ClimateIntel.com

2008 was a landmark year for climate change initiatives in California.  Despite an economic downturn, the California Air Resources Board (CARB) approved an ambitious plan to slash greenhouse gas emissions to 1990 levels by 2020.  This plan, once implemented, will affect every sector in California.  The State Legislature also approved a pioneering bill to encourage “smart growth” regional land use planning.  In addition, Governor Schwarzenegger pushed for increased use of renewable energy and forged new relationships with leaders throughout the world to tackle climate change issues.  Not to be outdone, local agencies adopted measures to, among other things, incentivize the use of solar electricity and reduce emissions from California’s ports.

Looking forward to 2009, California regulators will be busy implementing many of the broad initiatives from 2008; within the next year, CARB must adopt enforceable regulations to implement its “discrete early action” measures to reduce greenhouse gas emissions.  CARB will also begin the rulemaking process to implement other measures set forth in its scoping plan.  Given the deepening economic crisis and criticisms surrounding its prior economic analysis, CARB will most certainly conduct further studies regarding the short and long term costs and benefits of its plan to reduce greenhouse gas emissions.  In addition, in collaboration with the Western Climate Initiative, CARB will fill in many of the gaps regarding how it plans to implement a cap-and-trade program covering 85 percent of the state’s emissions.

California planners can also look forward to receiving additional guidance in 2009 regarding the intersection between climate change and environmental review responsibilities.  By July 1, 2009, the Governor’s Office of Planning and Research must prepare guidelines for the evaluation of greenhouse gas emissions under the California Environmental Quality Act (CEQA).  Notably, as California’s economic woes increase, there will likely be increased pressure to exempt certain job-generating projects from CEQA review in order to speed their approval.  Notably, late last month, Governor Schwarzenegger vetoed a much needed tax package in part because he wanted to exempt additional “shovel-ready” projects from CEQA review.  With the economic downturn, the open question for 2009 appears to be whether policy makers and regulators will delay many of the impressive climate change initiatives of 2008.

 At a time when many new energy projects have been slowed down or cancelled due to the falling oil prices, rising construction costs, and burdensome legal obstacles, the trend against such projects appears to be turning.  The State of Ohio recently granted Baard Energy the last of its required construction permits for a new coal-to-liquid (CTL) facility with an estimated price tag of $5 billion dollars.  The proposed Ohio River Clean Fuels (ORCF) facility, located in Wellsville, Ohio, would produce 53,000 barrels of liquid fuel per day, using coal and biomass as feedstock, and would come on-line in 2012. 

Supporters argued that the facility would generate thousands of new jobs for Ohioans during the construction process and hundreds more high quality jobs during its operation.  Opponents argued that the facility would release between 14 and 18 million tons of carbon dioxide annually, and that issuing a permit would be unlawful without imposing a binding obligation on the company to capture or sequester such emissions.  In the end, the state agreed with supporters of the facility, both granting the permit and providing a $500,000 grant to support acquisition of property under a “Job Ready Sites” program through the Ohio Department of Development.  

(more…)

In the second post of our series examining the incoming Obama administration and its push for a national climate change policy, we turn to the current political environment; firstly examining the domestic climate, at both the state and national level, and then toward  to international negotiations to replace the 1997 Kyoto Protocol, which continued last week in Poznan Poland.

————

President-elect Obama inherits a dysfunctional domestic climate change policy: while the federal government has either stalled, or actively opposed, greenhouse gas (GHG) control, state governments have established their own control programs. While recent efforts to enact federal legislation have exposed many challenges to a national climate policy, opportunities for strong national leadership exist. Three significant areas of action in domestic climate policy are outlined below.

National Climate Change Legislation

The current Congress has made progress on energy efficiency and renewable energy—most notably, the extension of the Investment Tax Credit (ITC) and the Production Tax Credit (PTC), and the increased stringency of auto mileage standards in the 2007 Energy Independence and Security Act.  While, a comprehensive statute to control GHG emissions advanced further than ever before, there remain substantial roadblocks to passage. The two most significant efforts of the last year are the Lieberman-Warner Climate Security Act (Lieberman-Warner) and Dingell-Boucher bills. Lieberman-Warner failed on a vote to end debate in early June, despite significant support from industry. The Dingell-Boucher bill was released only as a discussion draft, and with Congressman Waxman taking over as chairman of the House Committee on Energy and Commerce, its future seems bleak.

President-elect Obama’s campaign platform contained a cap and trade system similar to those in the failed legislation, but also included both more aggressive reduction targets and a 100% auction of carbon credits. As the fight over the Lieberman-Warner bill and the Waxman/Dingell face-off show, divisions within the Democratic caucus will remain a significant obstacle.

