Energy Efficiency & Climate Change Law

Business Implications of Climate Change and Related Disclosure Obligations

David Frenkil — Thu, 27 May 2010 09:59:29 -0500

The following interview was originally published in the Black & Veatch Pathfinder publication in March 2010.

Pathfinder: What do you see as the principal business risks associated with climate change?

Frenkil: Since climate change is widely believed to result in the increasing levels of weather-related fiscal losses in the United States, which are rising significantly faster than insurance premiums, population and economic growth, businesses face numerous climate-related risks such as the disruption of operations. As we saw with the advent of Superfund in the early 1980s, the insurance industry is reducing coverage to businesses it deems susceptible to the impacts of climate change until it determines how best to grapple with these relatively new risks. Meanwhile, as litigation mounts against large emitters of greenhouse gases, recent court decisions indicate a shift in judicial policy in favor of plaintiffs in climate-related suits. For example, the United States Court of Appeals for the Second Circuit recently reinstated Connecticut v. American Electric Power, a suit against six of the nation’s largest electric utilities, which would allow common law nuisance suits to proceed against owners of electric generation facilities alleged to be harming the environment through emitting greenhouse gases.

Pathfinder: How are companies responding to these risks?

Frenkil: Companies are increasingly taking a bifurcated response to climate change through considering 1) the ways in which climate change affects their business while 2) determining how their own business practices can be changed to mitigate greenhouse gas emissions. Such responses can affect a company’s ability to attract talent, as well as to market its products. In fact, greater transparency in environmental reporting, such as sustainability performance, has been shown to enhance a company’s access to capital. Recent regulatory uncertainty, however, stemming from the lack of a climate deal at both the international level and in the U.S. Congress complicates investment strategies for companies across the entire global economy.

Pathfinder: Some of those risks are significant. You seem to be suggesting, however, that the government has been less than insistent about getting them into the public eye. Is that correct?

Frenkil: Until recently, the Federal Government generally encouraged entities to report on their climate risks on a voluntary basis. During the Obama Administration’s first year in office, however, the Environmental Protection Agency (EPA) implemented a rule requiring entities that emit 25,000 metric tons or more per year of greenhouse gases to annually disclose their emissions. This rule is expected to cover 85% of the nation’s greenhouse gas emissions and much of the information collected under the rule is scheduled to become public in 2011. Another significant recent development is the interpretive guidance issued by the Securities and Exchange Commission (SEC) in early 2010, which clarifies what publicly-traded companies need to disclose to investors in terms of climate risks.

Pathfinder: What is the argument against full disclosure of climate risks?

Frenkil: Opponents of climate risk disclosure assert that attempts to forecast the impact of climate change on companies may be highly uncertain at best and, perhaps, even impossible, since a line cannot necessarily be drawn between the effects of what are believed to be human-induced climate change and events that would have occurred anyway. Therefore, corporate officers and directors have indicated a reluctance to favor the reporting of these risks out of concern that inaccuracies in the disclosure statement may wind up as a potential liability.

Pathfinder: How might mandating climate risk disclosure have an impact on the role of corporate officers and directors? What are its implications on corporations in general?

Frenkil: During the 2010 proxy season, investors filed a record 95 shareholder resolutions related to climate change, some of which mandating that the corporation disclose its climate risks. This 40% increase in shareholder climate resolutions from the previous year underscores that, now, more than ever, corporate officers and directors have a fiduciary duty to cost-effectively reduce their company’s exposure to climate risks and also to mitigate its carbon footprint.

The disclosure of climate risks will require companies to strengthen their environmental management. Their improved tools for climate risk assessments will help them identify the “low-hanging fruit” and other opportunities for cutting costs while reducing greenhouse gas emissions. Considering the unique and far-reaching influence of corporations within society, this new perspective has the potential to create a ripple effect throughout the communities, regions and even countries where these corporations are located -- and among their suppliers, customers and employees.

Byron Kennard: Edmund Burke on Climate Change

David Frenkil — Tue, 18 May 2010 09:42:14 -0500

Byron Kennard is a long time advocate of both the environment and of small-scale enterprise. In the late 1960s, working as a community organizer for the Conservation Foundation, Byron helped lay groundwork for Earth Day and the worldwide explosion of civic and political activism that followed in its wake. For this work, Kennard was later awarded the Leadership Medal of the United Nations Environment Program for "distinguished contribution to the cause of the environment."

In the 1970s, Kennard collaborated with the late E. F. Schumacher, author of Small Is Beautiful, to realize the book’s vision of small-scale enterprise as a principal protector and restorer of the environment. In 1998, Kennard founded the Center for Small Business and the Environment. During the last decade, Byron built and orchestrated a vibrant network of small business leaders and green entrepreneurs around the country, a network that strives to mobilize small businesses on behalf of environmental protection.

Byron Kennard is the principal author of Small Wonders: How the Creative Drive of Entrepreneurial Small Businesses is Combating the Recession, Creating New Jobs & Economic Growth, Solving Energy Problems, Fighting Global Warming and Protecting the Environment

Edmund Burke on Climate Change

The near-unanimous opposition of Republicans in Congress to climate change legislation strikes me as inconsistent with the tenets of modern conservatism laid down by Edmund Burke (1729-97), the movement's patron saint.

Burke is the Anglo-Irish politician and writer whose appeal to the right is based largely on his book, Reflections on the Revolution in France, which Burke wrote to express his profound hostility to the revolution's spirit of total, radical innovation. In his Reflections, Burke admonishes the French to consider what "they have received from their ancestors" and urges them "not to commit waste on the inheritance . . . hazarding to leave to those who come after them, a ruin instead of a habitation."

