Saturday, May 23, 2009

American Clean Energy and Security Act of 2009: Approved by Energy Committee, Now on to Other House Committees

Before the "American Clean Energy and Security Act of 2009", which was approved in the U.S. House Energy and Commerce Committee on May 21, goes to the full House for a vote, various provisions will be considered by up to eight other House committees.

Speaker of the House Nancy Pelosi, a California Democrat, said after the bill's passage by the Energy Committee, "The other committees of jurisdiction will soon bring forward their own contributions...I have asked these committees to work together and with the leadership to finalize this clean energy jobs package with the goal of having this package on the House floor as soon as possible."

The other committees are (in alphabetical order):
  • Agriculture
  • Education and Labor
  • Financial Services
  • Foreign Affairs
  • Natural Resources
  • Science and Technology
  • Transportation and Infrastructure
  • Ways and Means
As reported by the BNA Daily Environment Report ("Focus Turns to Other House Committees, Timing of Floor Vote for Climate-Energy Bill," May 26, 2009), "The key hurdle for the [Act] may be in the Ways and Means Committee, where Chairman Charles Rangel (D-N.Y.) is expected to have broad jurisdiction over sections of the bill that raise or distribute revenue as well as provisions to protect trade sensitive industries." While the bill as written provides for 85 percent of the emissions allowances to be distributed for free, the other 15 percent of allowances will be auctioned and therefore generate some funds.

Another key committee will be Agriculture. Congressman Collin Peterson, a Minnesota Democrat and chair of the committee, has been openly hostile to the legislation so expect him to fight the ag sector's corner as best he can. (For some reason that has not always been entirely clear to me, the agriculture sector has historically tried to wiggle out of environmental legislation; it seems that the ag sector has never considered itself a "polluting" industry.) Recently, he said, "This stuff is going no place in the Senate.  They can do whatever they want with this, but I can tell you, there is no way this is going to pass" ("Obama Hails Emissions Vote But Bill Faces Battle," Financial Times, May 23, 2009).  (Hummmm.  It would seem that if Mr. Peterson wants to remain chair of the committee that he might want to tone down his unhappiness.)  At a minimum, it is reasonable to assume that the agricultural lobby will be begging "their" committee to throw a lifeline to farmers and ranchers.

To be sure, there is lots more to come on this historic piece of legislation.

Friday, May 22, 2009

Carbon Trading: A Major Growth Industry?

There are many ways to think about carbon emissions trading schemes, but one that should not be overlooked in the environmental and natural resources communities is the very real possibility that carbon trading will evolve into a major new business opportunity.

Currently there is one mandatory emissions trading scheme -- the European Union ETS. Last year the total market value for carbon trading was about $120 billion, according to an article in The Wall Street Journal ("Trading May Yet Bloom," May 21, 2009). But what if the U.S. enacts a similar scheme? Then the market may grow to more than $2.1 trillion by 2020, according to the London-based consultantcy New Carbon Finance.

Some investment banks in the U.S. have been preparing for this day -- Morgan Stanley and Barclays PLC have carbon trading desks, the Journal reports.  And even Russian gas giant Gazprom is in the carbon trading business.

To be sure, the price of carbon has gone up and down like a yo-yo. But with the U.S. inching closer to some sort of carbon restrictions, it would seem a pretty good bet that this market is going to represent an enormous business opportunity in future years.

That is, of course, if these banks are still around at that point. Last time I checked, many investment banks were begging for government bailouts. Has anybody thought about turning the U.K. and U.S. banking systems over to Steve Jobs and Apple? An "ibank" may be in our future.

"Landmark" Cap-and-Trade Bill Passes in U.S. House Energy and Committee

The U.S. House Energy and Commerce Committee yesterday approved landmark legislation that, if enacted by Congress and signed into law by President Barack Obama, will for the first time in the U.S. establish a cost for emitting carbon and other greenhouse gases

H.R. 2454, "The American Clean Energy and Security Act" as amended, was passed by a vote of 33 to 25. According to the Democratically controlled committee, "This legislation is a comprehensive approach to America's energy policy that charts a new course towards a clean energy economy."

