Congressional debate in recent weeks has focused on the Waxman-Markey American Clean Energy and Security Act and the significant cleantech provisions contained within it (covered on ClimateIntel here). The release of the President’s FY2010 budget shows that the Obama Administration is also focused on commercializing promising cleantech and renewable technologies. Spearheading this effort is the Department of Energy, which released its 2010 budget request on May 7^th. The $26.4 billion request, combined with the $38.7 billion the Department received in the American Recovery and Reinvestment Act (the stimulus bill), gives the DOE a considerable amount of money—and therefore considerable influence—on the future of cleantech research. What is notable about the 2010 budget is not the size of the budget—the 2010 request is actually over 20% lower than the 2009 appropriation—but how the budget restructures and refocuses programs within the agency to create new R&D priorities.

Focusing on Renewable Energy, Energy Efficiency

DOE also makes significant changes to the funding of renewable energy projects, increasing the funds available to solar, wind and geothermal research by 83%, 36% and 14%, respectively. These funds will go toward developing “less expensive, more efficient and highly reliable” solar photovoltaic systems, developing concentrated solar technologies “that can compete on the baseload power market,” “accelerat[ing] the market penetration of wind energy,” and advancing the development of geothermal power “as a major contributor to baseload electricity generation.” In the vehicle and building technologies programs, extra funds are targeted toward “facilitating cost effective PHEVs [Plug-In Electric Hybrid Vehicles]” and “enab[ling] production of Net-Zero Energy Homes and Buildings.” (See pages 24-26 of the summary budget document for more.)

Another program, the Office of Electricity Delivery and Energy Reliability, receives significant funding increases—an increase of 52% over 2009—to support smart grid investment, as does the building and vehicle technologies programs.

Cleaner Traditional Fuels
Programs designed to promote cleaner use of traditional fuels also see a boost in the 2010 budget. The fossil fuel and nuclear programs are cut, while funding for both carbon capture and storage and advanced nuclear fuel cycles is increased. (The fossil energy program’s budget begins on page 57 of the summary document; nuclear energy on page 54.)

In contrast to the renewable programs, which have stated goals of improving the market penetration of mature, or nearly mature, technologies, the fossil and nuclear programs shift their focus toward long-term research. The budget even “zeroes out” a program, known as Nuclear Power 2010, which helped the nuclear industry with siting and licensing of new plants.

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

The World Bank and the International Emissions Trading Association convened their annual Carbon Expo with upwards of 1500 delegates all focused on the continued development of the global carbon market.  Questions and comments throughout the conference relate to the “change in tone” from the United States since the election of President Obama and what the US’s cap and trade system will look like.The political reality that has yet to penetrate global carbon market participants is whether the US will have a cap and trade system at all.  Carbon Expo keynote speaker, Ricardo Lagos Escobar, Special Envoy on Climate Change for the United Nations and former President of Chile, spoke optimistically of an agreement being reached at Copenhagen in December 2009 with the US as a full participant.  Even those speakers aware of the political challenges in the US focused not on the fundamental questions that remain before any cap and trade system can be enacted, but on such details as how Clean Development Mechanism offset credits will be accepted in the US.

Experienced carbon market participants, particularly those actively involved in the European Union Emissions Trading System, appear convinced that a cap and trade system can both achieve environmental objectives and do so in an economically efficient manner.  That case has not been made yet in the US and—at least for the moment—is not being made.  Cap and trade supporters in the US seem to assume that these concepts are entrenched and understood not only by the public at large, but also by policymakers in Congress and the Executive.

In the meantime, opponents are busily rebranding cap and trade as “cap and tax,” an effective ploy at a time of great financial uncertainty and an audience with little apparent appetite to raise taxes.  Cap and trade proponents need to join the debate at the most fundamental level if they hope to see such a system enacted in the US.

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

To view Part I on “Who Will Assure Compliance in the U.S. Cap-and Trade Market?” please click here.