Burke was writing in 1790, during the revolution's salad days, when many of his countrymen were enthralled by the fall of the ancient despotism. "Bliss was it in that dawn to be alive," declared Wordsworth famously. Burke felt no bliss; only deep foreboding. He saw catastrophe looming and predicted the coming of the Reign of Terror.

Now, I'm not writing to advocate the restoration of the French throne, as Burke did. I'm writing to advocate what Burke called a "first principle," the basic argument he used to oppose the revolution. I urge that it be our guide in addressing global warming, a catastrophe that looms in our time.

Burke argued that the social system on which European civilization rested had evolved over many centuries and was intricate and complex beyond human comprehension. Meddling with the structure and operation of such a system, he warned, would disturb its workings and set all hell loose.

What's this got to do with climate change?

The climate system on which human civilization rests evolved over many geologic eras. It is intricate and complex beyond our comprehension - certainly beyond the present reach of science, as most scientists will freely attest. This hasn't stopped us, however, from meddling with the climate system big-time.

According to the Pew Center on Global Climate Change, human activities have increased atmospheric carbon dioxide concentrations by 35 percent since the industrial era began. And we're still going at it, hot and heavy. There are, for example, about 825 million cars and light vehicles on the world's roads and about 65 million new cars and light trucks are being produced annually. These vehicles are emitting carbon dioxide into the atmosphere at levels not seen before.

Computer models suggest some of the consequences of this human-caused atmospheric loading but since it is unprecedented, we really have no way of knowing what the full impact will be. The only thing we can be sure of is that this radical change is not a good idea.

What more do we need to know in order to act promptly and aggressively to reduce greenhouse gas emissions? To achieve this, liberals in Congress have proposed a cap-and-trade system, which conservatives don't like. But if conservatives heed Burke's admonition, as they ought to, they need to come up with a viable approach of their own to reduce greenhouse gas emissions.

Interview with Photographer Edward Burtynsky

David Frenkil — Tue, 04 May 2010 22:21:40 -0500

Edward Burtynsky is an internationally-renowned photographer whose remarkable photographic depictions of global industrial landscapes – quarries, recycling yards, factories, mines and dams – are included in the collections of over fifty major museums around the world, including Bibliothèque nationale de France, the Museum of Modern Art and the Guggenheim Museum in New York. Mr. Burtynsky was the subject of the internationally acclaimed, award-winning feature length documentary film, Manufactured Landscapes.

In an interview with EfficiencyLaw.com, Mr. Burtynsky discusses his work, the oil spill in the Gulf Coast, China and the role that art can play in galvanizing the public's consciousness.

When I first saw your exhibit at the Corcoran Gallery of Art in Washington, DC last year and then when I watched Manufactured Landscapes, I was moved by the environmental degradation you capture in your work. Of course, this is only from viewing a photograph or a film. But, as you stand there on site before these scenes, what do you think as you look through your lens?

My photographs capture the collective impact that individuals have on the landscape as the world expands. The whole body of this work over the last 30 years is a careful and meditative lament for the loss of nature as pristine landscapes have been turned over by the human hand.

As I look out through the lens, I feel as if we’re all in a train without brakes, running out of control down a mountainside, except the passengers are not calling “emergency!” fast enough or loud enough.

The plight of fishermen in the Gulf Coast after the recent oil spill is not too different from that of the workers in China that we see in Manufactured Landscapes who get paid – by the brick – to knock down their own cities in preparation for deliberate flooding to make way for the Three Gorges Dam [as the largest dam in the world, it is often called "the Second Great Wall of China" with a length of 2,309 meters, and a total installed capacity of 84.7 billion kWh per year produced by 32 generators]. From what you have seen during the time you have spent there, do the more than 1.1 million residents who have been displaced by the construction of that dam resent the fact that they must move, and that everything they have known will soon be drowned for their country’s economic gain?

The residents who have been displaced by the construction of the Three Gorges Dam are angrybecause their families resided there for hundreds of years yet, once relocated, they are often left without the means to make money. Similarly, with offshore drilling of petroleum in the Gulf Coast, we are playing with a really dangerous substance in a very volatile environment that is susceptible to severe weather patterns, such as Hurricane Katrina. Since the damage to the environment from the BP oil spill will likely be several times more severe than the Exxon Valdez disaster, we should take a closer look at whether more offshore drilling is a good idea.

For this to change, it takes political will, but art can also play an important role through its ability to galvanize the public’s consciousness. For example, Al Gore’s film An Inconvenient Truth raised awareness about the climate issue. Suddenly, the media started talking about climate change on a frequent basis. I am hoping that this disaster will have a similar effect in that the response will be a more rational and careful approach to meeting the demands of our energy needs.

Photographers like Lewis Hine helped change child labor laws in the United States and Carleton Watkins’ pictures inspired the preservation of Yellowstone National Park. As a photographer who captures landscapes in distress, what do you hope is the reaction to your work today and what do you seek to accomplish when audiences view your work years from now?

I hope that what people take away from my work is a new awareness about the various ways in which we have made huge incursions on the natural environment. However, these impacts are largely out of sight and out of mind; and we have been living in a sophisticated state of denial in that there is a total disconnect between how we partake in the causes and effects of environmental degradation. For example, there is a lack of conscious awareness about the back-story of what happens elsewhere when we turn on our lights at night.

The economic engine is the best and fastest way to quickly turn this around. Consumers should be encouraged to buy products made by whatever company is the best in its class. This will then encourage other companies to meet these standards, which will push the best in class to go even further to keep its customers. For the business community, this will become just another method of working, except in a way that is healthier for everyone.

Amory Lovins: What Can We Do to Fix the Climate Problem?

