Influential European Environmental Bureau Urges European Union to Pursue Stronger Environmental Goals

 The European Union should seek adoption by developed countries of a 40 percent reduction target in greenhouse gas emissions for the 1990 to 2020 period, the European Environmental Bureau (EEB) said last week.

The EEB, which consists of more than 130 European environmental organizations from 31 countries, also recommended that EU member states shift 10 percent of their income tax-derived revenues away from labor and to energy and resource use. The recommendations were part of the EEB's "Ten Green Tests for the 2009 Swedish Presidency" of the EU.

Sweden will serve as president of the EU from the first of July through Dec. 31, 2009.  The Swedish government will play a leading role in determining the EU's negotiating position in the run up to the UN climate change meeting in Copenhagen in December.

Before each of the EU's 6-month presidencies, the EEB issues a list of 10 priorities that the presiding country should seek during its tenure as president.

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.

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."

U.S. EPA Issues Proposed Finding That GHGs Pose Threat to Public Health

After years of inaction by the U.S. federal government to address climate change, the tables have suddenly turned. Earlier today the U.S. Environmental Protection Agency issued a "proposed finding" that greenhouse gases (GHGs) contribute to air pollution that may endanger public health or welfare.

The proposed finding now enters a 60 day public comment period, which is the next step in the required deliberation process that EPA must take before issuing a final finding.

EPA Administrator Lisa P. Jackson said, "This finding confirms that greenhouse gas pollution is a serious problem now and for future generations. Fortunately, it follows President Obama's call for a low carbon economy and strong leadership in Congress on clean energy and climate legislation."

Addressing the seriousness of the challenge of climate change, Ms. Jackson said, "In both magnitude and probability, climate change is an enormous problem. The greenhouse gases that are responsible for it endanger public health and welfare within the meaning of the Clean Air Act."

The announcement came two years after the U.S. Supreme Court in Massachusetts v. EPA ordered the agency to determine whether GHGs should be regulated under the Clean Air Act.

Former Bush administration EPA general counsel Roger Martella said, "The proposed endangerment finding marks the official beginning of an era of controlling carbon in the U.S. This means that EPA's mission of environmental protection will burst outside those bounds and place it on the stage as one of the most influential regulators of both energy use and the greater economy in the upcoming year," according to The Washington Post ("EPA Proposes Regulating Greenhouse Gas Emissions," April 17, 2009).

The proposed finding involves six gases:

• Carbon dioxide
• Methane
• Nitrous oxide
• Hydrofluorocarbons
• Perfluorocarbons
• Sulfur hexafluoride
• The proposed finding does not include any proposed regulations; that step would be undertaken only after a "final" finding of endangerment and hearing from stakeholders.
  

The proposed finding does not include proposed regulations. They would be proposed and adopted only after the endangerment finding becomes final.

Meanwhile, legislation -- the American Clean Energy and Security Act of 2009 -- authored by U.S. House Energy Committee Chair Henry Waxman (D-CA) and aimed at establishing a GHG cap-and-trade system, will be considered by the House in the next few weeks.

So which approach is better? Legislative or regulatory? It depends on your position in the overall debate.

Legislative: More flexible, greater stakeholder influence

U.S. Senator Barbara Boxer, chair of the Senate Environment and Public Works Committee, favors the legislative approach. "The best and most flexible way to deal with this serious problem is to enact a market-based cap-and-trade system which will help us to make the transition to clean energy and will bring us innovation and strong economic growth," according to the BNA Daily Environment Report ("EPA Issues Proposes Rules Finding Greenhouse Gases Endanger Health, Welfare," April 17, 2009).

Administrator Jackson has also voiced a preference for legislation.

Business will also prefer this approach now that it is clear that the U.S. will take action on reducing GHGs.  The reason is that the chances of the various industrial sectors having their views taken into account is much greater in the legislative process where they can seek to influence politicians than in the regulatory process where their influence will be considerably less.  This is made all the more important bearing in mind that while Congress is likely to establish a cap-and-trade system, the EPA is likely to mandate what measures industry must take and skip the cap-and-trade system.  For business this is a key issue since they always prefer more flexibility to less flexibility.  

Regulatory: More control by EPA, probably a less flexible reduction system

If it becomes impossible for Congress to enact GHG-related legislation, then the regulatory approach can be undertaken through the authority of the Obama administration acting on its own. If this approach is taken, the likelihood for robust involvement from the various stakeholders, perhaps most importantly those who prefer a very "conservative" approach will be lessened.

More specifically, while EPA must take account of the various stakeholders' positions in the final analysis the agency will do pretty much what it so desires.

This approach, however, is likely to be susceptible to legal challenge but not before the endangerment ruling is finalized.