The Waxman-Markey Bill currently being marked up by Congress contains strict penalties for fraud and market manipulation.  Intent on sending a strong deterrent message to market participants, Section 401(f) of the proposed bill prohibits price or market manipulation, fraud and false or misleading statements or reports.  The subcommittee also made violation of Section 401(f) a felony punishable by fines of up to $25 million (or $5 million if the violator is an individual) or imprisonment of not more than 20 years or both.  The government can also recover costs associated with the prosecution and prohibit the violator from holding or trading a regulated instrument for up to five years.  The bill lists punishable actions for knowing violations in connection with a transaction involving a regulated instrument, including-

• using any manipulative or deceptive device or contrivance in violation of regulations
• cornering or attempting to corner the regulated instrument
• cheating or defrauding, or attempting to cheat or defraud, any other person
• delivering or causing to be delivered a false, misleading or inaccurate report concerning information or conditions that affect or tend to affect the price of a regulated instrument
• making, or causing to be made, in any document, required to be filed, a false or misleading statement with respect to a material fact, or to omitting any material fact required to be stated therein or necessary to make the statements therein not misleading
• falsifying, concealing or covering up by any trick, scheme or artifice a material fact; making any false, fictitious, or fraudulent statements or representations; making or using any false writing or document that contains a false, fictitious, or fraudulent statement or entry to an entity on or through which transactions in regulated instruments occur, or are settled or cleared; acting in furtherance of its official duties under the legislation.

In its current form, the bill provides FERC with a raft of punishment mechanisms, including prohibitions on trading, suspension of registration for up to six months, a daily civil penalty of $1 million while the violation continues disgorgement, restitution and the ability to enforce cease and desist proceedings.

Given the overriding central principle of ensuring environmental integrity, effective enforcement and compliance rules and activities are increasingly coming under strict scrutiny as trading schemes proliferate here in the United States and around the world.  Regulators will need stringent penalties to deter violations of the governing laws and rules.  These tools, however, will be effective only if they are meaningfully, fairly and swiftly enforced.

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

This is the first of a two-part series reviewing recent Congressional efforts to encourage development of the carbon capture and sequestration (CCS) industry in the United States.  The first post focuses on the CCS provisions in the recently-released House Climate Bill, H.R. 2545, the American Clean Energy and Security Act of 2009.  The second post will focus on the recently introduced Department of Energy (DOE) Carbon Capture and Sequestration Program Amendments Act of 2009, S.1013, and the recent hearing on the bill conducted by the Senate Energy and Natural Resources Committee.

In the recent surge of activity on comprehensive climate change legislation, carbon capture and sequestration (CCS) policy is taking a prominent position in both the House and Senate.  Both Houses have put the spotlight on fundamental legal, economic and policy issues that will drive the success or failure of geological sequestration as a carbon-mitigation strategy and shape the development of the CCS industry.  While the stimulus funding for CCS authorized under the American Recovery and Reinvestment Act (ARRA) and 2009 Omnibus Bill will provide a much-needed capital investment boost to the CCS industry, more than a one-time economic stimulus will be necessary to move CCS from a model technology to a national standard.

In the House

On Friday, May 15, 2009, Congressmen Henry Waxman (D-CA) and Ed Markey (D-MA) released an expanded revision to their earlier comprehensive climate change bill.  No longer a mere “discussion draft,” the 932-page “American Clean Energy and Security Act of 2009,” H.R. 2454, includes a prominently-placed 48-page subtitle on Carbon Capture and Sequestration.  The CCS provisions of the bill would-

• Revise the Clean Air Act and Safe Drinking Water Act to expand EPA’s authority to regulate siting, construction, operation and closure of CCS facilities and to require operators to demonstrate the financial resources needed to operate the facility safely from construction through closure (Section 112)
• Create a ten-year, billion-dollar annual funding stream generated by a per kilowatt hour assessment on carbon-intensive power generation, to support early investment in CCS construction at major fossil-fuel-fired power plants and industrial facilities (Section 114)
• Subsidize the day-to-day operation of CCS equipment at early-mover facilities by rewarding high-efficiency CCS operations with tradable emissions allowances created under the bill’s cap-and-trade framework (Section 115)
• Impose performance standards on newly-permitted fossil-fuel power plants, requiring 50 to 65 percent reductions in CO₂ emissions as the industry matures (Section 116). 

