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Commentary
The Kerry-Graham-Lieberman bill stalemate continues. The bill has gone to the Environmental Protection Agency (EPA) for modeling. President Obama hinted that immigration legislation may wait until next year . . . Given the limited time remaining for legislative deliberation in this election year, the parties will have to resolve the impasse very soon if there is going to be any consideration of a climate bill in 2010. Few Senators outside the K-G-L team have seen very much of the bill, which means that the proponents would have to work very fast to build understanding and support . . . EPA Administrator Lisa Jackson cautioned a House subcommittee that legislative nullification of the agency's "endangerment finding" would undo the agreement between the Obama Administration and the State of California on implementation of motor vehicle emission standards.
Executive Branch
- President Obama Hints Immigration Issue Will Yield to Climate Change. Speaking to reporters on Air Force One, President Barack Obama indicated that an immigration bill might not be taken up in Congress until next year, saying "I know there may not be an appetite immediately to dive into another controversial issue." According to the President, "There's still work that has to be done on energy, midterms are coming up, so I don't want us to do something just for the sake of politics that doesn't solve the problem." As discussed below, Sen. Lindsey Graham (R-SC) left his work on the climate bill after reports surfaced that the Democratic leadership could move forward on immigration reform before the climate bill.
- EPA Administrator Warns Against Nullification of Endangerment Finding. Lisa Jackson, Administrator of the Environmental Protection Agency (EPA), testified to the Subcommittee on Energy and the Environment of the House Committee on Energy and Commerce on the agency's efforts to regulate greenhouse gas (GHG) emissions. Jackson cautioned the subcommittee against legislatively overturning the agency's December 2009 finding that GHGs endanger public health and welfare, arguing that such an action would undermine the agency's recently promulgated vehicle GHG standards. Because those standards were promulgated jointly with new fuel economy standards, Jackson argued that the nullification of the vehicle GHG standards would eliminate about one third of the joint rules' expected GHG emission reductions and one quarter of the estimated fuel savings. Jackson also stated at the hearing that the agency had not yet opened negotiations with the State of California on a framework for vehicle GHG regulation in model years 2017 and later, but would do so soon. The agency's current GHG standards cover model years 2012 through 2016.
- CFTC Decides Not to Exercise Jurisdiction Over Chicago Climate Exchange, For Now. The five members of the Commodity Futures Trading Commission (CFTC) decided unanimously against exercising jurisdiction over the Chicago Climate Exchange (CCX), a voluntary cap-and-trade program launched in 2003. In August of last year, CFTC opened an investigation into whether the CCX's cash contract for GHG allowances – called the Carbon Financial Instrument (CFI) – serves a "significant price discovery function," a finding that would have subjected the CCX to CFTC oversight and required CCX to comply with trading principles set forth in the Commodity Exchange Act (CEA). CFTC concluded in last week's decision that "CCX CFI prices are not widely used as price references to the U.S. carbon market," and therefore did not meet the applicable standards for CFTC regulation under the CEA. As discussed below, the parent company of the Chicago Climate Exchange was sold this week.
- EPA Launches National Competition for Building Energy Efficiency. EPA initiated its first National Building Competition, a contest in which fourteen commercial buildings around the country will compete to reduce energy consumption over the next six months. The fourteen participating buildings were selected from a pool of 200 candidates enrolled in the agency's ENERGY STAR program. Styled after the television program "The Biggest Loser," the participants will receive online tips from the show's fitness trainer, Bob Harper. The winner of the competition will be announced in October. More information on the competition is available at http://www.energystar.gov/index.cfm?fuseaction=buildingcontest.about .
Congress
- Kerry, (Graham,) and Lieberman Send Bill Description to EPA, EIA. Senators John Kerry (D-MA) and Joseph Lieberman (I-CT), with the consent of Sen. Lindsey Graham (R-SC), sent specifications of their draft climate bill to EPA and the Energy Information Administration (EIA) so that the agencies could begin modeling the economic impacts of the bill. The modeling will likely take at least 4-6 weeks. Sen. Kerry told reporters that there had been behind the scenes progress towards resolving the impasse between Majority Leader Harry Reid (D-NV) and Sen. Graham, who walked away from work on the climate bill after reports surfaced that the Democratic leadership might prioritize immigration reform ahead of the climate bill. Maj. Leader Reid has since stated that the energy-climate bill will be ready first and brought to the floor first, but Sen. Graham has not re-engaged with the climate bill. Sens. Kerry and Lieberman told reporters that they had no plan to unveil their bill without Sen. Graham.
