***UPDATE: The full Senate Environment and Public Works Committee will hold a hearing entitled “Moving America toward a Clean Energy Economy and Reducing Global Warming Pollution: Legislative Tools” on Tuesday, July 7, at 10:00 am. Scheduled witnesses include the heads of the US Department of Energy, the US Environmental Protection Agency, and the US Department of Agriculture, as well as the Governor of Mississippi, the Mayor of Braddock, Pennsylvania, and representatives from The Dow Chemical Company and the Natural Resources Defense Council.

On Friday evening, June 26, the House of Representatives voted to approve the American Clean Energy and Security Act (ACES) (H.R. 2454), a 1300-plus page bill that would impose the first federal restrictions on CO2 emissions, establish a market structure for trading CO2 and other greenhouse gas emissions permits and promote investment in, and transition to, cleaner-energy technologies.  Friday’s 219 to 212 House vote was an important step forward for comprehensive climate change legislation, providing a much-needed endorsement of the cap-and-trade-style regulatory approach.  But if the vote in the House wasn’t challenging enough, securing the 60 votes needed in the Senate likely will prove even more difficult.

H.R. 2454: Select Provisions of the Bill

Climate Intel will provide more detailed assessments of the final House bill in upcoming posts, but some of the most notable elements of the new bill include—

• The first-ever federal cap on US emissions of greenhouse gases, starting with a required 17 % reduction from 2005 levels by 2020 and an 80 % reduction by 2050
• A system for buying, selling and trading greenhouse gas emissions permits within the limits of the cap, including a robust market for domestic and international carbon offsets
• A renewable portfolio standard requiring utilities to meet 20 percent of their load needs using renewable sources or energy efficiency by 2020, with at least 15% coming from renewable electricity
• New funding for new clean energy technologies, including renewable-energy, energy-efficiency and clean-coal technologies
• Targeted allocations of tradable emissions permits to reduce the impact of the program on key stakeholders, including coal-reliant states, consumers and “energy-intensive, trade-exposed industries that make products like iron, steel, cement and paper.”

The Vote

The Friday floor vote capped off several frenzied weeks of negotiations with policymakers in the Energy and Commerce Committee, the Science and Technology Committee, the Ways and Means Committee, the Agriculture Committee and the Rules Committee, which had to gain support for the bill.  Ultimately, the House passed 219 to 212, with 8 Republicans supporting and 44 Democrats opposing. See the vote count here.

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The American Clean Energy and Security Act (H.R. 2454) began floor debate this afternoon. Also under consideration is the Republican alternative. While Democratic leaders are confident that they have the votes to pass the bill, ClimateIntel has heard from its Congressional sources that it is actually the progressive wing of the Democratic party that is proving the most recalcitrant.

Currently debate is focused around a 310-page amendment to the bill adopted by the Rules committee which deals with a wide range of issues, including the definition of biomass; the oversight of forestry and agricultural incentive programs; transmission line siting authority and changing how a renewable electricity standard operates. See an overview of the changes here.

We will update this post with any further developments in the debate.

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In an earlier post, we noted that stalled negotiations between sponsors of the American Climate and Security Act and farm-state Democrats were one of the major hurdles preventing that bill from being voted on by the full House before the end of the week. Late last night, as The Hill reports, those negotiations concluded successfully, with an amended bill and an agreement to bring it to the floor before Friday.

The text of the amended bill is here.  We will continue to update the blog with any new developments.

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Current Administration and congressional climate proposals depend heavily on geological sequestration to reduce CO2 emissions from coal-fired power plants and other major sources and tend to presume that sources in every state will have access to nearby underground storage capacity.  This is the second post in a three-part series reviewing obstacles to a 50-state sequestration strategy and suggesting the need for a national infrastructure to support medium to long-range transport of CO2. 