The CCS portions of the bill track closely with the approach from the original “Discussion Draft” with a few notable exceptions.  First, the revised bill also provides more detail on how EPA would finance its incentive program for day-to-day operation of CCS equipment at CCS-equipped facilities.  The operational incentive in Section 115 is critical because not only are CCS facilities capital intensive, they also present significant operational challenges.  DOE estimates that operation of currently-available carbon capture technologies can increase the cost of power production by 30 to 80 percent and reduce the power generated by 20 to 30 percent.  This “parasitic loss” of power remains a disincentive to day-to-day operation of CCS equipment well after capital expenditures are recovered.  The initial Waxman/Markey discussion draft proposed a per-ton operational incentive for successful, large-scale sequestration.  The revised bill adds important details, authorizing EPA to allocate emission allowances to eligible operators using a formula that ensures between $50 to $100 dollars in allowance market value for each ton of carbon sequestered.  See Table 1.

Similar to the initial “Discussion Draft,” the revised bill establishes CO₂ performance standards for newly-permitted coal-fueled power plants.  The revised bill also switches from a numerical emissions limitation (800 to 1,100 pounds of CO₂ per megawatt-hour) to a percentage reduction requirement (50 to 65 percent reductions from the facility’s uncontrolled baseline).  This change in methodology could influence the design of future coal-fired facilities, reducing one inherent advantage that Integrated Gasification Combined Cycle (IGCC) facilities and other advanced coal technologies have had over conventional pulverized coal technology.  Newly constructed IGCC facilities tend to have lower uncontrolled emissions than their pulverized coal counterparts, making adherence to a single, numerical emissions standard easier to reach for an IGGC plant than a pulverized coal plant.  Under a percentage-reduction-from-baseline standard, however, the IGCC facility would start with a lower emissions baseline and end with a more stringent post-control reduction requirement.  It is unclear how this single variable would change the net competitiveness of new pulverized coal facility construction relative to an IGCC facility, but it is likely to be an issue of study for advocates for both technologies going forward. 

The revised bill also eliminates the requirement that DOE and related agencies prepare a report to Congress on the technical, legal and regulatory challenges associated with constructing the network of pipelines to transport captured CO₂ from sources to sequestration sites.  While the USGS and Department of Energy have ongoing programs to study aspects of the facility siting and transportation issue, questions remain regarding whether the infrastructure needed to transport CCS from cradle to grave will develop organically in the timeframe needed to support widespread adoption of CCS.  A congressional mandate to address these issues early on would help to ensure that policymakers and investors recognize that how carbon is transported may be just as important as how it is captured or ultimately stored.

An Important Start

On balance, the revised bill would improve the climate for long-term CCS investment.  The additional regulatory authority given to EPA should provide greater regulatory certainty to industry and help all stakeholders assess and manage the risks of CCS facility siting, design, construction, operation, and closure.  The capital and operational funding incentives in the revised bill would build on the funding already in the pipeline, reducing the economic risks and uncertainty with investing in CCS technology.  The stringent performance standards for new coal facilities suggest that even the most advanced pre-combustion, clean-coal technologies would have to adopt CCS.  Perhaps most importantly, the establishment of a cap-and-trade regime would create a market incentive for companies to mitigate their carbon emissions.

While the revised bill would be a step forward, it does not address all of the potential obstacles to commercial scale CCS implementation.  The revised bill does nothing to address issues such as long-term liability; allocation of subsurface property rights; or the regulatory, legal and technical challenges of linking major sources of carbon across the US to viable geologic sequestration sites.  While addressing so many complicated issues at once may be a tall order, policymakers need to consider these issues now if they are going to rely on CCS to play a critical role in US carbon-mitigation strategy. 