- Issues Still Unresolved in Kerry-Graham-Lieberman Bill Draft. Although Senators Kerry, Graham, and Lieberman were reportedly ready to release a draft version of their climate bill last Monday, reports indicate that some issues remain unresolved. Energy Daily reported that Senators Kerry, Graham, and Lieberman have not yet reached agreement on how to allocate royalty revenues from expanded offshore drilling, with some senators demanding that coastal states receive an increased share and others strongly opposed. Sen. Debbie Stabenow (D-MI) told reporters that she and others still have concerns about the border adjustment language to address competitiveness issues, but that agreement could still be reached before the bill goes to the floor.
States and Cities
- California Bill Creates $50M Fund for Clean Energy and Efficiency Loans. California Governor Arnold Schwarzenegger signed into law a bill that provides $50 million in state funds to back city and county loans for property assessed clean energy (PACE) bonds. The PACE program provides money to homeowners to make energy efficiency improvements. Repayment occurs through their property tax bill, or its equivalent, so that the improvements and the declining balance to pay for them attaches to the tax obligation of the homeowner. The fund aims to promote clean energy and energy efficiency projects by providing assurance against the default of bonds issued by city and county governments for such projects. Without the state fund, banks would require city and county governments either to pay higher interest rates on the bonds or establish their own reserve fund. The bill is expected to support $500 million-$1 billion in loans.
Industry and NGOs
- "We Can Lead" Coalition Issues Open Letter Urging Renewed Efforts on Climate. More than 170 business members of the "We Can Lead" campaign – including Exelon, PG&E, and Starbucks – signed an open letter to Senate Majority Leader Harry Reid (D-NV), urging the Senate "to help put the efforts by Senators Kerry, Graham, and Lieberman back on track." The letter stated that a national climate change policy is necessary to provide regulatory certainty and market signals that will stimulate innovation and enhance the competitiveness of the economy. "Every day the Senate fails to pass comprehensive climate and energy legislation," continued the letter, "is a day our economy falls another step behind and delays our ability to create millions of new American jobs." A similar letter sent to all Senators by 31 environmental organizations, including Defenders of Wildlife and the National Wildlife Federation, implored the Senate "not to squander the great promise" of the Kerry-Graham-Lieberman bill. The We Can Lead letter is available at http://www.wecanlead.org/actnow/ .
- CCX and Affiliated GHG Exchanges Sold to ICE. IntercontinentalExchange (ICE), an energy derivatives trading platform with offices in Atlanta and London, has agreed to purchase the three GHG exchanges owned by Climate Exchange plc – the CCX, the Chicago Climate Futures Exchange, and the European Climate Exchange – for a total price of $600 million. The deal is expected to close in July 2010. Once completed, the transaction will make ICE a significant player in providing GHG trading services, rivaled only by the CME Group's Green Exchange; The European Climate Exchange alone executes approximately 90% of exchange-traded allowance sales in the European Union's Emissions Trading System. Richard Sandor, the founder and Executive Chairman of Climate Exchange plc, said in an interview that the sale was motivated by ICE's ability to drive down the cost of trading and increase shareholder value. Said Sandor, "We thought it was the right combination with the right exchange and at the right time. As other exchanges have merged, they've talked about the benefits of one platform, a single clearinghouse for both energy and environmental products, all of which will be healthy for the environmental space."