A side note: because of the perceived mishandling of the Lieberman-Warner bill before the Senate, Akin Gump lawyers suspect that Majority Leader Sen. Harry Reid will turn to Sen. Jeff Bingaman of New Mexico to help shepherd any climate legislation through the Senate. While Sen. Bingaman has been an advocate of GHG control, his previously introduced legislation on climate change has included much more modest emissions control targets and limited carbon auctions; the Senator’s leadership may provide a significant moderating influence on any potential legislation.

Executive Agency Action

The Environmental Protection Agency (EPA) has largely opposed efforts to regulate carbon under exiting statutes, primarily the Clean Air Act.  For example, it opposed state efforts to have carbon dioxide ruled a “pollutant” for purposes of the Clean Air Act, a position rejected by the Supreme Court in Massachusetts v. EPA.  The Agency also denied the state of California’s petition to regulate emissions from automobiles. President-elect Obama has criticized the EPA’s recent actions and it seems likely that he would act quickly to reverse course in a number of areas.

Important changes are coming to the EPA’s regulation of GHG’s even before the accession of the Obama administration. In recent weeks, EPA issued a landmark decision on power plant construction. In a case about a power plant on American Indian land in Utah, the agency’s own appeals board ruled that EPA erred in refusing to consider requiring best available control technology (BACT) for GHG emissions control. For the short term, this essentially the freezes the permitting and construction of new power plants; the decision places the burden on the incoming administration to determine what will meet BACT standards and how power plants will be permitted going forward.

State Action

In stark contrast to the federal government, state governments have pushed ahead aggressively with GHG control pacts, both as individual states and as part of regional compacts. In the northeast, ten states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont) created the Regional Greenhouse Gas Initiative (RGGI), the first mandatory, market-based emissions control program in the United States. RGGI’s goals are modest—a 10% reduction in GHG emissions by 2018—but it provides an important guidepost for future programs.

(more…)

 On Thursday, the California Air Resources Board (CARB) unanimously approved a scoping plan for its ambitious initiative to reduce greenhouse gas emissions in the state.  The scoping plan, mandated by the Global Warming Solutions Act of 2006 (AB 32), aims to reduce statewide emissions to 1990 levels by 2020.  The scoping plan includes both an extensive cap-and-trade program as well as sector-specific emission reduction targets. 

While the plan is in many ways similar to an earlier draft released in June, it does strengthen California’s commitment to significant - transitioning eventually to full - auctioning of carbon credits.  By comparison, the Western Climate Initiative (WCI), a partnership of seven western states, including California, and four Canadian provinces, has only committed to auctioning 25% of its carbon credits by 2020.

The proposed cap-and-trade program covers 85% of the state’s emissions and will be linked to the WCI.  The cap-and-trade program will begin in 2012 and phase in particular sectors of the state’s economy.  In the first compliance period, the electricity sector and large industrial facilities will be covered by the program.  Additional sectors will be phased in to the cap-and-trade by 2015.

The scoping plan is a starting point by which CARB will begin a formal rulemaking process implementing the scoping plan’s recommended measures.  The rulemaking will develop key elements of the cap-and-trade, including determining the method used for distributing emissions allowances, appropriating revenues raised through auctions, and establishing the rules for the use of emissions offsets.

(more…)

 On November 17, 2008, California Governor Arnold Schwarzenegger signed Executive Order S-14-08 (EO S-14-08) to expedite the approval process for renewable energy projects and increase California’s renewable portfolio standards (RPS) to 33% by 2020. 

As previously raised by ClimateIntel, current inefficiencies and red tape in the permitting process have been holding up progress towards meeting California’s existing 20% by 2010 RPS goal.  Thus, the effectiveness of the RPS procurement process has been tempered by the slow pace of actual renewable development coming online.  The Governor’s EO S-14-08 directly addresses this problem through the following:

• Streamlining the application process for renewable energy development by creating a “one-stop” process for concurrent review of permit applications by the California Energy Commission (CEC) and the Department of Fish and Game (DFG).  On November 17, the CEC and DFG signed a Memorandum of Understanding (MOU) to create a joint Renewable Energy Action Team (REAT) that will concurrently review permit applications filed at the state level.  This streamlined process is expected to halve the application time for specific projects.  Beyond this, the CEC and DFG entered into a further MOU with the U.S. Fish and Wildlife Service and the U.S. Bureau of Land Management to include the federal partner agencies in the expedited permitting process for projects on federally-owned California land. 
• Initiating the Desert Renewable Energy Conservation Plan in the priority Mojave and Colorado Desert Regions.  Under this Plan, the REAT will, among other things, collaborate with federal partners and stakeholder groups to identify and map pre-approved areas for streamlined RPS project permitting and environmental review.  The REAT will also develop a Best Management Practices manual to assist applicants in designing projects to emphasize siting considerations and minimize environmental impacts.  The Plan is expected to reduce both the time and uncertainty normally associated with renewable project development.  
• Further accelerating and raising California’s RPS Goal from 20% by 2010 to 33% by 2020.  The Governor will be unveiling proposed companion legislation to codify this higher RPS standard and require all utilities, public and private, to meet the 33% target.  The legislation will also reform the renewable energy market structure to spur new development while providing consumer safeguards.

