EcoSecurities and ClimateBiz are partnering with other forestry experts, such as the Climate, Community & Biodiversity Alliance (CCBA) and Conservation International, to produce an important research survey: Forest Carbon Offsetting.  The survey is designed to evaluate the key issues facing corporate buyers or potential buyers of carbon offsets from forestry projectsPlease forward this information to others in the international carbon community.  Final results will be published and freely available as a downloadable report at the end of March or early April 2009 on the EcoSecurities website. Climate Intel encourages our readers to participate in the survey.

To participate, please visit “The Forest Carbon Offsetting” survey on the EcoSecurities website.

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UPDATE: In their conference of February 23rd, the Supreme Court declined to hear Utility Air Regulatory Group v. New Jersey, clearing the way for the EPA to enact new, stricter regulations regarding mercury emissions from power plants.

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As noted on SCOTUSblog earlier, the Obama administration moved earlier this month to dismiss a case that the Bush administration’s Environmental Protection Agency (EPA) had appealed to the Supreme Court. The case dealt with the Clean Air Mercury Rule—specifically provisions in the rule which allowed the EPA to de-list emissions sources without making specific health and environmental determinations. While this move by the Obama EPA will likely lead to the dismissal of the case in question—EPA v. State of New Jersey—another parallel case, Utility Air Regulatory Group v. New Jersey, remains before the Court.

The EPA’s motion dismiss likely puts that case in jeopardy as well; however, a coalition of electric utilities and trade organizations has asked the Court to continue Utility Air Regulatory Group v. New Jersey, arguing that the case has separate issues which are not made irrelevant by the dismissal of the EPA’s case.

Read their letter to the Court in full at SCOTUSblog.

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Policymakers attend this week’s hearings on the role of energy efficiency and renewable energy in achieving federal climate change and energy policy objectives should also keep an eye on the other hearing down the hall, the one entitled “Revisiting the Toxic Substances Control Act of 1976.”   Harnessing energy efficiency and renewable energy technologies will require rapid commercialization and deployment of cutting-edge chemicals, materials, and equipment.  Issues advocated in the Toxic Substances Control Act (TSCA) reauthorization process could have significant negative implications for the pace and scale of innovation in the green energy sector.

The Toxic Substances Control Act establishes the Environmental Protection Agency (EPA) as the gatekeeper for substances and materials manufactured or imported into the US market.  At least 90 days before importing or manufacturing a new chemical substance in the US (i.e., one not already listed on EPA’s TSCA inventory of existing chemicals), a company must submit a pre-manufacture notice along with basic information about the identity and physical chemistry of the substance and any risk information in the company’s possession.  EPA can use this information to assess whether further testing or risk mitigation may be needed as a condition of the substances use.  Similarly, EPA can promulgate rules limiting the use or conditions of use for existing chemicals to address unreasonable risks.  EPA’s regulatory authority is not limitless, however.  Courts have taken note of TSCA’s policy that “[a]uthority over chemical substances and mixtures should be exercised in such a manner as not to impede unduly or create unnecessary economic barriers to technological innovation while fulfilling the primary purpose of this chapter to assure that such innovation and commerce in such chemical substances and mixtures do not present an unreasonable risk of injury to health or the environment.”

Not all stakeholders agree with the current risk-benefit balance struck under TSCA.  Proponents of TSCA reform, including key policymakers in the House and Senate, argue that TSCA hobbles EPA’s ability to regulate risky chemicals and chemical-containing products.  Senator Frank Lautenberg (D-NJ), Chairman of the Senate subcommittee responsible for TSCA oversight, intends to reintroduce a TSCA-reform bill known as the “Kid-Safe Chemicals Act” (KSCA).  Senator Lautenberg will have powerful supporters.  During previous sessions, other co-sponsors of this bill included:  Barbara Boxer (D-CA), Chairman of the Senate Environment and Public Works Committee; Henry Waxman (D-CA), Chairman of the House Committee on Energy and Commerce; and Hilda Solis (D-CA), Congresswoman and Secretary of Labor-Designate.

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This past weekend, Secretary of State Hillary Clinton wrapped up her first foreign diplomatic trip with a visit to China. While a number of issues crowded the Secretary’s plate on this trip—including staving off the global financial crisis—Sec. Clinton placed climate change issues in the center of her diplomacy. Joined by her top climate envoy, Todd Stern—profiled by ClimateIntel here—the Secretary reiterated her, and the U.S.’s, commitment to engagement on climate change issues at every stop on her diplomatic tour.

