doom can now go sit with those still saying climate change is a hoax. It’s time for the Can’t-Do crowd to retire the scare tactics.”

But there's little evidence the two sides will see eye-to-eye anytime soon.

(Photo: Sen. James Inhofe's office)

Such developments may come none too soon to help the planet weather the ever-increasing amount of heat-trapping gases in its atmosphere. The Chinese plans come to light shortly after a U.S. government agency, the National Oceanic and Atmospheric Administration, reported that carbon dioxide continued a steady rise in its concentration in the atmosphere in 2007. 

On April 23, the agency's press statement (see text here) noted:

"Last year alone global levels of atmospheric carbon dioxide, the primary driver of global climate change, increased by 0.6 percent, or 19 billion tons. Additionally methane rose by 27 million tons after nearly a decade with little or no increase. NOAA scientists released these and other preliminary findings today as part of an annual update to the agency’s greenhouse gas index (see text here), which tracks data from 60 sites around the world."

According to NOAA, the rate of increase in carbon dioxide concentrations accelerated over recent decades along with fossil fuel emissions. The recent data showed about a 2.4 part per million increase. Since 2000, annual increases of two parts per million or  more have been common, compared with 1.5 ppm per year in the 1980s and less than one ppm per year during the 1960s.

The data follows by a few weeks the release of a report prepared by the U.S. Environmental Protection Agency that showed some domestic declines in greenhouse gas emissions, including carbon dioxide, between 2005 and 2006 (see Climate Law Update story here; access report here). That report also showed an increase in methane releases to the atmosphere. 

Separately, NOAA recently announced it would soon install the final nine of 114 stations as part of a new  high-tech climate monitoring network. The stations track national average changes in temperature and precipitation trends. The U.S. Climate Reference Network (CRN) is on schedule to activate these final stations by the end of the summer, the agency said (see press statement here). 

(Photo: Wind farm in China, Wikipedia)

In an e-mail to Climate Law Update, EPA spokeswoman Roxanne Smith said that between the issuance of the draft and final reports, "recalculations were made to incorporate additional revised data." When that new information is incorporated, errors are addressed or "improved methodologies are adopted," she said. Those can then lead to changes for all years in the inventory, which spans 1990 to 2006, Smith added.

The inventory includes estimates of carbon dioxide, methane, nitrous oxide, hydroflourocarbons, perflourocarbons and sulfur hexafluoride. It also calculates emissions removed from the atmosphere by so-called sinks, such as forests, vegetation and soils.

According to the latest report, carbon dioxide emissions from fossil fuel combustion declined about 1.6 percent between the two years, compared to the draft document’s estimated 1.9 percent drop. Overall estimates of carbon dioxide emissions in 2006 remained unchanged in both reports, while the revised version showed a slightly lower estimate for 2005.

In addition, the newest report, which is submitted to the Secretariat of the United Nations Framework Convention on Climate Change, estimated that overall emissions of the six main greenhouse gases have grown by 14.7 percent from 1990 to 2006. The earlier report had that figure at 14.1 percent. The United Nations body monitors the Kyoto Protocol.

One of the largest tonnage differences between the draft and final reports this year appeared to be a drop in the estimate of nitrous oxide. The earlier report estimated emissions of that gas at more than 530 million tons for each of the years, while the latest document estimated the amount at 370.1 million tons in 2005 and less than 367 million tons in 2006. A portion of the report charting annual changes to the calculations noted that revisions, including incorporating state-by-state data for nitrogen fertilizer use, had produced about a 27 percent annual decrease in the estimates for nitrous oxide emissions from soil management on farms.

(Pictured: General Electric advanced gas turbine, U.S. Department of Energy photo)

A coalition of states and environmental groups launched a new court fight with the EPA Wednesday over Johnson’s decision to institute a lengthy administrative process to consider what to do in light of last year’s landmark Massachusetts v. EPA decision by the U.S. Supreme Court. That petition, if successful in court, would also set a 60-day deadline for the EPA to issue its so-called endangerment finding, which would set the stage for new regulation of greenhouse gases (see Climate Law Update story).

Snowe’s statement was particularly notable, coming as it did from a Republican:

“The administration has a court-mandated obligation that they can no longer ignore. Their deliberate efforts to delay adherence to the Supreme Court’s decision is reckless and irresponsible. The administration’s response to global warming must coincide with what the science and the American people require.”

