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UPDATE: Watch a webcast of Steven Chu’s confirmation hearing before the Senate Energy and Natural Resources Committee here.

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Steven Chu, the presumptive head of the Department of Energy (DOE), and likely key personality in the new administration’s climate and energy policy, will face his first confirmation hearing, before the Senate Energy and Natural Resources committee this morning. Like Lisa Jackson, the subject of our last profile and nominee to head the Environmental Protection Agency, Mr. Chu seems to face a relatively smooth path to confirmation.

Lisa Murkowski, the top Republican on the committee, complimented the President-elect’s choice of energy advisors, stating “The incoming administration’s choice of seasoned energy and environmental advisors demonstrates the seriousness with which the new president takes the challenges facing the country in simultaneously tackling climate change and energy security.” Committee Chair Jeff Bingaman agreed, stating that he looks “forward to working with Dr. Chu as he takes on the responsibilities of Secretary of Energy at a pivotal time for our nation’s energy policy.”

Mr. Chu has not avoided controversy completely; in a speech he made in 2007, he described coal as “my worst nightmare,” a comment which has received increasing scrutiny in recent days. However Byron Dorgan, a Senator from the coal-producing state of North Dakota, met with Chu last week and said he was confident that Chu “believes that coal has to be a part of our future.”  Chu also met with a delegation of Illinois Congressmen to discuss the prospects of the FutureGen project—a project to build a near-zero emissions coal power plant. Sen. Dick Durbin said Mr. Chu had a “positive response” to the project.

Mr. Chu has history with alternative energy and other climate related projects: after taking over the Lawrence Berkeley National Laboratory in 2004, he focused much of its research on renewable energy technology. In May, he launched the Joint BioEnergy Institute, which has a mission to create alternative fuels from plant cellulose. Another biofuels research project has been funded by a $500 million outlay from BP.

In general, Mr. Chu has made strong statements about the dangers of climate change. In September of this year, he described the debate over anthropogenic climate as “reminiscent of the dialogue in the 1950s and ’60s on tobacco.” Observers have called his views on climate change “among the most forceful ever held by a cabinet member.”

Chu has also spoken about the expansion of nuclear power in the United States; in a 2005 interview he stated that “right now, compared to conventional coal, [nuclear] looks good—what are the lesser of two evils? But if we can reduce the volume and the lifetime of the waste, that would tip it very much against conventional coal.”

For all the praise heaped on Mr. Chu, there are some questions whether the DOE has the ability to take the lead on the ambitious energy goals of the next administration. The agency, which has a budget of only $25 billion, has largely been focused on managing nuclear weapons, cleanup of civilian reactors, and funding national laboratories such as the Berkeley lab Chu once ran.

Capitol Hill, after swearing in congressional members and selecting committee chairs and members last week, is busy this week with hearings, specifically confirmation hearings in the Senate, as Congress prepares for the inauguration of President-elect Obama next Tuesday, January 20.

On Tuesday, January 13, Steven Chu will go before the Senate Energy and Natural Resources Committee as nominee for Energy Secretary. The confirmation hearing takes place at 10 a.m. in Room 366 of the Senate Dirksen Building.

The Environment and Public Works Committee’s confirmation hearing of Lisa P. Jackson for Administrator of the EPA will be held on Wednesday, January 14 at 10 a.m. in Room 406 of the Dirksen Senate Building. While some controversy over President-elect Obama’s nomination of Lisa Jackson has surfaced, the hearing is expected to flow smoothly. Also, at this hearing, Nancy Helen Sutley, nominee for Chairman of the Council on Environmental Quality (CEQ), is expected to be heard by the committee.

In the House, on Thursday January 15, the Select Energy Independence and Global Warming Committee will conduct a hearing on the green economic stimulus at 2 p.m. Location to be announced. Also on Thursday, the Energy and Commerce Committee has a hearing slated for 10:30 a.m. on the U.S. Climate Action Partnership in Room 2123 of the Rayburn House Building.

A complete list of all hearings is available on the respective websites for the Senate and House.

Lisa Jackson, President-elect Barack Obama’s choice to head the Environmental Protection Agency (EPA), is expected to go before the Senate Environment and Public Works Committee on January 14^th for her confirmation hearing. Jackson, who served in the EPA under President Clinton, and most recently served as head of the New Jersey Department of Environmental Protection (DEP) and aide to Governor John Corzine, is likely headed for an easy confirmation. A number of environmental and industry groups from her home state praised her selection, and Senators, both Republicans and Democrats, have indicated that they expect her to win confirmation.

Jackson’s selection is not without some controversy, however; specifically, the nominee has been dogged by questions about how aggressively she pursued brownfield and other toxic site cleanup during her tenure at the New Jersey DEP. Particularly damning was a report by the EPA’s Inspector General, which criticized the timeliness of cleanup efforts and suggested that the EPA take over those efforts from the state.

On climate change issues, however, Jackson is largely seen as an aggressive regulator—during her tenure in New Jersey, she encouraged the state to place a moratorium on new coal-fired power plants and pushed hard for significant increases in the state’s renewable energy portfolio, as expressed in the New Jersey Energy Master Plan. She also called New Jersey a national leader in the battle against global warming and pressed for limits on emissions from all greenhouse gas sources. Jackson was also instrumental in creating the emissions reduction goals in New Jersey’s Global Warming Response Act, which seeks to lower emissions to 1990 levels by 2020.

