Project sponsors in California increasingly have become concerned about how to evaluate the potential climate impacts of their proposed projects under the California Environmental Quality Act (CEQA). AB 32, which seeks to reduce greenhouse gas emissions in California by an estimated 30% by the year 2020, has led some parties to contend that government agencies must take into account the potential climate impacts of the projects they approve, even if the projects contribute as little as “one molecule” of greenhouse gas.

Under CEQA, state and local agencies must evaluate and disclose the significant environmental impacts of proposed projects, and must adopt feasible measures to mitigate those impacts. These requirements place project sponsors and California agencies in a difficult position, because there is no regulatory guidance on how to evaluate an individual project’s contribution to climate change, much less how to determine whether a project’s potential contribution to climate change is “significant.” Until such guidance is developed (see recent efforts by Office of Planning and Research), agencies are faced with the dilemma of either (a) concluding that climate change is too speculative for evaluation and facing potential litigation from environmental advocacy groups and the California Attorney General, or (b) developing an ad hoc methodology for evaluating a project’s contribution to climate change, which may lead to unnecessary and costly environmental impact analysis and mitigation requirements.

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As the 2007 United Nations Climate Change Conference draws to a close, I would like to share comments on some of the major topics arising from the talks. Mitigating climate change and adapting to its impacts formed the basis for the majority of the talks at Bali, with technology transfer and new financing mechanisms proposed as the leading methods for facilitating global cooperation. Read the rest of this entry »

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Regulated industries are facing increasing pressure to craft practical strategies to decrease emissions of greenhouse gases. Through a series of “sector spotlights,” ClimateIntel.com assesses the challenges and opportunities a carbon-limited economy will bring to specific sectors. This spotlight explores four reasons why the chemical industry should position itself as an active player in the climate change debate. Read the rest of this entry »

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A federal court in California today issued a major ruling in the battle between states and the auto industry over who has the authority to regulate emissions from motor vehicles.

In Central Valley Chrysler-Jeep v. Goldstone, Judge Ishii of the Federal District Court for the Central District of California ordered that California may properly enact emissions regulations that are more strict than the federal fuel economy standards. The Plaintiffs, led by the Association of International Automobile Manufacturers, had argued that such regulations were pre-empted by federal law, specifically the Energy Policy and Conservation Act (EPCA). Read the rest of this entry »

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On September 26, 2006, Governor Schwarzenegger signed landmark legislation in California designed to reduce greenhouse gas emissions in the state to 1990 levels by the year 2020 (an estimated 30 percent reduction in greenhouse gas emissions from business-as-usual estimates). The bill, known as Assembly Bill 32 (AB 32) requires the California Air Resources Board (CARB) to adopt rules and regulations in an open public process to achieve the maximum technologically feasible and cost-effective greenhouse gas emissions reductions. AB 32 also authorizes CARB to adopt market-based compliance mechanisms to achieve the emission reduction goals. To accomplish its mandate, CARB must meet several milestones prior to the 2020 deadline.

Since the adoption of AB 32, CARB has move swiftly to approve discrete early action measures to reduce greenhouse gas emissions. In June, CARB approved three specific measures designed to cut emissions from California fuels, reduce refrigerant losses from automotive maintenance, and capture methane losses from landfills. In October, CARB approved six additional measures that are expected to reduce greenhouse gases from the trucking and port industries, cement and semiconductor industries, and consumer products. All of these measures will result in new regulations by January 1, 2010. In addition, CARB staff has compiled a list of 35 other early action measures that it plans to develop for possible approval between 2007 and 2012.

These actions, as well as later developed regulations, will significantly alter the way that business is conducted in California. Businesses will need to become more cognizant of their greenhouse gas emissions, and look for ways to improve their energy efficiency or maximize their pollution controls. Businesses may also be required to evaluate and mitigate greenhouse gas emissions for new projects pursuant to the California Environmental Quality Act (CEQA).

