This afternoon EPA unequivocally confirmed that the current administration will not propose, let alone implement, comprehensive greenhouse gas (GHG) regulation. In a long-awaited, 588-page Advance Notice of Proposed Rulemaking (“ANPR”), EPA surveys its Clean Air Act authority, outlines an analysis of whether GHGs endanger public health and welfare (and thus can constitute “regulated pollutants”), and reviews the applicability of climate change regulations under its stationary source, mobile source, and stratospheric ozone regulatory authorities. The Notice also opens a 4-month public comment period on the subject of GHG regulation.

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The Court of Appeals for the DC Circuit denied a petition by Massachusetts seeking EPA action on greenhouse gas (GHG) regulation within 60 days. Yesterday’s decision is part of the longstanding feud between the EPA and a group of states and environmental organizations.

In April 2007, the Supreme Court ruled in Massachusetts v. EPA that the agency must determine whether GHG emissions from automobiles endanger public health and welfare. After one year passed with no action, Massachusetts filed a writ of mandamus in the DC Circuit. Plaintiffs bring a mandamus action to seek the court’s help when a government official refuses to take a required action. The court, however, declined to act on the writ, denying the petition without comment.

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The carbon market has more than doubled in the last year and is estimated at approximately $64 billion in 2007, up from $31 billion in 2006. The allowance-based system of the EU Emission Trading Scheme (EU ETS) generates the biggest share of the market, over $50 billion in 2007. The EU ETS requires large emitters of carbon dioxide to annually surrender to the government the number of EU Allowances (EUAs) equal to their annual emissions, but also accepts for compliance purposes a limited number of credits created pursuant to the Clean Development Mechanism (CDM) and Joint Implementation (JI) flexibility mechanisms of the Kyoto Protocol, accounting for $12.9 billion and $499 million of the market, respectively.

Prices for primary forward Certified Emission Reductions (CERs) and Emission Reduction Units (ERUs) have been increasing significantly over the past year, with CERs trading at more than 26% over 2006 levels and ERUs at more than 38% above 2006. This dynamic rise in ERU prices is in large part attributable to the emergence of private sector buyers for the first time in 2007, with Japan in particular making some significant purchases in Eastern Europe. This is compounded by the establishment of JI procedures in a number of countries that appear to have substantially reduced regulatory uncertainties. Prices in 2008 appear to be continuing this trend as reports from the first quarter of the year show primary CER prices increasing again.

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The regulation of coal-fired power plants’ greenhouse gas emissions is now the focus of a congressional investigation. House Committee on Oversight and Government Reform Chairman Henry A. Waxman, (D-CA) sent a letter early this week to EPA Administrator Stephen Johnson requesting information on the EPA’s proposed rule for regulation of new and modified sources of air pollution under the Clean Air Act.

Waxman charges that the rule will “allow old, very dirty power plants to increase the amount of time they operate each year without installing pollution controls,” which will result in increased greenhouse gas emissions. The letter requests that the agency provide information on its consideration of climate change in development of the rule, including modeling and technical analyses, by June 30. The information requested by the Committee will not likely yield any new insights into EPA’s rulemaking, but it will provide another potential avenue to spotlight the Administration’s unwillingness to regulate greenhouse gas emissions.

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In a letter to Senate Majority Leader Harry Reid and Sen. Barbara Boxer, ten moderate Democrats who either voted against moving forward with the Climate Security Act this morning or who abstained from the vote presented a position statement critiquing the the Act as revised by Sen. Boxer and expressing concerns about its impacts to the economy.

The letter, signed by Sens. Stabenow (D-MI), Levin (D-MI), Lincoln (D-AR), Pryor (D-AR), Rockefeller IV (D-WV), Webb (D-VA), Bayh (D-IN), McCaskill (D-MO), Brown (D-OH), and Nelson (D-NE), identifies eight requirements for any future climate legislation:

1. Contain Costs and Prevent Harm to the U.S. Economy
2. Invest Aggressively in New Technologies and Deployment of Existing Technologies
3. Treat States Equitably
4. Protect America’s Working Families
5. Protect U.S. Manufacturing Jobs and Strengthen International Competitiveness
6. Fully Recognize Agriculture and Forestry’s Role
7. Clarify Federal/State Authority
8. Provide Accountability for Consumer Dollars

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In an effort to halt delays and proceed to debating amendments to the Climate Security Act (S.3036), 48 Senators today voted “yes” and six additional Senators not present - including both Senator Obama and Senator McCain - submitted written statements of support.

