Friday, June 5, 2009

Revised Summary of American Energy and Security Act (H.R. 2454) Released by House Energy Committee

On May 21, 2009, the U.S. House Energy and Commerce Committee reported out of committee the American Energy and Security Act (H.R. 2454), which is also known as the Waxman-Markey bill.

A revised bill summary is now available.

Meanwhile, word from Capitol Hill is that Speaker Nancy Pelosi, California Democrat, wants the bill debated on the floor of the House before the July 4th recess. Stay tuned.

Thursday, June 4, 2009

"Oil Nationalism" and the Protection of National Interests

Like it or not, "oil nationalism" has taken on a greater meaning in some Latin American countries. But a recent editorial in the Financial Times ("Oil Nationalism," May 30, 2009) suggests that oil nationalism may not always be in a country's best interest:

"Latin America is a study in contrast of how countries manage their oil. In Mexico and Venezuela, state and oil industry live in a symbiosis flaunted as resource nationalism – but their state oil companies are looking increasingly like wounded giants. Brazil’s Petrobras, managed with a more open attitude, now overshadows its sisters to the north. This shows that pragmatism, not xenophobia, is a better safeguard of national interests."
The FT editorial goes on to argue that:

"By inviting private oil companies to bid for concessions, Brazil continues to buck a regional trend: Bolivia and Venezuela have confiscated private stakes in oil and gas production. Petrobras is also partly privatised, although the state retains a majority of voting shares.

"Openness to the private sector is a wise choice. Tupi [the huge new oil field off the coast of Brazil] has been compared to the North Sea. The parallel goes beyond reserves: like the North Sea, the Brazilian offshore presents considerable technological challenges. The oil lies under thick sheets of rock and salt in waters thousands of metres deep. Not to want the best expertise in the world is hubris."
The editorial clearly points out that politics can play a role, even in places like Brazil:

"Petrobras is no stranger to politicisation: Brazil’s senate has voted to investigate it for alleged illegal contract awards. The pressure for political control will only increase as Tupi is developed. To avoid this, Petrobras must be treated like any commercial company. [Brazilian Oil Minister] LopĆ£o’s proposal to hold the state’s ownership stake in a separate company should be enacted. Brazil must also enforce a regulatory framework that makes Petrobras compete on equal terms with private actors.

"Maximising the value a nation derives from its oil requires collaboration, not confrontation, with private actors. A state company can help – if forced to act on commercial terms. This, not the solipsism of Venezuela or Mexico, is what real resource nationalism is about."
Certainly from North American or European investors' perspective, the FT editorial captures the current sentiment. But is it possible that Mexico and Venezuela might get the last laugh, so to speak, if longer-term oil and gas prices increase, therefore making these assets even more valuable? And in any case, it is not as if Venezuela is getting no outside investment. China seems quite interested in Venezuela's (as well as Brazil's) oil.

DU Environmental Law Clinic Sues Federal Government to Stop Proposed Logging in Southern Colorado

On Tuesday, the DU College of Law Environmental Law Clinic filed suit against the U.S. government in an effort to stop a proposed logging project involving southern Colorado lands situated around the headwaters of the Rio Grande river.

Under the direction of Mike Harris, Environmental Clinic Director, law student Jacob Schlesinger and clinic fellow Ashley Wilmes prepared the suit that alleges that a proposed 3,500 acre timber project in the Rio Grande National Forest near Alamosa, Colorado, will negatively impact areas already under stress from an on-going spruce budworm infestation and clear-cutting. The suit alleges that if the logging operation is allowed to go ahead, there will be continued soil damage that will harm the flow of water to the Rio Grande and have a negative impact on downstream communities.

Mr. Harris said, "The Forest Service's timber project, which amounts to an illegal 'chop the trees to save the forest' plan, will be a major setback for ongoing soil and timber recovery, which in turn will directly impact the quality of the Rio Grande."

The action was filed on behalf of two environmental groups, Colorado Wild and WildEarth Guardians.

The opportunity for students to work with nationally recognized environmental protection leaders like Mike Harris and the environmental law clinic is just one more reason that the graduate program is considered one of the best of its kind in the world.

Sustainable Banking: Special Report in the Financial Times

Anyone interested in sustainable banking should see today's Financial Times, which includes a 4 page special report. Among the stories:
  • "Leading Banks Reap Benefit of Environmental Agendas"
  • "Institutions Lead the Way in Investments: Socially Responsible Funds Have Held Up Well in the Crisis"
  • "Green Risks and Rewards: Grounds for Optimism"

Wednesday, June 3, 2009

Higher and More Stable U.S. Energy Prices Will Result in Long-Term Benefits, According to New Harvard Study

A price on U.S. greenhouse gas emissions must be established – either through a cap-and-trade system or a carbon tax – as part of the country’s overall energy policy, according to the Belfer Center for Science and International Affairs at Harvard University.

This recommendation is part of a policy brief, “Acting in Time on Energy Policy,” just published by the John F. Kennedy School of Government at Harvard. The report “outlines priorities for U.S. energy policy at the dawn of the Obama administration, and recommends specific steps that the U.S. government should take to address the numerous energy-related challenges facing the United States.”

According to the report, "Higher and stable energy prices would help achieve all the policy objectives in the longer term – improved oil security, lower greenhouse gas emissions, more efficient operation of the electricity system, more incentives for private sector innovation in energy technologies, and more incentives for consumers to purchase cleaner and more energy efficient products.”

As part of addressing the greenhouse gas emissions issue, there must be a long-term goal for global emissions reductions, the report said.

Other key findings and recommendations:
The U.S. should subsidize the building of 10 to 20 commercial-scale projects involving carbon capture and storage. Longer term, carbon capture and storage should be adopted at all large fossil fuel-based stationary power plants.

