U.S. EPA Announces Major New Greenhouse Gases Rule; European Union Questions American Progress on Emissions Reductions

Yesterday the U.S. Environmental Protection Agency issued the "Final Mandatory Reporting of Greenhouse Gases Rule,", which requires large sources of greenhouse gas emissions to report emissions data.

Suppliers of fossil fuels or industrial greenhouse gases, facilities that emit more than 25,000 metric tons per year, and manufacturers of vehicles and engines fall under the rule's coverage. According to the EPA the "new reporting system will provide a better understanding of where GHGs are coming from and will guide development of the best possible policies and programs to reduce emissions."

The facilities involved emit about 85 percent of the nation's greenhouse gas emissions. Under the rule, data collection will begin on January 1, 2010.

Does this mean the U.S. will at some point legislatively mandate greenhouse gas emissions reductions? Not exactly. What it does mean is that the U.S. federal government will know who is emitting what. The European Union, the only major governmental entity that has instituted a carbon emissions trading scheme, did not have a similar data collection system in place when the EU trading scheme took effect January 1, 2005. Some Europeans have pointed to this lack of data as a major error on the EU's part.

Despite the announcement, however, major figures in Europe are expressing concern about the lack of U.S. progress in reducing greenhouse gas emissions. For example, an article in the Financial Times ("US-EU Rift Clouds Climate Summit," Sept. 22, 2009), quotes an unnamed European Commission source as saying, "So far, we thought the basic problem was the Chinese and the Indians. But now I think the problem appears to lie most clearly with the U.S."

The Obama-EU honeymoon is officially over. All men (and women) to their battle stations (in a manner of speaking of course).

European Commission Slaps Two European Energy Giants With Huge Fines

The European Commission, the European Union body responsible for enforcing competition law, has imposed antitrust-related fines of nearly $800 billion on both Eon and GdF Suez.

The Commission said that the two energy giants -- Eon, a German firm, and GdF Suez, a French firm -- violated EU antitrust measures by agreeing not to sell natural gas in each other's home markets over a jointly built gas pipeline. The market-sharing agreement continued even after European gas markets were liberalized.

Why, you might ask, is this news item part of the blog? Simply because it indicates that in some markets -- the EU in this instance -- energy companies can find themselves being aggressively pursued by antitrust authorities. Put another way, finding, extracting, and transporting the energy are not the only issues that need to be considered in a business context. 

The combined $1.6 billion fine was the first of its kind levied by the Commission for an antitrust infringement in the EU energy sector.

Neelie Kroes, the EU Competition Commissioner, said:

"This decision sends a strong signal to energy incumbents that the Commission will not tolerate any form of anticompetitive behavior. Marketing sharing is one of the worst types of antitrust infringement. This agreement deprived customers of more price competition and more choice of supplier in two of the largest gas markets in the EU."

Both companies said they will appeal the Commission's decision.

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.