According to a story in today's Wall Street Journal ("House Panel Clears Plan to Cut Greenhouse Gases," May 22, 2009), the approval of the proposal bolsters "prospects that the government will put a price on carbon for the first time [thus] portending a major shift in how the U.S. uses energy." The European Union has had similar legislation in place since January 1, 2005, and thus the U.S. efforts in this regard are several years behind what the EU is already doing.

The bill as amended would cut U.S. GHG emissions about 17 percent below 2005 levels by 2020 and by 80 percent by 2050. It also calls for about 85 percent of the emissions allowances to be given way for free (as opposed to auctioned off) to energy intensive sectors in the economy. President Obama has called for complete auctioning of the allowances, but clearly that is not going to happen and it now appears the president is flexible on this issue. The remaining 15 percent of allowances would be auctioned at a starting price of $10 per metric ton.

Diane Cappiello, national environment reporter for the Associated Press, explained on the NewsHour tonight, more about why such a large percentage of allowances will be distributed for free: 
"This bill would actually give 85 percent of those credits away for free to a variety of industries. And they did that for the sole purpose [of] assuaging some of the concerns of moderate Democrats who say, hey, listen the coal plants in my state are going to have a really hard time getting there if they have to buy these [credits] and also reduce emissions.  So that's exactly why it was done."

Despite passing in the House Committee, formidable challenges lie ahead for any eventual passage. The challenge lies not so much in the U.S. House where the Democratic majority is likely to pass the bill this summer but in the U.S. Senate. Despite a big Democratic majority in the Senate, bill advocates will need 60 votes in favor of the measure in order to avoid a filibuster. The bill does not lend itself to strictly "party-line" thinking, since Democratic senators from "rust belt" states are likely to want even more concessions before approving the measure.

A good overview of the bill can be found by clicking here, "House Panel Approves Climate Bill," (NPR Morning Edition, May 22, 2009).

However, it is way too early for green advocates to cheer since yesterday also brought news that the Chinese government is calling for far more aggressive greenhouse gas emissions cuts than either the American bill or EU law has called for. The Chinese have proposed that western nations cut their emissions by 40 percent by 2020 with a baseline of 1990. Washington and Brussels are not likely to agree with this proposition.

Thursday, May 21, 2009

The "Six Americas:" How Americans View Climate Change

The Yale Project on Climate Change has just published a fascinating look at six distinct American groups and how each looks at climate change.

"Global Warming's Six Americas 2009: An Audience Segmentation Analysis" identifies Americans' attitudes and beliefs about climate change. The survey, which underpinned the analysis, took account of Americans' attitudes, risk perceptions, values, policy preferences, behaviors, and motivations. The study identified "very different levels of engagement with the issue."

The six groups are:

  • "Alarmed" (18 percent): Convinced about the seriousness and reality of climate change; are already taking consumer-based, political, and individual action.
  • "Concerned" (33 percent): Certain that global warming is a serious and real problem; however, not personally engaged in doing anything yet.
  • "Cautious" (19 percent)
  • "Disengaged (12 percent)
  • "Doubtful" (11 percent)
  • "Dismissive" (7 percent): Very sure climate change is not happening; actively opposed to national efforts to reduce emissions of greenhouse gases.

According to the study, "This research provides essential knowledge that can be leveraged by climate educators and communicators throughout American society...This research provides a solid facilitate the changes required to achieve a transition to a low-carbon future."

Perhaps. But somehow it always seems that the ideas of the good and the great -- reflected in reports just like this one -- get lost somewhere between Kanarado, Kansas and Burlington, Colorado. Oh well, carry on you six Americas...and please wear name tags so everyone will know which group you are in.

More Graduation Memories

After last Saturday's graduation ceremony, I posted several photos with graduating students. Today I add several more photographs. This has been a wonderful class, and I will miss each one of them.

