U.S. Cap and Trade Will Need 60 Votes in the Senate

Last week, in a move that received relatively little attention, the U.S. Senate approved a measure effectively requiring that 60 votes will be needed to pass any American cap-and-trade legislation.

The Republican-sponsored measure, which passed by a 67-31 vote, provides that the cap-and-trade legislation will not receive so-called "reconciliation protection." Legislation that receives such protection is not subject to the vagaries of the Senate's filibuster procedure in which 60 votes are needed to move legislation forward.

As reported in the Financial Times ("Senate Rules Out Fast-Track Action to Push Through Climate Change Laws," April 3, 2009), "While not binding, the [measure], which drew support from more than 20 Democratic senators, showed the Obama administration had little chance of forcing through climate change measures as part of the budget. It also underscored the difficulty that Mr. Obama will face winning support for his proposed cap-and-trade system even outside the budget process, raising the possibility of the U.S. arriving empty-handed at the next round of United Nations talks on climate change in Copenhagen in December."

That scream you just heard (or thought you heard) was from the Berlaymont in Brussels, home of the "very pro" cap-and-trade European Commission.

European Power Companies Announce Intent to be Carbon-Free by 2050

Sixty European electricity CEOs have announced their commitment to "strive to achieve a carbon-neutral power supply by 2050."

Meeting as members of Eurelectric, the European electricity generation trade organization, the CEOs said, "The European electricity industry is making a clear commitment to achieving a carbon-neutral sector by mid-century."

The CEOs, who represent firms generating 2500 TWh electricity per year in 27 countries, said that in order to achieve this goal the companies will need to pursue a combination of efficient clean fossil technologies including carbon capture and storage, high-efficient combined heat and power, and nuclear power alongside new renewable sources. "A crucial factor here is also to simplify licensing procedures for new build," the CEOs said.

The CEOs noted that, "Policymakers have a crucial role to play here." In part, they said, policymakers should work for a worldwide approach to the global challenge of mitigating greenhouse gases (in other words, find a concrete way to get China, India, and the U.S. into the GHG reduction effort), increase support for research and development, and support a market-based approach to integrating renewable energy into the grid.

Not to be too critical, but no one can ever accuse the EU (or many European trade organizations) from suffering low climate change-related aspirations. The real trick is to find a way to enforce the legal commitments already on the books and to persuade the really "big guys" of GHG emissions to get working on this.

How "Green" is Stimulus Funding?

A new report by HSBC, a global banking leader, indicates that China and the United States have allocated the greatest amounts of their respective economic stimulus packages for green projects.

According to a story in The Economist ("Greenstanding," April 4, 2009), China will spend just over $200 billion on green projects while the U.S. will spend over $90 billion.  Other large spenders, according to the HSBC report, are South Korea at $30.7 billion, Germany at $13.8 billion, and Japan at $12.4 billion.

Despite constant chatter from the British and French governments about their commitment to green projects, spending from Paris will only amount to $7.1 billion while London will spend a paltry $2.1 billion.  

Has anyone checked these numbers with French President Nicholas Zarkozy or U.K. Prime Minister Gordon Brown?  Mssrs. Zarkozy and Brown like to bang on and on about the need to address climate change, but apparently their governments' piggybanks are empty when it comes to green stimulus spending.

"A Blueprint for a Safer Planet"

Lord Nicholas Stern, climate change advisor to the U.K. government and former chief economist at the World Bank, has just published, "A Blueprint for a Safer Planet: How to Manage Climate Change and Create a New Era of Progress and Prosperity."

Lord Stern is best known as the author of The Stern Review of the Economics of Climate Change, a 2006 700-page assessment of the economic impact of climate change.  

In his new book, Lord Stern argues, "When we emit greenhouse gases we damage the prospects for others and, unless appropriate policy is in place, we do not bear the costs of the damage.  Markets then fail in the sense that their main co-ordinating mechanism -- prices -- give the wrong signals."

A review in the Financial Times ("A timely prophecy," April 4, 2009), says, "Stern's prescription for a low-carbon future includes putting a price on carbon, investing in renewable energy, and providing funding for poor countries to keep their forests intact...Other sections, such as the one on changes to current forms of carbon financing, will be strictly for the nerds."

The reviewer, Fiona Harvey, the FT's environment correspondent, goes on to say, "If this year's crucial climate change negotiations are to be successful, this book will be required reading for all participants.  Perhaps the experience of bailing out the banks will persuade them that an early market intervention for the climate may avoid an even more disastrous bust in future."

As of today, the book is available on Amazon's U.K. website, but not on its U.S. website.

Clean Energy Investment Not Immune From Financial Crisis

The global financial crisis has taken its toll on clean energy investment.  Nevertheless, the medium and long term outlook for clean energy investment remain extremely bright.