Legislation should be enacted to set a “variable tax” when oil reaches a certain price. For example, a tax could be established that sets an oil “floor price” of $90 per barrel. When oil has a market price of $80 per barrel, a $10 tax would increase the cost to $90 per barrel. Once the price hit $90 a barrel, the tax would be suspended. In effect, the tax would eliminate the possibility of huge downward trending oil prices.

Additional investment is required for energy infrastructure projects.

Tuesday, June 2, 2009

Adjunct Professor William J. Brady Invited to Present Paper at the Oxford Round Table at the University of Oxford

Adjunct Professor William J. Brady has been invited to attend and present a paper entitled “The Financial Crisis and Environmental Catastrophe Insurance” at this year’s meeting of the Oxford Round Table (ORT) at Oxford University in the United Kingdom.

This year’s topic for the Oxford Round Table is "Money, Politics, and Law: Effects of the Meltdown on the Human Condition."

Prof. Brady is a partner in the Denver law firm of Grimshaw & Harring, PC. The symposium participants consist of 40 academic invitees from multiple disciplines. The ORT advisory committee chooses presentations based on abstracts submitted by invitees. Professor Mads Andenas, Professor of Law, University of Oslo, and a Fellow of the Institute of European and Comparative Law, University of Oxford, and a Fellow of the Institute of Advanced Legal Studies, University of London, will serve as chairperson for this year's symposium.

Professor Brady has been selected to deliver a lecture and PowerPoint presentation, based on the following approved abstract:
"The looming specter of coming environmental catastrophes presents a 'worldwide financial crisis' of never-before-imagined proportions. Yet poorly understood concepts of risk transfer cloud the future.

"Over the past two decades, an explosion in lawsuits concerning past environmental and natural resources damages and government-mandated remediation has erupted in the developed world. Disputes commonly arise over liability when contaminate releases occur at industrial complexes and seaports, municipal owned or operated landfills and airports, active or closed military installations or weapons facilities, nuclear power plants, and other hazardous/toxic waste sites.

"Corporate policyholders continue to scurry to secure insurance coverage for potentially staggering liabilities, not knowing whether their insurers and retrocessionaires will be capable of performing as promised.

"The US EPA has estimated that the cost of cleaning up toxic waste at more than 60,000 disposal sites in the US may run as high as $500 billion, and worldwide remediation could run into the trillions, leading policyholders and insurers to adopt a 'scorched earth' litigation posture. In many jurisdictions, courts are venturing into uncharted areas of insurance coverage, knowing that the stakes for both policyholder and insurer are high. The very survival of insurers, public and private companies and, in some instances, entire communities, is threatened by staggering response costs designed to achieve a safe and clean environment.

"The questions to be answered are patent:

"Can a fiscally responsible world afford the mega-liability clean up and remediation expense, or alternatively, afford not to respond? What are the consequences of the latter?

"Is there enough current capacity in the global insurance market to cover these risks? Should governments in the developed world assume a lead role in creating multi-national, public-private partnership, insurance pools to meet the financial crises posed by future eco-terrorism or environmental catastrophe?

"Can and should funding be appropriated from the imposition of a worldwide carbon tax to meet this challenge?"

Monday, June 1, 2009

MRLS Graduate Earns JD Degree, Graduates as a Member of "Order of St. Ives"

In some instances, Master's of Resource Law Studies graduates go on to seek their juris doctorate degrees.

Jonathan Thompson, who earned his MRLS degree in 2005, is one of those students. On May 16 he earned his JD degree. I hasten to note than Jonathan was recognized as a member of the Order of St. Ives, the JD program's highest academic award. He joined a group of 20 students who graduated with this honor.

It has been a long road (bearing in mind the two degrees) for Jonathan. All along the way he has been a valuable member of our community and has willingly spoken to MRLS students as well as participated in several orientation sessions during his years at DU.

We wish him all the best.

Sunday, May 31, 2009

Global Energy Consumption to Increase 44 Percent Between 2006 and 2030

Global energy consumption will grow by 44 percent between 2006 and 2030 according to the International Energy Outlook 2009.

The report, released last week by the U.S. Energy Information Administration, projects that during this period the growth in energy consumption will be driven largely by the economies of developing nations.

Total world energy use in 2006 was 472 quadrillion British thermal units (Btu).  In 2015 the number will rise to 552 quadrillion Btu and in 2030 it is projected to be 678 quadrillion Btu.

World oil prices are also expected to increase throughout this period.  The report says oil will be $110 per barrel in 2015 (in real 2007 dollars) before rising to $130 per barrel in 2030.  Looked at another way, total petroleum and other liquefied fuels, which were being consumed at a rate of 85 million barrels per day in 2006, will increase to 107 million barrels per day in 2030.  About one-third of the 22 million barrels per day increase will come from OPEC countries while another 3.4 million barrels per day will come from non-OPEC countries.  The balance of the increase will come from unconventional resources such as biofuels, gas-to-liquids, and oil sands.

Other highlights from the report:
"Renewable energy is the fastest-growing source of world electricity generation...From 2006 to 2030, world renewable energy use for electricity generation grows by an average of 2.9 percent per year, and the renewable share of world electricity generation increases from 19 percent in 2006 to 21 percent in 2030.  Hydropower and wind power are the major sources of incremental renewable electricity supply."

"In [the report], which does not [take account of] specific policies to limit greenhouse gas emissions, energy-related carbon dioxide emissions are projected to rise from 29.1 billion metric tons in 2005 to 40.4 billion metric tons in 2030 -- an increase of 39 percent.  With strong economic growth and continued heavy reliance on fossil fuels expected, much of the increase in carbon dioxide emissions is projected to occur among the developing nations of the world, especially in Asia."