In the Senate

The second article in this series will look at recent legislative activity in the Senate and how it could potentially address some of these remaining CCS implementation issues.

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

Jurisdictional conflict between the Federal Energy Regulatory Commission (FERC) and the Commodities Futures Trading Commission (CFTC) is nothing new.  FERC currently has jurisdiction over physical movements and rate settings requirements for electric transmission and natural gas pipelines.  FERC mainly regulates physical products on spot markets rather than futures contracts, while the CFTC oversees the futures markets.  FERC is subject to oversight of both the House and Senate Energy Committees, while the CFTC falls under the oversight of the House and Senate Agriculture Committees.  The FERC and CFTC have a long history fighting turf wars - most recently in the courts - regarding FERC’s jurisdiction over financial institutions whose allegedly illegal actions impact prices in the physical market.

Against that back-drop, the new Waxman-Markey energy and climate bill, the leading cap-and-trade bill in Congress, throws fuel on the fire.  The revised draft, released late last week, would give FERC control over the burgeoning carbon allowances and offset market (the “cash market”), which many speculate will reach $1 trillion in trades annually by 2020.  The regulatory fate of the carbon derivatives market, however, is left to the discretion of the President.  The bill directs the President, with advice from an interagency working group (including FERC and CFTC), to determine primary jurisdiction over carbon credit derivatives.  The Environmental Protection Agency (EPA) likely will have the leading role in preserving the underlying environmental integrity of the carbon assets though monitoring, reporting, verification, registration and enforcement, regardless of who oversees market activity.

The agency ultimately given jurisdiction to ensure compliance in the markets will have broad influence across sectors from electricity generators, energy intensive industry, and transportation, to financial institutions - both large and small, public and private.  The power sector is more accustomed to dealing with FERC because of its oversight in the energy and electricity markets.  Financial institutions, who will trade a variety of financial products and design endlessly creative carbon-based investment strategies, generally have more experience with the CFTC.  The CFTC is already regulating some forms of carbon trading, including the activity of the Chicago Climate Exchange, a voluntary carbon offset market.  Not surprisingly, there is no shortage of advocates before Congress on both sides of the FERC/CFTC jurisdictional debate. 

Members of Congress are divided along the same fault lines, with the added feature that some believe the proposed regulations are not sufficiently protective.  The CFTC appears poised to showcase its capabilities at the first meeting of its expanded energy and environment markets advisory committee.  This committee includes 11 new members, several of whom have vocally endorsed CFTC as the logical choice.  Some Members suggest a partnership between the two agencies, pairing FERC’s significant experience in regulation of power plants with the CFTC’s experience in regulating commodities.  Finally, other Members have voiced skepticism of any carbon trading regime, viewing carbon credits as the next great opportunity for “market failure,” particularly with respect to carbon derivatives, pressing the claim that proposed regulatory regime is not protective enough.  Just today, Bart Stupak (D-MI), introduced legislation (HR 2448) to, among other things, tighten regulation of the carbon market, indicating that he would not vote for the bill without a strong regulatory framework in place to deal with carbon derivatives. 

The White House has not yet expressed a clear position on its choice for regulator.  Carol Browner, Obama’s chief of environmental and energy policy has questioned whether carbon is a security or a commodity.  Classifying the legal nature of emissions allowances is yet another complexity that must be resolved in this debate.  See http://climateintel.com/2009/01/23/property-rights-conveyed-by-emission-allowances-an-analysis/.  The more important questions for consideration are not who is the regulator, but rather what the regulations do and how the regulator assures compliance. 

To view Part II in the two-part series, please click here.

