Article by Kyle Danish, Shelley Fidler, Kevin Gallagher, Megan Ceronsky and Tomás Carbonell

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Commentary

The Cancún international climate negotiations commenced amid modest expectations . . . It was a busy week for EPA. The agency issued safety standards and reporting rules for CO2 sequestration sites, established a timetable for GHG PSD permitting in states that currently lack authority for such permitting, issued a joint notice of intent with the National Highway Traffic Safety Administration outlining the agencies' current thinking on GHG standards for motor vehicles in 2017-2025, and issued draft regulations for a first of its kind program to regulate the fuel economy of medium and heavy duty trucks . . . At the same time, the resurgent House Republicans pushed back. They sent letters to the Administrator promising greater oversight of the agency and calling for delay in GHG rules. They also terminated the House Select Committee on Global Warming, and called for suspension of international financial assistance related to climate change . . . A bipartisan group of Senators called for extension of tax incentives for renewable energy projects . . . The Supreme Court has decided to take up Connecticut v. AEP, the case in which a group of states and NGOs brought a lawsuit against four utilities and the Tennessee Valley Authority; the plaintiffs have alleged that the defendants' power plant GHG emissions constitute a public nuisance under federal common law. We expect arguments in April 2011 . . .

Executive Branch

  • EPA Issues Final Safety Standards and GHG Reporting Rules for CO2 Sequestration Sites. On Nov. 22, the Environmental Protection Agency (EPA) issued two regulations affecting facilities that engage in underground injection and sequestration of CO2. One of these regulations establishes construction, monitoring, and testing requirements for CO2 injection wells and sequestration sites under the Safe Drinking Water Act (SDWA). Intended to ensure that sequestered gas does not contaminate groundwater supplies, these "Class VI" well standards require, among other things, that site owners provide financial assurances to cover liability from potential contamination for as long as fifty years after closure of the site (with flexibility to shorten the requirement on a case-by-case basis). The second regulation is a supplement to EPA's rule for mandatory reporting of greenhouse gases (GHGs). Known as "Subpart RR," this rule requires that sequestration site owners develop monitoring, reporting, and verification plans, and annually report quantities of carbon dioxide injected or sequestered. Subpart RR is available at http://edocket.access.gpo.gov/2010/pdf/2010-29934.pdf. The Class VI standards are available at http://water.epa.gov/type/groundwater/uic/upload/pre-FR_class6_2010-11-22.pdf.
  • EPA Issues Final Rule on State Authority to Issue GHG Permits. EPA has issued a final rule determining which states are presently unable to issue Prevention of Significant Deterioration (PSD) permits for GHG sources under the Clean Air Act (CAA). In August of this year, EPA proposed to determine that 13 jurisdictions lack adequate legal authority to carry out the agency's "Tailoring Rule," which establishes a phased-in timetable for PSD permitting of GHG sources beginning January 2, 2011. The final rule makes this determination final for permitting authorities in the following states: Arizona, Arkansas, California, Connecticut, Florida, Idaho, Kansas, Kentucky, Nebraska, Nevada, Oregon, Texas, and Wyoming. Seven of these states requested that EPA establish a deadline of December 22, 2010 to revise their PSD regulations, thereby allowing EPA to implement a Federal permitting program in those states by January 2, 2011 if the deadline is missed. Five other states indicated that they will be able to submit revisions to their PSD regulations soon after January 2, 2011—before any sources applying for permits are adversely affected. Because the state of Texas did not select a deadline, the rule gives the state a default deadline of December 1, 2011 to amend its PSD regulations. Although Texas could lose its authority to issue PSD permits between January 2 and December 1, 2011, EPA's Assistant Administrator for Air and Radiation, Gina McCarthy, stated in an interview that EPA will soon undertake a separate rulemaking to prevent that outcome and allow GHG sources in Texas to continue to apply for PSD permits during the interim period. The final rule is available at http://www.epa.gov/nsr/documents/20101201finalrule.pdf.
  • EPA and NHTSA Issue Supplemental Notice on Vehicle GHG and Fuel Economy Standards for MY 2017-2025. EPA and the National Highway Traffic Safety Administration (NHTSA) issued a joint supplemental Notice of Intent that outlines the agencies' progress in developing proposed GHG standards for light duty vehicles in model years 2017 through 2025. The supplemental notice provides the agencies' responses to comments received on a September 30, 2010 Notice of Intent describing several potential levels of stringency for the standards and initial estimates of their costs and environmental benefits. In addition, the supplemental notice describes additional analyses the agencies intend to perform in preparing the proposed standards. The agencies expect to complete the proposed standards by September 30, 2011 and issue a final rule by July 31, 2012. The supplemental notice is available at http://www.epa.gov/oms/climate/regulations/ld-ghg-cafe-2017-snoi.pdf.
  • EPA and NHTSA Publish, Set Comment Deadline for First GHG and Fuel Economy Standards for Heavy Duty Vehicles. On November 30, EPA and NHTSA also published in the Federal Register the agencies' first joint GHG and fuel economy standards for heavy duty vehicles including combination tractors, heavy duty pickup trucks and vans, vocational vehicles, and heavy duty gasoline and diesel engines. In the notice, the agencies also set a deadline of January 31, 2011 for submitting public comments on the proposed standards. The standards, which were issued in pre-publication form in late October and covered in the Nov. 1, 2010 edition of the Climate Change Policy Update, would apply to vehicles produced in model years 2014 through 2018. The agencies predict that the standards would avoid emissions of approximately 250 million metric tons of CO2 over the lifetime of vehicles covered by the rule, and yield approximately $35 billion in net fuel savings for vehicle operators (after accounting for the cost of complying with the standards). The notice is available at http://edocket.access.gpo.gov/2010/pdf/2010-28120.pdf.
  • CFTC Calls for Public Input to Study of GHG Market Oversight. Responding to a directive in the Wall Street Reform and Consumer Protection Act of 2010 (also known as the "Dodd-Frank Act"), the Commodity Futures Trading Commission (CFTC) called for public input on an interagency study on regulatory oversight of present and prospective markets in GHG allowances and offset credits. The Federal Register notice announcing the call for public input solicits comment on eleven questions relating to the goals of market oversight, characteristics of existing markets for allowances and offset credits, and policy tools for market oversight. Due in mid-January 2011, the study is required to include policy recommendations for Congress "to ensure an efficient, secure, and transparent carbon market." The notice is available at http://www.cftc.gov/ucm/groups/public/@lrfederalregister/documents/file/2010-29780a.pdf.

