This is the final week before Congress briefly adjourns for the Memorial Day recess. When they return, the Senate is expected to begin debate on the Lieberman-Warner Climate Change bill. Whether or not 60 votes can be mustered to take the bill to debate is still an open question. This week, the action and debate is still at the Committee level.

On Tuesday at 10 AM, Energy and Natural Resources Chairman Jeff Bingaman will be holding a hearing on the economic impact of climate change legislation. Scheduled to testify is Peter Orzag, the director of the Congressional Budget Office, along experts from the Congressional Research Service, and the Deputy Administrator of the Energy Information Administration. As mentioned previously, Senator Bingaman is a supporter of the inclusion of a so-called “safety valve” into any cap and trade system, so this hearing will be instructive as to where that debate is likely to head.

On Wednesday at 2:30 PM, the Senate Agriculture Committee will hold a hearing entitled “Climate Solutions and Job Creation: How Agriculture and Forestry can Help Lower Costs in a Low Carbon Economy,” focusing on how the agriculture and forestry sectors could create carbon offsets. Also on Wednesday at 10 AM, the Senate Judiciary Committee will hold a hearing on the rise of oil prices with executives from ExxonMobil, ConnocoPhillips, Chevron, Shell, and BP America scheduled to testify.

On Thursday at 10 AM, the hearings move to the House side with the Foreign Affairs Committee taking up the oil price issue with David Sandlow of the Brookings Institute, Anne Korin of the Institute for the Analysis of Global Security testifying, and Paul Saunders of the Nixon Center. Additionally, on Thursday at 9:30 AM, the Select Committee on Global Warming and Energy Independence will have Secretary Bodman testifying in a hearing examining the Bush Administration energy policy.

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California Attorney General Edmund G. Brown Jr. recently announced an agreement with the San Diego County Regional Airport Authority to reduce greenhouse gas (GHG) emissions from a major airport expansion project.

San Diego Airport is the busiest single-runway airport in the U.S. To accommodate anticipated future growth, the airport plans to add ten new gates, new overnight jet and passenger parking, and expanded aircraft taxiways.

To reduce GHG emissions, the airport agreed to a series of specific measures, including:

• preparing an inventory of GHG emissions from aircraft ground movement and reducing themby 20% by 2015;
• providing landside electrical power to aircraft to eliminate the need to run on-board engines to use electricity while on the ground;
• replacing existing tow vehicles and airport shuttles with electric or alternative fuel vehicles;
• using green construction methods, equipment, materials, and design in new construction; and
• requiring LEED Certification for all new facilities.

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The California Senate is considering the nation’s first “truth in advertising” standards for claims associated with carbon credits or offsets. Pursuant to the proposed legislation (SB 1762), authored by Senate President pro Tem Don Perata, it would be unlawful for any person to represent in an advertisement or in any sales or promotional materials that a greenhouse gas “credit” reduces greenhouse gas emissions unless it meets certain conditions. Violators could face fines, as well as civil liability to recover the cost of the credit.

This is not the first time California has weighed in on the need for greater regulation of the carbon market. In February 2008, the California Attorney General co-signed a letter to the Federal Trade Commission (FTC) from 9 states (AR, CA, CT, DE, IL, ME, NH, OK, and VT) urging the Commission to take action to amend its green marketing guidelines to address the growing carbon market. Unlike the ongoing FTC proceeding, however, the proposed California legislation would provide specific standards applicable to offsets sold on the voluntary market in California.

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Yesterday, the House Select Committee on Energy Independence and Global Warming convened a hearing to discuss how green building - the practice of constructing sustainable and energy efficient buildings - can both curb climate change and reduce energy costs.

In his opening statement, Chairman Edward Markey (D-MA) observed that the building sector is responsible for up to 48% of our nation’s greenhouse gas emissions, and an even higher percentage on a local level. For example, 78% of Boston’s heat-trapping gases are attributed to buildings. Nonetheless, only 7% of participants in a recent survey identified buildings as a major source of climate change emissions. The hearing yesterday was intended to change that perception.

Chairman Markey plainly stated, “[e]fficient design, low-emission construction materials, and decreased energy use in buildings can combat global warming and simultaneously reduce the rising costs of lighting, heating and cooling structures…” The overall economic and environmental benefits of more efficient buildings are clear… consumers get a good return on their investment.” Accordingly, Chairman Markey urged the greening of all buildings, “whether they are new or already built, commercial or residential, public or private.”