Gabriela Rodrigues (LLM, Brazil)

Alvaro Ordonez (LLM, Ecuador)

Stephen Ziri (LLM, Nigeria)

Melissa Rossiter (MRLS, U.S.) and Julia Verdi (MRLS, U.S.)

Marcelo Olivares (LLM, Chile)

Wednesday, May 20, 2009

New Report Confirms the Benefits of Living Abroad

Many of the students in the graduate program have either lived abroad sometime in their lives, are currently living abroad, or are hoping to live abroad at some point.

For many years the scientific community has pondered whether there is a link between an individual living abroad and increased personal creativity. Now it appears that an answer is in hand: According to a recent study, there is indeed a certifiable link between people who live abroad and their level of creativity.

In many ways, this is no real surprise. But on the other hand, it confirms that living abroad for a period of time has demonstrable benefits. And to be sure, nearly all who work in and study about environmental and natural resources are well aware of the international dimensions of the issues we face. The environment, as we well know, does not abide by any jurisdictional boundaries. The same applies with natural resources.

"Cultural Borders and Mental Barriers: The Relationship Between Living Abroad and Creativity" is published in the Journal of Personality and Social Psychology, 2009, Vol. 96, No. 5, pp. 1047-1061.

"Creativity, which is typically defined as the process of bringing into being something that is both novel and useful, is one of the most intriguing psychological phenomena," authors William W. Maddux of Insead in Paris and Adam D. Galinsky of Northwestern University write. "Although it is said that travel broadens the mind...we found a robust relationship between living in and adapting to foreign countries and creativity."

The researchers concluded, "This research provides a critical first step toward understanding how foreign living experiences are associated with creativity, with both experiences abroad and creativity being particularly significant as the world becomes more globally oriented and interconnected."

So how does this apply to all of us? In a very significant way I would suggest. If our core interest was say residential property development in Arizona, then that is what we would need to know about. But the concepts of "the environment" and "natural resources" and "energy" are so broad as to encompass every continent and all of the earth's oceans and bodies of water.

Consequently, the more someone is able to think creatively the more likely the chances that many of today's less-than-satisfactory approaches to the environment, natural resources, and energy can be developed for tomorrow's benefit. That's not to suggest, of course, that someone who has not lived elsewhere is not capable of being creative, but only that the experience of living somewhere other than one's "home territory" can pay future dividends.

One last point, however: As The Economist ("Ex Pats At Work," May 14, 2009), in its review of the study, put it: "Merely traveling abroad, however, [is] not enough. You have to live there. Packing your beach towel and suntan lotion will not, by itself, make you Hemingway."

New Report From NREL Evaluates Proposed Federal Renewable Standards on the Electricity Sector

The National Renewable Energy Laboratory, the premier renewable energy research institution in the U.S., has published a new study that compares three proposed federal renewable energy standards (RES).

The "Comparative Analysis of Three Proposed Federal Renewable Electricity Standards" analyzes bills introduced by Senator Jeff Bingaman, a New Mexico Democrat, Congressman Ed Markey, a Massachusetts Democrat, and a bill sponsored jointly by Congressmen Henry Waxman, a California Democrat, and Markey.  The analysis compares these bills with the combined impact of the renewable portfolio standards already in place in 28 states.  

According to the study, the Bingaman measure would result in a "peak effective RES" of 12.1 percent.  The Markey measure would result in a peak of 21.8 percent, and the Waxman-Markey bill would result in a peak of 17 percent.  The base scenario -- which takes into account the currently existing state-based renewable energy portfolio standards -- was estimated to generate 10.4 percent of national load in 2020 and 12.4 percent in 2024.

In terms of reductions in carbon dioxide emissions, the Bingaman proposal reduces emissions 95 million metric tons annually in 2030 compared to the base case.  The Markey RES saves an estimated 150 million metric tons annually in 2030 and the Waxman proposal reduces emissions by 435 million metric tons by 2030.

To evaluate the impact of the three federal proposals on the U.S. electricity sector, a team of NREL senior energy analysts used a "detailed least-cost optimization model capable of simulating the special attributes of variable sources like wind and solar power."