Especially notable was Sec. Clinton’s schedule in China, where she visited a new cogeneration plant using high-efficiency gas turbines built for the Chinese by General Electric, and made a speech promoting sustainable growth and urging the Chinese to not “make the same mistakes [the United States] made, because I don’t think either China or the world can afford that.” Sec. Clinton also stressed that while the United States had long been the world’s largest emitter of heat-trapping gasses, the Chinese had recently taken that position. While China’s per-capita emissions remain significantly lower than the United States’, much of the world continues to express serious concerns on the growth in China’s absolute emissions.

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 This Week on the Hill

Congress comes back from its President’s Day recess for a week that will feature President Obama’s address to the nation on Tuesday night and the passage of the FY2009 Omnibus bill, which contains the bulk of non-stimulus, non-entitlement spending for this fiscal year.  It will also be an active week in the committees with multiple hearings on both ends of Capitol Hill.

Hearings begin on Tuesday morning at 9:30 a.m. in the Energy and Environment Subcommittee where Chairman Markey will lead a hearing on “Energy Efficiency: Complementary Polices for Climate Legislation” in Room 2322 of the Rayburn House Building.  Witnesses include Philip Giudice, Massachusetts Department of Energy Resources; Tom King, president of National Grid USA; Rick Wells, vice president of energy, Dow Chemical; Lain Campbell, vice president and General Manager, Johnson Controls; John Anderson, president, Electricity Consumer Resource Council.

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On February 11, 2009, in what is being termed the largest solar deal in the world, Southern California Edison and BrightSource Energy Inc. announced a deal that will bring 1,300 MW of solar-thermal power to California’s largest investor-owned utility.  The deal makes a bold statement against the current state of the credit markets and the panoply of considerations inherent in large-scale energy projects.  The optimism surrounding the ability to get the deal financed likely comes in significant part from the renewal of the federal investment tax credit for solar (ITC) in Q4 2008, as well as expectations over the new administration’s economic stimulus package.

The deal consists of a series of seven power purchase agreements (PPAs) broken into 100 or 200 MW chunks, which will first have to be approved by the California Public Utilities Commission (CPUC).  BrightSource, an Oakland, Calif. startup initially backed by investors like Google, Morgan Stanley, Chevron, BP, Statoil Hydro, VantagePoint Venture Partners and Black River, will own and operate the solar plants and, in turn, deliver power to SoCal Edison over the 20-year contract terms.

The first 100 MW is expected to be located in a solar-thermal complex already being developed by BrightSource on the California-Nevada border in the Mojave Desert, and may come online as early as 2013 depending on the regulatory approval process.  BrightSource is also looking to neighboring states for potential sites to power the deal, including the Devers-Palo Verde No.2 power corridor under review by the Arizona Corporation Commission, and the Mormon Mesa in Nevada.

These projects should benefit from the streamlined permitting process instituted by Executive Order S-14-08 (EO S-14-08), which was signed by Governor Schwarzenegger on November 17, 2008.  Among other things, EO S-14-08 propelled creation of the Renewable Energy Action Team (REAT) by the California Energy Commission (CEC) and Department of Fish & Game (DFG), and a Desert Renewable Energy Conservation Plan in the priority Mojave and Colorado deserts.  The projects should also experience the synergies resulting from an MOU entered into by and between the CEC, DFG, U.S. Fish and Wildlife Service and the U.S. Bureau of Land Management, which includes the federal partner agencies in the expedited permitting process for projects on federally-owned California land. As previously reported by ClimateIntel, California’s new streamlined process is expected to halve the application time for specific projects.

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While the major story in Washington this week has been the negotiations surrounding the nearly $800 billion stimulus package, a piece of legislation with significant impact in the cleantech space also cleared significant hurdles. On Wednesday,  the House of Representatives passed H.R. 554, the National Nanotechnology Initiative Amendments Act of 2009 (NNI Amendments), by voice vote.