Attorneys who spoke with reporters Wednesday describing the legal action said it would have no impact on the decision regarding California’s automobile regulations, despite the fact the Supreme Court ruling dealt with vehicle emissions. But the Feinstein-Snowe legislation would address the issue by setting a June 30, 2009 deadline for the EPA to complete taking another look at the question of California’s efforts to restrict the emissions.

The EPA's action regarding California was in response to the state's attempt to enforce rules implementing a 2002 state law (see description rules and legislation).

(Photo of U.S. Sen. Dianne Feinstein, courtesy of her office)

Joining Massachusetts as parties were California, Connecticut, Illinois, Maine, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Washington, the District of Columbia, the city of New York and the government officials of Baltimore. A number of other states also came in as friends-of-the-court in support of the filing. Many of the nation’s largest environmental groups also came on board, including the Natural Resources Defense Council, Environmental Defense Fund and the Center for Biological Diversity.

The latest action came on the one-year anniversary of the U.S. Supreme Court’s landmark Massachusetts v. EPA decision holding that the agency had the authority to regulate the emissions as pollutants under the Clean Air Act. The high court’s ruling did not outright require the agency to issue regulations but it told the EPA it had to consider such issues as whether the public health might be threatened. The ruling came in the context of regulating emissions from motor vehicles but no one believes the implications stop there.

Last week, EPA Administrator Stephen L. Johnson cited the broad potential of a decision to regulate in the area when he informed lawmakers he would take more time to consider the decision under an administrative procedure that could take months to complete. That announcement set off a wave of criticism from Democrats and environmental groups that culminated in Wednesday’s court action. But it also drew praise from some in industry (see previous Climate Law Update stories here and here).

Not all the critics were Democrats. California's Republican Gov. Arnold Schwarzenegger issued a statement Wednesday (see text) chastising the EPA for having "failed to lead" and pledging that the state is "prepared to force it out of the way in order to porect the environment."

In an e-mail to Climate Law Update, Jonathan Shradar, the EPA’s press secretary, said the agency would continue working on the process laid out by Johnson, “taking into account all sources of GHG emission and realizing the best approach for dealing with climate issues.” Shrader characterized the rule-making procedure announced by Johnson as “a reasonable path forward.” 

Advocates of government regulation have not missed the larger implications, either. Bookbinder noted that petitions have already been filed with the EPA seeking to regulate emissions from such sources as power plants. One heated controversy involves a Utah coal-fired power plant for which the EPA issued a permit that is now being appealed by environmentalists, including the Sierra Club, citing the Supreme Court decision (see Climate Law Update story).

Said Milkey:

“While the petition we filed today is specific to motor vehicles, the same logic also applies to power plants. That is, if motor vehicle emissions are causing endangerment then certainly power plant emissions are doing so and EPA has an obligation to regulate them under the Clean Air Act.”

California Attorney General Jerry Brown, who also signed on to the writ, suggested that forcing the EPA to issue its finding would have important ramifications for the national conversation over climate change:

“If this administration says that greenhouse gases endanger public health, then that’s something. That’s an important step that prevents somewhat their continuing obfuscation of this whole matter of global warming.”

The filing puts the case back in the hands of a court that had previously agreed with the EPA’s decision that it lacked the authority to regulate greenhouse emissions (see text of ruling). It was that decision the Supreme Court overturned last year. Bookbinder said the District of Columbia court is where the case started and “they’ll be the one whose job it is to enforce the Supreme Court’s mandate.”

Brown seemed to acknowledge the case might be headed into unfriendly territory.

“There’s some right-wing judges that were put on there and, you know, they have their own view of the world,” he said. He quickly added: “We’re hopeful the strength of the case is so clear that we have a good chance, although we recognize the realities that pertain in present-day Washington.”

(Photo of Massachusetts Attorney General Martha Coakley via Wikipedia)

Critics of Johnson's move said it virtually guaranteed that the EPA would not act during the remainder of President Bush’s term in office, and threats to take the agency back to court flowed freely. The statement from Brown’s office Tuesday charged the EPA had extended “the time period another twelve months” until Bush leaves the White House.

Tuesday's announcement did not say specifically what legal avenue Brown and “dozens of states and national environmental groups” planned to take. But it said their action would be aimed at stopping the EPA “from continuing to ignore the Supreme Court.”