David Frenkil — Mon, 26 Apr 2010 19:39:21 -0500

Amory B. Lovins contributed this Guest Article to EfficiencyLaw.com, which is especially relevant today, considering this weekend's announcement that U.S. climate legislation has suffered yet another setback in Congress.

Physicist Amory Lovins is Chairman and Chief Scientist of Rocky Mountain Institute and Chairman Emeritus of Fiberforge Corporation. Published in 29 books and hundreds of papers, his wide-ranging innovations in energy, security, environment, and development have been recognized by the Blue Planet, Volvo, Onassis, Nissan, Shingo, and Mitchell Prizes, MacArthur and Ashoka Fellowships, the Benjamin Franklin and Happold Medals, 11 honorary doctorates, honorary membership of the American Institute of Architects, Fellowship of the Royal Society of Arts, Foreign Membership of the Royal Swedish Academy of Engineering Sciences, and the Heinz, Lindbergh, Right Livelihood, National Design, and World Technology Awards. He advises governments and major firms worldwide on advanced energy and resource efficiency, has briefed 20 heads of state, and has led the technical redesign of more than $30 billion worth of industrial facilities in 29 sectors to achieve very large energy savings at typically lower capital cost. His latest academic chair was as a 2007 visiting professor in Stanford University’s School of Engineering. In 2009, Time named him one of the 100 most influential people in the world, and Foreign Policy, one of the 100 top global thinkers. He currently leads RMI's strategic synthesis Reinventing Fire—mapping and driving the business-led transition from oil and coal to efficiency and renewables.

What Can We Do to Fix the Climate Problem?

Climate protection, like the Hubble Space Telescope’s mirror, got spoiled by a sign error: in fact, climate solutions are not costly but profitable, because saving fuel costs less than buying fuel. Many leading companies are making billions of dollars’ profit by cutting their carbon intensity or emissions at rates of 5–8% per year —in the best cases, 6–16% per year. When politicians who lament climate protection’s supposed costs, burdens, and sacrifices join the parallel universe of practitioners who routinely achieve profits, jobs, and competitive advantage by wasting less fuel, the political obstacles will melt faster than the glaciers.

Stabilizing carbon emissions requires only increasing energy productivity (measured in $ GDP per GJ) by 2% per year, rather than the canonically assumed 1% per year; stabilizing climate (to the extent irreversible changes aren’t already underway) needs only approximately 3–4% per year. The U.S. has long achieved 2–4% per year, compared with China's 5%. Raising global adoption to 3–4% per year will be profitable and not so difficult—especially since most of the growth is in countries like China and India that can more easily build their infrastructure right than fix it later. The main missing ingredient is careful attention to “barrier-busting”—turning the 60–80 known market failures in buying energy efficiency into business opportunities. A least-cost climate-protection strategy can also have surprisingly broad trans-ideological appeal.

Energy efficiency is not the only, but certainly the main, tool for profitable climate protection, and indeed could suffice if pursued to its full modern potential, typically with expanding rather than diminishing returns (i.e., radical savings at lower capital cost, now demonstrated in a couple of dozen sectors but awaiting a revolution in design pedagogy and practice).

Detailed assessments show how to save half of U.S. oil and gas at respective average costs of $12/bbl and $0.9/GJ (2000 $), and three-fourths of U.S. electricity at approimately $0.01/kWh —all below short-run marginal cost. For example, tripled-efficiency but safer and uncompromised cars , trucks, and planes using current technology would respectively repay their extra capital cost in 2, 1, and 4–5 years at current U.S. fuel prices.

Now add alternative supplies. Global fossil-fuel carbon emissions come about 2/5 from burning oil and 2/5 from making electricity (the remaining gas and coal are analogous). Redoubled U.S. oil efficiency at $12/bbl plus substituting saved natural gas and advanced biofuels (together averaging $18/bbl) can eliminate U.S. oil use by the 2040s. Since the average cost of getting completely off oil is roughly $15/bbl—one-fifth the recent price—this transition will be led by business for profit. Innovative public policies can support, not distort, the business logic without needing new fuel taxes, subsidies, mandates, or national laws. Early implementation is encouraging, and by 2009 had pulled ahead of schedule.

As for electricity, “micropower”—low-carbon combined-heat-and-power plus carbon-free decentralized renewables—provided 1/6 of the world’s electricity and 1/3 of its new electricity in 2005, meeting from 1/6 to over 1/2 of all electrical needs in 13 industrial countries. By 2008, the latest data available, micropower was providing 17% of the world’s electricity (vs. nuclear power’s 13%) and about 91% of the world’s new electricity (vs. nuclear’s less than 0%); renewables other than big hydro got $100 billion of private investment and added 40 billion watts of capacity while new nuclear build got no private investment and lost net capacity; the renewables including big hydro got more total investment than all fossil-fueled generation. Micropower and “negawatts” are widening their dominance of the world’s new electrical services, and their 207 “distributed benefits,” when counted, will widen their already decisive economic advantage by about another tenfold. Some notable vendors of big thermal power plants, seeing their markets dwindling, now understand this and believe their future is in distributed and renewable power, while others deny the reality of these trends. Evidence is also emerging that the supposed need for bulk electrical storage in a largely or wholly renewable supply system is a myth: reliability can instead be ensured by proper diversification, forecasting, and integration with existing assets.

The new climate-safe technologies for both supply and efficiency, being cheaper and faster (hence doubly lower in financial risk) than traditional competitors, will continue to wallop them in the marketplace—and to buy more climate solution per dollar and per year. Conversely, when central planners continue to buy costlier and slower options, they reduce and retard climate protection—by approximately 2–10-fold per dollar and 20–40-fold per year, for example, when new nuclear power is bought instead of micropower and efficiency.