Should Jackson’s confirmation proceed as smoothly as expected, she will inherit an agency with significant immediate policy challenges, such as the rewriting of the Clean Air Interstate Rule program, which was invalidated by the courts in July 2008. Though the rule remains in force, the D.C. Circuit ordered the EPA to fix the rule’s “fundamental flaws.” The agency must also address the controversy surrounding a December memo by current EPA head Stephen Johnson, which barred the EPA from considering greenhouse gas emissions in the permitting of new coal power plants.

Beyond these immediate challenges, the EPA will likely be the lead agency in designing the emissions reduction program championed by President-elect Obama and the Democratic Congress. Senator Barbara Boxer, who last summer introduced a detailed cap and trade bill along with Senators Lieberman and Warner, indicated that any new legislation would leave major decisions to the EPA. Other climate issues the agency could confront include making an endangerment finding regarding carbon dioxide emissions under the Clean Air Act, or granting California a waiver to impose stricter state limits on automobile emissions—both actions avoided or denied by the current administration’s EPA.

The House Energy and Commerce Committee held their organizing meeting today to determine subcommittee chairmanships and committee assignments for junior members.  Rep. Ed Markey (D-Massachusetts) will assume the chairmanship of the new Energy and Environment Subcommittee, which will combine the jurisdictions of the old Energy and Air Quality Subcommittee with the Environment and Hazardous Waste Subcommittee.  Rep. Markey also chairs the Select Committee on Global Warming and Energy Independence.  While it remains to be seen whether the bulk of climate change legislative work will occur at the full Committee or in Rep. Markey’s Subcommittee, it is expected that the Subcommittee will be active in examining key aspects of the climate change debate.  It is also not clear whether and how the Committee will reach agreement on certain controversial issues in the debate, including among others the safety valve, “off ramp”, and immediate auction issues, which could pose a challenge to both full Committee Chair Henry Waxman as well as Rep. Markey as they seek to move climate change legislation this year.

 Two days before Christmas, the DC Circuit Court of Appeals reversed course and issued a new ruling in the Clean Air Interstate Rule (CAIR) case–North Carolina v. EPA, No. 05-1244. 

In July 2008, a three-judge panel struck down the CAIR program after determining that it violated EPA’s statutory mandate.  The panel held that EPA was required to evaluate and address air pollution contributions on a state-by-state basis, whereas CAIR uses a regional approach.  In addition, they held that the EPA lacked authority to terminate or limit emissions allowances originally issued under the Acid Rain Program (ARP); many of CAIR’s environmental benefits are based on mandating accelerated retirement of ARP allowances, so that pollution is quickly reduced across the region. 

The panel then held that the rule would be vacated in its entirety and remanded to EPA to promulgate a new rule consistent with the court’s opinion.  The federal government filed a petition for rehearing and rehearing en banc on September 24, 2008.  A month later, the court issued an order directing the other parties to the case to file a response to the government’s petition. 

On December 23, 2008 the same three-judge panel granted the petition for rehearing in part and significantly modified its prior remedial order.  The Court withdrew its vacatur order and reinstated the rule — held that the rule should stay in place — pending the EPA’s reconsideration of the rule on remand.  The Court noted that, “notwithstanding the relative flaws of CAIR, allowing CAIR to remain in effect until it is replaced by a rule consistent with our opinion would at least temporarily preserve the environmental values covered by CAIR.”  The Court underscored, however, that EPA must still fix “CAIR’s fundamental flaws” in a timely manner, or face being hauled before the Court yet again.  “[W]e do not intend to grant an indefinite stay of the effectiveness of this court’s decision,” the Court cautioned.

This decision is the result of a rather uncommon process within the D.C. Circuit. At the outset, it is unusual for the DC Circuit to grant a petition for rehearing, particularly one that so substantially modifies the court’s initial ruling.  Patricia Millett, co-head of Akin Gump’s Supreme Court and Appellate practice, noted that the judges had already considered and addressed the ramifications of their vacatur decision in July, so it is “particularly unusual for the Court to reevaluate and reverse course on an issue of such consequence that had already been debated and decided.  After all, these type of administrative law issues are the DC Circuit Court’s bailiwick.”  None of the issues presented in the rehearing were strikingly new or novel - the effects of eliminating CAIR were outlined for the Court at the time.  Because the government also sought rehearing en banc by the full D.C. Circuit — something that it is relatively rare for the Solicitor General to authorize the federal government to do in that court — there is speculation that the panel’s change of heart may have been motivated by pressure or concerns from other members of the Court.

In the end, the Court determined that having an illegal program in effect is better than not having any program at all, given the environmental benefits that CAIR is expected to deliver.  EPA estimates that CAIR “will result in $85 to $100 billion in health benefits and nearly $2 billion in visibility benefits per year by 2015 and will substantially reduce premature mortality in the eastern United States.”

