Climate Change Summary Newsletter and Commentary
February 22, 2010
By: Steven L. Hoch
Brownstein Hyatt Farber Schreck, LLP
California
California Bill Aims To Streamline Approvals For Industrial GHG Controls
A California lawmaker has introduced an industry-backed bill to expedite the approval of certain industrial projects that attempt to comply with GHG regulations, primarily a proposed cap-and-trade program. The bill would allow these projects to qualify for a “focused” EIR under CEQA, a process that could assist in avoiding some of the law’s assessment and mitigation review layers and can help block litigation against projects. The bill is drawing early opposition from some environmentalists, who argue it is overly broad and prematurely assumes many GHG-reduction projects will have limited environmental impacts. The bill is sponsored by the California Council for Environmental & Economic Balance (CCEEB), which represents a variety of large stationary source facilities. Practically speaking, the bill aims to require CARB to fully assess cumulative and other environmental impacts of the cap-and-trade program and separate GHG regulations, as well as alternatives to the GHG rules, before adopting the regulations later this year. This would allow subsequent industrial projects that appear to comply with the CARB GHG regulations to use the “focused EIR” process, which would streamline local permitting approvals.
See: The bill - http://carboncontrolnews.com/ccndocs/feb10/ccn02182010_bill.pdf See: CCEEB Analysis of the bill - http://carboncontrolnews.com/ccndocs/feb10/ccn02182010_background.pdf
Because of the opposition by environmental groups, it is doubtful this bill will pass. If it does pass, it will be because of the need for jobs and that projects which can employ Californians. It is clear that one of the impediments to getting such projects on line is that there is a built in delay (sometimes of far too many years) to deal with the litigation process that arises out of the CEQA. While this bill does not eliminate many of those impediments, it certainly seems to go far enough to eliminate a major part of the GHG issues that under CEQA must be dealt with. We will keep track of this and report if it looks like it will actually pass.
Solar Provides Energy for Calif. Utility
Sacramento Municipal Utility District (SMUD) last month became California's first utility to offer a feed-in tariff designed to boost the generation of renewable energy and was flooded with applications. SMUD's tariff, called a "FIT" in industry shorthand, has been in the works since August 2009. It offers energy sellers fixed prices for up to 100 megawatts of power that SMUD would buy from small renewable energy projects. The tariff is divided into two categories: projects 3 MW and below, and those between 3 and 5 MW. But some FIT proponents say SMUD's rates aren't high enough to entice smaller developers. SMUD based its rates on the avoided cost to ratepayers, including the futures prices of natural gas, the assumed cost of new natural gas-fired capacity and the estimated value of greenhouse gas offsets. A lingering question is how such programs might fit into state and national tariffs. SMUD officials structured their program to mesh with a 2009 law, S.B. 32, which set a statewide cap of 750 MW for all investor-owned and large public utilities. If California changes its law, it could change the way individual utilities' FITs are structured, however.
See: http://climateupdate.shareurworld.com/ A feed in tariff essentially mandates that the utility take the power and pay for it. This permits the possibility of smaller facilities that offer power for the user and provides for the sales of the excess. It is essentially a way to self finance a project from the sale of the power. Given that such facilities may be built where power is already being supplied, the obstacles for transmitting the excess power back to the grid are significantly lower, because there is likely less of a need for entirely new transmission facilities. Already existing power transmission and distribution systems may need upgrade, but that is far easier and less controversial then putting in huge transmission towers across the landscape. However, if the critics are correct and the rates for purchase aren’t sufficient for the smaller developer (i.e. the person who may want to run their factory from green power and sell the excess) may be less inclined to jump in. Time will tell.
NEPA
Draft CEQ Guidance On GHGs In NEPA Reviews Includes Key Exemption
The White House Council on Environmental Quality’s (CEQ) issued draft guidance on incorporating GHG consideration in National Environmental Policy Act (NEPA) reviews of federal actions which exempts federal land and resource management actions from being subject to GHG analyses. In the guidance on incorporating GHG considerations in NEPA reviews, CEQ proposes that agencies may want to consider whether if it is meaningful to assess a project’s GHG impacts if the project would emit more than 25,000 metric tons of carbon dioxide-equivalent. Justifying the threshold, CEQ says the 25,000 ton level is the same established in a number of existing federal documents, including a tool EPA created to determine the threshold for facilities to be subject to its recently issued GHG reporting rule. The draft provides guidance on considering climate change impacts on a proposed action, including the relationship of climate change to the project’s design and environmental impacts, as well as mitigation and adaptation measures. The memo says impacts on water resources, ecosystems, agriculture and forestry, health, coastlines, and arctic regions in the United States are particularly important, citing tribal and Alaska native communities as examples of vulnerable populations. In the draft mitigation and monitoring guidance, CEQ proposes three measures for lead agencies to improve NEPA reviews: consider mitigation throughout the review process and identify adopted measures as “binding commitments to the extent consistent with agency authority”; create or strengthen a monitoring program to ensure mitigation is both implemented and effective; and support public participation and accountability through “proactive disclosure of, and access to, agency mitigation monitoring reports and documents.”