- Report Identifies Opportunities for Administration to Use Existing Authorities to Support Energy Efficient and Sustainable Buildings. A group of energy efficiency and green building organizations, real estate industry associations, and affordable housing advocates – organized by the U.S. Green Building Council – released a report providing almost 100 recommendations for the use of existing executive authority to promote energy efficient and sustainable buildings in the commercial and multifamily sectors. The report surveyed over thirty federal programs responsible for about $72 billion in federal spending or loan guarantees, administered by a wide variety of agencies, which range from the Department of Housing and Urban Development to the National Park Service. The recommendations focus on existing legal authorities that would not require new statutes or appropriations. Key opportunities identified in the report include: reforming federal banking regulation, and oversight of Freddie Mac and Fannie Mae, to encourage proper appraisals and underwriting of efficient and sustainable buildings; integrating energy efficiency criteria into competitive federal grants and funding formulas; providing clearer guidance for the existing energy efficient commercial buildings tax deduction and national historic preservation tax credit; and providing affordable housing owners with flexibility to use retained and leveraged funds for building retrofits. The report is available at http://www.usgbc.org/ShowFile.aspx?DocumentID=7187 .
- CNAS Recommends Closer Study of Security Implications of Climate Change. The Center for a New American Security (CNAS), a defense-oriented think tank with close ties to the Obama Administration, has issued two reports addressing the topic of national security and climate change. The first report, "Lost in Translation," argues that national security policymakers would benefit from greater access to and understanding of climate change science, and recommends various institutional mechanisms to encourage communication between climate scientists and national security officials. The second report, "Broadening Horizons," urges the Department of Defense (DOD) to intensify its study of and adaptation to climate change, and recommends that DOD engage in policy debates over geoengineering; study the feasibility of placing nuclear power generators on military bases to generate zero-GHG energy; and extend the scope of the Pentagon's Northern Command to the Arctic Circle, which is gradually opening to shipping routes and new resource claims as a result of the retreat of polar ice. The "Broadening Horizons" report is available at http://www.cnas.org/files/documents/publications/CNAS%20Publication_Climate%20Change%20and%20the%20US%20Armed%20Forces_April%2020.pdf ; the "Lost in Translation" report is available at http://www.cnas.org/files/documents/publications/Lost%20in%20Translation_Code406_Web_0.pdf .
Studies and Reports
- MIT Modelers Double Temperature Rise Projections. Researchers at MIT have published the results of 400 runs of the MIT Integrated Global Systems Model, an integrated model of global economic activity and the climate system. The model's median temperature projection is a 5.2˚ C (9.4˚ F) increase by 2100, with a 90% probability that the temperature rise will be between 3.5˚ and 7.4˚C (or 6.3˚ and 13.3˚ F). This projection is more than double the projection released in 2003 using an older version of the model, which projected a median temperature rise of 2.4˚C (or 4.3˚ F) by 2100. The model does not include possible positive climate feedbacks, such as large-scale releases of methane from melting permafrost in the arctic. A description of the research, which was published in the Journal of Climate, is available at http://web.mit.edu/mitei/research/spotlights/change-odds.html .
- EPA Releases Climate Indicators Report. EPA released a report documenting trends in the United States potentially related to climate change. The report found that many of the trends have intensified with rising atmospheric GHG emission concentrations, including rising air and water temperatures, heavier precipitation, glacial melting, more frequent heat waves, ocean acidification, sea level rise, and intensified tropical cyclones. The report is available at http://www.epa.gov/climatechange/indicators.html .
International
- U.N. Advisory Group Issues Climate Change Recommendations. The Advisory Group on Energy and Climate Change (AGECC) issued a report providing recommendations for the on-going international climate change negotiations. The report's major recommendations include developing a global campaign to support sustainable development of energy resources; bolstering climate change finance; adopting national strategies for energy efficiency and energy access; and requiring the United Nations and development agencies to provide incentives for low-carbon policies. The AGECC was established by U.N. Secretary General Ban Ki-moon to incorporate an assessment of global energy issues into the climate change negotiations.
- Australia Postpones GHG Efforts. The Australian government deferred its plans to pass legislation establishing an emission trading program by mid-2011. Prime Minister Kevin Rudd announced that Australia would instead aim for passage of the Carbon Pollution Reduction Scheme following the conclusion of the current Kyoto Protocol commitment period at the end of 2012.
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