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

All eyes will be on the House Energy and Commerce Committee where Chairman Waxman will begin the mark up of the American Clean Energy and Security Act.  After weeks of negotiations with fellow Democrats on his committee, Chairman Waxman released a revised draft of the legislation on Friday.  The revamped bill would reduce greenhouse gas emissions by 17% from 2005 levels by 2020, create a 20% renewable electricity standard by 2020 and establish the first economy-wide, cap-and-trade program for greenhouse gasses at the national level.  Republicans, who did not participate in the negotiations, will likely oppose the reporting of the bill unanimously (Rep. Bono-Mack (R-CA) seems to be the only possible cross-over vote).  Democrats could lose as many as four votes, though that would not endanger its approval by the committee.  Republican Ranking Member Joe Barton (R-TX) has threatened to use parliamentary tactics to delay the bill’s approval.  Republicans are also threatening to offer hundreds of amendments to peel off wavering Democrats.  Assuming approval by the committee, the bill must still wind its way through numerous other committees with concurrent jurisdiction before proceeding to a vote on the House floor.

On Tuesday, May 19, starting at 9 a.m., the Senate Environment & Public Works committee will hold a hearing in Room 409 of the Dirksen Senate Office Building on “Business Opportunities and Climate Policy.”  Executives from Dupont, Trinity Industries, Sapphire Energy, Lange-Stegman, Coulomb Technologies, Inc., Hydro Green Energy, Imbue Technology Solutions, Inc. (ImbuTec) and BASF will testify.  That afternoon the Senate Foreign Relations committee will conduct a hearing on green global economic recovery at 2:15 p.m. in Room 419 of the Senate Dirksen Office Building.  A witness list is not available.

On Thursday, May 21, the House Small Business Committee will hold a hearing on “Heroes of Small Business” to hear testimony from the Environmental Protection Agency (EPA) and United States Department of Agriculture (USDA) on regulatory issues impacting the domestic biofuels industry.  Representatives from the renewables industry and family farmers will testify in the hearing scheduled for 10 a.m. in Room 2360 of the Rayburn House Office Building.  Also that morning the House Agriculture Committee will hold a hearing on low-carbon fuels at 10:30 a.m. in Room 1300 of the Longworth House Office Building.

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

The Australian Government announced yesterday a AUD$4.5 billion Clean Energy Initiative as part of its commitment to ensure 20% of Australia’s electricity comes from renewable sources by 2020.  (All dollars figures referenced in this post are Australian Dollars.)  Under the plan (which includes $1 billion in existing funds), the Government is proposing to spend:

1. $465 million to establish Renewables Australia to support leading-edge technology research and capacity building;
2. $2.4 billion in low emissions coal technologies, including new funding of $2 billion in industrial-scale Carbon Capture and Storage (CCS) projects under the CCS Flagships program.  This program will support the demonstration of industrial-scale projects in Australia, potentially including a carbon dioxide storage hub;
3. $1.6 million in solar technologies, including $1.365 billion in a Solar Flagships Program to help position Australia as a world leader in this technology.  This program will aim to create an additional 1,000 MW of solar generation capacity, which is triple the size of the largest project of its kind currently operating anywhere in the world; and
4. $14.9 million over three years, added to the Government’s Clean Energy Trade and Investment Strategy, to attract productive investment into Australia’s clean energy sector and assist Australian clean energy companies to access international markets through export and investment.

The Government’s announcement follows upon the “Carbon Capture and Storage Initiatives in Australia” event at the Australian Embassy in Washington, DC.  Speakers James McGregor, Energy Systems Manager, CSIRO; Mark Taylor, Senior Associate, New Energy Finance and a representative from the newly-created Global Carbon Capture and Storage Institute (GCCSI), an Australian organization developed to accelerate the deployment of CCS technology globally, discussed CCS projects both in Australia and worldwide.

The Australian experience with CCS research and development is particularly pertinent to the United States because both countries depend heavily on coal-fired generation of electricity. Eighty percent of Australia’s energy comes from coal-fired power stations, accounting for one-third of Australia’s GHG emissions.  While there are 238 CCS projects, excluding lab-scale initiatives, at various stages in twenty-seven countries, both Australia and the United States are likely to require successful CCS technologies to attain the GHG emissions reduction targets contemplated.

