Climate Change Summary Newsletter and Commentary
March 22, 2010By: Steven L. Hoch
Brownstein Hyatt Farber Schreck, LLP
California – Out Front Again
California Regulators Move Closer To Tightening GHG-Reporting Threshold
CARB appears closer to lowering the annual GHG emissions threshold that triggers facility reporting requirements – from 25,000 metric tons annually to 10,000 tons – a move that could put pressure on EPA to lower its 25,000-ton reporting threshold to ensure consistency. The rules are slated to be adopted by CARB at an October meeting, as part of a package of other climate change program regulations, including the state’s cap-and-trade program. The new threshold would include facilities consuming 180 million standard cubic feet of natural gas, or 980,000 gallons of diesel fuel, as examples. Changing to a 10,000-ton threshold would make California consistent with the proposed WCI requirements for trading.
See: http://www.arb.ca.gov/cc/reporting/ghg-rep/ghg-rep.htmRunning contrary to EPA, CARB continues to move “downmarket” to bring more facilities under its reporting rules. Lowering the reporting level in CA will certainly be something that various NGO’s will continuously point out to EPA as something that should be done nationally done now. The NGO’s will be saying, if CA can do it, EPA can do it. The fear is, of course, that the more you know about sources of GHG, the more likely it will be to find a reason to regulate. Watch for a fight with the EPA. If you’re in CA, you are going to have to report. If you are a publically traded company in CA and are within the 10-25K bracket, your SEC filings had better be up to date and rock solid.
California’s Legislative Analyst’s Office says CARB Does Not Have Authority to Implement 33% Renewables
The Legislative Analyst’s Office (LAO) says in a new report that the air board lacks the authority to implement a landmark 33% renewable energy standard (RES) and is recommending most budget funding for the effort be rejected by state lawmakers so that proper legislation can first be enacted. Gov. Schwarzenegger last year signed an executive order directing CARB to carry out the new RES, and administration officials have been claiming that the 2006 global warming solutions law, AB 32, provides the foundation for this authority. Currently, most of the authority over the state’s existing renewable portfolio standard (RPS) rests with the PUC under statutes approved by the Legislature in 2002 and 2006. The current RPS requires investor-owned utilities in the state to meet a 20% renewables rate by the end of 2010; this target is not expected to be met by any of the utilities. Utility officials, who could not be immediately reached for comment, are likely to agree with LAO’s conclusions about CARB’s lack of authority to implement a 33% RES, but will continue to argue against any new legislation to implement such a standard, arguing it is overly aggressive and likely to significantly increase energy costs.
See: http://192.234.213.2/analysis/2010/resources/res_anl10.aspx#zzee_link_4_1267810740 The legality of the executive order has been questioned by many others and the fact that the LAO has come out strongly on this issue does not bode well for the Gov. on this point. Attacks on the executive order are not ripe for legal action because the regulations that seek to enforce that are still a work in progress. We would assume that CARB will hold to that policy notwithstanding the possible challenges, until a court tells them otherwise. The PUC, on the other hand, who has the constitutional authority to set limits, may not wish to actually expand the 20% legal requirement because there is no chance that the major public electric utilities will be able to meet that at all. Setting a higher level of commitment would only make failure look worse. Time and energy to get various land use issues for transmission lines and ways to make green energy more affordable to produce should take center stage as opposed to useless jockeying over numbers.
Public Opinion
Stanford Researcher says “Climategate” is not Increasing Skepticism
Contrary to other studies, a Stanford researcher has concluded that the percentage of Americans who believe in the existence of global warming has changed little since 2008, but also says that three-quarters of adults continue to hold such a belief, a percentage that is “a slight dip” of 5 percentage points in a year and a half, said Jon Krosnick, a professor of political science and communication at the California-based institution. At the same time, public confidence in climate scientists remained constant over the past few years, he said. That means that the 2009 “Climategate” situation, in which stolen e-mails revealed internal disagreements among prominent climate scientists, did not influence public opinion, he said. He asserts his results are different then other recent surveys because those surveys use “multi-barreled” questioning that overload respondents with too many choices, rather than asking people one thing at a time. The time of year also may matter, he said. He noted that the percentage of people saying that average temperatures in the world “have been higher in the last three years” dropped from 58 percent in 2008 – when questions were asked in the summer – to 43 percent in 2009 – when they were asked in the winter.
See: http://woods.stanford.edu/docs/surveys/Krosnick-20090312.pdf What the truth is about the current level of public opinion is certainly not clear. Prof. Krosnick is correct in this assessment that some surveys are not completely reliable because of the way they were structured and no doubt in the next few weeks someone will be criticizing his conclusions. Further, antipathy is different then opposition. So where the public’s psyche really is remains unpredictable. But what is clear is that the publics view is focused on other issues now.
EPA Flinches
Court Grants Temporary Stay
The Court of Appeals the District of Columbia has granted EPA’s request to suspend several lawsuits over its contested GHG reporting rule to try to administratively resolve industry and environmentalists’ challenges to the rule, though industry warns it may still ask the court for an emergency stay of the rule if it cannot reach a settlement with EPA. EPA is required to file status reports on settlement talks at 90-day intervals beginning May 24, the order says. The court’s Feb. 22 order granting abeyance of the GHG reporting rule lawsuits gives EPA the opportunity to try and reach a settlement with industry and environmental groups that sued over major provisions of the rule. EPA has also won abeyance in a number of other lawsuits challenging agency air rules. For example, the D.C. Circuit Jan. 26 granted a joint motion filed by the American Chemistry Council and EPA to hold in abeyance a lawsuit over an Oct. 29 national emission standards for hazardous air pollutants for chemical manufacturing area sources, so that the agency can complete its review of an administrative petition for reconsideration of the regulations.
