Climate Change Summary Newsletter and Commentary

Climate Change Summary Newsletter and Commentary

September 28 2009

Steven L. Hoch
Brownstein Hyatt Farber Schreck, LLP

OBSERVATION OF THE WEEK

Recession Spurs Fall in GHG Emissions
Politicians love to take credit for things even if they had nothing to do with it… so who is going to lay claim to this?

The global recession has resulted in a significant drop in greenhouse gas emissions as manufacturing falls, according to an unpublished International Energy Agency study. The report found that carbon emissions from burning fossil fuels had fallen by the largest amount in 40 years. Other factors that may have played a role in this reduction include the decision not to move forward with some plans for coal-fired power stations and the impact of environmental regulations imposed by governments.

GHG MONITORING

EPA Releases Final GHG Reporting Rule
Guess who winds up paying for reporting?

The rule would require entities emitting at least 25,000 tons of CO2 and other GHGs to report their emissions. EPA estimates the rule will require reporting from about 10,000 facilities that account for about 85 percent of U.S. GHG emissions. Covered entities include suppliers of coal-based liquid fuel, petroleum products, natural gas, industrial greenhouse gases, and carbon dioxide in addition to facilities that use those resources, including stationary fuel combustion sites, electricity generators, manure management sites, waste landfills, and multiple manufacturing plants including lime, iron, steel, lead, cement, and aluminum. Additionally, it will include emissions from all heavy-duty and off-road vehicles. Manufacturers—rather than car owners or sellers—will be responsible for reporting the emissions. Monitoring requirements to collect GHG data will take effect January 1, 2010. The first reports must be submitted to EPA by March 31, 2011. EPA estimates the cost of the rule at $115 million for the first year and $72 million on an annualized basis in subsequent years—less than 1 percent of annual sales for small businesses.

CORPORATE GREENING

Survey says: “More companies going green.”
But how do we know they are all calculating the same….maybe they have no cows?

The Carbon Disclosure Project, a U.K.-based nonprofit that presses businesses to calculate and make public their carbon footprints, says 332 of the Standard & Poor’s 500 companies responded to this year’s study, a 66 percent return, up from 64 percent last year. Comerica, Inc. scored the highest in the survey’s ranking criteria, followed by Wal-Mart Stores Inc., Chevron Corp.; and Cisco Systems Inc., Best Buy Co. Inc., and News Corp. also ranked among the top climate-conscious firms. Almost twice as many corporations said they have established targets for reducing their greenhouse gas emissions, the report says. Fifty-two percent of the S&P 500 firms responding to the study disclosed specific emission reduction targets, up from 32 percent in 2008.

GREEN BUILDINGS

Labeling Green Buildings – Adrift
Let’s take care of the cow calculations first. (See below)

A study released last week by RAND Corp., surveyed building efficiency and labeling policies in Europe and Australia, with an eye toward what could work in America. The report makes recommendations for U.S. lawmakers if they go ahead with a labeling program but doesn’t answer the question of just how would these labels affect the business? No one is actually sure. Furthermore, Congress deleted from the draft of the Waxman bill a provision allowing states to label all buildings, new and old, for their energy performance. Environmental and energy efficiency groups protested. They said leaky old buildings make up the bulk of the building stock and are a key source of emissions cuts, since 40 percent of the country’s annual CO2 emissions come from the buildings sector. [What will happen is up in the air.]

TAXES/FEES

California Gas Tax Gone with the Wind…
We dodged that bullet.

A California tax-reform panel has rejected a Democratic faction’s proposal to increase the state’s gasoline tax in part to help lower GHG emissions. The plan would have sought an 18 cent hike to the state’s gas tax in the first year, followed by annual 7-cent and inflation-based hikes.

California Regulators Pass First U.S. Fee on GHG Emitters
But, they got us with this bullet.

