The Federal Trade Commission recently closed the period for public comments on whether the Commission should update its “Green Guides” to address the growing corporate and consumer retail carbon market and related market claims. One major issue raised in the FTC proceeding was the interplay between Renewable Energy Certificates (“RECs”) and Carbon Offsets (“Offsets”) and how these products are being used in the voluntary carbon market.

In both the voluntary Offsets and REC markets, there can be significant variation among the providers with respect to design of marketed products and the projects underlying them. It is this variability, both within and across each type of carbon product, that has raised concerns regarding the claims being made in REC and Offset markets and the need for greater clarity as to what consumers should expect from a REC or Offset carbon instrument.

The key issues raised include:

Read the rest of this entry »

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

The U.S. Department of Energy’s Energy Information Administration (EIA) is holding its “2008 Energy Conference” at the Washington, D.C. Convention Center. House Energy and Commerce Chairman John Dingell delivered a keynote speech this morning on the topic of “the Outlook for Energy and Climate Legislation.” During his remarks, Chairman Dingell reiterated that his committee was working feverishly to complete drafting comprehensive cap-and-trade climate change legislation, noting the difficulty of crafting legislation that would garner sufficient support to be passed.

Earlier in the year, Chairman Dingell had floated “trial balloons” concerning the comparative merits of a “carbon tax” over a cap-and-trade system. At the EIA conference, the Chairman acknowledged that very little support had developed behind the carbon tax approach. Mr. Dingell declined to predict a timetable for passage of any legislation his committee develops.

Speaking after Chairman Dingell, Frank Macchiarola, minority staff director for the Senate Committee on Energy and Natural Resources, offered a less sanguine outlook for passage of legislation. While commending the progress made so far in this Congress, Mr. Macchiarola pointedly commented that “leaner” and “more economically sensible” climate legislation could be expected in the “next few years.”

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

Lifecycle greenhouse gas (“GHG”) emissions analyses seek to quantify the GHG emissions created by the manufacture of the product through transportation to the consumer, use and disposal. Such analyses are generally considered the most effective means of establishing the full impact of a product on climate change. Estimating the emissions generated at each stage, however, is difficult and controversial. The Environmental Protection Agency (“EPA”) will weigh in on the debate this year when the agency commences a rulemaking on lifecycle GHG emission reduction targets for renewable fuels. The methodology that EPA chooses to measure lifecycle GHG emissions will be critical to the burgeoning biofuels industry and will likely set the standard for future regulation of other carbon-intensive industries.

The 2007 Energy Independence and Security Act, Pub. L. No. 110-140 (2007) (the “Act”) requires for the first time that biofuels meet stringent lifecycle GHG emissions targets to qualify for the Renewable Fuel Standard (“RFS”). The Act obligates EPA to complete a rulemaking by December 2008 that would establish the appropriate model and inputs for estimation of lifecycle GHG emissions and finalize emission reduction targets that renewable fuels must meet to be considered for the RFS. EPA is working on the draft rule and expects to issue a notice of proposed rulemaking by late summer, making it highly unlikely that EPA can meet the statutory deadline.

Read the rest of this entry »

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

This week both Senate and House committees will have hearings concerning global climate change and rising energy costs. These hearings begin on Wednesday in both the House Transportation and Infrastructure and Small Business Committees.

The Transportation Committee will be holding a hearing on Metropolitan Transportation Challenges, a focus of the hearing will likely be congestion pricing plans, with specific focus on the impending decision on New York City’s proposal.

The Small Business Committee will have a hearing on rising gas prices. The witness list has not yet been posted.

Also, Wednesday at 2:30pm, the Senate Commerce Committee will hold a hearing on coal gasification technologies. Dr. John Marburger, the Director of the White House Office of Science and Technology; James Childress, exec. Director of the Gasification Technology Council; Michael Mudd, from the FutureGen Alliance; and David Hawkins of the NRDC are all slated to appear.

On Thursday at 10am, the Energy and Commerce Committee will hold a hearing on possible EPA greenhouse gas regulations. Witnesses will include:  Robert Meyers, principal deputy assistant administrator, U.S. EPA’s Office of Air and Radiation; David Doniger, policy director, Natural Resources Defense Council’s Climate Center; and Lisa Heinzerling, professor of law, Georgetown University Law Center.

At the same time, the Appropriations Committee will hold a hearing on the FY2009 NOAA budget.

Across the Capitol, the Senate Environmental and Public Works Committee will hold a confirmation hearing on David Hill, who has been nominated to be the new Inspector General for the EPA.

Finally, the Senate Committee on Health, Education, Labor, and Pensions will hold a hearing on the public health implications of climate change on Thursday at 10am. Scheduled to appear are Jonathan Patz, professor of environmental studies at the University of Wisconsin; John Balbus of Environmental Defense; and Kristie Ebi, president of ESS, LLC.

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

The plastics industry has a strong interest in monitoring the development of domestic climate change regulatory policies. In Congress, both chambers are conducting record numbers of hearings on all aspects of the climate change issue and a bill has been passed out of committee in the Senate. In the 2008 Presidential race, all three leading major candidates have indicated support for legislation containing mandatory emissions limits. Even the Supreme Court of the United States has determined CO₂ is a pollutant subject to regulation under the Clean Air Act.