Congress

  • Ranking Republican Committee Members Pressure EPA on GHGs. Rep. Jerry Lewis (R-CA), currently the ranking member on the Appropriations Committee, wrote to EPA Administrator Lisa Jackson promising to put EPA regulatory proposals "under a microscope" in the 112th Congress and to exercise the committee's "prerogative to withhold funding for prospective regulations and de-fund through the rescissions process many of those already on the books." Rep. Lewis said that a "particular focus will be the EPA's ongoing arbitrary interpretation of the Clean Air Act to proceed with the regulation of greenhouse gas emissions early next year." The letter is available here. Rep. Lewis is seeking a waiver from House Republican chairmanship term limit rules to allow him to Chair the Appropriations Committee when the new Congress is sworn in. Rep. Darrell Issa (R-CA), currently ranking member of the Committee on Oversight and Government Reform, also wrote to Administrator Jackson, asking EPA to delay regulation of GHGs under the Clean Air Act and to extend the window for public comment on the recently released guidance on implementing the PSD program for GHGs. Rep. Issa also requested a briefing on EPA's plans for regulating GHGs from mobile and stationary sources. The Issa letter is available here.
  • Bipartisan Senate Group Pushes Renewal of Renewable Energy Tax Incentives. Twenty-six senators signed a letter to their colleagues asking their support for a renewal of the Treasury Grant Program during the current lame duck session. The grant program, first authorized under Section 1603 of the American Recovery and Reinvestment Act, provides cash grants for renewable energy developers in lieu of an investment tax credit. The letter notes that the economic downturn has made it impossible for renewable developers to attract financing in the tax equity market, making the grant program necessary to support clean energy development. The letter also cites a Lawrence Berkeley National Laboratory study of the $2.6 billion in grants awarded by March 1, 2010. The study found that the grant program facilitated hundreds of renewable energy projects and saved over 55,000 American jobs in the wind industry. The letter is available here. Although the letter's signatories included Republican George LeMieux (FL), Sen. LeMieux also joined the rest of his caucus in signing a letter to Majority Leader Harry Reid (D-NV) promising to filibuster all legislation until the Senate passes legislation to fund the government and to extend the tax cuts passed under President George W. Bush, which will expire this year.
  • Baucus Releases Tax Bill With Clean Energy Incentives. Finance Committee Chairman Max Baucus (D-MT) released a package of tax measures that includes incentives for renewable energy development, including an extension of the Section 1603 Treasury Grant Program (see discussion above). The proposal would also provide a 36 cents/gallon tax credit for blending ethanol into gasoline through 2011, and extend a 54 cents/gallon tariff on imported ethanol for a year. The legislation also includes $1.6 billion in Clean Renewable Energy Bonds for renewable energy projects undertaken by municipal and other public power utilities, provides an additional $2.5 billion for a 30 percent tax credit to support manufacturing of advanced clean energy equipment, and extends through 2011 the $1/gallon production tax credit for biodiesel producers.
  • House Republicans Will Terminate Global Warming Committee. Rep. James Sensenbrenner (R-WI), ranking member on the Select Committee for Energy Independence and Global Warming, announced that the committee would not be maintained under the incoming Republican-controlled Congress. The Committee was launched in 2007 by Speaker Nancy Pelosi (D-CA). At what was likely the Committee's final hearing, witnesses including General Wesley Clark, Vice Admiral Dennis McGinn, and Robert F. Kennedy, Jr. testified on the national security and economic threats posed by climate change. Current Select Committee Chairman Ed Markey (D-MA) said: "the politics may change, but the problem is not going away."
  • Republican Senators Oppose International Climate Funds. Republican Senators John Barrasso (WY), James Inhofe (OK), David Vitter (LA), and George Voinovich (OH) wrote to Secretary of State Hillary Clinton asking that the Administration "freeze" any new financial support for international climate change finance programs "in light of the federal government's dire financial situation and the poor state of the economy." The Senators reiterated their opposition to the Copenhagen Accord, and stated: "We do not believe that billions of U.S. taxpayer dollars should be transferred to developing countries through unaccountable multilateral or bilateral channels for adaptation, deforestation and other international climate finance programs." The letter is available here.