According to U.K.-based New Energy Finance, a global leader in analysis about carbon markets and clean energy technology, "Investment in clean energy has collapsed to just $13.3 billion in the first quarter of 2009, down by no less than 44% on the fourth quarter of last year and 53% below the level achieved in the first quarter of 2008."  Meanwhile, over $150 billion of economic stimulus funding targeted to clean energy has not fully begun to flow into the market.

According to the firm's report, "The biggest single element in clean energy investment is asset finance of new-build projects such as wind farms, solar parks and biofuel plants.  This amounted to just under $11.5 billion in the first three months of 2009, down 44% from the fourth quarter of 2008 and half the figure for the first quarter of 2008."

On the other hand, Michael Liebreich, chairman and CEO of New Energy Finance, said, "The medium-term and long-term outlook for clean energy is strong, given the imperatives for G20 economies to curb carbon emissions and improve energy security.  We forecast that on current policies, annual investment in the sector will return to growth in due course and reach $350 billion by 2020."

Denver Water Board Director of Planning Meets With Graduate Students

David L. Little, director of planning for Denver Water, met today with graduate program students.

Denver Water, which reports to the five-person Denver Water Board, serves water and promotes its efficient use to 1.3 million people in the city of Denver and surrounding suburbs. Established in 1918, Denver Water is the state's oldest and largest water utility. In 2007, Denver Water generated nearly $200 million in revenue.

Mr. Little explained the history of Denver Water as well as the integrated resource plan, which serves as the strategic underpinning for the utility's services. The planning department is responsible for identifying and integrating the future water and facility needs and resources of Denver Water and determining and protecting options to meet those needs and resources. He also explained the relationship between western slope water users and the Denver Water.

Most of the water delivered by Denver Water comes from a sophisticated series of mountain reservoirs that store nearly 700,000 acre feet of water.

European Commission Publishes White Paper on EU-Related Climate Change Adaptation Strategies

The European Commission has published a white paper, "Adapting to climate change: Towards a European framework for action."

The white paper, which proposes various policy-related measures, reflects the European Commission's view that, "The earth's climate is changing and the impacts are already being felt in Europe and across the world." The white paper presents "the framework for adaptation measures and policies to reduce the European Union's vulnerability to the impacts of climate change."

The European Commission, in presenting the white paper, said, "Adapting to climate change will be integrated into all EU policies and will feature prominently in the Union's external policies to assist those countries most affected."

European Commissioner for the Environment Stavros Dimas said, "The seriousness of climate change is becoming greater and more disturbing withi each passing year...It is therefore essential that we start work now with governments, business, and communities to develop a comprehensive adaptation strategy for the EU and to ensure that adaptation is integrated into key EU policies."

Despite the EU's leadership on climate change (e.g., adoption of the EU Emissions Trading Scheme), not everyone in the "green lobby" is satisfied with the steps the EU has taken. Tony Long, director of the European Policy Office for the WWF, said, "We are particularly concerned for a potential water crisis across Europe, whereby southern countries will suffer from reduced supplies and other regions will face increased extreme weather events and floods. Why isn't action taken now? How much longer do we have to wait?"

Major Energy-Related Legislation Introduced in U.S. House

The introduction yesterday of "The American Clean Energy and Security Act of 2009" marks the official beginning of Congressional consideration of issues ranging from encouraging clean energy development to establishing a cap-and-trade system for greenhouse gas emissions.

The measure establishes a particularly important starting place since it was drafted by two key members of the U.S. House of Representatives, Henry Waxman (D-Cal), chairman of the powerful House Energy and Commerce Committee, and Edward Markey (D-Mass), chairman of the Committee's Energy and Environment Subcommittee. Both congressmen are enthusiastic supporters of a cap-and-trade system.

The Act, which totals more than 600 pages, contains four titles:

• Title I: Clean Energy
• Title II: Energy Efficiency
• Title III: Reducing Global Warming Pollution Through a Cap-and-Trade System
• Title IV: Transitioning for a Clean Energy Economy

Among other things, the Act calls for:

• Retail energy suppliers to generate 25% of their electricity from renewables by 2025
• Establishment of a cap-and-trade system for electric utilities, oil companies, large industrial sources, and other entities that are responsible for 85% of the country's greenhouse gas emissions
• The cap-and-trade system will reduce the number of emissions "allowances" issued each year to meet a combined target of 20% below 2005 levels in 2020 and 42% below 2005 levels in 2030

The importance of this measure cannot be understated since it reflects the House leadership's view of how a total energy package should be implemented.

On the other hand, the House Republican leader, John Boehner (R-Ohio), was quick to describe the bill as "the Democrats' national 'cap and trade' energy tax legislation." However, the reality is that with a big Democratic majority in the House whatever the House leadership wants is likely to make its way into the final bill passed in the House. When the measure moves to the Senate, it may be tougher sledding. Stay tuned...