The Bay Area Air Quality Management District (BAAQMD) proposed one of the nation’s first carbon taxes to be assessed on stationary sources of greenhouse gas emissions. Over 2,500 district-permitted facilities would be subject to the tax, which would be computed by multiplying the total carbon dioxide equivalent (CDE) emissions from the permitted facility by the unit fee of $0.042 per metric ton of CDE. The proposed tax would raise about $1.1 million annually to help cover the cost of the District’s Climate Protection Program activities. BAAQMD estimates that most facilities with relatively low greenhouse gas emissions would have annual fees under $1. The largest emitters, however, would have annual fees in excess of $50,000 (i.e., the five Bay Area petroleum refineries and the two largest Bay Area power plants).

Several industry groups oppose the proposed carbon tax. These groups have raised concerns about the financial burden of the tax and the potential interference with a state-wide initiative to address greenhouse gas emissions. BAAQMD staff disputes these claims, explaining that the fees should have a minor financial impact on businesses. Moreover, the fees - not a “carbon tax” according to District staff - represent a modest step to recover the District’s costs and would not lead to inconsistencies or confusion with a state-wide program. A public hearing is scheduled for May 21, 2008 to consider adoption of the proposed fees.

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Texas Governor Rick Perry submitted a letter to the EPA last Friday requesting a 50% nationwide waiver from the federal Renewable Fuel Standard (RFS) . The RFS calls for roughly 9 billion gallons of renewable fuels in 2008, up from 4.5 billion in 2007. If granted, the waiver would restore the 2007 requirement.

Governor Perry is seeking the waiver reportedly as a way to reduce demand for corn, a popular feedstock for biofuels. In his letter to EPA, Governor Perry claims that 30-35% of corn will be diverted to biofuel production this year, which he claims contributes to rising food costs.

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The Oregon Department of Environmental Quality has released draft air quality regulations that would require all industrial facilities permitted under federal or state air quality programs to monitor their greenhouse gas (GHG) emissions beginning in 2009. The regulations, which are expected to impact more than 700 industrial sources ranging from coffee roasters to coal-fired power plants, are designed to create accurate GHG emissions data in anticipation of reductions that Oregon committed to as part of the Western Climate Initiative.

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Further demonstrating its leadership on climate change response, California’s Secretary for Environmental Protection signed an agreement with the United Nations Development Programme (UNDP) to support China’s efforts to address climate change. Pursuant to the agreement, California will share valuable information, such as academic research, effective policy initiatives, lessons learned and technological innovations, with the Chinese provincial governments to support their efforts to develop strategies and actions to mitigate global climate change. California is currently developing its own program to cut greenhouse gas emissions by 30% by the year 2020.

Governor Schwarzenegger issued the following statement about the agreement: “California alone cannot solve climate change - this is a global problem that requires a global solution. America has to lead, and we are doing so even with or without Washington. California is not waiting for the federal government to take action but instead we are forming agreements and building relationships with countries like China to fight climate change.”

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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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Guest article by Nicole Wobus, Summit Blue.

Oregon is one of seventeen states with greenhouse gas emissions targets. Late last month, Governor Ted Kulongoski moved the state’s climate change agenda forward when he appointed members to the Oregon Global Warming Commission, a 25-person policy advisory group. The Commission, established through the state’s climate change bill, HB 3543, is tasked with recommending a package of policy initiatives for the Governor to introduce during the 2009 legislative session. It will build on findings and recommendations put forth by Oregon’s Climate Change Integration Group. That group’s upcoming final report will highlight steps the state is taking to adapt to a changing climate and will recommend further actions.

The Governor intends to make growth in the state’s “green economy” a centerpiece in the policy package. In comments to the Commission on January 24 the Governor stated, “[d]ealing with global warming is not just a moral imperative, it’s an economic imperative” that will create a “business climate ideal for investment in renewable and clean energy technologies.”