The Supreme Court ruling did not require the agency to issue regulations but it told the EPA it had to consider such issues as whether public health was endangered.

A spokesman for the EPA could not be reached for comment Tuesday.

(Photo of Stephen L. Johnson, courtesy EPA)

Brendan Cummings, a California attorney for the environmental group Center for Biological Diversity, which successfully sued the highway agency over the mileage standards, expressed some cautious support for the new development. But, he told Climate Law Update, “it shouldn’t have taken a lawsuit for the federal government to realize fuel economy standards are one of the best ways we can address global warming.” He said a “true analysis of the societal and environmental costs” of carbon emissions would lead to “much higher fuel economy standards.”

Noting that the Federal Register notice avoids any mention of greenhouse gases or global warming, Cummings said the agency still appeared to be “in denial or delusional or intentionally hiding the ball, or all three.”

Eric Bolton, a transportation department spokesman, referred questions about the Federal Register statement to the document itself.

“Everything is supposed to be in there,” he said.

The California air agency’s vote reduced to 7,500 cars the number of non-polluting vehicles that major automakers are supposed to sell in the state from 2012 to 2014. The previous requirement had been 25,000 but officials realized that development of qualifying vehicles appeared to be lagging. The board also established a requirement that could result in 58,000 new plug-in hybrids over that same period. However, if manufacturers produce 25,000 no-emission vehicles, there are no remaining plug-in hybrid requirements. 
 

In addition, the agency will move forward with plans to meld together its programs designed to cut smog-forming pollution, which was the original intent of the emissions standards, with those meant to curb greenhouse gases. Those latter standards have run into an obstacle at the federal level, where the Environmental Protection Agency has refused to grant the state a needed waiver to proceed (see previous Climate Law Update story). State officials have sued to overturn the decision.

“That’s to simplify the program and make it easier to understand,” said air board spokeswoman Gennet Paauwe. “What the board felt, it was time to overhaul the program.”

She said while the state awaits a resolution of the waiver issue it has to move forward with developing the regulations.

Nichols, in the air board’s statement issued Thursday, said the decision would lead to more green choices for consumers while continuing to pressure automotive engineers to make improvements.

“We must continue to push for all types of technologies – fuel cells, electric vehicles and hydrogen-powered cars – as we fight our duel battles against smog and global warming,” she said.

(Photo: California State University-Pomona)

Cox said the manufacturers’ organization was not trying to dispute evidence that the planet is getting warmer. But he said officials run the risk of creating “economic havoc” in the country, especially in light of what other nations, such as China, are doing to move forward with fossil plants. Burning such fuels, such as coal and oil, produces carbon dioxide and other greenhouse pollutants.

“There’s a limit in how fast we can move our energy mix away from fossil fuels,” Cox said. He said there is already a virtual moratorium on the construction of new coal plants in the United States, a situation he said could easily produce power shortages in a few years.

Critics of the trade association’s economic analysis of global warming legislation have knocked it for, among other alleged shortcomings, looking only at the costs of reducing emissions but not the cost of inaction, potentially leading to unbridled climate change. But Cox, who said society must “wean” itself off of fossil fuels and toward other energy sources such as rewewables, said it will take a viable economy to be able to deal with the problem.

“If you shut down the economy,” Cox said, “that will take people’s minds off global warming quickly.”

 Another group that was apparently pleased with Johnson’s decision was the Heritage Foundation, a conservative think tank. The Los Angeles Times reported that official of the organization said it had spent months sending detailed legal analyses and memos to government officials noting the Supreme Court decision could have widespread impacts on businesses. An EPA spokesman, the paper reported, said Johnson had acted independently.

Johnson, in the letter to Boxer, the California Democrat who chairs the Senate Environment and Public Works Committee, and Sen. James Inhofe, the committee’s ranking Republican from Oklahoma, seemed to acknowledge a decision to regulate could have wide ramifications:

"Such an approach makes sense because, as the Act is structured, any regulation of
greenhouse gases - even from mobile sources - could automatically result in other regulations applying to stationary sources and extend to small sources including many not previously regulated under the Clean Air Act. Consequently, any individual decision on whether and how sources and gases should be regulated may dictate future regulatory actions to address climate change. My approach will allow EPA to solicit public input and relevant information regarding these interconnections and their possible regulatory requirements.