There is little question that the federal government believed that the environmental and public health benefits of CAIR were critically important issues, given that the Solicitor General authorized the EPA to seek rehearing en banc and the EPA included with its petition signed declarations from high-ranking air pollution officials offering support for CAIR.  Brian J. McLean, the Director of EPA’s Office of Air and Radiation, argued that vacating CAIR “would remove the primary incentive for power companies to install and operate emission controls” in many areas.  He also noted the effect that vacating CAIR would have on the markets for emission allowances under the Clean Air Act: in a four month period the price for sulfur dioxide allowances dropped by roughly 80 percent, reducing by over $3 billion the value of banked allowances being held by firms. 

Thus, in addition to achieving significant environmental benefits, the DC Circuit’s reversal is likely to send a positive message about the future of emissions markets in the US, an important issue as President-elect Obama readies his climate change agenda, and Congress returns to work with hopes of passing comprehensive carbon legislation. 

Today we continue with the third part of our “A Change in Climate” series, examining potential Obama administration goals and policy solutions to address American greenhouse gas emissions. Today we examine one of the broad pathways that a policy would likely take: green investment and economic stimulus.

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As we have outlined in this series, the current conditions in the credit markets and the global economy necessitate a massive stimulus package; with priorities directed towards the economy, a emissions reduction program will likely be delayed. Any economic stimulus, however, can have a definite effect on the nation’s climate change policy, by investing in the development of clean technologies, energy efficiency and renewable energy. During his campaign, Barack Obama consistently supported a series of programs centered around clean energy investment, which he said would allow American workers to “build the high-demand technologies of the future.”

President-elect Obama has continued to advocate for this program after his election; in one of his weekly post-election radio addresses, the President-elect stated that he had “directed [his] economic team to come up with an Economic Recovery Plan that will mean 2.5 million more jobs by January of 2011,” a plan involving, “building wind farms and solar panels; fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead.”

Investment in clean technology can potentially be an avenue for significant job growth. According to a report from the Center for American Progress, an investment of $1 million in clean tech creates 17 new jobs, as compared to only 4.5 new for jobs for a similar investment in oil. Even that investment is made budget neutral—by cutting spending in the oil industry—the economy still gains 12.5 jobs. In that same report, researchers predict that $100 billion in new spending could spawn as many as 2 million new jobs. That investment would be significantly smaller than the likely size of the new stimulus, which the President-elect has signaled could reach $775 billion.

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2008 was a landmark year for climate change initiatives in California.  Despite an economic downturn, the California Air Resources Board (CARB) approved an ambitious plan to slash greenhouse gas emissions to 1990 levels by 2020.  This plan, once implemented, will affect every sector in California.  The State Legislature also approved a pioneering bill to encourage “smart growth” regional land use planning.  In addition, Governor Schwarzenegger pushed for increased use of renewable energy and forged new relationships with leaders throughout the world to tackle climate change issues.  Not to be outdone, local agencies adopted measures to, among other things, incentivize the use of solar electricity and reduce emissions from California’s ports.

Looking forward to 2009, California regulators will be busy implementing many of the broad initiatives from 2008; within the next year, CARB must adopt enforceable regulations to implement its “discrete early action” measures to reduce greenhouse gas emissions.  CARB will also begin the rulemaking process to implement other measures set forth in its scoping plan.  Given the deepening economic crisis and criticisms surrounding its prior economic analysis, CARB will most certainly conduct further studies regarding the short and long term costs and benefits of its plan to reduce greenhouse gas emissions.  In addition, in collaboration with the Western Climate Initiative, CARB will fill in many of the gaps regarding how it plans to implement a cap-and-trade program covering 85 percent of the state’s emissions.

California planners can also look forward to receiving additional guidance in 2009 regarding the intersection between climate change and environmental review responsibilities.  By July 1, 2009, the Governor’s Office of Planning and Research must prepare guidelines for the evaluation of greenhouse gas emissions under the California Environmental Quality Act (CEQA).  Notably, as California’s economic woes increase, there will likely be increased pressure to exempt certain job-generating projects from CEQA review in order to speed their approval.  Notably, late last month, Governor Schwarzenegger vetoed a much needed tax package in part because he wanted to exempt additional “shovel-ready” projects from CEQA review.  With the economic downturn, the open question for 2009 appears to be whether policy makers and regulators will delay many of the impressive climate change initiatives of 2008.

Congress returns to Capitol Hill this week to swear in congressional members and to dive into the many pressing issues that promise to make 2009 a hectic year.

On Wednesday, January 7 the Senate Environment and Public Works committee will hold a briefing on “Investing in Green Technology as a Strategy for Economic Recovery” at 10 a.m. in Room 406 of the Dirksen Senate Building. Pulitzer Prize winner Thomas Friedman, who recently published “Hot, Flat, and Crowded,” is a featured panelist.

Additionally, a hearing is scheduled for Thursday, January 8 by the Senate Energy and Natural Resources committee to discuss current energy security challenges at 9:30 a.m. in Room 366 of the Dirksen Senate Building. Topics to be discussed, among other energy-related issues, include climate change, renewable energy and cap-and-trade legislation. The hearing will lay out 2009 objectives for the committee.