Discussion on Kerry Lieberman and EPA with William Brent
Here is a Q&A I did with William Brent, the head of Weber Shandwick’s cleantech practice and blogger at www.mrcleantech.com:
WB: I asked my friend Graham Noyes of law firm Stoel Rives who focuses his practice on bioenergy projects, federal energy incentives and carbon monetization for his thoughts on the Kerry Lieberman bill.
Q (WB): What was your main takeaway from the bill?
A (GN): Some context first. There’s a massive potential hammer out there on GHG emitters in terms of the risk of regulation under the Clean Air Act (CAA) by the EPA, which has already issued an endangerment finding that found GHGs to be a danger to public health and welfare, thereby making the EPA obligated to regulate GHG's under the CAA. So the wheels are turning forward at the EPA to regulate GHG. That’s what the EPA will do if nothing else happens. So it’s really surprising that Kerry Lieberman imposes what I think to be much stricter limitations on the EPA than the status quo.
In that sense the bill is very favorable to those industries that have the most to lose from GHG regulation, because it essentially weakens the regulatory landscape for GHG intensive industry when compared to what the EPA is likely to do. That’s why we have the strong industry support lined up for the bill. What’s odd is that we have universal Republication opposition (from a party known for its pro-business stance), and near universal Democratic support (from a party known to support more environmental protections). That is a fundamental disconnect.
The 800 lb gorilla in the room is the EPA's ability to utilize the CAA if the Kerry-Lieberman bill stalls. That’s a really interesting regulatory and political landscape for this thing to play out.
Q: Can you be more specific on how Kerry Lieberman is easier on emitters?
A: We don’t know what the EPA will do precisely in order to get its targets in the endangerment finding. Emissions levels, cost implications for regulated industries – we don’t know. But it’s easy to imagine a scenario in which the EPA ratchets down harder and harder on these emissions to get the problem under control, specifically the PPM concentration of CO2 in the atmosphere.. By contrast, Kerry Lieberman has a slow front-end phase-in (with only some industries included in the first years), price collars and very substantial offset programs to lower the economic impact, none of which the EPA would necessarily do. Most people expect the EPA would be more onerous than Kerry Lieberman.
Q: Is legislation or regulation better at the end of the day?
A: The Clean Air Act was not designed for GHGs, but for what we usually think of as pollutants- emissions that are directly unhealthy. CO2 is not something people worry about breathing, it’s the indirect risk of global warming caused by the escalating CO2 levels that triggerred the finding. CO2 is also more ubiquitous than other pollutants hence the tailoring rule actually reduces scope of CAA enforcement.
The EPA would regulate by mandate, not by consensus. If we can’t get legislation passed and the EPA begins enforcement, there will be a lot of criticism about over-reaching and strangling industry. EPA would take a lot of heat for this.
Q: Some argue that EPA will take much longer to regulate than legislation.
A: I don’t necessarily think so. This legislation requires extensive rule-making that will take a long time to happen, consider the RFS2 delay. And the EPA won’t build in phase-in limits like Kerry Lieberman. If EPA moves ahead on its present course, I think it would have a faster impact on emissions than the bill.
Ultimately, I think this landscape will spur a deal with a surprising alliance.
What are the top three ramifications on business from this bill?
The bill would establish a long-term value to CO2e reductions. This will benefit all renewable energy projects and support US offset projects in methane capture, agriculture and forestry that make good GHG sense.
Growing America's Fuel - President Obama Announces Strategies to Achieve U.S. Biofuels Goals
President Obama met today with a bipartisan group of governors from around the country and announced a series of steps the administration is taking to boost biofuels production in the United States. The President’s Biofuels Interagency Working Group released a report spelling out ways to promote the development of the biofuels industry in the United States in connection with the long-term renewable fuels standard of 36 billion gallons per year by 2022. The report, Growing America’s Fuel, focuses on government strategies to achieve the renewable fuels standard and the target for 100 million gallons of cellulosic biofuels in 2010. The strategies include supporting the development of first and second generation biofuels with the additional focus on accelerating third generation biofuels development and supporting feedstock research and demonstration. The report addresses the use of regional supply chain systems to ensure all fuels produced are compatible with the U.S. transportation fuel infrastructure.
