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.

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

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.

On Wednesday morning, the House of Representatives released a bill which would supply a package of loans to the American auto industry totaling $15 billion. The loans, which are supposed to provide funding to the industry through March 31^st of next year, come with significant strings attached—most importantly the creation of a “car czar” who would have oversight of the industry, and who would have veto authority over any business transaction of $100 million or more. Congressional Democrats also released a discussion draft of the bill, which could be voted on as early as this afternoon.

While much of the discussion surrounding the bill will focus on the authority given to the government in overseeing the auto industry, the bill also contains a number of important provisions dealing with automobile fuel efficiency, public transport and greenhouse gas emissions. Significantly, Section 10 (g) of the bill prevents the industry “from participating in, pursuing, funding, or supporting in any way, any legal challenge (existing or contemplated) to State laws concerning greenhouse gas emission standards.”

Beyond this blanket provision on participating in lawsuits—likely aimed at protecting the state of California’s emissions standards, Section 13 of the bill requires the industry to study the feasibility of construction of vehicles for sale to public transit agencies. The bill also requires automakers to submit long term restructuring plans which must include provisions which will allow them to “comply with any and all Federal and State fuel efficiency requirements and the commencement of domestic advanced technology vehicle manufacturing, as required in the Energy Independence and Security Act of 2007.”

Of course, this bill has yet to be voted on by either chamber of Congress—and some Senate Republicans, including Richard Shelby, ranking member of the Senate Banking Committee, have expressed considerable concerns. The provisions mentioned above, however, show that policymakers are interested in using the opportunities created by the financial crisis to create incentives for further “greening” of American industries.

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

On September 25, 2008, EPA filed a Petition for Rehearing or Rehearing En Banc of the D.C. Circuit’s July 11, 2008 decision to vacate EPA’s Clean Air Interstate Rule (”CAIR”).  That decision eviscerated EPA’s primary tool for regulating interstate NOx and SOx emissions from 28 “upwind” states and DC that contribute to National Ambient Air Quality Standards violations in “downwind” states. 

While acknowledging a remand may still be necessary for portions of the decision the government is not contesting, the Petition asserts the panel erred in its unanimous ruling that: a) EPA’s regional trading scheme for SOx and NOx was inconsistent with the Clean Air Act’s requirement that EPA evaluate and address air pollution contributions on a state-by-state basis; b) EPA lacked authority to terminate or limit SOx and NOx allowances issued pursuant to EPA’s Acid Rain Program and c) vacating the entire rule was the necessary and proper remedy.

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As the final weeks of the 110th Congress wind down, air pollution regulation is again taking center stage.  Republican Senators Inhofe and Voinovich introduced a bill yesterday that would reinstate the Clean Air Interstate Rule (CAIR), an EPA-promulgated rule that was struck down by the DC Circuit Court in July.  The Inhofe-Voinovich proposal would “implement the Clean Air Interstate Rule and the rule establishing Federal Implementation Plans for the Clean Air Interstate Rule as promulgated and modified by the Administrator of the Environmental Protection Agency.”

In the House, Democratic Representatives Dingell and Boucher are working to reinstate only the first phase, which goes into effect in 2009 for NOx and 2010 for SOx emissions.  Under this type of proposal, CAIR would be enacted, but would sunset after a few years, giving future Congresses the opportunity to debate long-term solutions without the time pressures inherent in end-of-session negotiations.

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Note:  This is the first in a series of articles by ClimateIntel looking into legal, policy, and investment drivers that may influence the long-term viability of “clean-coal” technologies as tools for combating climate change. 

As Swedish Company Vattenfall prepares to commence operation of its new pilot clean-coal plant in Schwarze Pumpe, Germany, clean-coal advocates and policymakers should take notice and cheer.  Then, however, they should step back and reflect on the considerable technical, legal, and policy work left to be done if the “clean-coal” energy industry is to play its part in balancing global energy consumption with carbon emissions.

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Over the past five years, the U.S. wind power industry has grown at an annual pace of 30%.  According to a recent report by the U.S. Department of Energy, wind power could account for up to 20% of the nation’s electricity supply by 2030. As business grows and competition intensifies, wind project developers are facing increasingly complex legal issues and their need for experienced counsel from the very first to the very last stages of the project cannot be overstated.  One of the first steps in starting a wind project is securing the necessary real estate.  In a series of three posts, of which this is the first, we will outline some of the major issues relevant to the negotiation of wind project leases or easements and will provide general recommendations for developers.

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India’s National Action Plan on Climate Change (NAPCC) sets out eight focal points for the government’s sustainable development strategy through 2017. The NAPCC is likely to become a significant driver of new investment opportunities in the country’s renewable energy portfolio, and in solar generation in particular.

As the world’s second most populous country and second largest growing economy, India has unique challenges in developing an energy supply adequate to meet the country’s development needs, including providing electricity to the 44% of its population without grid access.

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EPA is requesting comments on proposed standards for Underground Injection Control (UIC) of carbon dioxide (CO2) at commercial sequestration facilities. When finalized, these standards should provide commercial sequestration project developers with a more consistent and predictable regulatory environment in which to carry out ambitious carbon capture and sequestration projects.

EPA already regulates most underground injection of liquids, gasses, and slurries under existing SDWA regulations, including programs addressing the use of CO2 in enhanced oil recovery activities and pilot CO2 sequestration projects. Because large-scale injection of CO2 for long-term sequestration raises unique technical and safety issues, however, EPA had previously stated that more targeted regulations for commercial projects would be necessary.

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Today, port authorities from around the world endorsed the World Ports Climate Declaration, in which they actively commit themselves to reducing greenhouse gas emissions and improving air quality.  The endorsement came at the conclusion of a three-day conference hosted by the City of Rotterdam and sponsored by, among others, the C40 Climate Leadership Group, an alliance of the world’s largest cities committed to tackling climate change.  According to the conference chairman, 55 ports endorsed a framework that will lead to “concrete international measures.”

Subjects that will be addressed by the ports include the development of a standard method for quantifying CO2 emissions from ships.  The ports also plan to develop a global indexing system that will enable them to reward climate-friendly ocean going ships, and punish the polluters.  The next follow-up meeting will take place in Los Angeles in November.

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