The timing of the Bill’s passage, less than a month from its introduction in the House and concurrently with efforts to pass critical economic legislation, should not go unnoticed.  While the Bill lacks the high dollar press appeal of other pending economic recovery legislation, the 30-page Bill would also play a role in promoting the long-term strength of the US economy.  Experts project that between 2006 and 2014, global revenues from nanotechnology-enabled products will grow from $50 Billion to $2.6 trillion, and comprise 15% of projected global manufacturing output.  The United States’ ability to capture and retain a significant share of this growing global nanotech market will depend, in part, on how government, industry and academia can work together to support targeted research and development efforts, as well as critical environmental, health and safety testing, needed to bring emerging nanotechnologies to the market quickly and safely.

The NNI Amendments revise and refine the current federal approach to federal funding, coordination, and oversight of nanotechnology research in important ways.  Most importantly, the Bill would promote a more strategic approach to setting federal research priorities and place a greater emphasis on health and safety research as well as research into certain “areas of national importance,” starting with “energy efficiency, nano-electronics, health care and water remediation.” (For a more detailed discussion of the various changes proposed by the NNI Amendments see our prior post).

Now that the House has passed the NNI Amendments, responsibility to move the legislation shifts to the Senate, where its fate is less clear.  In 2008 a similar piece of legislation died in the Senate despite overwhelming support and passage in the House.  Some possible clues into the bill’s fate could come Thursday, however, when the Senate Commerce, Science, and Transportation Committee will hold an executive session to establish Committee rules and discuss a budget resolution.  Coming only a day after the House’s passage of the small but important bill, it will be interesting to see if any Senator voices an interest in shepherding the the NNI Amendments through the Senate the way Congressman Bart Gordon (D-TN) did in the House.

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ClimateIntel has been chronicling the advantages of developing a quasi-governmental agency, the Renewable Energy Private Investment Corporation (REPIC), to assist the financing and growth of renewable energy industries.  In the short term, REPIC can provide market-based lending and loan guarantees to help unfreeze and lower the cost of capital during these difficult market conditions.  In our view, REPIC can provide services beyond lending and loan guarantees to benefit private capital investments, such as technology and project insurance, and private equity support to small scale and emerging technologies.  In the long term, REPIC can mobilize private investment capital, promote social and environmental goals, and ultimately lower the cost of capital to renewable energy industry.  In this post, we explore the administrative advantages of REPIC.

As discussed in prior posts, REPIC can be structured similarly to the Overseas Private Investment Corporation.  We envision an advisory council and staff that are specialists in environmental/energy policy, renewable technologies, and finance.  These experts can provide a streamlined and single source review process for REPIC programs, while depoliticizing the selection of projects to be funded or insured.  Like any other commercial lender, REPIC would evaluate project and transactional risks to ensure that financing is commercially, technically, and financially sound.  Interest rates and fees for financial products would be based on the cost of U.S. government issued securities, plus a premium based upon the project’s perceived commercial, managerial, and technical risks.   One major advantage to REPIC, as compared to the DOE Loan Guarantee program, is that commercialization specialists within REPIC would  work with applicants during the early stages of the application process, giving companies an early indication in the event a particular project does not fit within REPIC’s project selection criteria .  Under the DOE Loan Guarantee program, applicants must complete a costly and expensive application before a project is even considered. There is no early warning that a project will not qualify.

Accordingly, REPIC would house four discrete divisions that would collaborate, but have their own areas of competence: private equity; structured finance; insurance; and policy.  Each division would have the discretion to meet with applicants, guide the application process and assist with the eventual loan or insurance negotiation.  Through this collective expertise, REPIC would have a greater understanding of the risks associated with emerging technologies than traditional lenders so the cost of lending would more closely reflect the risks involved in a particular project or technology.

By housing a multidisciplinary panel of experts within REPIC, inherent efficiencies and synergies will reduce transactional costs and time for project review in contrast to the high costs and administrative delays associated with traditional loan guarantee programs that hamper project development.  At the same time, REPIC can promote broader US policy and economic development goals by establishing lending criteria designed to advance certain environmental, social, and regulatory objectives.  REPIC’s lending criteria can prioritize funding for projects that will provide lasting benefits to the US economy, including those projects that:

• Promote sound environmental standards
• Encourage job creation, training, and economic development
• Contribute to reductions in greenhouse gas emissions
• Advance the competitiveness of U.S. technologies
• Meet federal renewable fuel standards and forthcoming renewable energy standards

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This is a busy week on Capitol Hill.  Legislatively, the fragile bipartisan stimulus deal must first survive procedural votes in the Senate before it moves to a much thornier conference committee with House leaders who would like to replace some of the Senate’s tax cuts with spending measures that were stripped out of the bill. 

