ENVIRONMENTAL LAW UPDATE
On December 19, 2007, the Energy Independence and Security Act of 2007 (Act) was signed into law. The Act builds upon the energy security, conservation, and efficiency provisions of the Energy Policy Act of 2005 and is likely to present numerous growth and development opportunities for various industrial and energy sectors.
The Act is significant legislation. It contains provisions for increased fuel economy standards, production of renewable fuels, and provides financial incentives for research and development of renewable energy technologies, biofuels, waste energy recovery, and carbon-capture technology. The Act also encourages short-sea transportation and the development of programs to support international renewable-energy research and development. A summary of major aspects of the Act follows.
Corporate Average Fuel Economy Standards (CAFE)
The Act directs incremental increases in the CAFE standards beginning in 2011, resulting in a combined passenger and nonpassenger fleet-wide average of 35 mpg by 2020. This represents a 40 percent increase in current fuel economy standards. Domestic manufacturers of passenger automobile fleets must meet a minimum fuel economy standard of the greater of 27.5 mpg or 92 percent of the projected average fuel economy for the combined U.S. manufactured domestic and nondomestic passenger automobile fleets for that model year.
A fuel economy credit trading program may be established for manufacturers whose automobiles exceed CAFE standards. Manufacturers may earn credits which may be used to meet CAFE standards for their fleet in future model years or which may be sold to other manufacturers whose fleets do not meet CAFE standards. The flexible fuel vehicle credit program for automobile manufactures that produce flex-fuel vehicles has been extended to 2019.
Grants may be awarded for the development of improved vehicle technologies, including plug-in electric-drive vehicles, electric transportation projects, and hybrid and advanced diesel technologies. The federal government may provide loan guarantees for the construction of manufacturing facilities for advanced vehicle batteries and battery systems, and funding awards for facilities that produce advanced technology vehicles and components.
Renewable Fuels
The Act creates a "Renewable Fuel Standard" which requires that transportation fuel sold or introduced into commerce in the U.S. on an annual basis contain 36 billion gallons of renewable fuel by 2022. This production level represents a nearly five-fold increase of renewable fuels over current levels. Renewable fuel produced from facilities constructed after the date of enactment of the Act must achieve at least a 20 percent reduction of lifecycle greenhouse gas emissions. The Act also amends the Clean Air Act to allow for credits for any person that refines, blends, or imports additional renewable fuels. The credits may be used by that person or transferred to other persons for the purpose of complying with the mandatory increase in the production of renewable fuels.
In addition, $500 million in grant monies have been appropriated for fiscal years 2008 to 2015 to encourage the production of advanced biofuels. Grant monies have also been appropriated for research and development of commercial applications of biofuel production technologies, for research and development of cellulosic ethanol and biofuels, and for a pilot program for the establishment of refueling infrastructure corridors for renewable fuel blends.
Energy Efficiency
The "Recoverable Waste Energy Inventory Program" has been created to provide $200 million in grants per year for projects that successfully produce electricity or incremental useful thermal energy from waste energy recovery. Waste energy includes exhaust heat or flared gas from any industrial process and waste gas or industrial tail gas that would otherwise be flared, incinerated, or vented. The program allows for the sale of net excess waste-energy-recovery produced power.
The Act also creates a cooperative program between the federal government and energy intensive industries for research and development and the use of new materials, processes, technologies, and techniques to optimize energy efficiency and economic competitiveness in the industrial and commercial sectors.
Carbon Capture And Sequestration
Over $200 million has been appropriated for competitive awards for the research and development of new techniques to capture, sequester, or use carbon dioxide in a manner that leads to the overall reduction of carbon dioxide emissions. Approximately $200 million per year has been set aside for a program to demonstrate technologies for the large-scale capture of carbon dioxide from industrial sources.
Transportation
The Act creates a "Short Sea Transportation Program" to encourage the use of short-sea transportation to relieve landside congestion along coastal corridors. Increased use of short-sea transportation will be accomplished through the development of infrastructure and marine transportation strategies and through the encouragement of shipper utilization of short-sea transportation methods.
International
The Act provides for the development of clean and efficient energy technology policies and programs in developing countries and provides for an outreach program to promote the export of clean and efficient energy technologies to countries such as India and China. The International Clean Energy Foundation has been established to promote foreign policy and energy security goals of reducing global greenhouse gas emissions. The Act also creates the United States/ Israeli Energy Cooperation Program to provide grants for joint research and development projects in the areas of improved energy efficiency and renewable energy sources.
Conclusions And Recommendations
The Energy Efficiency and Security Act of 2007 requires improved renewable fuels and fuel technologies while providing significant grant monies and program opportunities for businesses that operate in the area of renewable fuel, biofuel, and efficient energy technologies. The Act also provides financial incentives for businesses that utilize energy efficient and renewable energy technologies. It is in the best interest of every company to monitor the regulations that will be promulgated and implemented under the Act.
Blank Rome has experienced attorneys in numerous practice areas and business sectors. We are available to assist both existing and potential clients with an understanding as to how the Energy Independence and Security Act of 2007 may affect your company and its business plans.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
