The three senators at the center of climate and energy negotiations are aiming to unveil their bill during the week celebrating the 40th anniversary of Earth Day on April 22.
And that just happens to coincide with the launch of my new book Straight Up, which puts the bill and forthcoming debate into context. Here’s more background on the bill.
Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Lieberman will finish writing their draft proposal that sets a first-ever price for the industrial releases of greenhouse gas emissions and expands domestic production of oil, gas and nuclear power.
The three lawmakers expect to be out of Washington for much of the two-week recess that starts today, but they said their staffs will be busy on Capitol Hill writing the bill and meeting with key industry officials and environmental lobbyists to glean last-minute ideas for the proposal.
Graham yesterday outlined several specific decisions already made, including sector-specific emission limits for power plants starting in 2012, with manufacturers to follow four years later. For allowances, the senators will propose recycling all revenue generated by the sale of the utility industry’s allowances back to consumers through local distribution companies.
They also will add a “price collar” to give industry certainty about compliance costs. Sen. Mark Warner (D-Va.) is taking a lead on this issue, meeting with Kerry, Graham and Lieberman, along with Tom Ferrell, the chairman, president and CEO of Richmond-based Dominion Resources Inc., and Tom Kuhn, the president of the Edison Electric Institute.
“One of the things you saw was wide swings of predictions of what this bill would cost and one thing is to try and give folks who want to make investments in alternative energy predictability and also give utilities predictability,” Warner told reporters.
Lieberman said the trio also plans to include several of the suggestions offered yesterday by a collection of industry trade groups, including the U.S. Chamber of Commerce and American Petroleum Institute. This was the third meeting for the U.S. Chamber-led group, also known as the Alliance for Energy and Economic Growth.
Several of the industry officials left their 90-minute meeting with the senators offering praise for the process, even though they still are waiting to see the details.
“Candid,” said Paul Schlegel, director for public policy at the American Farm Bureau Federation. “I think the senators are being genuine in their outreach to people, and that’s a big deal.”
“It was another extraordinary session with a direct and frank exchange of ideas between industry leaders and the senators sitting around the table, talking about specific needs that should be contained in a final legislative product,” said John Shaw, senior vice president of government affairs at the Portland Cement Association.
The food fight is just getting started. Senators cobbling together a sweeping energy and climate bill are at the early stages of divvying up valuable emission allocations among regulated firms and well-financed interest groups.
Their decisions are big ones, worth hundreds of billions of dollars over the climate program’s roughly 40-year lifespan. Already, lawmakers are fighting over who should get a bigger share of the allowances, as well as the broader philosophical mechanics of pricing greenhouse gases.
Interests pressing for Senate allocations run the gamut. Investor-owned power companies say they need more than a third of the free allocations for their customers to help them compensate for higher energy bills. States that stepped up first on climate policy claim their early actions deserve recognition. Other voices in the debate include retirees, wildlife conservationists, religious groups and advocates for keeping tropical rain forests standing.
Sens. Joe Lieberman (I-Conn.) and Lindsey Graham (R-S.C.) said yesterday they were getting closer to unveiling their “breakthrough” proposal on allocations with Sen. John Kerry (D-Mass.), promising a bill that would be both business and consumer-friendly. Graham and Lieberman said about 60 percent of the revenue raised by the government would immediately go directly back to the public as soon as the climate program starts.
Sources briefed on the senators’ proposal say it has been dubbed “reduction and refund” instead of the “cap and trade” term that has been demonized by opponents.
The senators said that each industrial sector — electric utilities, petroleum refiners, manufacturers — will face different emission limits and startup dates. As such, the allocation plan for each also will be different.
For transportation fuels, the senators said an idea being offered up by BP America, ConocoPhillips and Shell Oil Co. involves a “linked fee” that would be tied to the carbon market price for the other industrial sectors.
“The money we generate comes from the companies. It’s an assessment on what they do in the carbon world,” Graham said. “They’re creating a carbon product, they’re going to pay a fee. Some of it will be passed on. Some of it will be absorbed. But the money we collect from them gets passed back to the consumer, which holds them harmless. Bill Gates may not get it, but most people in my state will. And any money not going back to the consumer from this linked fee has to go to do something the country needs, like retire the debt, or I won’t support it.”