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At its public hearing on December 6, 2007, the California Air Resources Board (CARB) approved a regulation to reduce emissions from diesel auxiliary engines on ocean-going vessels while at berth. The regulation will require operators of vessels meeting specified criteria to turn off their auxiliary engines for most of their stay in port or, alternatively, to demonstrate specific fleet-wide emission reductions.

The approved regulation is subject to certain modifications that were suggested by staff at the Board hearing. On February 22, 2008, CARB met with the affected industry, the ports, and other interested stakeholders to discuss the modified regulation. Stakeholders will have 15 days to submit comments on the modified language.

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Tenaska, Inc., one of the largest independent power producers in the United States, announced its intention to build a conventional coal-fueled electric generating facility located just east of Sweetwater, Texas, about 150 west of Dallas/Fort Worth. The Tenaska plant is noteworthy for two reasons.

• First, it is designed to capture 85% to 90% of the CO2 it produces and to use it for enhanced oil recovery efforts.
• Second, it does not propose to use integrated gasification combined cycle (IGCC) technology to recover carbon.

Tenaska hopes to begin construction in 2009 and commence commercial operation in 2014.

The new plant will be a conventional pulverized coal-fueled unit utilizing supercritical steam generating technology to burn low-sulfur, sub-bituminous Powder River Basin coal. Tenaska has not yet determined the precise carbon capture technology it will employ, but intends to capture and process CO2 and deliver it by pipeline to Permian Basin oil fields. There, it will inject the CO2 into underground formations to enhance oil recovery efforts, which will result long term CO2 storage deep below the surface.

Tenaska contends that this conventional pulverized coal plant is a technology superior to IGCC for reasons related to the type of coal burned, geographic conditions at the proposed site, and diversity of the technology employed at its plant. Tenaska indicates that IGCC works best with low moisture, high BTU, bituminous eastern coal, while the higher moisture, lower BTU Powder River Basin coal is better suited for pulverized coal technology. Tenaska also contends that IGCC technology works best at elevations closer to sea level; the proposed site for its new plant is at a higher elevation.

A potential side benefit of this project is that, if additional transmission infrastructure is needed for this project, the transmissions upgrades could provide necessary infrastructure for local wind power producers as well.

A final noteworthy aspect is that Tenaska is expecting this plant to qualify as an Advanced Clean Energy Project. This Texas program provides significant financial incentives to projects that include CO2 capture and meet emissions standards for mercury, nitrogen oxides and sulfur dioxide. Federal clean coal incentives would also be important to the economics of the project.

Hat tip: Colin Campbell, RTP Environmental Associates

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On February 14, 2008, the California Air Resources Board’s Economic and Technology Advancement Advisory Committee (ETAAC) released its final recommendations regarding proposed technologies and policies for reducing greenhouse gas emissions in California. Pursuant to the California Global Warming Solutions Act of 2006 (AB 32), ETAAC is required to advise CARB regarding “activities that will facilitate investment in and implementation of technological research and development opportunities.” The recommendations were developed through a year-long public participation process and input from California’s technology community. ETAAC approved the final report on February 11, 2008.

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A federal judge has authorized a settlement agreement between the South Coast Air Quality Management District (AQMD) and diesel engine makers after seven years of litigation. The agreement allows the regional air district to continue enforcing its clean fleet rules. AQMD’s clean fleet rules, adopted in 2000 and 2001, require fleet operators of 15 or more vehicles to purchase clean-fueled vehicles, such as ones operating on natural gas, when they replace or add vehicles to their fleet. The Engine Manufacturers Association and the Western States Petroleum Association had challenged the rules claiming that they were preempted by the federal Clean Air Act.

The effect of the parties’ agreement is that AQMD’s clean fleet rules will continue to apply to all fleets owned by state and local governments, as well as private companies that are under contract to, or operating under, an exclusive license or a franchise with state or local governments. The rules will not apply to fleets owned by the federal government or to fleets owned by private companies not under contract to state and local governments.

AQMD has been enforcing the rules since 2005. In 2007, AQMD reported that the rules had resulted in the purchase of more than 6,000 low-emitting vehicles.

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