In the second post of our series examining the incoming Obama administration and its push for a national climate change policy, we turn to the current political environment; firstly examining the domestic climate, at both the state and national level, and then toward  to international negotiations to replace the 1997 Kyoto Protocol, which continued last week in Poznan Poland.

————

President-elect Obama inherits a dysfunctional domestic climate change policy: while the federal government has either stalled, or actively opposed, greenhouse gas (GHG) control, state governments have established their own control programs. While recent efforts to enact federal legislation have exposed many challenges to a national climate policy, opportunities for strong national leadership exist. Three significant areas of action in domestic climate policy are outlined below.

National Climate Change Legislation

The current Congress has made progress on energy efficiency and renewable energy—most notably, the extension of the Investment Tax Credit (ITC) and the Production Tax Credit (PTC), and the increased stringency of auto mileage standards in the 2007 Energy Independence and Security Act.  While, a comprehensive statute to control GHG emissions advanced further than ever before, there remain substantial roadblocks to passage. The two most significant efforts of the last year are the Lieberman-Warner Climate Security Act (Lieberman-Warner) and Dingell-Boucher bills. Lieberman-Warner failed on a vote to end debate in early June, despite significant support from industry. The Dingell-Boucher bill was released only as a discussion draft, and with Congressman Waxman taking over as chairman of the House Committee on Energy and Commerce, its future seems bleak.

President-elect Obama’s campaign platform contained a cap and trade system similar to those in the failed legislation, but also included both more aggressive reduction targets and a 100% auction of carbon credits. As the fight over the Lieberman-Warner bill and the Waxman/Dingell face-off show, divisions within the Democratic caucus will remain a significant obstacle.

A side note: because of the perceived mishandling of the Lieberman-Warner bill before the Senate, Akin Gump lawyers suspect that Majority Leader Sen. Harry Reid will turn to Sen. Jeff Bingaman of New Mexico to help shepherd any climate legislation through the Senate. While Sen. Bingaman has been an advocate of GHG control, his previously introduced legislation on climate change has included much more modest emissions control targets and limited carbon auctions; the Senator’s leadership may provide a significant moderating influence on any potential legislation.

Executive Agency Action

The Environmental Protection Agency (EPA) has largely opposed efforts to regulate carbon under exiting statutes, primarily the Clean Air Act.  For example, it opposed state efforts to have carbon dioxide ruled a “pollutant” for purposes of the Clean Air Act, a position rejected by the Supreme Court in Massachusetts v. EPA.  The Agency also denied the state of California’s petition to regulate emissions from automobiles. President-elect Obama has criticized the EPA’s recent actions and it seems likely that he would act quickly to reverse course in a number of areas.

Important changes are coming to the EPA’s regulation of GHG’s even before the accession of the Obama administration. In recent weeks, EPA issued a landmark decision on power plant construction. In a case about a power plant on American Indian land in Utah, the agency’s own appeals board ruled that EPA erred in refusing to consider requiring best available control technology (BACT) for GHG emissions control. For the short term, this essentially the freezes the permitting and construction of new power plants; the decision places the burden on the incoming administration to determine what will meet BACT standards and how power plants will be permitted going forward.

State Action

In stark contrast to the federal government, state governments have pushed ahead aggressively with GHG control pacts, both as individual states and as part of regional compacts. In the northeast, ten states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont) created the Regional Greenhouse Gas Initiative (RGGI), the first mandatory, market-based emissions control program in the United States. RGGI’s goals are modest—a 10% reduction in GHG emissions by 2018—but it provides an important guidepost for future programs.

On the other coast, California has embarked on a much more aggressive GHG control program—one with the ultimate goal of reducing California’s emissions 80% below 1990 levels by 2050. California’s program is much closer in its scope and requirements to what climate scientists say is necessary to prevent catastrophic climate change. That program, however, is still in its early stages, though the Scoping Plan, which outlines California’s commitments to reducing its GHGs, was approved last week. Read the approved Scoping Plan here, and read more about the plan on ClimateIntel. California has also been a leader in the Western Climate initiative, a regional compact comprised of states and Canadian provinces.

International Policy and Negotiations

President-elect Obama is planning significant changes to U.S. climate change policy, but what happens in the United States does not occur in a vacuum. In recent years, large-scale international negotiations on how to structure a post-Kyoto accords have continued apace, largely without serious U.S. involvement—let alone leadership—on the issue.  The incoming Obama Administration has committed to change that dynamic, but will face major hurdles in accomplishing that change; in particular, the U.S. will need to work hard to find common ground with China, which appears this year to have replaced the United States as the world’s top emitter of greenhouse gasses (GHGs).

 The Bali Roadmap

The U.S. presidential transition comes at a crucial juncture in the international climate change negotiations. Last December, in Bali, representatives of over 180 U.N. member states, including the U.S., agreed to the “Bali Roadmap,” or Bali Action Plan (BAP), an agreement to develop the major elements of a successor agreement to the Kyoto Protocol by the end of 2009.  GHG reduction commitments in the Kyoto Protocol run through 2012.

1.                  Poznan Conference to Further the BAP

The 14th conference of the parties to the UN Framework Convention on Climate Change, held last week in Poznan Poland, marked the half-way point between the adoption of the BAP in December 2007 and a summit in Copenhagen, planned for December 2009, where the main elements of a post-Kyoto Protocol pact are to be announced. However, little progress, if any, was made on critical issues such as long-term emission reduction commitments, reforms to the clean development process, financing and deploying technology to developing countries and mechanism for the protection of forests.  Results from Poznan may be found here.

2.                  “Common but Differentiated Responsibilities”

A fundamental obstacle to a new agreement is the underlying principle of “common but differentiated responsibilities.” First established in the UN Framework Convention on Climate Change and reaffirmed in the BAP, this principle holds that developed and developing countries have different roles in reducing GHGs.  The central role of this principle reflects the developing world’s insistence on accounting for both the historical role developed nations had raising GHG concentrations to their current levels and the large gaps in per-capita emissions between developed and developing countries (e.g. China, the highest emitter in total terms, has per-capita emissions only one-fourth of the U.S.). Determining the scale of the “differentiated responsibilities,” however, has proved difficult. Indeed, this principle explains in large part the U.S. unwillingness to sign on to the Kyoto Protocol’s emissions reduction commitments, which only apply to certain industrialized and advanced industrializing countries, and exclude China and India.  In Poznan, there was some hope that the developing world’s posture on the committing to emissions reductions is changing as Mexico indicated a willingness to agree to long-term emission reduction targets.

3.                  Technology Transfer

The concept of technology transfer is generally supported, but the mechanisms of the transfer remains in a bitter dispute.  In particular, great controversy surrounds proposals by developing countries that would force the transfer of technology while potentially undermining  intellectual property rights.  From a premise not dissimilar to the idea of common but differentiated responsibilities, China and India have repeatedly asserted that developed nations have a moral obligation to transfer technology, including associated intellectual property rights, “at a preferential rate,” due to the West’s historic emissions.

Opportunities for American Leadership

The opportunities for American leadership in international negotiations are great. Immediately after the presidential election, Yvo de Boer, the Executive Secretary of UN climate change organization, formally invited President-elect Obama to attend the Poznan conference. Though President-elect Obama declined, former Vice President Al Gore and Democratic Senator John Kerry participated in Poznan, and the effect of Obama’s election was felt in the tone of the conference proceedings.  In any case, his pledges to repudiate much of President Bush’s climate change policy, and commitments from the main climate negotiators to cooperate “closely with the team of the incoming president,” point to a U.S. return to a leading seat at the negotiation table on climate change.

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