Industry officials earlier this month suggested funneling some of the linked fee revenue into the Highway Trust Fund, la federal gasoline taxes. But Graham said yesterday that the idea had lost traction. “That may be more problematic, but the one thing I can tell people about the money, if you don’t get it, it’s going to help your kids.”
The senators also said they are planning to direct the electric utilities’ allocations back to the public and industrial customers via local distribution companies, or LDCs.
Graham said the approach has an added layer of complexity because it is tied to the four additional years before major manufacturers must begin compliance when compared with the electric utilities.
NextEra Energy Resources thought it had a golden project. The company proposed a 2,000-acre solar farm, named Beacon, on fallow agricultural land on the edge of California‘s Mojave Desert. The site has the great desert sun but is on degraded land near a freeway, an auto test track and old buildings
The site “is exactly where solar should be,” says David Myers, head of conservation group Wildlands Conservancy.
But two years later, NextEra still awaits permission to begin construction from the California Energy Commission, which grants permits on such projects after environmental reviews. Time is running short, not only for NextEra but for several dozen green-energy projects in California. Ground must be broken on them before year’s end to get federal stimulus funds worth 30% of the projects’ cost.
The deadline “” and the push for green energy by President Obama and California Gov. Arnold Schwarzenegger“” has inspired unprecedented coordination among regulators and environmentalists who want green energy but not rampant destruction of wilderness. If they succeed in siting so many large solar projects quickly, California may set a precedent for how other states resolve concerns over land use vs. the benefits of green energy.
“It’s a scene that’s being played out all over the country,” says Benjamin Kelahan, senior vice president for energy of the Saint Consulting Group. But California, he says, is “a hotbed of activity.”
Yet the sheer number and size of the California projects, especially a dozen huge solar farms unlike anything regulators have reviewed in 20 years, is stressing agencies and stakeholders alike. No other state has so many huge solar projects in the pipeline. Billions of dollars in stimulus funds ride on whether the permitting process can be sped up without sacrificing California’s stringent environmental standards.
No corners are being cut, regulators say. But some environmentalists fear that the tight deadlines will lead to projects that could’ve been better with more time. And companies say that some projects, like NextEra’s, have suffered delays born of inefficient permitting.
“These are large projects at a scale we’ve never seen before on a time schedule that’s never been done before,” says Kimberley Delfino, California program director for the environmental group Defenders of Wildlife. “This is not going to be an easy thing to do.”
If all are built, the 49 projects seeking stimulus funding would generate 11,000 megawatts of electricity a year. That’s enough to supply 7 million California homes and give California utilities a big boost in meeting mandates to get 33% of their energy from renewable sources by 2020.
The projects also would drive 10,000 construction jobs, 2,200 operational jobs and up to $30 billion in investment, including up to $10 billion in federal stimulus dollars, says Michael Picker, Schwarzenegger’s renewable-energy adviser.
Policies to reduce greenhouse gas emissions by 25 percent from 1990 levels by 2020, if swiftly implemented, would create 45 trillion yen ($486 billion) in new business and 1.25 million new jobs, the Environment Ministry said.
Contrary to calculations by the previous administration headed by Taro Aso that said measures against global warming could hinder economic growth, the ministry’s report Friday concluded both can be achieved.
According to the report, policies that subsidize solar power generation and tighter standards on housing heat insulation would generate new investments totaling 33 trillion yen in 2020 for the development of energy-saving technologies and other purposes.
Exports of the new technologies would create 12 trillion yen more in new demand, it said.
The 2010 budget will move the province into a deeper shade of green and that will be good for business, Finance Minister Raymond Bachand said Tuesday.
“Sustainable development will be an important thrust and a signature feature of our economy for the next 20 years at least,” Bachand told the National Assembly.
“Tackling climate change will provide Quebec with new opportunities and openings for developing a green economy.”