Committees in both chambers will be busy this week with various hearings that will have a big impact on future energy bills and eventual climate change legislation.  The Senate Energy and Natural Resources Committee begins its work on Tuesday, February 10 with a hearing on the Renewable Electricity Standard (RES) at 10 a.m. in Room 366 of the Senate Dirksen Building.  This hearing is part of Chairman Bingaman’s drive to have a 20% RES by 2020.  Appearing at the hearing are Ralph Izzo, chairman, Public Service Enterprise Group; Don Furman, senior vice president for business development, transmission and policy, Iberdrola Renewable Inc.; David Wright, president, Southeastern Association of Regulatory Utility Commissioners; Scott Jones, executive vice president, Forest Landowners Association; and Lester Lave, professor, Carnegie Mellon University.

The new Chairman of the Energy and Environment Subcommittee, Rep. Ed Markey, gavels in his first hearing titled “The Climate Crisis: National Security, Economic, and Public Health Threats” on Thursday, February 12 at 10 a.m. in Room 2123 of the House Rayburn Building.  Witnesses include General Gordon Sullivan (Ret.), President and Chief Operating Officer, Association of the United States Army; Mr. James Woolsey, VantagePoint Venture Partners, former Director, Central Intelligence Agency; Dr. Kristie Ebi, Lead Author, Public Health Chapter of the 2007 Intergovernmental Panel on Climate Change Fourth Assessment Report; Dr. Frank Ackerman, Stockholm Environment Institute U.S. Center, Tufts University; Professor Daniel Schrag, Harvard University; and Dr. Patrick Michaels, Cato Institute.

Thursday, February 12 the Senate Energy Committee will perform its oversight duties over the loan guarantees provided in the advanced clean energy loan program.  The oversight comes after four years of relative inaction by the Department of Energy in issuing any of the loans authorized by Congress.  Slated to be questioned at the hearing are Kevin Book, senior analyst Friedman Billings Ramsey & Co.; David Frantz, director, Loan Guarantee Program, DOE; and Alexander Karsner, distinguished fellow, Council on Competitiveness.  The hearing is scheduled for 10 a.m. in Room 366 of the Senate Dirksen Building.

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The U.S. Overseas Private Investment Corporation (OPIC) and the U.S. Export-Import Bank (Ex-Im) recently settled litigation seeking to require OPIC and Ex-Im to account for carbon dioxide emissions in connection with projects they support. Plaintiffs, the City Council of Boulder, Colorado, Friends of the Earth, Greenpeace, and the cities of Arcata, Oakland and Santa Monica, California, filed the lawsuit in the U.S. District Court for the Northern District of California (Docket No. C 02-4106 JSW) in August 2002.  Plaintiffs alleged that OPIC and Ex-Im provided assistance, in the form of loans and loan guarantees and insurance, to projects around the world that contribute to climate change without complying with National Environmental Policy Act (NEPA) requirements.

On March 30, 2007, in a ruling on cross-motions for summary judgment, the Court held that OPIC had not established that it was exempt from NEPA and rejected defendants’ claims that the lawsuit sought extraterritorial application of NEPA.  The Court found, however, that it could not determine as a matter of law whether the “illustrative projects” plaintiffs used for summary judgment constituted major federal actions under NEPA.  The Court also declined to rule on whether those projects were “cumulative actions” requiring a single Environmental Impact Statement.  The Court reasoned that because the projects involve substantial non-federal activity, the record was insufficient to allow the Court to determine the degree of control over the projects exercised by OPIC and Ex-Im.

The court rejected OPIC and Ex-Im’s argument that “the impacts of global warming on the domestic environment … are too remote and speculative to be considered for purposes of NEPA.”  In support of this ruling, the Court noted that the defendants did not dispute the allegation that the projects emitted GHGs, and the defendants had made statements in their own reports suggesting that GHGs contribute to global warming.  The Court noted, however, that it could not rule on the issue of causation until it determined whether the projects would have gone forward without OPIC or Ex-Im assistance.

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