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Part 1 of this two-part series discussed provisions of the American Clean Energy and Security Act of 2009 (ACESA) introduced by Representatives Waxman and Markey that would require U.S. importers of fossil fuels to hold emissions allowances for downstream greenhouse gas emissions resulting from combustion of the imported fuels. This post addresses Title IV of ACESA, which would potentially impose a second layer of compliance obligations and costs on U.S. importers. Title IV is intended to safeguard the competitiveness of U.S. manufacturing industries vulnerable to “carbon leakage;” i.e., the potential shift of emissions-intensive manufacturing from the U.S. to foreign jurisdictions with no or less onerous emissions restrictions.

Title IV would establish two mechanisms to safeguard the competitiveness of greenhouse gas emissions-intensive U.S. manufacturing industries in light of carbon leakage. First, Title IV would allocate some emissions allowances to greenhouse gas emissions-intensive and trade-exposed domestic manufacturing industries at no cost. In this way, qualifying U.S. manufacturers would, in principle, maintain their competitive balance vis-à-vis foreign manufacturers even as they are subjected to declining emissions caps. This first mechanism would not impose specific obligations on U.S. importers.

Title IV also provides, however, for a fall-back mechanism, laid out in Sections 411-16, that could restrict imports in the event the free allowance mechanism is found not to adequately safeguard domestic manufacturing industries from carbon leakage. These provisions call for the establishment, after 2017, of an “International Reserve Allowance Program” pursuant to which importers of “covered goods” would be required to surrender, upon importation, “international reserve allowances” in an amount covering the greenhouse gas emissions associated with the manufacture of the imported goods. International reserve allowances would be drawn from an independent allowance pool and could not be used by domestic entities to comply with their domestic cap-and-trade obligations arising under Title III.

As set forth in Section 411, covered goods would include “primary products” such as iron, steel, aluminum, cement, glass, pulp, paper, chemicals, and industrial ceramics, as well as products that generate “a substantial quantity of direct greenhouse gas emissions or indirect greenhouse gas emissions” in the course of their manufacture. Thus, a potentially vast range of imports could be covered by the International Reserve Allowance Program. Under Section 416(a)(1), however, imports originating in least developed countries or in countries accounting for less than 0.5 percent of total greenhouse gas emissions would be exempted from international reserve allowance requirements. Section 415 would prohibit imports unless accompanied by the required number of international reserve allowances. While not specified, U.S. Customs and Border Protection (CBP) would likely have a significant role in the administration of these provisions.

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Energy demand to heat, cool and power buildings creates by far the largest contribution to U.S. greenhouse gas emissions. Any realistic program to reduce domestic emissions must seriously tackle building efficiency. Recent energy policy legislation—the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007—created a number of programs at the Department of Energy (DOE) to promote building energy efficiency, such as the Net-Zero Energy Commercial Building Initiative. The American Recovery and Reinvestment Act of 2009 built on that foundation.  Also known as the Stimulus Bill, that Act created the Energy Efficiency and Conservation Block Grants and the State Energy Program, which would distribute $6B to states that bring their energy codes into line with the most recent national model energy codes. Despite the flurry of federal attention, building energy codes remain a state-by-state patchwork (as this map from the DOE shows)—some states have established energy codes which require energy efficiency improvements, while other codes actually create roadblocks for energy efficient development.  The American Clean Energy and Security Act of 2009 (ACESA) attempts to resolve these issues by not only creating a standard national energy code, but also requiring states to work towards achieving the dictates of that code.

Updating National Model Building Energy Codes

State action to enact energy codes (though those codes are often based on the national model energy codes), creates a national patchwork of standards. ACESA, however, would address that by requiring the Secretary of Energy to release updated national model energy codes at least once every three years. The model codes would set ambitious goals for energy savings: 30% in the period 2009-2016, and at least 50% for codes developed after 2016. Furthermore, Title II of ACESA modifies the Energy Conservation and Production Act (42 U.S.C. §6833), stating that any code should be “set at the maximum level of energy efficiency that is technologically feasible and life-cycle cost effective, and on a path to achieving net-zero-energy buildings.”