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This afternoon, the House passed the Farm Bill conference report by a veto-proof margin of 318 to 106.  While the Senate vote will not take place until tomorrow, supporters believe that there will also be more than enough votes in that chamber to override a presidential veto.  At this time, it appears likely that the energy provisions contained in the report will eventually become law.

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On Monday, after months of debate, negotiations, veto threats, and various grass-roots campaigns, the conferees for the 2008 Farm Bill revealed their compromise product. This year’s edition of the legislation has a greatly expanded energy portfolio, designed to put American farms and farmers at the cutting edge of the newly robust biofuels marketplace. Some of the highlights for the Title IX Energy Programs are:

• Authorizes $1 billion for new investments into energy related feedstocks;
• $320 million in loan guarantees for biorefineries;
• Creates a new program, the Rural Energy for America Program (REAP), which will provide $250 million in grants and loans for agricultural producers and rural businesses to purchase renewable energy systems;
• Authorizes $120 million for additional biomass research and feedstock development;
• Funds the Bioenergy program at $300 million which would provide incentives to expand production of biofuels;
• Creates a Biomass Crop Assistance Program;
• Creates a sugar-to-ethanol program.

Interestingly, the Farm Bill was unveiled the same week that committees on both sides of the Capitol are holding hearings examining the relationship between biofuel production and food and commodity prices. The Senate Foreign Relations committee meets on Wednesday morning at 9:30am to evaluate the issues, while the House Agriculture Committee will meet on Thursday.

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Turning his attention to the climate regulation debate, John McCain presented his strategy for confronting global climate change. McCain’s plan:

• Mandates gradual greenhouse gas emissions reductions under a cap-and-trade program to reach 60% below 1990 levels by 2050, with an “increasing fraction of permits for emissions could be supplied by auction.” By comparison, both Hillary Clinton’s proposal and Barack Obama’s proposal commit to reducing greenhouse gas emissions 80% from 1990 levels by 2050 and auctioning 100% of the permits provided under a cap and trade system. Read the rest of this entry »

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Carbon emission regulatory regimes are coming soon in response to rising public pressure for action, according to experts from business and academia who spoke at the recent First Annual Conference-Workshop on Business and the Environment in Philadelphia, hosted by the Initiative for Global Environmental Leadership (”IGEL”), a new Wharton/Penn initiative.

Once seen as the job of government regulators and non-governmental organizations only, in today’s world we are seeing more and more that the biggest pressures to enact measures against greenhouse gas emissions are coming instead from “the community, banks and insurers,” said Patricia A. Calkins, vice president of environment, health and safety at Xerox, and a moderator one of the sessions. Some companies have been voluntarily making dramatic shifts to reduce their carbon footprint by choosing the more efficient Energy Star-rated products or, in the case of leading global toy maker Mattel, simply rearranging the types of inventories carried by each of its two distribution centers and by so doing, reaping a “huge reduction” in energy use. While cost-benefit analyses may play a part in some of these companies’ motivations, Eric Orts, founding director of IGEL, says that this is not always the case. Consumer pressure and worries about being targeted or labeled as a polluter have been moving companies to act.

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The Congress will spend most of its remaining time before the Memorial Day recess completing its work on the Iraq-Afghanistan Emergency Supplemental Appropriations bill, the FY2009 Budget, and a reauthorized Farm Bill. Following the recess, every indication points to the Senate bringing up the Lieberman-Warner climate change bill for debate (whether there are the 60 votes to invoke clouture and have a vote on the bill itself is anyone’s guess).

This week, the following hearings are scheduled:

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Paul Gutermann and Kenneth Markowitz presented at Carbon Expo 2008 in Cologne, Germany. Mr. Gutermann discussed the ongoing battle in the United States between state and federal authorities over climate change initiatives. Mr. Markowitz presented on the challenges associated with ensuring compliance across market-based systems.

Mr. Gutermann’s presentation explored how states like California and the members of regional initiatives in New England, the West, and the Midwest run the risk of conflicting with federal programs or entering areas of exclusive federal power. Regional cap and trade programs are most susceptible to challenges under the Commerce, Compacts, and Supremacy Clauses of the U.S. Constitution.

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