Even if additional research and site characterization could resolve geological uncertainties regarding widespread local CO2 storage, companies also will have to overcome the public and political opposition that locally undesirable land use (LULU) energy projects engender.  While CO2 sequestration provides important global benefits, local communities are likely to balk at hosting a sequestration project injecting millions of tons of liquid CO2 as a waste product under or near their communities.

The saga of Used Nuclear Fuel Storage at Yucca Mountain in Nevada illustrates the challenge of siting even one nationally-important, but locally-opposed, facility.  First identified as the nation’s prospective high-level nuclear waste storage site in 1987 and approved by Congress in 1994, the Yucca Mountain high-level nuclear waste storage facility received over 9 billion dollars in funding through 2008 despite vociferous opposition from local stakeholders and, in some cases, key federal constituencies.  In early 2009, the Obama Administration proposed to defund the project.  While only Congress can cancel the project, Senate Majority Leader Harry Reid (D-NV) has committed to doing just that.  Irrespective of the merits of the decision to defund Yucca, it is a significant setback for the domestic nuclear energy industry, as the reversal leaves the nation twenty years behind in developing a long-term disposal strategy for high-level nuclear waste.

Even relatively innocuous renewable energy projects  face siting difficulties.  Indeed, the U.S. Chamber of Commerce recently initiated a campaign to document the wide variety of energy projects that have been stopped or delayed across the nation by local opposition.  The siting challenge illustrates an important reality check for policymakers and investors:  a prospective site may contain optimal subsurface geologic characteristics, but if developers cannot negotiate the local siting process, the technical feasibility of a location is irrelevant.

Siting CCS facilities on federal lands may be one way to reduce the ability of local opposition to stop a project.  The Department of Interior has estimated that 5.5 percent of the onshore U.S. CO2 storage capacity is beneath potentially leasable Federal lands.  But, federal lands bring limitations of their own.  First, federal lands are not uniformly distributed across regions and states, and many areas of the country (e.g., the northeast, southeast and midwest) lack large swaths of federal lands on which facilities could be sited.  The disconnect is even more significant when major emissions sources are considered.  According to a recent DOE Report, while 65% of emissions come from east of the Mississippi River, 83% to 86% of storage capacity on federal lands lies west of the Mississippi River.   In other words, a siting strategy that relies on federal lands for citing will require investment on CO2 transport to match source generation to sequestration capacity.

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The major climate-related news on Capitol Hill this week remains the negotiations going on within the Democratic party over the American Clean Energy and Security Act. Sponsor Rep. Harry Waxman (CA) and a group of moderate, farm state Democrats, lead by Rep. Collin Peterson (MN) continue to disagree over how to administer a program encouraging climate-friendly practices among farmers, putting plans to bring the bill to the House floor before the July 4^th recess in jeopardy.

In other House news, a Wednesday markup of a transportation authorization bill will have major climate implications. The markup, in the Transportation and Infrastructure Committee headed by Rep. Jim Oberstar, will provide $500 billion in funding for the nation’s roads and transit systems, and will shift a significant percentage of funding away from highways and towards transit systems, especially high-speed rail-which will receive $50 billion. Also before the committee is a proposal which would require planners to consider the carbon footprints of the transit sector.

Finally, the House Energy and Water Development Appropriations Subcommittee will markup the appropriations for the Department of Energy (DOE), the Army Corps of Engineers and the Bureau of Reclamation on Thursday at 9am in 2362-B Rayburn. The DOE budget, which ClimateIntel examined previously here, contains significant new funding for cleantech, renewable energy and climate science initiatives.

After the jump, other important hearings this week.

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Current Administration and congressional climate proposals depend heavily on geological sequestration to reduce CO2 emissions from coal-fired power plants and other major sources and tend to presume that sources in every state will have access to nearby underground storage capacity.  While some federal agencies and studies consider widespread localized sequestration to be viable, a nationwide rollout faces significant obstacles.  In areas where local sequestration is impractical, emissions sources will be forced to transport captured CO2, by pipeline, ship or other mode, to a viable sequestration site.  To date, however, federal climate proposals have given limited attention to developing the CO2 transport infrastructure. 