States would have to certify the updated codes within a year-showing that the codes they adopted either met or exceeded the total energy savings of the national model and would have to report on their progress towards compliance within another year. ACESA would also provide incentive funding to states implement the new codes, or when a state fails to comply with the code, to local jurisdictions working towards compliance. To make compliance, states would have to show that 90% of new or renovated construction

Retrofit for Energy and Environment Program (REEP)

While the updated building codes target new buildings, the REEP program would facilitate the retrofitting of existing buildings, creating “maximum cost-effective energy efficiency improvements” and funding that program in proportion to the energy savings demonstrated by the participating jurisdictions. This program targets what some have called the “low hanging fruit” of energy efficiency.  A 2007 study by McKinsey and Co. showed that almost all retrofitted building improvements come considerably more cheaply than other efficiency improvements, such as the development and market penetration of hybrid vehicles. Many of those improvements are in fact “negative marginal-cost” in that they pay their costs back. As the study (and others) explain, however, coordinated programs are needed to make these retrofits a reality. The REEP program would be the first national program of this kind.

Impacts of Energy Efficiency Building Codes

These programs come at an important time for the green building movement; while a number of jurisdictions have begun green energy code updates and energy efficient retrofit programs, recently there have been signs of a backlash. In July 2008, a coalition of ventilation, heating and other building construction trade groups sued the city of Albuquerque, arguing that federal efficiency laws preempted local regulation. That litigation has yet to come to trial—but comprehensive federal standards of the type suggested in ACESA would likely moot litigation of this type by aggressively advancing efficiency standards at all levels of government.

The “low hanging fruit,” “negative marginal cost” contentions are encountering skeptics who question whether new aggressive standards will actually achieve the results proponents claim. A recent study published by the Commercial Real Estate Development Association (also known as NAIOP) showed that increasing energy savings in commercial buildings-are requiring longer and longer payback durations-with the maximum (no-cost) savings achievable being 23%. While other studies have found greater possible energy savings, this controversy outlines one of the challenges facing a successful national green building program. We will examine the controversy over energy savings further in a subsequent post.

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

This week, as with the last few weeks, all attention is trained on the House Energy and Commerce Committee, where Chairman Henry Waxman continues trying to cobble together a majority to move his cap-and-trade legislation out of the committee.  From all indications, the fragile negotiations are moving towards a conclusion.  Oil patch Democrats want more allowances for their hometown industries.  Congressmen from coal country want to see greater funding for carbon capture, a less ambitious renewable energy standard (RES) and even less reductions by 2020.  It is likely that the entire Republican side of the committee dais will oppose the bill, and, with close to a dozen members on the Democratic side wary of a bill that can’t be sold back home, the task of moving a bill by Memorial Day is difficult but not impossible.

With the frenzy of negotiations in the House and multiple budget hearings on Capitol Hill, there are only two climate-related hearings slated for this week.  On Wednesday, May 13 the House Science and Technology Subcommittee will conduct a markup of the National Climate Service Act of 2009 in Room 2318 of the Rayburn House Office Building at 10 a.m.  On Thursday, May 14 the Energy and Natural Resources Committee will conduct a hearing in Room 366 of the Dirksen Senate Building at 2:30 p.m. to receive testimony on S. 1013, the Department of Energy (DOE) Carbon Capture and Sequestration Program Amendments Act of 2009.  The first panel of witnesses includes Dr. Victor K. Der, Acting Assistant Secretary, Office of Fossil Energy, U.S. DOE; Dr. Kit Batten , Science Advisor, Office of the Deputy Secretary, U.S. Department of the Interior; and The Honorable Thomas E. Lubnau, II , State Representative from Wyoming, House District 31.  The second panel of witnesses includes Mr. John Tombari, Vice President, Schlumberger Carbon Services; Mr. Karl R. Moor , Vice President and Associate General Counsel, Southern Company; Mr. Scott Anderson , Senior Policy Adviser, Environmental Defense Fund; and Ms. Chiara Trabucchi, Principal, Industrial Economics, Inc.

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