"This approach gives the appropriate care and attention this complex issue demands. It
will also allow us to use existing work. Rather than rushing to judgment on a single issue, this approach allows us to examine all the potential effects of a decision with the benefit of the public's insight. In short, this process will best serve the American public."

But Johnson in his letter also noted that his agency is facing legal action and petitions on the issue. Among them, although he did not mention it specifically, is an attempt by a number of organizations to impose greenhouse gas controls on a proposed Utah power plant (see Climate Law Update story).

The latest move follows by weeks Johnson’s issuance of his formal reasons for turning down California’s attempt to regulate greenhouse gas emissions from motor vehicles, in a move that also has raised hackles on Capitol Hill and among environmentalists (see Climate Law Update story).  

In his letter Thursday, Johnson wrote that he would direct the EPA staff to prepare an "Advance Notice of Proposed Rulemaking" to "discuss and solicit public input on these interrelated matters." That document would be issued later this spring and then would be followed by a public comment period. "The agency will then consider how to best respond to the Supreme Court decision and its implications under the Clean Air Act," he wrote.

Officials in Johnson's office did not return a call from Climate Law Update seeking comment on the latest move. 

Boxer, an outspoken environmental advocate, issued a statement accusing Johnson of "foot-dragging." She said the letter "makes it clear that EPA doesn't intend to take any real action to combat global warming before President Bush leaves office."

Aides to Inhofe, who has called global warming “the most media-hyped issue of all time,” could not be reached for comment Thursday.

Environmental groups and California government officials ripped Johnson. Said David Bookbinder, chief climate counsel for the Sierra Club, in a written statement (see press release):

"One year after the Supreme Court recognized the grave problem of climate change and ordered EPA to take the formal steps necessary to begin controlling global warming-causing pollution, Administrator Johnson has decided that what he needs to do is think about it some more.  After a year of navel-gazing, Administrator Johnson says that later this spring he will ask the public to provide EPA with (a) the "best available science" on global warming, and (b) their views on the "interconnections" between various parts of the Clean Air Act that "may" be affected by any decision to begin limiting GHG emissions.  Then, after months of public comments and some unspecified period thinking about them -- and only then -- will EPA "consider how best to respond to the Supreme Court decision and its implications under the Clean Air Act."

The Natural Resources Defense Council also weighed in (see press release), with a statement by David Hawkins, the environmental group’s climate center director. Hawkins said the announcement “follows an industry script designed to delay any real action to reduce global warming pollution for as long as possible and certainly until the next administration.”

Both Hawkins and Bookbinder threatened new court action. Hawkins said the NRDC would, as part of a coalition of groups, “return to federal court next week to enforce compliance with the Supreme Court’s decision.”

The negative reaction was not limited to environmental groups. Stanley Young, a spokesman for the California Air Resources Board, told Climate Law Update the "EPA's inaction heaps delay upon delay." However, he said the air board would continue moving forward with implementing California's own greenhouse gas reduction law, AB 32.

Kenneth Alex, a top lawyer for California Attorney General Jerry Brown, in an interview with Climate Law Update, said the latest move was part of “an ongoing abdication of responsibility and it’s nothing new.” Brown has been aggressively moving to require local governments and private entities in California to take steps to curb greenhouse emissions.

“In essence,” said Alex, a supervising deputy attorney general, “they’ve opened a public comment period on nothing.”

(Photo: Sen. Barbara Boxer via official Web site)

Backers of the Kansas bill had noted that it included other provisions that could have boosted other elements of the state’s renewable industry. Builders of the project also included plans for a bioenergy center that would capture some of the carbon dioxide and used it to grow algae for fuel.

But in her public statement and veto message, Sebelius cited not only the threat of climate change to her agricultural state but also the potential for federal legislation, which she did not specifically name, that would “have the net impact of taxing carbon.” That description could apply to proposals such as the Lieberman-Warner bill that would establish a cap-and-trade program for greenhouse emissions. Sebelius said the new plants permitted under the Kansas bill would have produced 11 million new tons of carbon every year. Building new coal plants “is likely to create a significant economic liability for Kansas in the future.”

She also had this to say about wind generation:

“I am encouraged that the Legislature made a modest attempt to address some of our alternative energy assets, but this bill fails to promote our wind assets and sends the wrong signal to potential investors for transmission lines and additional wind power.