This series reviews three obstacles to a 50-state sequestration strategy and discusses the need for a national infrastructure to support medium to long-range transport of CO2.

Part 1: The Porosity Problem
Part 2: NUMBY
Part 3: 50-States, 50 Hurdles

Recognizing these obstacles and honestly confronting them is a critical step to making geological sequestration work.  And, without a successful geologic sequestration program, the United States’ ability to achieve emissions reduction targets is astronomically more difficult.

Part 1: The Porosity Problem

While there are many different factors that determine the suitability of a geological formation to store liquefied carbon, one important threshold consideration is porosity.  An effective sequestration site must contain deep layers of porous rock, capable of absorbing and retaining injected CO2 within its void spaces, much like a sponge that absorbs and holds water.  This porous rock must be covered by an upper layer of dense and highly impermeable cap rock that will prevent upward migration of CO2 toward drinking water aquifers or the surface.  

Citing private and public studies conducted to date, the Environmental Protection Agency (EPA) and the Department of Energy (DOE) have estimated that 95% of all coal-fired plants are within 50 miles of an “ideal” candidate sequestration site.  Other government analyses, however, suggest that not all regions and states are geologically equal when it comes to underground storage capacity.  Indeed, federal researchers have had mixed success in identifying viable sequestration sites with the proper geological characteristics based on theory and scientific testing alone. 

EPA and DOE are working to demonstrate the feasibility of geological sequestration at a wide range of host geological sites nationally, but to date, most successful CCS projects have been sited at current or former oil and gas fields.  For decades, the oil and gas industry has injected liquid CO2 underground to promote enhanced oil recovery.  If CCS storage potential is tied to oil and gas production potential, however, there are likely to be significant disparities in storage potential from one region to another.  DOE’s own website acknowledges that “there is a mismatch between largest [CO2 emission sources] and the largest oil and gas traps.”  A 50-state sequestration strategy will force the CCS industry to diversify its portfolio of storage sites.  Federal studies indicate that unmineable coal seams and deep saline formations offer promising storage potential, but the practicality of such formations remains untested in many parts of the country, despite considerable efforts at regional characterization.

For example, there are large numbers of CO2 emitting sources in the Appalachian Basin, making it an important test area for the viability of DOE’s localized sequestration strategy.  In a recent report on progress at a small-scale sequestration field test in the Appalachian Basin of Ohio, researchers found that “porosity, void space and permeability of the target formations were lower than expected.”  DOE’s difficulty in pinpointing a viable sequestration site location for a small regional pilot project illustrates the uncertainties that remain when it comes to siting at the local level.  

DOE is addressing this nationwide site characterization challenge aggressively, investing department resources and grant funding into projects to improve understanding of sequestration capacity in different geological settings.  Earlier this month, DOE announced its intent to offer an additional $50 million in grants to support site characterization work. 

Missing from both Congress and DOE is a serious Plan B in the event that localized geologic sequestration is not feasible in major portions of the country.  Federal policymakers will need a plan to transport captured CO2 from “pore-locked” emissions sources to areas where high-volume sequestration is practicable. 

The prevailing hope of widespread access to local sequestration capacity could become reality within the timeframes policymakers will need to support U.S. climate mitigation plans.  The U.S. experience with project siting on the basis of geology alone suggests strongly that this hope is a dim one.  Geologic sequestration is critical to U.S. climate policy and Congress and the Administration need to address the available alternatives should the local sequestration strategy prove untenable. 

To view Part II in this three-part series, please click here.