Judicial

  • Supreme Court Agrees to Hear Climate Change Nuisance Case. The Supreme Court has granted a petition for certiorari filed by four electric power utilities in Connecticut v. AEP, a case brought by eight states, the City of New York, and three land trusts alleging that GHG emissions from the four utilities and the Tennessee Valley Authority constitute a public nuisance under federal common law. In 2009, the United States Court of Appeals for the Second Circuit reversed a decision dismissing the case as a "political question," holding that plaintiffs' public nuisance claims presented a justiciable legal question and rejecting utility arguments that EPA's recent moves to regulate GHGs under the Clean Air Act preclude tort-based remedies for climate injuries in the federal courts. Justice Sonya Sotomayor, who was on the three-judge Second Circuit panel that heard the case in 2006 (but did not participate in the panel's decision), has recused herself from the case.

States and Cities

Industry and NGOs

  • Trade Groups Urge Delay of EPA GHG Regulations. The U.S. Chamber of Commerce and twenty trade organizations sent a letter to the leadership of the House and Senate, as well as the chairmen and ranking members of the House and Senate Appropriations Committees, urging that EPA regulations of GHGs be delayed as part of any measure to continue funding for the government. The letter argues that permitting of GHG sources under the PSD program will impose a "virtual freeze on new construction of manufacturing facilities or energy efficiency modifications to existing facilities." The American Chemistry Council, National Association of Manufacturers, and the American Petroleum Institute were among the trade associations signing the letter. The letter is available at http://www.americanchemistry.com/s_acc/bin.asp?CID=217&DID=11522&DOC=FILE.PDF.
  • Religious Leaders Oppose Removal of EPA Authority to Regulate GHGs. In a letter to all members of the Senate, the leaders of 56 religious denominations and organizations urged Senators to reject a bill introduced by Sen. Jay Rockefeller (D-WV) to suspend EPA regulation of GHGs from stationary sources for two years. The letter argues that "Senator Rockefeller's bill, and other proposals, would allow our nation's substantial contribution to climate change to continue unchecked, exposing vulnerable communities to the impacts of climate change." Organizations signing the letter included the Episcopal Church, the Presbyterian Church (USA), National Council of Churches USA, Union for Reform Judaism, and the United Methodist Church. The letter is available at http://nccecojustice.org/downloads/112310%20Religious%20groups%20CAA%20news%20release%20FINAL2.pdf.

Studies and Reports

  • Study Finds Climate Change Will Exacerbate Food Prices. Research released by the International Food Policy Research Institute projects that real agricultural prices, which declined during much of the 20th century, will likely rise between now and 2050 as a result of growing incomes, population increases, and negative effects of climate change on agricultural productivity (including in the American Corn Belt region). The study found that climate change impacts will reduce food availability and human well-being in all regions and increase the number of malnourished children in developing countries by 8.5 to 10.3 percent relative to a scenario where GHG emissions are curbed. The analysis finds that through 2050, the effects of climate change can be managed through well-designed investments in productivity, but "starting the process of slowing emissions growth today is critical to avoiding a calamitous post-2050 future." The study is available at http://www.ifpri.org/publication/food-security-farming-and-climate-change-2050.
  • GAO Urges Increased Capture of Natural Gas at Drilling Sites on Federal Lands. A report released by the Government Accountability Office (GAO) found that the Department of Interior likely underestimates the amount of natural gas vented and flared at extraction sites on federal lands. GAO based this conclusion on estimates from EPA and the Western Regional Air Partnership that are as much as 30 times higher than the volumes reported by well operators. GAO recommended that the Department of Interior require lessees to reduce the amount of natural gas that is flared, vented, or otherwise emitted where it is economic to do so, which the report estimates could increase federal royalty revenues by $23 million annually and reduce GHG emissions by 16.5 million metric tons of CO2 annually, an amount equivalent to taking 3.1 million cars off of the road. The report is available at http://www.gao.gov/new.items/d1134.pdf.