“The new feature of net-metering does not include wind power which could have served as a powerful incentive to individuals and communities to embrace our most abundant natural resource.”

Sebelius also signed an executive order (see text) creating a new advisory group to explore strategies for reducing greenhouse emissions and protecting the economy. She named Jack Pelton, president of Cessna Aircraft Company, to head the group.

In a statement, Earl Watkins, president of Sunflower Electric Power Corporation, one of the companies that had hoped to build the 1,400-megawatt project, said the veto would “unnecessarily raise electric rates” for the state’s residents (see project description).

“We are experiencing significant growth on the Sunflower system, and we must add new coal generation to support our existing natural gas and wind generation assets,” Watkins said.

The Utah conflagration brewed up over the EPA's issuance last August of a permit allowing Deseret Power Electric Cooperative to add a 110-megawatt unit to its existing Bonanza power plant. Such "prevention of significant deterioration" permits are issued for larged stationary facilities. The decision came just months after the U.S. Supreme Court weighed in on the issue of the EPA’s authority to regulate greenhouse emissions in its Massachusetts v. EPA decision. Although the court held that greenhouse gases could be regulated as air pollutants, the EPA has yet to decide what to do.

Citing that ruling, which came in the context of a dispute over automobile emissions, the environmentalists including the Sierra Club appealed the decision through the agency’s internal processes. Those groups claim the EPA must establish new controls on carbon dioxide emissions for the project. From the Sierra Club brief (see text here):

“On April 2, 2007, the Supreme Court held that carbon dioxide and other greenhouse gases are ‘pollutants’ under the Clean Air Act. Massachusetts v. EPA, 127 S.Ct. at 1460. Now having been definitively ruled a pollutant, [carbon dioxide] is accordingly a regulated pollutant under the act and EPA is required to impose [carbon dioxide best available control technology] emission limits in the Bonanza [prevention of significant deterioration] permit.”

The EPA, however, has maintained that carbon dioxide “is not currently a pollutant regulated" under the federal Clean Air Act. In its response to the appeal, the agency cited a 1993 memorandum in which its attorneys concluded carbon dioxide was not subject to the EPA’s regulatory authority.

Last week, a coalition of trade groups representing a cross-section of energy and manufacturing, weighed in against the environmentalists’ position. In a brief (see text here) to the EPA the groups argued that the Supreme Court decision addressed only the government’s authority to regulate emissions from new motor vehicles. A finding requiring them to be covered for facilities such as Utah’s, they argued, would cause “a huge expansion of the number of sources and activities” that would require permits, which officials would not have the resources to process.

Quentin Riegel, deputy general counsel for the National Association of Manufacturers, one of the groups filing the brief, in a statement predicted “an impassable regulatory gridlock” would develop if the Sierra Club won.

But the environmental groups also had powerful allies. In another brief, eight states, including California, New York and Massachusetts, backed the environmental groups. They argued that the Supreme Court ruling “conclusively” established the EPA’s authority to regulate greenhouse emissions for the project and that the 1993 interpretation “did not survive” the court ruling.

See the EPA’s docket, with links to all the filings in the matter, here.

(Official press photo: Gov. Kathleen Sebelius)

The first report, issued by the nonprofit Environmental Integrity Project, discovered in the EPA data a nearly 3 percent increase in carbon dioxide emissions. It said that was the biggest one-year increase in nearly a decade. It also found that California, often viewed as a leader in greenhouse emissions-cutting efforts, was one of the ten states with the largest increases between 2006 and 2007. The others were Texas, Georgia, Arizona, Pennsylvania, Michigan, Iowa, Illinois, Virginia and North Carolina. However, the report noted that California generates significantly less carbon dioxide per megawatt of electricity than the national average. The report largely was based on the EPA’s “Clean Air Markets” database and it also cited information from the energy department.

It contrasted with the earlier government report, which included figures up to the year 2006. That report, which considered emissions from a wide variety of human sources, showed an overall reduction of about 1.5 percent in greenhouse gas emissions between 2005 and 2006. Among other information, it showed about a 2 percent drop in carbon dioxide emissions from fossil fuel combustion to generate electricity, and a slightly lower reduction from such emissions from all fossil fuel burning. The report attributed the figures, which came against a history of generally rising emissions since 1990, to a variety of reasons related to the weather, the economy and increased uses of natural gas and renewable sources for power generation. It was not immediately known whether the two reports’ estimates of power plant emissions were directly comparable.