New measures to combat climate change provide for investments of $72 million over three years and include $30 million for the development of a made-in-Quebec electric bus along with $24 million for the marketing of carbon-certified products.
And, included in a three-year, $1.1 billion package for research and innovation, are pilot projects to advance green technologies. They focus on developing more environmentally-friendly aircraft and, in the pulp-and-paper sector, developing new products such as biofuels.
Decision-makers around the world are in a period of transition when it comes to the future of supplying energy. Even if everyone agrees that a low carbon future is the inevitable solution, there is nothing close to consensus regarding which path to take.
Increasingly, industrial and developing countries find themselves favoring different paths – not only for their own countries but for each other.
These differences were on full display at the Copenhagen climate talks in December. Now, the battleground has moved to World Bank energy projects and investments.
On Apr. 8, the World Bank’s board is expected to approve a 3.75-billion-dollar loan for a coal-fired power plant in South Africa.
Earlier this month, it was reported that the United States was opposed to the loan due to the high greenhouse gas emissions of coal-fired plants and that its representatives on the bank’s board would abstain from voting on the proposal. U.S. officials have since denied that a decision has been made.
An abstention would allow the loan to go forward, while also allowing the U.S. to go on record in opposition to it.
A new legal agreement committing nations around the world to curb greenhouse-gas emissions is unlikely to be completed until the end of 2011, two years later than originally envisioned, the top U.N. climate official said Wednesday.
Yvo de Boer, executive secretary of the U.N. climate-change secretariat, said countries need to restore confidence in U.N. negotiations following the dismal results of the Copenhagen summit in December, which ended in a vague agreement of principles and a pledge of finances for poor countries most threatened by climate change.
“There was a great deal of frustration at end the end of the Copenhagen.
All public bodies should have a legal duty to protect their workers from climate change in the same way as institutions currently carry out health and safety checks, according to the Royal Commission on Environmental Pollution.
The body set up to warn Government about the risk of environmental disasters said climate change will cause floods, droughts and heatwaves in future.
In a key report on ‘Adapting Institutions to Climate Change’ the committee of experts recommended that every school, hosptial and business should have a legal duty to adapt to climate change. For example by putting in place flood defences and plans for water shortages.
Sir John Lawton, Chairman of the Royal Commission, said global warming is a real risk and could cause huge problems for Britain.
He said all businesses and public bodies should have to carry out a “climate change adaptation test” in the same way as they currently conduct health and safety checks.
“The planet is already slightly above the worse case scenario so if we do nothing we could be looking at a temperature rise of 4C (7.3F) by 2100,” he said.
“Any society confronted with those kind of dramatic changes to their climate would be very wise to take due attention to the risk that poses to society, infrastructure and people’s lives and begin to plan accordingly. That should become central because just like health and safety scenarios – where people are going to get killed or injured – people are going to get killed or injured by climate change and that is why it is important.”
A tiny activist group with a shoestring budget and an aggressive attitude is fast becoming a rising power in environmental policy.
The Center for Biological Diversity, an organization focused on saving imperiled species, chalks up victories even as it rebels against much of the environmental community. It secured Endangered Species Act protection for the polar bear. It won a court decision forcing federal agencies to look at climate change repercussions as part of environmental reviews. It pushed Wal-Mart to make green concessions as it opens new stores.
Started by a philosopher, physician, psychology major and biologist who met while tracking spotted owls, the group eschews both traditional inside-the-Beltway tactics and fringe group approaches. It does not lobby, negotiate or campaign for climate legislation. It rejects showy protests like taking over coal plants or unfurling banners on national monuments.
Instead, CBD relies on a strategy of relentless lawsuits. It is controversial, with critics charging that the tactic clogs up the courts, burdens federal agencies and fails to bring a comprehensive solution. It is also highly successful. The center has won 93 percent of its cases.
“They have convinced courts that agencies have ignored or improperly implemented a whole host of environmental and natural resource management statutes,” said Robert Glicksman, a professor of environmental law at George Washington University Law School. “They have taken the initiative to bring these lawsuits. They have done their homework in terms of making convincing claims.”