The EPA announced on May 16 that it will take public comment on Texas’ request that the agency use its authority under the 2007 Energy Independence and Security Act (the “Act”) to cut in half new volume requirements for the production of renewable fuels derived from grain. The Act - which increased substantially the volume requirements for renewable fuels beginning this year - provides EPA with the authority to waive the renewable fuel standard (RFS) requirements upon finding that implementation of the RFS would harm the economy or the environment.

On April 25, 2008, Texas Governor Rick Perry formally requested that EPA use its authority under the Clean Air Act to waive a portion of the RFS for ethanol on grounds that implementation of the mandate “is unnecessarily having a negative impact on Texas’ otherwise strong economy while driving up global food prices.”

EPA, in consultation with the Departments of Agriculture and Energy, must make the determination whether to waive the RFS within 90 days of receiving the petition.

Update: The comment period on Texas’ proposal will close on June 23, 2008.

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Yesterday, the House Select Committee on Energy Independence and Global Warming convened a hearing to discuss how green building - the practice of constructing sustainable and energy efficient buildings - can both curb climate change and reduce energy costs.

In his opening statement, Chairman Edward Markey (D-MA) observed that the building sector is responsible for up to 48% of our nation’s greenhouse gas emissions, and an even higher percentage on a local level. For example, 78% of Boston’s heat-trapping gases are attributed to buildings. Nonetheless, only 7% of participants in a recent survey identified buildings as a major source of climate change emissions. The hearing yesterday was intended to change that perception.

Chairman Markey plainly stated, “[e]fficient design, low-emission construction materials, and decreased energy use in buildings can combat global warming and simultaneously reduce the rising costs of lighting, heating and cooling structures…” The overall economic and environmental benefits of more efficient buildings are clear… consumers get a good return on their investment.” Accordingly, Chairman Markey urged the greening of all buildings, “whether they are new or already built, commercial or residential, public or private.”

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This afternoon, the House passed the Farm Bill conference report by a veto-proof margin of 318 to 106.  While the Senate vote will not take place until tomorrow, supporters believe that there will also be more than enough votes in that chamber to override a presidential veto.  At this time, it appears likely that the energy provisions contained in the report will eventually become law.

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On Monday, after months of debate, negotiations, veto threats, and various grass-roots campaigns, the conferees for the 2008 Farm Bill revealed their compromise product. This year’s edition of the legislation has a greatly expanded energy portfolio, designed to put American farms and farmers at the cutting edge of the newly robust biofuels marketplace. Some of the highlights for the Title IX Energy Programs are:

• Authorizes $1 billion for new investments into energy related feedstocks;
• $320 million in loan guarantees for biorefineries;
• Creates a new program, the Rural Energy for America Program (REAP), which will provide $250 million in grants and loans for agricultural producers and rural businesses to purchase renewable energy systems;
• Authorizes $120 million for additional biomass research and feedstock development;
• Funds the Bioenergy program at $300 million which would provide incentives to expand production of biofuels;
• Creates a Biomass Crop Assistance Program;
• Creates a sugar-to-ethanol program.

Interestingly, the Farm Bill was unveiled the same week that committees on both sides of the Capitol are holding hearings examining the relationship between biofuel production and food and commodity prices. The Senate Foreign Relations committee meets on Wednesday morning at 9:30am to evaluate the issues, while the House Agriculture Committee will meet on Thursday.

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The House Energy and Commerce Committee’s Energy and Air Quality Subcommittee convened a hearing yesterday to examine the Renewable Fuels Standard (RFS) provisions of the Energy Independence and Security Act of 2007 (EISA). The RFS requirements in EISA substantially increase those contained in the Energy Policy Act of 2005, mandating renewable fuel use of 9 billion gallons by the end of 2008 and 36 billion gallons by 2022. Subcommittee Chairman Rick Boucher (D-VA) opened the hearing by noting recent calls for a “reexamination” of the RFS in light of rising food prices and the national debate on carbon emissions.

Full Committee Ranking Member Joe Barton (R-TX) contended that the higher RFS mandate contained in EISA “cannot be met” and said he will introduce a bill to repeal the RFS mandate contained in the new law. Full Committee Chairman John Dingell (D-MI) did not attend the hearing, but submitted a statement for the hearing record suggesting, in part, that amending the RFS “would be unwise and could lead to unintended consequences.”

Subcommittee Democrats, joined by Rep. John Shimkus (R-IL), generally characterized the RFS as a success, suggesting that greater ethanol use was helping to lower gas prices and increase U.S. energy supplies. Republican Members of the Subcommittee generally advocated revisions to the RFS mandate.