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

With two weeks until the July 4 congressional recess, discussions about how to move Chairman Waxman’s cap-and-trade legislation are still ongoing.  The Senate Committee on Energy and Natural Resources is slated to finish its mark up of the American Clean Energy and Leadership Act.  A major piece of this bill is the delicately negotiated fifteen percent renewable electricity standard for utilities.  The goal is to implement this standard by 2021 with up to a quarter of the requirement available through efficiency improvements.  While the Senate legislation is getting far less attention than the broader climate change legislation passed out of the House Committee on Energy and Commerce last month, it will likely become the center of a bicameral energy bill that might, or might not, include the cap-and trade-provisions drafted in the House.  The markup will commence on Tuesday and might continue into Wednesday.

The Senate Finance Committee will also take a close look at the tax implications of a cap-and-trade system in a hearing Tuesday morning.  The chair of the Finance Committee, Sen. Max Baucus, is also a member of the Environment and Public Works Committee, so he has a stake in how the final cap-and-trade legislation is put together.  Witnesses include Gary Hufbauer, Peterson Institute for International Economics; Keith Butler, Duke Energy; Mark Price, financial products analyst, Washington National Tax.

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ClimateIntel.com has been named by the e-Justice blog as one of the “50 Best Blogs About Environmental Law.” In their June 10 posting, they applaud ClimateIntel’s insight on climate change, specifically on international law and intellectual property matters.

ClimateIntel was created in November 2007 by Akin Gump Strauss Hauer & Feld LLP to provide financial institutions, regulated businesses and other stakeholders with objective insight into legal and policy developments in the carbon market. The blog specifically focuses on U.S. federal- and state-level regulatory and policy intelligence, climate change litigation matters and international regulatory and policy intelligence.

For more information on ClimateIntel, please contact Paul Gutermann.

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The Waxman-Markey American Clean Energy and Security Act (ACESA) has been voted out of the Energy and Commerce Committee; next it heads to the House floor and possibly for debate before July 4^th.  Now questions surrounding the bill turn to the magic number—218, the “yes” votes needed to gain the bill’s passage.  Ultimately, despite near unanimous Republican opposition to date, geography may be more important than political party in determining where the “yes” votes come from.  A recent paper co-authored by researcher from the Brattle Group and UCLA, “Carbon Geography: The Political Economy of Congressional Support for Legislation Intended to Mitigate Greenhouse Gas Production” (pdf), attempts to shed light on the relationship between geography, per-capita emissions and a pro- or anti-carbon regulation stance.

The study found wide variations in the per-capita emissions of carbon.  For example, coastal, urbanized states with access to hydro or natural gas have considerably lower per-capita emissions than did midwestern and southern states, which depend on coal generation for much more of their baseload power generation.  In fact, extent of coal mining was one of the highest correlating factors for per-capita emissions; sectors like residential and commercial had much less affect on the overall distribution of emissions.

Emissions, Income, Ideology

The researchers investigated not only the geographic distribution of these emissions, but also the correlations between per-capita carbon emissions, per-capita income and ideology (the ideology measure goes beyond environmental votes to encompass all contested votes). Higher emissions correlated strongly with a decrease in per-capita income and an increase in across-the-board political conservatism.

This dichotomy—richer, more liberal and relatively decarbonized areas vs. poorer, conservative, carbon-intensive ones—informs the battle over the ACESA bill. Simply put, those areas that both face greater burdens in reducing emissions (due to more carbon-intensive economies) and less economic wherewithal in adapting to those changes (due to lower per-capita incomes) are far less likely to support making those emissions reductions in the first place. This holds for both Houses of Congress.

What this means for Waxman-Markey

Examining the various data, the authors suggest that three outcomes are most likely in the crafting of emissions control legislation:

1. Deadlock and watered down legislation.
2. Price offsets for carbon intensive regions or sectors, such as free allocation of pollution allowances.
3. Anti-regressive policies to protect sensitive consumers.

Congressmen Waxman and Markey seem to have used the second and third strategies to craft a bill that could be passed by the Committee on Energy and Commerce. While the study authors list some downsides to these policies (including wealth transfer without changing behaviors), others have disputed this, saying that “freely allocating allowances does not influence firms’ production and emission reduction decisions.”