In this environment, any meaningful legislation is likely to have direct impacts on the plastics industry and its customers. Consider the following:

Read the rest of this entry »

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

The Congress returns from its Easter Recess this week to begin a work period that might see significant movement on crucial climate change legislation. With both chambers hoping to have legislation reported by the summer, the Energy and Commerce Committee is expected to begin writing a discussion draft before the end of April. There will also be some sort of finality on a reauthorized Farm Bill - either an extension of existing provisions, or a new bill ready for the President’s signature.

Senate Hearings
The Commerce Committee has noticed a hearing to examine the FY2009 NOAA budget with the expectation that NOAA administrator, Vice Adm. Conrad Lautenbacher will testify. No date has been finalized

The Energy and Natural Resources Committee will hold a hearing on April 1, at 2:30 on Forest Restoration, with officials from the US Forest Service, the Nature Conservancy, and NRDC all slated to appear

The Environment and Public Works Committee will hold a hearing on April 2, at 10am on the listing of the Polar Bear as an endangered species. Secretary of the Interior Dirk Kempthorn has been invited to testify but as of this writing has not responded.

On Thursday, the Environment and Public Works Committee will hold a hearing on “Greenhouse Gas Emissions and Higher Education” with the Presidents of Yale University, the University of Minnesota, and UC-Berkley all slated to testify.

The Foreign Relations Committee has noticed a hearing on International Deforestation, though no time has been given. Former Ambassador Stuart Eizenstat is scheduled to testify.

House of Representatives
The Select Committee on Energy Independence and Global Warming has three hearings this week. On April 1, at noon there will be a hearing on “Oil Price Issues.” On April 2, at 1:30 there will be a full committee meeting to ask for subpoenas for EPA documents related to the 2007 Supreme Court Case Massachusetts v. EPA. Following this hearing there will be another hearing on “Limiting Aviation Emissions” with Dan Elwell of the FAA, Bob Meyers of the EPA, and Tom Windmuller of the Air Transport Association testifying.

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

The U.S. Climate Action Partnership (USCAP) made an important contribution to the debate over cost containment mechanisms in a national economy-wide cap and trade program. In a six-page “discussion paper,” the coalition of industry, environmental groups and other NGOs identified the elements of a systematic approach to address price instability in a carbon cap and trade program.

The USCAP proposal focuses on measures to ensure carbon market integrity, while simultaneously providing tools to ameliorate market distortions. USCAP urges Congress to design cost containment measures to address a variety of concerns about price and cost impacts of a cap-and-trade system. The group identifies the “primary concerns” as:

1. Short-term extreme price volatility;
2. Sustained excessively high allowance prices;
3. An allowance price trajectory that discourages important investments in emissions-reducing technologies; and
4. An illiquid market.

Read the rest of this entry »

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

As Congress develops national climate change policy, members are focusing more on the details of the legislation. As a result, new terms are being used in the debates. One such term, something of a misnomer, is “safety valve.” This term is being used as short-hand for non-market mechanisms to control costs under an economy-wide cap-and-trade system.

The issue of cost containment arises in the context of hypothetical market disruptions leading to steep and rapid increases in the price of carbon credits that some believe could result in significant negative impacts on the U.S. economy.

Proponents of including a cost control mechanism contend that such price spikes could cause unanticipated declines in economic output and growth and that a cost control mechanism is necessary to buffer the most severe negative consequences. Opponents of cost control mechanisms argue that a limit on the price of emission credits would, inter alia, create market distortions for those investing in clean energy technologies or constructing clean energy infrastructure.

Read the rest of this entry »

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

In California, project sponsors and government agencies are facing increased pressure to analyze the impact of proposed projects on climate change. The California Environmental Quality Act (CEQA) requires a lead agency, before approving a project, to evaluate the potentially significant environmental impacts of that project and to adopt feasible measures to mitigate those impacts.

These requirements place project sponsors and California agencies in a difficult position because there is currently no regulatory guidance on how to evaluate an individual project’s contribution to climate change, much less how to determine whether a project’s potential contribution to climate change is “significant.” To address this difficulty, the Governor’s Office of Planning and Research (OPR) has been instructed to develop CEQA guidelines “for the mitigation of greenhouse gas emissions or the effects of greenhouse gas emissions.” OPR must complete its draft guidelines by July 1, 2009.

Read the rest of this entry »

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

Although not drafted as a direct response to global climate change, the EPA recently issued a final rule that will significantly reduce emissions of nitrogen oxide compounds (NOx) from diesel locomotives and marine diesel engines.

Nitrous oxide is a greenhouse gas that is regulated under the Kyoto Protocol, and would be included in any cap-and-trade program established by either the Lieberman-Warner bill or the Bingaman-Specter bill.  The new rule will lead to substantial reductions of particulate matter and NOx from these sources - perhaps by as much as 80 to 90 percent by 2030.

The rule covers all new diesel locomotives and large marine diesel engines (over 600 kW), as well as remanufactured engines.  The rules for remanufactured engines will go into effect first, as soon as certified remanufacture systems are available.  The rule also establishes near-term standards for newly-built engines, which will phase in beginning in 2009.  Finally, long-term emissions standards based on high-efficiency catalytic aftertreatment technology will be phased in beginning in 2014.  The standards will be fully in place in 2030.

According to EPA estimates, implementation of the rule will reduce annual NOx emissions by 800,000 tons per year.  NOx, once converted to N2O in the atmosphere, have a warming potential roughly 310 times that of carbon dioxide.  That means this rule will have the same impact as eliminating 248 million tons of carbon dioxide emissions or taking approximately 45 million cars off the road.

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