In short, the climate problem is neither necessary nor economic, but is an artifact of not using energy in a way that saves money. Climate change can be prevented by taking markets seriously —letting all ways to save or supply energy compete fairly, at honest prices, no matter which kind they are, what technology they use, where they are, how big they are, or who owns them. Internalizing carbon and other environmental costs will be correct and helpful but not essential.

Fair competition can simultaneously solve many other problems. For example, saving electricity needs about 1,000 times less capital, and repays it about 10 times faster, than supplying more electricity. This 10,000-fold capital leverage can turn the power sector (now gobbling about a fourth of global development capital) into a net funder of other development needs. Profitably eliminating oil use would certainly make the world better and safer. A more efficient, diverse, dispersed, renewable energy system can make major supply failures, whether caused by accident or malice, impossible by design rather than (as now) inevitable by design.

The inevitable demise of nuclear power—already stricken by a fatal attack of market forces— can belatedly stem nuclear proliferation too, by removing from ordinary commerce a vast flow of ingredients of do-it-yourself bomb kits and their innocent-looking civilian disguise. That would make those ingredients harder to get, more conspicuous to try to get, and politically far costlier to be caught trying to get, because for the first time, the motive for wanting them would be unmasked as unambiguously military. Focusing intelligence resources on needles, not haystacks, would also improve the odds of timely warning. All this wouldn’t make proliferation impossible, but would certainly make it far more difficult for both recipients and suppliers.

Had my analyses of these opportunities been adopted when first published [in 1979-1980 in the Bulletin of Atomic Scientists], we would not now all be worrying about climate change, oil dependence, or Iran and North Korea. But it’s not quite too late. As the late Donella Meadows said, “We have exactly enough time—starting now.”

So what are we waiting for? We are the people we have been waiting for. And as Raymond Williams wrote, “To be truly radical is to make hope possible, not despair convincing.”

Implications of Europe's 11% Drop in Carbon Emissions

David Frenkil — Thu, 01 Apr 2010 10:31:08 -0500

The European Union announced today that carbon emissions under its Emissions Trading Scheme (EU ETS) -- a mandatory private entity, market-based trading program through which EU member states reduce their carbon dioxide emissions while attempting to minimize adverse effects on economic development and employment -- fell by about 11.2 percent in 2009; thus resulting in a higher supply of carbon permits on the $140 billion EU ETS market.

Because an increase in the supply of permits will likely further reduce the already low cost of compliance for businesses covered under the carbon trading program, this data suggests that the EU ETS is falling short of its aim to encourage major polluters of greenhouse gases (GHGs) to reduce their emissions through financial pressure. At current prices of less than €13 ($17.60) per tonne, the cost of carbon is far too low to result in a significant change in the way companies generate and use energy.

Also, since companies can "bank" carbon permits into the future, the surpluses from 2009 will adversely impact the price of EU ETS carbon permits in the long-term since these inventories will make it easier for businesses to offset future emissions once the economy recovers. This results in a windfall for certain companies. For example, Lafarge, a European cement company, earned €142 million ($192.7 million) by selling extra permits in 2009, nearly twice as much as it earned from selling permits in the previous year.

Similarly, the iron and steel industries, which posted the largest declines in emissions, enjoyed a surplus of 84.6 million carbon permits last year. As a whole, the industrial sector covered by the EU ETS saw emissions decline by about 23 percent, leaving it with 180 million excess permits worth about €2.3 billion ($3.1 billion).

Light At the End of the Tunnel

Despite the current surplus in carbon permits, prices will likely rise in the future to levels that would encourage companies to reduce their own GHGs and shift investment to low-carbon technologies. First, later this decade (perhaps at the beginning of Phase 3 of the EU ETS, which begins January 2013), EU leaders should be expected to reduce the level of carbon permits made available to industries that benefitted from 2009's 11.2 percent reduction in carbon emissions and, thus, correcting the €2.3 billion windfall in the long term. Also, the cost of carbon permits will likely rise as emissions increase in the EU due to (i) economic recovery and (ii) the EU's implementation of the Fuel Quality Directive, which would allow imports of tar sands and other carbon-intensive fuels.

Summary of Climate Legislation in the 111th Congress: Is Cap-and-Trade Dead?

David Frenkil — Thu, 11 Mar 2010 21:01:10 -0500

In 2009, federal climate legislation stalled in the wake of economic downturn, health care reform, and the failure to reach an internationally binding agreement in Copenhagen. The unexpected loss of a Democratic Senate seat in January further weakened the prospects of enacting federal legislation this year. Recognizing that significant compromises in the content and scope of climate legislation will likely be required to pass a bill in 2010, proponents of climate legislation in the Senate have begun to explore alternatives to the economy-wide cap-and-trade model. These proposals include a cap-and-dividend scheme, a stand-alone energy bill, or a hybrid scheme combining one or more alternatives. Details on the policy shift, including recent Senate activity, are provided below.

Comprehensive Cap-and-Trade Climate Legislation: Still Viable but Unlikely

Economy-wide cap-and-trade is the centerpiece of the House-approved American Clean Energy and Security Act of 2009 (H.R. 2454, also known as the Waxman-Markey bill). The bill would initially target large stationary sources (> 25,000 mtCO2e), with smaller sources gradually phased-in as EPA lowers the emissions threshold. Uncapped sources would be subject to potential EPA regulation under Clean Air Act (CAA) Section 111 (New Source Performance Standards), but the bill would prohibit EPA from regulating GHGs under other key CAA programs (e.g., PSD and Title V). The bill would also require the development of industrial energy efficiency standards.