The study provides an overview of how the electric utility sector "might develop in the next several decades under various policy scenarios," Douglas J. Arent, NREL's director of Strategy Energy Analysis and Applications Center, said.

Monday, May 18, 2009

New Version of "American Clean Energy and Security Act of 2009" Introduced; Markup Session Begins Today

The real battle over the "American Clean Energy and Security Act of 2009" started today as the House Committee on Energy and Commerce began its "markup" on the bill.

This new version of the legislation -- which would institute a cap-and-trade system for greenhouse gas emissions -- replaces the "draft bill" that Reps. Henry Waxman, California Democrat, and Edward Markey, Massachusetts Democrat, introduced on March 31.

However, no sooner had the new bill been introduced last Friday than an amendment in the nature of a substitute bill was introduced.

The bill -- certain to be one of the most contentious environmental/energy bills handled by Congress in years -- will be considered by the House committee this week and next. Chairman Waxman's goal is to report the bill out of committee by the end of next week.

As the markup session began this afternoon, Chairman Waxman said, "I am very proud of the work this committee has done in developing this legislation. Energy legislation is by its nature contentious. It can inflame regional differences. But over the last several weeks, we have been able to bridge these differences and build a remarkable coalition behind the legislation."

Well, I guess we'll wait and see. One thing is for sure -- the bill is now replete with all sorts of free (for the time being) emissions allowances.

Word in Washington is that the measure will receive no Republican votes in committee. Does a nearly straight party-line vote (although some Democrats are likely to join the Republicans in voting against the bill) represent "a remarkable coalition?" Maybe in Washington, D.C., but not in the real world. On the other hand, the bill was never likely to receive much Republican support in any case.

China Set to Spend $400 Billion on Renewables?

An official from China's National Energy Administration says the country may spend more than $400 billion on renewable energy projects between now and 2020.

According to a draft proposal -- that still needs approval by the country's influential National Development and Reform Commission -- more than $130 billion is earmarked for wind projects, nearly $20 billion for solar projects, and $30 billion for biomass, the BNA International Environment Daily has reported ("Chinese Draft Plan Calls for $440 Billion in Spending on Renewable Energy by 2020," May 18, 2009).

China's rapid economic development has been undertaken at the expense of the environment.  Government officials are not under any illusions that this can be sustained, but they chaff at calls from western governments to improve China's energy generation mix (i.e., reduce greenhouse gas emissions) with the response that no one put any limits on western energy use in the 1800s and 1900s.

EU Emissions Trading Scheme Shows Results in 2008

Greenhouse gas emissions from European Union firms taking part in the EU Emissions Trading Scheme (ETS) fell 3.06 percent from 2007 to 2008, the European Commission has reported.

Stavros Dimas, EU Environment Commissioner, said last Friday the results confirm "that the EU has a well functioning trading system, with a robust cap, a clear price signal and a liquid market, which is helping us to cut emissions cost effectively."  In a not so subtle comment aimed at the U.S. and other large emitters, Mr. Dimas added, "This should encourage other countries in their efforts to set up comparable domestic cap-and-trade systems, which we would like to see linked up with the EU ETS to create a stronger international carbon market."

The ETS, the world's first greenhouse gas cap-and-trade system, began operation in January 2005.  It is now in its "second phase," which runs from 2008 to 2012.  In this phase, GHGs are to be reduced 6.5 percent.  The "third phase" will begin in 2013 and run to 2020.  In April, the EU formally adopted a legally binding target of reducing GHGs to 20 percent below 1990 levels by 2020 as well as increasing the share of renewable energy to 20 percent by 2020.  More information on the third phase of the ETS is available by clicking here.

The degree to which the economic slowdown played a part in the reduction was downplayed by Mr. Dimas' spokesperson who said, "Companies for different reasons have undertaken emissions reductions, but what we can safely assume is that the ETS has been the major force [behind] some of the major reductions" ("Emissions From EU Facilities Participating in Trading Scheme Drop 3 Percent in 2008," BNA International Environment Daily, May 18, 2009).