CARB voted unanimously to make businesses bear most of the costs of administering A.B. 32. The fee starts at 12 cents a ton of CO2 starting in 2010, then drops to 9 cents a ton after the first three years. As an example, a cement plant would pay about $200,000 a year, with oil refineries expected to average closer to $1.3 million a year, under the fee schedule. From costs passed to individual consumers, CARB anticipates a restaurant would pay about $17 a year and a household about $1.60 a year.

TRANSPORTATION

San Francisco Airport Kiosk Sells Carbon Offsets
All these and no peanuts on the flight anymore?

Three kiosks recently unveiled at the airport allow flyers to pay a voluntary fee to counteract their plane’s carbon emissions. Travelers enter their flight’s details to find out how many pounds of carbon dioxide they are responsible for offsetting. The machines then charge $13.50 per ton. A round-trip from SFO to JFK would cost $23.42 per person. A one-way trip to LAX would cost $1.75. Of the $13.50, $12 funds reforestation at a 24,000-acre forest preserve in Mendocino County. The remaining $1.50 supports San Francisco environmental programs.

Air Transport Group Promises to Cut CO2 Emissions in Half by 2050
The airlines should just make the pilots buy offsets at the kiosks before they take off.

The International Air Transport Association (IATA) stated it would stabilize airline emissions by 2020 and cut emissions by half from 2005 levels by the middle of the century. IATA also stated that airline emissions already are projected to fall by 7 percent this year, with most of the reduction—5 percent—attributable to fewer flights resulting from the global economic downturn. Some of the future reductions will come from better routing computers and alternative aviation biofuels.

YOUR TAX DOLLARS AT WORK

House of Representatives Rolls out a Hybrid-Diesel Truck
A Prius on steroids.

A new diesel-electric truck will be used to ferry thousands of pounds of furniture and office supplies between House buildings and warehouses near Washington Dulles International Airport. The $133,000 Model 330 Hybrid Electric is designed to run 30 percent more fuel-efficient and uses virtually no fuel at speeds under 25 miles per hour. By comparison, conventional models of the same size cost around $65,000. The House wants an all electric truck that is available today, but is waiting to see how the vehicle performs in its first years on the road.

DOE Audit Says Green Projects Wasted Money
And they are ready to hand out billions for new projects… Great.

An audit of green projects run to date by DOE shows that the agency has squandered money and lacks trained personnel to oversee the technically complex projects. Past projects have been subject to waste and abuse, according to the agency’s inspector general. One project, for example, paid $565,000 over six years to a contractor in Texas for a high-efficiency laundry that is no longer in use, while another project paid $3.4 million without checking whether the conservation steps actually worked.

COWS

Petition Seeks Emissions Limits on Livestock Operations
Cows breathe a moo of relief when EPA says cow flatulence will not be regulated.

A coalition of environmental, animal rights and community groups filed a petition to EPA making the scientific and legal case that concentrated animal feeding operations (CAFOs), emit two greenhouse gases (methane and nitrous oxide) that hurt human health and welfare. The petitioners say that regulating emissions from CAFOs, which produce 500 million tons of waste a year, could make a big dent in global warming. Combined agricultural activities account for more than 6 percent of total U.S. emissions. A major portion of that comes from the manure on feedlots, and from the animals themselves. The groups’ call could reignite recent warnings from farm advocates who fear the specter of a “cow tax.” EPA Administrator Lisa Jackson has insisted she has no plans to regulate the flatulence of cows.

Dispute over Cows’ Carbon Footprint – What are the Rules?
Not sure if the non-regulation of cow flatulence is going to help resolve this problem.

The large British retailer Tesco PLC has begun labeling its milk with a carbon footprint, calculated at 2 pounds of CO2 per pint of milk. The U.S. dairy industry came up with a carbon footprint 15 percent lower than Tesco’s figure. The difference is partly due to the multiple products a cow provides: milk and then, once the cow is slaughtered, beef. Someone needs to make a decision on how much carbon counts to the former versus the latter. All of it adds up to a lot of uncertainty for retailers trying to curb their emissions or get a head start on possible regulation.