Although Waxman-Markey has been superseded by negotiations in the Senate, it has served, and will likely continue to serve, as a point of reference for future Senate work. For example, the Clean Energy Jobs and American Power Act (S. 1733, also known as the Kerry-Boxer bill) was modeled on the provisions of Waxman-Markey with several key modifications, including a slightly more stringent cap and the retention of EPA’s authority to regulate GHGs under the PSD and Title V programs. Strong opposition to EPA’s use of revised modeling in its economic impact analysis led Republicans to boycott the mark-up while it was in Committee, preventing formal debate and the consideration of amendments. As a result, the bill was generally considered dead on arrival in the Senate.

Despite these setbacks and the recent policy shift toward alternative climate measures (see below), a core group of industry and environmental groups continue to support economy-wide cap-and-trade. Edison Electric Institute and several of its member companies, for example, are advocating for an economy-wide approach.

Patchwork of Emerging Climate Policy Alternatives

In Fall 2009, Senators Kerry, Graham, and Lieberman initiated “dual track” negotiations involving industry groups and the White House in the development of bipartisan climate legislation. The Senators have thus far declined to release a framework for the legislation, a desire to “keep everything on the table.” Although the Senators initially appeared in favor of an economy-wide cap-and-trade system, recent statements indicate they may abandon cap-and-trade in favor of a hybrid approach that combines cap-and-dividend (see discussion of CLEAR below) with cap-and-trade for certain sectors. In order to garner the necessary 60 votes in the Senate, the bill is expected to feature significant compromises on incentives for nuclear power and expanded oil and gas drilling. The effort has already earned the support of the U.S. Chamber of Commerce, which is widely perceived as a leading critic of climate legislation.

A second bipartisan initiative in the Senate, the Carbon Limits and Energy for America’s Renewal (CLEAR) Act, is receiving an unexpected amount of support for its “cap and dividend” proposal. Under this approach, fossil fuel refineries and importers would be required to purchase “carbon shares” for each ton of carbon sold. 75% of the revenues would be refunded directly to U.S. residents through tax-exempt monthly dividends. The remaining 25% would fund energy technology research and development, adaptation, and assistance for energy-intensive and trade-sensitive sectors. Notably, only covered entities would be authorized to participate in trading (i.e., there would be no external market). According to Senators Cantwell and Collins, this feature is designed to avoid the creation of a new speculative commodity market that may cause volatile price spikes and harm to consumers and the economy. Over 40 companies and organizations have announced plans to lobby on the bill.

It is also possible that the Senate will pass an energy bill in lieu of, or perhaps in combination with, comprehensive climate legislation. Senator Graham recently circulated a draft stand-alone energy bill that would mandate “clean energy” production targets over the next 15 years. New nuclear facilities and coal-fired power plants that sequester a minimum of 65% of GHG emissions, as well as traditional renewable power sources such as wind and solar, would qualify as clean energy under the bill. Although Kerry and Lieberman have reviewed Graham’s draft bill, they have not yet agreed to include it in the comprehensive package. Others Senators are considering whether to revive the American Clean Energy Leadership Act (S. 1462, also known as the Bingaman Energy Bill), which passed the House Energy and Natural Resources Committee in June 2009.

Other alternatives under consideration include an electric utility sector cap on GHG emissions (Voinovich and Lugar), a carbon tax (Dorgan, Murkowski, and Corker), and a bill that would reduce emissions by doubling nuclear power production and promoting development of carbon capture and storage, biofuels, and solar technologies (Alexander and Webb). While these alternatives are not likely to be politically viable on their own, Senators Kerry, Graham and Lieberman may incorporate certain elements into the bipartisan bill they ultimately introduce. The Senators have also initiated discussions with Senators Cantwell and Collins, reflecting the possibility of a merger of the CLEAR Act and the bipartisan bill.

Making Sense of EPA's Climate Regulations

David Frenkil — Wed, 10 Feb 2010 20:09:31 -0500

Although the U.S. House of Representatives passed the Waxman-Markey climate bill (H.R. 2454) by a narrow margin over seven months ago, the U.S. Senate continues to consider its own version of the climate bill - a process which politicians from both sides of the aisle indicate might not happen in 2010. However, even in the absence of federal legislation, the Obama Administration has taken unprecedented strides to address climate change during its first year in the White House.

While numerous agencies within the Obama Administration have helped make the shift toward low-carbon policies in the United States, the bulk of greenhouse gas (GHG) regulation has been handed down by the U.S. Environmental Protection Agency (EPA). Since EPA Administrator Lisa Jackson was appointed by President Obama in early 2009, the EPA has picked up the ball which had been punted by the Bush Administration in regards to GHG regulation following the Supreme Court's landmark Massachusetts v. EPA decision in 2007.

The following discussion provides an overview of Mass v. EPA and explains how the subsequent climate-related regulations tie in with one another.

The Clean Air Act provides the EPA with authority to regulate “air pollutants.” However, prior to the Obama Administration, GHGs were not considered among the air pollutants regulated by the EPA while the Bush Administration refused to take action on GHGs arguing that they did not come within the scope of their regulatory powers.

Massachusetts v. EPA

A group of 19 private organizations filed a rulemaking petition with the EPA on October 20, 1999, requesting that the EPA regulate "greenhouse gas emissions from new motor vehicles under § 202 of the Clean Air Act." On September 8, 2003, the agency issued an order denying the rulemaking petition, providing two reasons for its decision. First, using reasoning that contradicted opinions by previous EPA General Counsels, the agency alleged that the Clean Air Act does not authorize the EPA to issue mandatory regulations to address global climate change. Second, the agency reasoned that, even if it had the authority to set GHG emission standards, it would be unwise to do so.

When petitioners, environmental organizations and state and local governments sought review of the EPA order in the United States Court of Appeals for the District of Columbia Circuit, the Court denied the petition for review because two of the three judges on the panel agreed, "the EPA Administrator properly exercised his discretion under § 202(a)(1) in denying the petition for rule making." Mass v. EPA, 415 F.3d 50, 58 (2005).