See: http://views.washingtonpost.com/climate-change/post-carbon/?hpid=news-col-blog See Document: http://www.whitehouse.gov/sites/default/files/microsites/ceq/20100218-nepa-consideration-effects-ghg-draft-guidance.pdf
At this time the guidance is open for public comments. It’s a foregone conclusion that both the environmental community and industry will weigh in. It should be no surprise that one side will be saying the rules are too liberal and the other side saying they don’t go far enough. The point is clear, as we have noted before, for GHG emission projects to come on line in the short term, and not decades from now, some of the general environmental review process has to be circumvented or rewritten so that the projects can come on line. As we have said before, if there is an imperative to bring on line the projects that reduce or eliminate GHG emissions, they need to be brought on line quickly. That means the processes involved have to be truncated or eliminated. The question, of course, is always where the line for change should be and whether both the environmental community and industry can give up some of their sacred cows to move forward.
Cap-and-Trade
White House Economic Report Touts Cap-And-Trade
A new report released this week by the president’s Council of Economic Advisers (CEA) highlights the central role that a cap-and-trade program for greenhouse gas emissions could play in the Obama administration’s efforts to rebuild the economy. One chapter of the 462-page report is devoted to “Transforming the Energy Sector and Addressing Climate Change.” It highlights the adverse impacts on economic growth of rising temperatures and outlines the administration’s climate and energy agenda, including ongoing regulatory efforts, engagement in international negotiations, proposals to eliminate fossil fuel subsidies and work with Congress to implement cap-and-trade legislation. The report attempts to counter criticisms that cap-and-trade would slow economic growth by imposing high costs on businesses and consumers. It points out that the acid rain cap-and-trade program implemented in the early 1990s ended up being far less expensive than industries had predicted and cites several studies showing the House climate bill would impose relatively low costs on consumers while spurring additional benefits, such as creating new jobs in clean-energy industries. The report also notes several strategies that have been employed to control costs under a cap-and-trade program, such as allowing firms to bank and borrow allowances, providing offset credits from uncapped sectors and imposing price ceilings and floors on emission allowances.
See: http://www.grist.org/article/2010-02-12-obama-celebrates-clean-energy-investments-reaffirms-support-cap/ and http://www.whitehouse.gov/administration/eop/cea/economic-report-of-the-PresidentThis report runs contrary to some of the statements coming out of the White House that to get an energy/GHG bill out of this Congress cap-and-trade would likely be dropped. Perhaps this report will be used to rally support for cap-and-trade. In comments from the President, it is clear that he would prefer to have cap-and-trade as part of an overall bill but the political reality of the situation is what it is. The key will be the ability of the White House to lead the charge on cap-and-trade as an important mechanism to invigorate a new industry that will bring jobs to the American worker. We will follow up on the comments made by the various groups bound to weigh in.
Nuclear Power
President Obama announced an $8.3 billion loan guarantee to help Southern Company build two reactors, a move that the administration hopes will invigorate the nuclear power industry after nearly three decades in which no new plants have been built. Supporters of nuclear power argue more reactors will be needed for the United States to tackle global warming effectively because nuclear is a much cleaner energy source than coal-fired power plants, which spew greenhouse gases. Of course, nuclear power is controversial, however, because of its radioactive waste, which is now stored on site at reactor locations around the country. The two reactors, which some experts estimate will cost $8.8 billion to build, could be in service in 2016 and 2017.
See: http://www.alertnet.org/thenews/newsdesk/N16216891.htm Nuclear power is an answer that has been ignored over the last three decades. It produces no GHGs. Had we been able to continue building nuclear power plants, as the French have, we would be in a strategically better position and would have added far fewer GHGs into the atmosphere. Now is the time to try to rectify this mistake. However, it is likely that there will be significant environmental opposition to the construction of such plants and thus while the loan guarantee is a significant gesture by the current administration, they will need to actively weigh in to support such construction in the permitting process and possible litigation. The will to do that is far different then merely guaranteeing a loan which may never be called on due to the need to obtain approvals before construction commences.