While not sufficient to invoke “cloture,” the only procedure by which the Senate can vote to place a time limit on consideration of a bill or other matter and thereby overcome a filibuster, the 54 Senators who supported moving forward exceeded the expectations of supporters of the legislation. Seven Republicans joined the 39 Democrats and 2 Independents voting in favor of cloture. Only 36 Senators, including four Democrats, voted to reject cloture.

Attention on climate change now moves to the House of Representatives. John Dingell, Chairman of the House Committee on Energy and Commerce, announced yesterday that the subcommittee chaired by Rick Boucher, would begin hearings on climate legislation, including the Climate Security Act that had been the subject of Senate debate.

The fall presidential campaign will serve as a forum for debating climate policy and energy security and for setting parameters for action in the new Congress next year.

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Republican Senators today called for a reading of the full text of the Boxer-Lieberman-Warner Climate Security Act (S. 3036). E&E News PM [subscription req.] reported that the procedure was invoked by Senate Minority Leader Mitch McConnell (R-Ky.) because “Democratic leaders did not fulfill a pledge to confirm three of President Bush’s judicial appointees before Memorial Day.” The floor debate is now projected to begin tomorrow, with the likely introduction of a number amendments, including ones related to nuclear power.

The reading began at 1 PM and is expected to continue into the night. Listen to the reading on C-SPAN2 online (Windows Media Player or RealMedia).

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The Senate’s Democratic leadership had planned to debate the Climate Security Act in earnest this morning, but instead spent the day in the midst of a 30 hour preliminary debate period required by a Republican procedural motion. Both sides offered partisan recriminations, with Democrats blaming Republicans for stalling the bill, while Republicans accused Democrats of trying to limit debate and the number of amendments that can be considered.

During this 30 hour period, which expires overnight tonight, the debate focused on large-scale questions - in particular the absence of nuclear subsidies, the overall costs of the bill, and how revenue is scheduled to be allocated.

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The Senate has begun debate on S. 3036, the Climate Security Act (the Lieberman-Warner Bill in the vernacular). While there looks to be more than enough votes in the Senate to move to a debate, it is anyone’s guess whether there are the 60 votes needed to cut off debate and move to a final vote- that will largely be determined by the type and amount of amendments that are accepted, rejected, or permitted to be debated. Getting the 60 votes necessary to cut off debate became one vote harder this week with the absence of Sen. Ted Kennedy.

For further initial background on the debate, today’s Washington Post cites the call to action inherent in the recent federal Climate Change Science Program report as contributing to a “sturdy platform” for leadership from the next Administration; while the New York Times analyzes conflicting interests of various industry groups and the Wall Street Journal’s Environmental Capital predicts that “nothing much will happen.”

ClimateIntel will monitor the debate and update this blog as events warrant. C-SPAN2 is streaming the debate online (Windows Media Player or RealMedia).

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The Lieberman-Warner Climate Security Act has emerged as the leading legislative vehicle for the creation of a national cap-and-trade system for greenhouse gas (GHG) emissions. Recently described by the Wall Street Journal as “the most extensive government reorganization of the American economy since the 1930s,” the Climate Security Act would, among many other things, require U.S. importers of a wide range of manufactured goods to purchase and surrender emissions allowances representing the GHGs associated with manufacture of the imported goods.

This requirement, intended to ensure that U.S. emissions caps do not diminish the competitiveness of domestic manufacturing industries vis-à-vis their foreign rivals, would only be excused for goods produced in countries that have adopted GHG emissions requirements as stringent as those in effect in the United States. In this way, the Climate Security Act would use U.S. market access to compel foreign exporting nations to limit GHG emissions, and could significantly affect trade flows.

In anticipation of the floor debate scheduled to begin in the Senate next week, Senator Boxer issued a substitute bill (S. 3036) that significantly alters the regulation of imports. One of the principal trade-related changes in the substitute bill is that it would create an International Climate Change Commission (ICCC) that would determine which foreign countries have taken “comparable action” to the United States in curbing GHG emissions. A negative determination would trigger the requirement for importers to provide emissions allowances pursuant to an International Reserve Allowance Program. The ICCC’s duties would also extend to determining the scope of manufactured goods falling under the import provisions, as well as modifying the import emissions allowance requirements as warranted.

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