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The California Air Resources Board (CARB) recently estimated that approximately 25% of the state’s greenhouse gas emissions come from electricity generation. In response, the California legislature established a wide variety of programs to reduce electricity consumption, to implement emission performance standards (SB 1368), and to increase the use of renewable electricity sources, such as solar and wind power (SB 1078 and SB 107). The California legislature also directed CARB to adopt rules and regulations to reduce all sources of greenhouse gas emissions in the state to 1990 levels by the year 2020 (an estimated 30% reduction in greenhouse gas emissions from business-as-usual estimates). Despite these significant steps to address global climate change, one group thinks California can do more.

Earlier this month, proponents of a renewable energy initiative submitted 735,000 signatures to qualify for the November ballot. The initiative, entitled the Solar and Clean Energy Act of 2008, would require that all utilities in California achieve 40% renewable electricity by 2020, and 50% by 2025. By comparison, current law requires that retail sellers, including investor owned utilities (IOUs), increase their share of renewable electricity by 1% per year so that, by the close of 2010, 20% of retail sales are generated from renewable energy sources (pending legislation would increase this standard to 33% by 2020). Notably, as of 2006, California’s IOUs generated only about 13% of their electricity from renewable sources.

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This morning, the House Select Committee on Energy Independence and Global Warming held a hearing entitled “Nuclear Power in a Warming World: Solution or Illusion?” Representative Markey, the Committee’s Chair, made his feelings known from the opening words, noting that “Americans from Wall Street to Main Street rejected nuclear power” decades before the recent resurgence in interest. Three of the four witnesses called to the hearing were also strongly anti-nuclear in their testimony, while the fourth came from the Nuclear Energy Institute.

If there was any doubt before, it is clear that Rep. Markey is not a supporter of an expanded role for nuclear power in any future climate change legislation. He decried the $145 billion in subsidies that have been given to the nuclear industry since 1950, and noted that renewable energy has only received a fraction of that amount. Renewables are also being deployed more rapidly, he argued, noting that worldwide, “the 20,000 megawatts of wind energy capacity built in 2007 was more than 10 times that of nuclear.”

Markey’s position is at odds with the current administration and other powerful Congressional leaders. President Bush has made nuclear energy a centerpiece of his energy policy. The Energy Independence and Security Act of 2007 provides over $18 billion in loan guarantees for nuclear plants. In his remarks on the day he signed the bill into law, President Bush noted that “[I]f we’re serious about making sure we grow our economy and deal with greenhouse gases, we have got to expand nuclear power.”

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A new Clean Energy Investment Bank could provide the impetus to move the U.S. clean energy technology market more fully into the mainstream energy industry.

Yesterday, Sen. Pete Domenici (R-NM) and seven co-sponsors introduced a bill (S.2730) to establish a Bank that would provide loans, loan guarantees, and insurance to facilitate the development and commercialization of clean energy and energy efficiency technologies — solely within the United States. The Bank would act as an independent government corporation, similar to the U.S. Export-Import Bank.

According to Domenici, the Bank would “take responsibility for management of the Department of Energy’s Title XVII loan guarantee program,” which was established by the Energy Policy Act of 2005 to support early commercialization of advanced technologies that reduce greenhouse gas emissions.

Dominici’s proposal appears to be consistent with the message of a May 2007 letter from Chairman John Dingell and ranking members of the House Committee on Energy and Commerce, calling for the Administration to use its full Title XVII loan authority to promote green energy investment.

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Speaking at Resources for the Future this afternoon, Kathleen McGinty, Secretary of the Pennsylvania Department of Environmental Protection, outlined an “all things in moderation” approach to managing carbon, looking at the relative benefits and challenges of (1) a carbon tax, (2) cap-and-trade programs, and (3) corn-based ethanol.

Secretary McGinty began by underlining the “essential role” for a carbon tax in driving interest and investment from Wall Street, but noted that, unless the tax is set high enough to overcome the inherent advantages of the wholesale electricity providers, that it will be ineffective. McGinty described the equally “essential” need for a cap-and-trade program, which is a “fundamental building block” for carbon management, but expressed concerns about these programs’ capacity to resolve the climate crisis, as the world’s carbon demand quickly escalates in the U.S., China, and elsewhere.

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In an interesting provision in the new Energy Independence and Security Act of 2007, the U.S. pledged to fund cooperative research and development efforts with Israel to develop alternative sources of renewable energy. Israel is a recognized leader in alternative energy technology, and the home of more than 200 companies that research and develop environmental and energy-related technologies.

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