Now is the time for active involvement in the regulatory shaping process. CARB currently has several scheduled meetings and workshops on early action measures, as well as industry specific activities. CARB has also started the process of formulating a scoping plan for its overall plan to reduce greenhouse gas emissions. The scoping plan, when complete, will set forth a range of emission reduction actions such as direct regulations, alternative compliance mechanisms, monetary and non-monetary incentives, voluntary actions, and market-based mechanisms such as a cap-and-trade system. The next public workshop is scheduled for December 14 in Sacramento, California.

For further information about this topic, please contact Akin Gump.

Seven states and the City of New York filed suit in July 2004 against the five electrical utility companies alleged to be the country’s largest emitters of carbon dioxide. In Connecticut v. American Electric Power, Inc., the plaintiffs alleged that the power plants’ carbon emissions cause a public nuisance by contributing to climate change.

Plaintiffs argue that “Defendants’ emissions of carbon dioxide, by contributing to global warming, constitute a substantial and unreasonable interference with public rights in the plaintiffs’ jurisdictions, including, inter alia, the right to public comfort and safety, the right to protection of vital natural resources and public property, and the right to use, enjoy, and preserve the aesthetic and ecological values of the natural world.” As relief, the plaintiffs sought an order capping and eventually reducing the emissions generated by defendants’ plants.

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House Energy and Commerce Committee, Subcommittee on Investigations Oversight and Investigations Subcommittee (Chairman Stupak, D-Mich.) of House Energy and Commerce Committee will hold a hearing titled “Energy Speculation: Is Greater Regulation Necessary to Stop Price Manipulation?” on Wednesday, 12/12.

Senate Energy and Natural Resources Committee (Chairman Bingaman, D-N.M.) will hold a hearing on proposals that would revise and update the Mining Law of 1872, on Thursday, 12/13.

Public Lands and Forests Subcommittee (Chairman Wyden, D-Ore.) of Senate Energy and Natural Resources Committee will hold a hearing on forest restoration and hazardous fuels reduction efforts in Oregon and Washington state, on Thursday, 12/13.

For further information about this topic, please contact Akin Gump.

The Russian Federation’s carbon emissions are significantly lower than the limit placed on the country under the Kyoto Protocol, leaving Russia with the opportunity to sell a portion of its emissions quota. Under current prices, the total potential value of Russian carbon credits is estimated at around US$40 - US$60 billion. Given these facts, one would expect quite a bit of activity on the part of officials and companies to unlock this potential value - especially since the level of actual carbon credit trading in Russia has been quite low.

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This week, I will be posting updates on the United Nations Conference on Climate Change discussions being held in Bali, Indonesia. 

The Bali Conference is beginning to feel more like an industry association meeting than a COP. The presence of traders, offset project developers, and other carbon market types are making their strong presence felt.

Andrei Marcu, president of the International Emissions Trading Association (IETA), has provided several statements on behalf of “civil society” in support of continuation of the Clean Development Mechanism and for strengthening governance structure.

The Bali Conference is markedly different from the Nairobi meetings last year. At the 2006 Conference, few industry representatives attended, and those who did were clearly pushing company-specific issues. The dynamic has changed dramatically, with unprecedented involvement of industry.

For further information about this topic, please contact Akin Gump.

Today the House of Representatives will take up H.R. 6, the long awaited energy bill. The bill contains many of the priorities of the Democratic majority, including an increase in fuel efficiency standards for cars and light trucks, an increase in the nation’s renewable fuel standards, a new renewable portfolio standard for the nation’s utilities, incentives for hybrids, and many other items designed to conserve energy. Speaker Pelosi’s Fact Sheet on the bill describes it as an “historic step” that will “strengthen national security” and “reduce global warming.”

While it is largely assumed that Speaker Pelosi has the votes to pass this through the House, it will be interesting to see which Democrats vote no. Oil patch Democrats, such as Rep. Gene Green (D-TX), have announced that they are uncomfortable with the bill. The renewable portfolio standard for utilities poses problems for those Democrats who represent states with limited renewable resources, many in the south. The Senate probably poses the biggest hurdle; there southern Senators could block the bill. Sen. Pete Domenici (R-NM) is less than pleased with how the negotiations for the bill proceeded and he could round up enough votes to keep the bill off the floor.

For further information about this topic, please contact Akin Gump.