Interestingly, this study seems to indicate that ACESA has already cleared the most difficult hurdle (at least in the House). According to the study’s examination of the 111^th Congress, districts represented by members of the Energy and Commerce Committee—both Democrats and Republicans—have higher per-capita emissions than the average emissions district by district in the Congress as a whole. Districts represented by members of the Energy and Environment Subcommittee have even higher per-capita emissions. Districts represented by House members likely to have critical roles in passage of a bill, such as Collin Peterson Chairman of the Committee on Agriculture, have “carbon geography” scores suggesting that support may be difficult to achieve.

Regional Agreements

Another interesting corollary to the concept of carbon geography is the prevalence of regional greenhouse gas reduction agreements, such as the Western Climate Initiative (WCI), or the northeast’s Regional Greenhouse Gas Initiative (RGGI). As the maps developed by the researchers show, not only do per-capita emissions vary wildly across the country, those emissions also vary considerably across sectors. This wide variation in sectoral and geographical emissions means that regional agreements can bring areas of the country with common interests—or sectors with common interests—together to achieve emissions control results that might not be possible under a national standard, where addressing regional disparities takes more primacy.

The Brattle/UCLA research paper suggests that carbon geography may produce political tensions that could prove difficult to resolve.  Unless key swing Congressmen decide that ACESA adequately addresses these regional disparities, the bill will have a difficult time passing through Congress.  The make-up of the Committee on Energy and Commerce provides at least some hope that the bill will be more palatable for the House as a whole.

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The House and Senate continue their pace to the July 4 recess.  Last week, the leadership of the House Committee on Ways and Means and Committee on Agriculture met with Speaker Pelosi to discuss reporting out their sections of the cap-and-trade legislation.  The Speaker requested that the committees finalize their mark-ups by June 16, an admittedly ambitious plan.  Overall, this week is fairly quiet in the committees of jurisdiction.  The Senate Energy and Natural Resources Committee will hear the nomination of long-time climate advocate Cathy Zoi to become the new Assistant Secretary of Energy Efficiency and Renewable Energy (EERE).

On Tuesday, June 9, the House Committee on Energy and Commerce’s Subcommittee on Energy and Environment will hold a hearing on Allowance Allocation Policies In Climate Legislation: Assisting Consumers, Investing In A Clean Energy Future, And Adapting To Climate Change at 9:30 a.m. in Room 2322 of the Rayburn House Office Building.  Witnesses include Thomas F. Farrell II, on behalf of the Edison Electric Institute; Rich Wells, Vice President, Energy, Dow Chemical Company; Nat Keohane, Economist, Environmental Defense Fund; Reverend Dr. Mari Castellanos, Minister for Policy Advocacy, United Church of Christ, Justice and Peace Ministries; G. Tommy Hodges, on behalf of the American Trucking Association; David Sokol, Chairman of the Board, Mid American Energy Hodings Company; and David Montgomery, Vice President, Charles River Associates.

Also on Tuesday, the Subcommittee on Commerce, Trade, and Consumer Protection will hold a hearing at 10 a.m. in Room 2123 of the Rayburn House Office Building titled “It’s Too Easy Being Green: Defining Fair Green Marketing Practices.”  Witnesses include James Kohm, Director, Enforcement Division, Federal Trade Commission; M. Scot Case, Vice President, TerraChoice, Executive Director, EcoLogo Program, Urvashi Rangan, Ph.D., Director, Technical Policy, Consumers Union; Dara O’ Rourke, Ph.D., Associate Professor, University of California Berkeley, Co-Founder, GoodGuide; and Scott P. Cooper, Vice President, Government Relations, American National Standards Institute.

Then on Thursday, June 11, the House Agriculture Committee will conduct a hearing on the climate bill (H.R. 2454) at 2 p.m. in Room 1300 of the Longworth House Office Building.  The committee is one of eight committees that will have a say on the climate bill.

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