President Obama also announced the creation of an Interagency Task Force on Carbon Capture and Storage. Representatives from the DOE and the EPA will co-chair the task force which will develop a plan for affordable carbon capture and storage technology in the next ten years, with a goal of bringing five to ten commercial demonstration projects on line by 2016.
EPA Announces "Endangerment" and "Cause or Contribute" Findings
Stoel Rives partner Tom Wood reports:
Minutes ago EPA announced its long awaited “endangerment” and “cause or contribute” findings in relation to six key greenhouse gases – carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride. While technically this announcement is of limited significance (applying only to motor vehicle emissions), the policy import of these determinations is tremendous.
In 2007, the U.S. Supreme Court held that greenhouse gases are air pollutants covered by the Clean Air Act in the Massachusetts v. EPA decision. This case arose in relation to EPA’s choice not to regulate carbon dioxide emissions from new motor vehicles. The Court held that EPA must determine whether or not emissions of greenhouse gases from new motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare, or whether the science is too uncertain to make a reasoned decision.
Earlier this year EPA proposed to issue the two part finding required to commence regulation of greenhouse gas emissions from new motor vehicles. This required first a finding that greenhouse gas emissions endanger public health and welfare and a second finding that emissions from new motor vehicle engines cause or contribute to greenhouse gas air pollution. The comment period for these proposed findings ended June 23, 2009 and EPA received over 380,000 public comments. Today, Lisa Jackson (EPA Administrator) signed final findings that greenhouse gases endanger both the public health and the public welfare of current and future generations and that the combined emissions of these greenhouse gases from new motor vehicles and new motor vehicle engines contribute to the greenhouse gas air pollution that endangers public health and welfare.
As a legal matter, today’s findings relate only to vehicle emissions. However, the precedent that they create will almost certainly result in substantial regulation for other source categories. It is no coincidence that this finding was announced on the first day of the Copenhagen talks on climate change. The Obama administration both wanted to show that some progress was being made in the U.S. and it wants to leverage this progress into further statutory or regulatory requirements.
Towards this goal, one of the more interesting things to come out of the determinations is the formal establishment of the new pollutant: “Well-Mixed Greenhouse Gases.” This term is now officially entered into EPA’s regulatory lexicon as a pollutant to be regulated. Well-Mixed Greenhouse Gases consists of the 6 Kyoto gases (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride) but introduces the grouping now as a regulatory unit. It is noteworthy that vehicles are not material sources of all of these greenhouse gases and so the use of this term should be seen as setting the stage for future regulation.
Also of interest is an EPA restatement in a footnote that at this time it does not consider greenhouse gases to be a regulated air pollutant. This is of tremendous significance to stationary sources of greenhouse gases as the moment that greenhouse gases become regulated, there is the potential argument that they are subject to Title V and major new source review permitting. At the risk of understating the issue, that would be a mess of biblical proportions.
For those wishing to read all 284 pages of the findings document, it can be found at: http://www.epa.gov/climatechange/endangerment/downloads/FinalFindings.pdf
The findings are not valid until 30 days after they are published in the Federal Register. Expect publication to occur later this month.
EPA Extends RFS 2 Comment Period
Last week, the US EPA extended the rulemaking period on RFS 2 until September 25, 2009. This extends the period by 60 days. While this rulemaking is highly complicated and contentious, it is unclear that extending the comment period will improve this situation. In addition, the effective date of the regulations continues to be delayed. This could undermine Congress' intentions in passing the Energy Independence and Security Act that established RFS 2. Let's hope EPA is able to move quickly and efficiently in finalizing and implementing the regulations.