See: http://environmentalnewsstand.com/ The status reports required will be followed carefully in the environmental media, but they may not contain any real information, rather just perfunctory reports of meetings, topics, etc. What is important is that EPA may feel somewhat uncertain of their position. On the other hand, the move made by the EPA could be viewed seeking reconciliation with various groups to avoid the battles that they will be faced with so that the implementation can be prompt and without significant further challenge. Reaching such a reconciliation is unlikely, but there could be bits and pieces of agreement that can be removed from the legislation’s reach.
EPA Delay of GHG Permits to 2011 Prolongs Uncertainty for New Plants
EPA’s decision to delay until 2011 its mandate for first-time GHG permitting requirements at stationary sources is prolonging uncertainty for new coal-fired plants aiming to win final permits before the requirements take effect, because industry fears EPA will aggressively stall issuance of final permits until next year. EPA’s administrator stated recently that EPA would delay until 2011 the effective date of its proposed “tailoring” rule to exempt sources emitting less than 25,000 tons per year (tpy) of GHGs from Clean Air Act permitting requirements, and that EPA could in the first few years raise the threshold up to 75,000 tpy to focus on only the largest sources. But industry officials say that EPA’s delay only exacerbates problems for proposed coal-fired power plants and other facilities striving to win Clean Air Act permits so they can begin construction before GHG limits take effect. They also claim that EPA is aggressively and deliberately stalling permits it opposes – including reopening final permits through administrative orders -- in order to subject those facilities to GHG limits next year. Environmentalists are downplaying industry’s concerns about a delay in issuing GHG permitting requirements, saying the delay to 2011 “doesn’t change anything.” One environmentalist says that of a dozen or so proposed major coal fired power plants, “They’ll die of their own weight” either due to air permit flaws or other reasons.
See: http://environmentalnewsstand.com/ Building a power plant of any type requires reasonable expectations of a great many variables. Governmental regulation is certainly one of them and delay of regulation is therefore having an impact. It could be that EPA is delaying so that coal plants will not be built. But, it is affecting other facilities as well. Of more interest in this discussion is the comment by the environmentalist who predicts, notwithstanding any other issue, such plants are doomed for “other reasons.” The NGO’s have been very vocal on the construction of new coal plants over the last few years and that should not be expected to go away. The challenge, of course, is to replace the need to fill in with greener power production and distribution, which while giving lip service to, some of the same NGO’s are raising considerable negative comments over their construction.
China
A new study by scientists at the Carnegie Institution finds that over a third of carbon dioxide emissions associated with consumption of goods and services in many developed countries are actually emitted outside their borders. Some countries, such as Switzerland, “outsource” over half of their carbon dioxide emissions, primarily to developing countries. The study finds that, per person, about 2.5 tons of carbon dioxide are consumed in the U.S. but produced somewhere else. For Europeans, the figure can exceed four tons per person. Most of these emissions are outsourced to developing countries, especially China. Over a third of the carbon dioxide emissions linked to good and services consumed in many European countries actually occurred elsewhere, the researchers found. In Switzerland and several other small countries, outsourced emissions exceeded the amount of carbon dioxide emitted within national borders. The United States is both a major importer and a major exporter of emissions embodied in trade. The net result is that the U.S. outsources about 11% of total consumption-based emissions, primarily to the developing world.
See: http://www.physorg.com/news187282192.html This should really come as no surprise. Off shore productions of consumable goods in this country is vast. In fact, the 11% figure set forth in this report seems remarkably low, but since it’s a net, perhaps that makes sense. In looking at the world as a whole it is not surprising that there will be transference of GHG production for one country to another. It is the natural outcome of a worldwide trading scenario. There will be net consumers and net exporters. It would appear that the real issue is not who is in what category, but rather, if the problem of GHG is worthy of being addressed, how does every country lower their own profile.
Crunch in Rare Elements Could Undercut Growth of Some Green Technologies
Some of the most prominent technologies that are promoted for environmental reasons may face a component shortage in a few years if current trends continue in the supply and demand for rare earth elements. Hybrid electric vehicles, wind turbines, and compact fluorescent lights, to name only three of many products, depend on rare earth elements such as neodymium, lanthanum, and cerium. But about 95 percent of the world supply of rare earth elements is produced by China and China has tightened its export controls on those minerals over the last three years. Even without export constraints, there would be a risk that global demand could outstrip supply for rare earth elements.
See: http://responsiblenergy.blogspot.com/2009/10/rare-earth-elements-vital-to.html At a speech I gave some months ago at the UCLA School of Public Policy, I raised the issue that the chief source of lithium which is used widely in hybrid’s batteries, was China. I pointed out that one might expect some time in the future to hear the slogan “No blood for oil” be changed to “No blood for lithium.” While being overdramatic, the point was do we as a country want to take a carbon based economy whose geopolitical issues are well known and troublesome, and trade it for another that could be equally as troublesome? Clearly technological developments in the western world should take this issue into consideration and to the extent possible, find either other sources or replacements now before the concrete is set on a particular plan that relies on such rare substances which in turn will cause another round of problems in the future.