On appeal, the U.S. Supreme Court issued a landmark decision when it ruled on April 2, 2007 that due to the rise in sea level, Massachusetts had standing to challenge the EPA’s denial of the rulemaking petition. Massachusetts v. EPA, 549 U.S. 497 (2007). Although the Court found that sovereign interests have standing to sue in climate-related cases, it was silent on the issue of standing for private litigants. (As an aside, in late 2009, both the Second and Fifth Circuit Courts asserted that private litigants do, in fact, have standing to bring suits against emitters of GHGs. See, Connecticut v. American Electric Power Corp. et al., 582 F.3d 309 (2nd Cir., 2009) and Comer v. Murphy Oil, 585 F.3d 855 (5th Cir. Miss. 2009)).

The most significant part of the decision, which provides context for the EPA regulations discussed in the following section of this post, was the Court's ruling that the EPA has the authority to regulate GHG emissions. Thus, the Court remanded the petition to the EPA, holding that, “[u]nder the clear terms of the Clean Air Act, EPA can avoid taking further action only if it determines that greenhouse gases do not contribute to climate change or if it provides some reasonable explanation as to why it cannot or will not exercise its discretion to determine whether they do.”

Upon remand, the Bush Administration delayed a decision until July 2008 when it announced that it would punt the issue to the next administration. However, in her first year on the job, the new EPA Administrator Lisa Jackson picked up the ball (and to extend the metaphor, the EPA has run the ball down the field farther than any previous administration). Each of the following actions are discussed in detail below. The EPA has:

(i) finalized two distinct findings that (a) GHGs constitute a threat to public health and welfare, and (b) that the combined emissions from motor vehicles cause and contribute to climate change;

(ii) finalized a rule that mandates the largest emitters of GHGs submit annual reports to the EPA;

(iii) proposed a rule that would include GHGs in the permitting requirements for large industrial facilities;

(iv) proposed more stringent fuel economy standards, in conjunction with the Department of Transportation; and

(v) finalized a rule to increase the level of renewable fuel consumed in the transportation sector.

"Endangerment" and "Cause and Contribute" Findings

Under the "Endangerment" finding, the EPA - and thus, the Federal Government - acknowledges for the first time that the current and projected concentrations of the six GHGs recognized in the Kyoto Protocol - carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6) - threaten the public health and welfare of the United States.

Also, the "Cause and Contribute" finding asserts that the combined emissions of CO2, CH4, N2O, and HFCs from new motor vehicles and vehicle engines “cause or contribute” to the atmospheric concentrations of these key GHGs.

Although the “Endangerment” and “Cause and Contribute” findings do not by themselves regulate GHG emissions from any source, these two findings are significant because they pave the way for the regulation not only of emissions from motor vehicles, but also those from stationary sources.

Due to these policy implications, the findings are being challenged both in the judiciary and before Congress. On December 23, 2009, a group of companies, members of Congress and trade associations filed a legal challenge to the "Endangerment Finding" in the U.S. Court of Appeals for the Federal Circuit in Washington, DC (click here for a copy of the Dec. 23rd filing). The plaintiffs include the top Republican on the House Energy and Commerce Committee, Rep. Joe Barton (R-TX), the Georgia Motor Trucking Association, the National Cattlemen's Beef Association and a Georgia car dealership that sells General Motors and Ford vehicles. However, Attorneys General from Arizona, California, Connecticut, Delaware, Iowa, Illinois, Maine, Maryland, Massachusetts, New Hampshire, New Mexico, New York, Oregon, Rhode Island, Vermont, and Washington are hoping to intervene in support of the EPA finding.

In the Senate, Lisa Murkowski (R-AK) sponsored a joint resolution (S.J. Res. 26) disapproving of the "Endangerment" finding. Similarly, on the House side, a bipartisan-sponsored bill was introduced by Representatives Ike Skelton, (D-MO), Collin Peterson, (D-MN), and Jo Ann Emerson, (R-MO) that would amend the Clean Air Act to prohibit regulation of greenhouse gases as it relates to global climate change. However, both bills are likely to fail because, in order to become law, these bills would have to be signed by President Obama, which would negate the very policies that were promulgated by his administration and for which the administration allocated $43 million in the EPA's 2011 annual budget "for regulatory initiatives to control greenhouse gas emissions under existing Clean Air Act authorities.” Further, considering the current level of support for climate-related legislation in the Congress, it is unlikely that the necessary two-thirds of both the House and the Senate would vote to overturn a presidential veto on this issue.

Mandatory Reporting Rule

This rule establishes an economy-wide system for mandatory reporting of GHGs that provides much broader scope and detail than a previous EPA rule requiring reporting of greenhouse gas emissions from electric generation facilities (see 40 C.F.R. Part 75.13 and 75.64). The EPA anticipates that the new rule will apply to approximately 10,000 facilities that account for approximately 85% of GHG emissions in the United States.

Facilities subject to the rule consist of entities from a wide spectrum of industries. The industries with the most number of covered entities include utilities, waste treatment, natural gas suppliers, manufacturers of paper, steel and cement, and oil refineries. These facilities were required to begin emissions monitoring in January 2010. The information accumulated during this mandatory monitoring is required to be submitted in detailed annual reports to the EPA beginning in 2011 and will be made available to the public, while other data submitted to EPA (e.g., production and process data) may be protected under the agency’s procedures governing confidential business information.

Although the EPA Mandatory Reporting Rule will provide consistent information among covered entities, many public companies will not qualify for the EPA program because only approximately 10,000 entities will be covered by the new EPA rule. This means that more than 70,000 entities emitting at least 1,000 million tons of GHGs will be without consistent reporting standards. However, this rule is expected to create new opportunities for industry and government policy.