Eric Schaeffer, the founder and director of the Environmental Integrity Project, in the organization’s statement announcing its report described its findings in cautionary terms:

“The current debate over global warming policy tends to focus on long-term goals, like how to reduce greenhouse gas emissions by 80 percent over the next 50 years. But while we debate, carbon dioxide emissions from power plants keep rising, making an already dire situation worse. Because carbon dioxide has an atmospheric lifetime of between 50 and 200 years, today’s emissions could cause global warming for up to two centuries to come.”

The report said the data "make clear why national environmental groups have expended so much effort trying to stop the construction of a new batch of conventional coal-firec power plants, which would make a bad situation worse."

Until 2002, Schaeffer directed the EPA’s office of regulatory enforcement. He left the agency in a dispute over what he considered the Bush administration’s laxity in enforcing air pollution laws.

The energy department report, originating from the Lawrence Berkeley National Laboratory, examined the plans made by 15 private and public utilities in the West for how they might deal with a new era of carbon regulations and costs. It discovered wide variances in their assessments but it concluded that they might have too rosy a picture of carbon prices under such mechanisms as a cap-and-trade system. Such programs are widely believed to be on their way as individual states go forward with greenhouse gas reduction plans and regional entities, such as the Western Climate Initiative develop their own strategies, including a market. Congress is also exploring legislation to establish a national market.

“Most utilities’ base-case carbon price assumptions are near the low end of the spectrum” compared to those developed by the energy department’s Energy Information Administration, the report said. It said most of the utilities analyzed their prospective portfolios’ costs in light of future carbon regulations. But it seemed to warn that they might be taking too narrow a view, and it also explicitly noted that planners were often ignoring indirect impacts that could flow from carbon regulations such as changes in wholesale electricity market prices, coal plant retirements and capital costs of generation. The report recommended that utilities take a close look at what the future might hold:

“Given the potentially far-reaching financial consequences, utilities shold consider the potential cost sof future carbon regulations – and the uncertainty of that cost – when developing their long-term resources strategies. The starting point in this process is to develop specific assumptions about the nature and timing of future carbon regulations that might realistically be implemented, at either the state or federal level, over the lifetime of the investments considered in the plan.”

It recommended that utilities evaluate their portfolios “across a broad range of carbon emission price projections” and that they consider evaluating “a diverse set of low-carbon” resources and look at portfolios “that include the maximum achievable energy efficiency potential.” In fact, the report discovered that utilities may already be moving in that direction, reporting:

“Energy efficiency and renewable generation are the dominant low-carbon resources being pursued by utilities in the West. All utilities selected preferred portfolios that include an expansion to utility-funded energy efficiency programs and new renewables, and half of the utilities selected portfolios in which energy efficiency and renewables together provide 50 percent or more of all incremental resource needs.”

The report also found only limited interest in nuclear power and carbon sequestration. But it found that most had included natural gas.

(Wikipedia photo: Castle Gate Power Plant, Utah)

The report came on the same day Lehman found itself embroiled in the continuing Wall Street jitters over the stability of financial firms. The New York Times reported the firm’s stock fell 20 percent by the end of the day Monday. On Tuesday, the company reported a first-quarter net income of $489 million, a 57 percent drop compared to last year's first quarter.

Announcement of the new environmentalist-industrialist ad campaign comes as discussion over the economic impact of addressing climate change heats up in advance of the anticipated June debate in the Senate over the Lieberman-Warner Climate Security Act. Last week, the National Association of Manufacturers and the Environmental Protection Agency released separate reports assessing the economic price tag from the legislation, sparking a spirited debate (see previous story). The legislation is named for its primary sponsors, Sens. Joseph Lieberman, an independent of Connecticut, and John Warner, a Virginia Republican.

In a statement, the Environmental Defense Action Fund, which is the non-tax-exempt lobbying arm of the Environmental Defense Fund, said that the industrial executives believe that “solving climate change is an opportunity to jumpstart the U.S. economy" and that quick action by Congress means "America can own the energy technologies that will power" the century.

"Amid a heated national debate over job losses, the business leaders point to the job-creating power of a national cap on global warming pollution,” the statement said.

The ads feature Chief Executive Officer Robert Lane of Deere, which is a major manufacturer of farming equipment and fellow CEO Alexander Cutler of Eaton, a company that produces devices that can improve the energy efficiency of buildings.