International

  • International Negotiators Begin Cancún Climate Talks. Negotiators from around the world are in Cancún, Mexico for two weeks of climate change negotiations at the 16th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC). With expectations low for the negotiations and negotiators continuing to debate issues that have proven obstacles to agreement in recent years, most observers see limited prospects for a breakthrough agreement and expect incremental progress at best. The most significant substantive issues under discussion are emission monitoring, reporting, and verification (MRV); climate change adaptation and mitigation financing for developing nations; and technology transfer. Major developments in the climate talks through the first week include:
    • Immediately prior to the Cancún meetings, the United Nations Environment Programme released a report, titled "The Emissions Gap Report," which finds that the achievement of all national commitments under the Copenhagen Accord through 2020 – even those that are conditional on specified actions by other nations – would fail to keep global emissions on track to prevent a global temperature increase of 2 degrees Celsius. Signatories to the Copenhagen Accord agreed to take action, through deep global emission cuts and long-term cooperative action, to prevent dangerous anthropogenic interference with the climate system by keeping the increase in global temperature below 2 degrees Celsius.
    • Disagreements have arisen over whether the Cancún meetings should focus on just those few areas where agreement is seen as most likely – an approach pushed by UNFCCC Executive Secretary Christiana Figueres – or a broader approach that could lead to a comprehensive agreement.
    • A two-treaty approach has been the subject of increasing debate. This approach would involve a comprehensive climate treaty that would go into effect sometime around 2015 and a second treaty that would extend the Kyoto Protocol from its current expiration in 2012 to the beginning of the new comprehensive agreement. While many developing nations favor continuing the current regime by adopting a single new treaty that would establish a new compliance period of the Kyoto Protocol, the two-treaty approach is consistent with the positions of the United States and Japan. The U.S. remains firmly opposed to any new agreement that does not include binding emissions reduction commitments from major developing nations, such as China and India. Japan has adopted a similar stance, declaring that it will not accept binding commitments beyond 2012 unless other major emitters – including China and the U.S. – do so as well. At the talks, China has reiterated its refusal to accept binding emissions targets.
    • The European Union announced that it is on pace to fulfill its fast-start climate change financing commitments under the Copenhagen Accord. Under the Accord, developed nations pledged to provide $40 billion to developing nations between 2010 and 2012 to support climate change adaptation and mitigation programs. The EU share of that commitment was $7.2 billion.
    • India proposed a global emission monitoring system for major emitters that is aimed at resolving disagreement between the United States and China over the transparency of developing nation MRV procedures. In submitting the proposal, the Indian delegation noted that the proposal is contingent upon an extension of the Kyoto Protocol and the provision of financial and technological assistance by developed nations.
    • A proposal by Papua New Guinea intended to ensure the continued existence of the Clean Development Mechanism (CDM) beyond the expiration of the Kyoto Protocol – regardless of whether a new treaty covering 2012 and beyond is reached – was rejected. The proposal was defeated by nations that see global carbon markets essentially tied to national commitments under a new agreement. Carbon market participants urged support for the proposal in order to prevent a collapse of the carbon market by providing certainty about the continued existence of the CDM.
  • Mayors Sign Voluntary Climate Pact. Meeting in Mexico City, Mexico, for the World Mayors Summit on Climate, mayors from hundreds of localities in 43 nations signed the Global Cities Covenant (Mexico City Pact). By signing the agreement, each city voluntarily agreed to ten voluntary climate change actions intended to mitigate GHG emissions and adapt cities to the impacts of climate change. The actions include commitments to reduce GHG emissions and to pursue the creation of mechanisms that allow cities and localities access to international climate change mitigation and adaptation funds. Each participating city will register its emissions with the "carbonn Cities Climate Registry" (cCCR), a registry announced the same day as the pact. The Mexico City Pact also provides for the creation of a Secretariat that will seek additional signatories and implement the actions called for in the pact. The text of the pact is available at http://www.wmsc2010.org/wp-content/uploads/2010/09/The-Pact-Final-181110.pdf.

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