(i) New Opportunities for the Private Sector
It is expected that such reporting standards will create incentives for these facilities to reduce their GHG emissions because monitoring of a company’s emissions might expose opportunities for reducing energy consumption and, thus, operating expenses. The rule creates an opportunity for many facilities to identify major sources of emissions along with potential emission reduction options. It also prescribes a separate GHG monitoring and reporting methodology for each affected sector. Additionally, many affected facilities will be required to sample and test fuel, or install accurate devices to measure facility output and emissions.

The proposed rules regarding New Source Review and Title V Permits, as discussed below, will also provide opportunities for reducing energy consumption, GHG emissions and cost because it requires large emitters to acquire permits that would demonstrate they are using the best practices and technologies to minimize GHG emissions.

Further, as with companies that rank high on the EPA’s Toxic Release Inventories (TRI) list, companies that report a high level of GHG emissions under the new EPA rule may face public scrutiny and pressure to reduce emissions. This would certainly create incentives for public companies to improve their management of GHGs because the stock market reacts negatively to evidence of poor environmental management.

(ii) Accuracy in Future Greenhouse Gas Emissions Caps
Previous experiences from emissions reduction schemes in both the United States and the European Union suggest that the data generated through the new EPA rule has the potential to help establish effective GHG emissions caps in the United States. In response to the 1990 Clean Air Act amendments, the EPA measured the average emissions of sulfur dioxide and nitrogen oxide over a 3-year period in order to establish a cap-and-trade program regulating power plants’ emitting of these gases. The U.S. program used average emissions from 1985 to 1987 as the baseline against which to measure reductions required to begin in 1995 and 2000, thereby providing greater certainty that the program achieved reductions relative to past emissions levels. The program was a great success because, three years ahead of schedule, it reduced emissions by half while also reducing cost to emitters. Although the Congressional Budget Office had estimated that the program would cost industry $6 billion a year, the actual economic impact came instead to between $1.1 and $1.8 billion a year.

When compared with the United States’ sulfur dioxide emission trading scheme of the 1990’s, the failure of the European Union’s Emissions Trading Scheme (EU ETS) during Phase I revealed that historical data spanning several years is the most accurate way to measure emissions data. The importance of accurate emissions data was revealed by the price collapse of EU ETS allowances (EUAs) in 2006, resulting from the release of emissions data that showed an over-allocated of EUAs in Phase I. The supply of EUAs was greater than its demand, in part, as a result of the uncertainty surrounding the data used to set the emissions cap and distribute allowances. This occurred following the ETS directive, which allowed member states just six months to identify which entities to regulate under the ETS, obtain baseline emissions data for the covered entities, establish an emissions cap that would be consistent with its Kyoto target, and determine how many allowances to distribute to each covered entity.

The short period made it difficult to overcome various data limitations. First, EU member countries generally based their emissions caps on business-as-usual projections and allocation decisions on recent baseline emissions data voluntarily submitted by covered entities. According to the U.S. Government Accountability Office, the reliability of this data is questionable because of the potential incentive for covered entities to inflate emissions, which results in more allocated credits. The inherent uncertainty of these business-as-usual projections was compounded by the assumptions underlying the models used to forecast emissions, such as economic growth and relative fuel prices.
Second, the significant decline in the price of carbon was derived from the relatively optimistic assumptions that EU member states made about economic growth, thus resulting in higher projections of emissions.

Finally, the EU member countries did not have baseline data that separated emissions on a facility-specific basis. This was necessary to determine both the total emissions released by all entities covered under the ETS as well as how many allowances each particular entity would need to cover its annual emissions. However, the data generated from the EPA Mandatory Reporting Rule offers the U.S. accurate facility-specific statistics that can be used to design an effective national emissions trading scheme.

GHG emissions standards in New Source Review and Title V Permits

The EPA issues two types of air permits: construction permits and operating permits. Construction permits for new and modified major facilities (e.g., power plants), are required under the EPA’s Prevention of Significant Deterioration (PSD) program, as mandated by the Clean Air Act, to install the “best available control technology” (BACT) if they increase emissions of pollutants “subject to regulation” in areas that currently meet national air quality standards. Because it applies only to new sources or major modifications, the PSD program is commonly referred to as “New Source Review.” In addition to the requirement for construction permits under the PSD program, Title V of the Clean Air Act requires the EPA to issue operating permits (known as “Title V” permits) to contain emissions limits for all “regulated pollutants” from major stationary sources.

Since the EPA added six new GHGs to its arsenal of regulated air pollutants in the “Endangerment” and “Cause and Contribute” findings (see above), the agency is expected to finalize a rule to guide the application of New Source Review and Title V permits to large emitters of GHGs by the end of March 2010. Under this regulation, known as the “Tailoring Rule,” both the PSD and Title V permitting programs would apply to new facilities with annual emissions of GHGs equivalent to at least 25,000 tons of GHGs and to modifications at existing facilities that result in an increase in emissions of between 10,000 and 25,000 tons of GHGs per year. These thresholds would “tailor” the New Source Review and Title V programs to limit which facilities would be required to obtain permits. Overall, this regulation would cover facilities responsible for approximately 70% of the nation’s GHG emissions from stationary sources, while excluding small businesses and farms.

Even though the "Tailoring Rule" has not yet been finalized, the first PSD permit with a limit on GHG emissions was issued in February 2010 after Calpine Corporation, in anticipation of a new federal rule, voluntarily sought a standard for GHG emissions in its application for a PSD permit at the company’s planned 600-megawatt Russell City Energy Center located in Hayward, California.