(Photograph of Sen. Joseph Lieberman via Wikipedia)

Environmentalists were more split on the EPA study, however, with Environmental Defense saying it showed the economy could grow substantially while controlling emissions, and the Natural Resources Defense Council accusing the agency of hiding the key conclusions that demonstrated emissions reductions are affordable. 

Under the Lieberman-Warner bill, known as the Climate Security Act, greenhouse emissions from major economic sectors, including electric power, transportation, manufacturing and natural gas would be capped and gradually reduced. It also would establish a trading program for emissions credits. Backers of the legislation have estimated it would reduce emissions by as much as 66 percent from 2005 levels by 2050. The full Senate is expected to take up the bill, which some environmental groups want to strengthen, in June.

The EPA report also did not discuss the economic benefits of reducing emissions. But the other newly released government analysis suggested those could be substantial. The study prepared by the U.S. Climate Change Science Program and the U.S. Department of Transportation and made public earlier in the week (see press release here) predicted global warming could pose huge threats to the Gulf Coast region. Those included increased intensity of hurricanes, sea level increases of up to seven feet, endangering roads and other infrastructure and the inundation of a “vast portion” of the coast from Houston, Texas, to Mobile, Alabama. One group said the government appeared to be trying to release the report in a way to minimize public notice. The report noted that about two-thirds of the nation's oil imports pass through the region, and that it is home to the largest concentration of freight-handling ports in the country. It painted the threat to the region's transportation network in stark terms:

"Warming temperatures are likely to increase the costs of transportation construction, maintenance, and operations. More frequent extreme precipitation events may disrupt transportation networks with flooding and visibility problems. Relative sea level rise will make much of the existing infrastructure more prone to frequent or permanent inundation – 27 percent of the major roads, 9 percent of the rail lines, and 72 percent of the ports are built on land at or below 122 cm (4 feet) in elevation. Increased storm intensity may lead to increased service disruption and infrastructure damage: More than half of the area’s major highways (64 percent of Interstates; 57 percent of arterials), almost half of the rail miles, 29 airports, and virtually all of the ports are below 7 m (23 feet) in elevation and subject to flooding and possible damage due to hurricane storm surge."

The EPA's analysis of the climate change bill, which also did not factor in last year’s energy conservation legislation that, among other things, required better gas mileage in cars, some  impacts were potentially more significant than the business groups’ figures showed. The EPA compared a variety of scenarios to a baseline that assumed compliance with existing domestic and international policies but no new ones after 2007.

 According to the EPA, by 2030, the Liberman-Warner bill could reduce the nation’s GDP by as little as less than 1 percent to as much as nearly 4 percent, or $983 billion, compared to what it would be otherwise. The business groups’ report showed a maximum impact of about 2.7 percent by 2030.

On the other hand, the EPA report also predicted there might be no flight of emissions to other countries, known as “leakage,” as energy prices rise. It also predicts that the use of fossil fuels might peak as soon as 2010, followed by a slow decline to 2050. It also shows renewable sources, such as wind and solar, playing a “significant role” if the bill were enacted. Among other highlights of the report, which were also outlined in a letter to Lieberman from Robert J. Meyers, the EPA’s principal deputy assistant administrator, the bill could reduce emissions by up to 56 percent by 2050, a slightly lower estimate than that put forward by the legislation’s sponsors, and it cites the electricity sector as providing the greatest source of emissions reductions. The report also suggested that technology to capture and store carbon could deploy by as early as 2020.

Meyers' letter also promised that the EPA would issue a revised analysis in May or June, showing the effect of the new energy law. 

In a joint statement responding to the EPA’s analysis, the senators focused on findings under certain scenarios studied by the EPA that they said showed the economy would grow almost as fast with the legislation in place as without it, that greenhouse emissions would not be shifted abroad, and that that other benefits would occur, such as driving natural gas out of the electricity sector, to the benefit of manufacturers who use gas.  

“EPA’s detailed analysis indicates that the U.S. can curb global warming without sacrificing economic prosperity,” Lieberman said in the statement. “We will examine the results closely for improvements that they might suggest for the bill.”

Warner said the results also indicated that greenhouse gases could be controlled “in a manner that leaves the economy whole and is not burdensome on consumers.”

(Wikipedia Photo: Hurricane Katrina damage to New Orleans)