About half of the states in the U.S. have renewable energy mandates, but California’s 33% by 2020 will be the most aggressive.  With California again pushing the envelope, hopefully, the Obama Administration will be next to push for a strong federal renewable portfolio standard.

On November 4th, California voters rejected both of the proposed renewable energy measures.  Proposition 7, the Renewable Energy Generation Initiative, would have required government-owned utilities to generate 20% percent of their electricity from renewable energy by 2010, a renewable energy portfolio standard already applicable to private utility companies.  Proposition 7 also would have raised the requirement for all utilities to 40% by 2020 and 50% by 2025.  Many argued that, while well-meaning, the measure was poorly drafted, and would have created loopholes for compliance, resulted in higher electric rates and forced small renewable energy companies out of business.  Opposed by leading environmental groups, renewable power providers, taxpayers, business and labor, Proposition 7 was defeated 65% to 35%. 

Proposition 10, the Alternative Fuel Vehicles and Renewable Energy measure, would have authorized the state to sell $5 billion in general obligation bonds to finance various renewable energy and alternative fuel vehicle incentives, largely green car rebates.  It would have cost the state about $10 billion over 30 years to repay the bonds.  This proposition was heavily backed by Clean Energy Fuels Corp., a company founded by Texas billionaire T. Boone Pickens that operates natural gas filling stations throughout the U.S. and Canada.  Opponents, which included environmental groups and consumer watchdogs, criticized the measure as special interest legislation that would have provided large subsidies to compressed natural gas.  Voters rejected the measure 60% to 40%. 

(more…)

The California Air Resources Board today released its final scoping plan for reducing California greenhouse gas emissions to 1990 levels by 2020 as part of the Global Warming Solutions Act of 2006, or AB 32.  While other states are looking to reduce greenhouse gas emissions from certain sources via the Western Climate Initiative (WCI) and the Regional Greenhouse Gas Initiative (RGGI), CARB’s final scoping plan would impact almost all industries throughout California.  Despite the downturn in the economy, Governor Schwarzenegger applauds the scoping plan and believes it will strategically places California in a secure, competitive position for the future.

The plan calls for emission reductions through, among other things, vehicle emission standards, expanded energy efficiency programs, solar incentives, implementation of water efficiency and sustainable forest programs and increased utilization of renewable energy sources (by increasing the renewable portfolio standard to 33 percent by 2020).  The plan also calls for a cap-and-trade program linked to regional partner programs.  Industries, which feel the burden of the economic downturn, have expressed concerns that the proposed restrictions may place them at a disadvantage compared to their peers in states lacking climate change regulations.  CARB, however, projects that the plan will ultimately increase economic production by $33 billion and create more than 100,000 jobs.

(more…)

A press release yesterday announced that Governor Schwarzenegger signed legislation (SB 375) to create more environmentally-friendly communities, sustainable developments and alternative transportation methods in California. The legislation builds upon the Global Warming Solutions Act of 2006 (AB 32), which was the first of its kind both in California and in the U.S., and addresses the reduction of greenhouse gas emissions.

(more…)

On Tuesday, September 23, the Western Climate Initiative (WCI) partners, including seven western states and four Canadian provinces, announced their proposed design of a regional market-based cap-and-trade program.  The WCI partners are recommending a multi-sector program to reduce greenhouse gas (GHG) emissions to 15% below 2005 levels by 2020.

Under the current proposal, the WCI would initially regulate emissions from electricity generation and large industrial and commercial facilities that emit more than 25,000 metric tons of GHGs.  The scope would expand in 2015 to include smaller facilities and transportation fuels.

(more…)

The Western Climate Initiative (WCI) is expected to release a report on Tuesday detailing the design of a regional cap-and-trade program for carbon emissions.  The WCI is a consortium of 7 Western states and 4 Canadian provinces that have committed to reducing greenhouse gas (GHG) emissions by 15 percent (from 2005 levels) by 2020.

The WCI is the second major regional GHG reduction program to attempt to implement a cap-and-trade program.  The first program, the Regional Greenhouse Gas Initiative (RGGI), composed of 10 states on the East Coast, will hold its first auction on Thursday and begin operations in January 2009.

(more…)