Fights
Chamber, GOP Suits Latest Challenges To EPA Climate Risk Finding
The list of groups filing formal challenges to EPA’s climate change endangerment finding—or pledging to soon do so—has grown, with the U.S. Chamber of Commerce Feb. 12 formally seeking federal court review of the finding and the conservative Competitive Enterprise Institute (CEI) expected to file a similar petition. The chamber on Feb. 12 asked the U.S. Court of Appeals for the District of Columbia Circuit to review the EPA endangerment finding, calling it a “nationally applicable final action” by the agency ripe for the court’s consideration. In a separate, Feb. 9 petition to the same court, 12 House Republicans and several business groups seek the same court review. Neither move is much of a surprise, with the chamber having been a harsh critic of the finding and the Southeastern Legal Foundation—one of the plaintiffs on the petition—last year having petitioned EPA seeking reconsideration of the endangerment finding on behalf of a smaller group of GOP lawmakers. On February 16th, the State of Texas also filed a suit and seeks to intervene in the action filed by the Chamber.
See: http://www.businessgreen.com/business-green/news/2257919/chamber-commerce-launches-legal%20&http://cei.org/news-release/2010/02/16/new-lawsuit-petition-challenge-epa-global-warming-regulations%20&%20http://www.reuters.com/article/idUSN1661844120100216
These suits will likely be an interesting sidelight to the climate change picture. Ultimately, it is very doubtful that the Court will agree with any of the arguments made and there are many technical legal issues that could derail a final ruling on the key issue of whether or not the endangerment finding was proper or appropriate. However, along the way the Court may actually issue some preliminary rulings that will no doubt catch the public’s eye and become part of the fabric of the ongoing discussions regarding climate change. In Congress, there is still opposition to the findings by the EPA and bills have been introduced to alter that finding through legislation. Such bills will likely not pass, and certainly would be vetoed by the President.
Transmission of Green Power
Utilities Split Over Transmission Expansion, Renewable Energy Integration
A diverse group of investor-owned and municipally owned utilities sent a letter Feb. 9 to top Senate leaders expressing concerns with a pending Senate energy bill (S. 1462) and signaling a major industry split over how best to expand the nation's transmission system and integrate more renewable energy resources. The utilities focused on two aspects of the bill's provisions—the regional transmission planning process and the allocation of costs for new projects, especially for wind and solar generation. The group said the committee-passed bill would give the FERC too much control over regional transmission projects, transforming the agency into a “national transmission planner.” Bill language that would allow FERC to approve or modify a transmission plan submitted by local and regional entities should be deleted, the group said, because local and state planners are capable of making the best decisions for the customers they serve. With respect to who should pay the costs of new transmission lines to support renewable and other clean energy sources, the group wants the Senate to retain language in the committee bill (Corker amendment) that requires FERC to conduct cost-benefit analysis before allocating costs for new projects among ratepayers. The utilities expressed concern that their customers will be assessed charges for major transmission projects that will not directly benefit them, or that would be more expensive than other local or regional alternatives, such as distributed generation, wind farms built directly on the East Coast rather than importing wind power from the Midwest, and expanded nuclear power and hydropower.
See: http://climate.bna.com/subscriber/World.Climate.Change.Report.html?d=A0C2C0Q8T3&dt=News The current transmission systems were set up regionally and when you look at the various backbones of the systems they demonstrate this: The question is, is this the most sensible thing to do at this time when we are trying to bring in new energy sources on line which may be sited quite differently then the current systems. Also, there is a need for a fundamental upgrade in transmission capacity no matter what the source. Will it be easier to have this accomplished through one agency or continue to rely on regional planning and funding which would then not permit the dilution of cost nationally? Will the processes to get transmission lines approved be better handled on a national basis of regionally? All good questions with no definitive answers. But, the cost of the new transmission projects will be huge and given the way energy is shared across the nation, all persons do share in the production and distribution of energy and thus the cost is likely also rationally split up the same way.
Tofu
Tofu Could Cause More Environmental Harm than Meat
Britain's Cranfield University examined the impacts of meat substitutes, many of which are produced from soy, chickpeas and lentils that are often imported. The researchers found that a switch from locally raised beef and lamb in Britain to meat substitutes, which are highly processed and created through energy-intensive production methods, could cause more foreign lands and forests to be converted into farmland. World Wildlife Fund commissioned the study. The benefits of vegetarianism depend heavily on the foods consumed in place of meat, the study concludes. "A switch from beef and milk to highly refined livestock product analogues such as tofu could actually increase the quantity of arable land needed to supply the UK," it says. A spokeswoman for the Vegetarian Society said the study relied on "a number of questionable assumptions."
See http://www.timesonline.co.uk/tol/news/environment/article7023809.ece and (Vegetarian Society) http://www.vegsoc.org/ Carnivores should be happy with the outcome of this report. Aside from the obvious humor, the issue of measuring the actual GHG impact needs to become more of a standard procedure so that issues such as this can be more effectively analyzed, if necessary. As for this particular issue, the choice of eating tofu or beef is really nothing that should need to be analyzed!!!
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