Fuel Economy Standards

In response to the 1973-74 oil embargo, the U.S. Congress passed the Energy Policy Conservation Act (EPCA) in 1975, which established, among other provisions, fuel economy standards for passenger cars and light trucks (commonly referred to as “Corporate Average Fuel Economy” or "CAFE" standards). These CAFE standards have remained at 27.5 mile-per-gallon (mpg) since 1990 (to put it into context, the last time that CAFE standards were raised, there was no internet, the Soviet Union was still one country, Saddam Hussein had yet to invade Kuwait while George W. Bush was known simply as the President's son and part-owner of the Texas Rangers, and most baby-boomers were still in their 30's).

However, in September 2009, U.S. Department of Transportation Secretary Ray LaHood and EPA Administrator Lisa Jackson jointly proposed a rule establishing an historic national program that would begin to improve vehicle fuel economy and reduce GHGs. The coordinated standards will apply to light-duty trucks as well as passenger vehicles covering model years 2012 through 2016. The aim of the standards is to build a national fleet of passenger cars and light-duty trucks that begins to address the issue of the major emissions from the domestic transportation sector in the US.

The new CAFE standards are expected to be announced by the end of March 2010 in order to meet the statutory requirement that CAFE standards be completed 18 months before the next model year begins in October so as to provide manufacturers with enough lead time to make extensive necessary changes in their automobiles.

Renewable Fuels Standard

Finally, under the Energy Independence and Security Act of 2007 (EISA 2007), the EPA is responsible for revising and implementing regulations to ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel, which are produced from plant or animal products or wastes, rather than from fossil fuels. The best known renewable fuels today are ethanol and biodiesel.

While at least 7.5 billion gallons of renewable fuel must be blended into motor-vehicle fuel sold in America by 2012, the new Renewable Fuel Standard program will increase the required volumes of renewable fuel to 36 billion gallons by 2022.

Oil Drilling Not the Cause of Haiti Earthquake

David Frenkil — Sat, 06 Feb 2010 21:29:49 -0500

In the 1920s, geologists in South Texas, an unlikely spot for earthquakes, noted faulting near the Goose Creek oil field. Since then, University of Texas researchers showed that earthquakes in some parts of Texas may be induced by the pumping of fluids at oil and gas fields, or by the injection of fluids to dispose of chemical wastes. For example, the earthquakes in the Fashing-Pleasanton area southeast of San Antonio and in the Texas Panhandle near Snyder, Texas, are almost certainly triggered by pumping.

Like Texas, Haiti infrequently experiences earthquakes. This has prompted numerous stories in the blogosphere "exposing" a link between the devastating 7.0 magnitude earthquake that hit Haiti on January 12th, and oil exploration off its coast. While the devastation caused by the earthquake and its aftershocks is horrifying, as the following analysis shows, the relationship between oil interests and the earthquake is simply a spurious association.

History of Earthquakes in Haiti

Since 1835, Haiti has experienced less than a handful of serious earthquakes. A magnitude 7.7 earthquake in 1842, which destroyed Cap-Haïtien, also ruined the San-Souci Palace (completed in 1813), the so-called Caribbean equivalent of the Palace of Versailles. Earthquakes followed in 1857 and 1870. Also, in 1946, an earthquake off the coast of Haiti reportedly "knocked pedestrians off their feet" and in 2004 a magnitude-4 earthquake struck Haiti following a week of deadly floods.

Due to the infrequency of earthquakes, Haitians were ill-prepared to respond to to the magnitude-7 shock on January 7th. Instead of running away from their homes and buildings, as would most residents of earthquake-prone areas like San Francisco, Haitians ran for cover during the earthquake as if it were a Hurricane. Since structural weaknesses were reported in the country's schools and buildings as recently as 2008 even in the absence of tremors, over 200,000 Haitians were killed in the destruction that ensued from the 7.0 magnitude earthquake centered just ten miles southwest of the capital of Port-au-Prince, at a shallow depth of 6.2 miles.

Between that initial earthquake on January 12th and the time of writing on February 7th, Haiti has experienced more than 60 additional earthquakes of at least 4.0 magnitude.

How the Quake Unfolded

Earthquakes typically occur near faults or fractures in the Earth's crust where rock formations, driven by the movements of the crustal or tectonic plates that make up the Earth's surface, grind slowly past each other or collide, building up stress. At some point, stress overcomes friction and the rocks slip suddenly, releasing seismic energy in the form of an earthquake, which drops the stress in one area but raises the stress elsewhere along the fault line. Eighty percent of earthquakes on Earth occur on the sea floor and most of them occur along the plate boundaries.

According to the U.S. Geological Survey, the initial earthquake on January 12th occurred in the boundary region separating the Caribbean plate and the North American plate, which slide past each other at a rate of about 0.8 inches (20 mm) per year, with the Caribbean plate moving eastward with respect to the North American plate. The quake stretched between 50 and 60 km (approximately 35 miles) along the Enriquillo-Plaintain Garden fault system, which measures 500 km (310 miles) in length and last produced a major earthquake in 1860. This fault system runs generally east-west through Haiti, to the Dominican Republic to the east and Jamaica to the west.

Although the magnitude of the quake was significant yet smaller than previous earthquakes in Haiti, three factors made it particularly devastating:

(i) it was centered just ten miles southwest of the capital city, Port au Prince;

(ii) the quake was shallow: only about ten to fifteen km (approximately six to nine miles) below the land's surface;

(iii) many homes and buildings in the economically poor country were not built to withstand such a force and collapsed or crumbled.

Alleged Role of Oil Drilling

As the price of oil approached $140 per barrel in the summer of 2008, the prospect of black gold located beneath Haitian territory sparked interest in oil exploration off the country's coast for the first time since 1979.

Four companies participated in the drilling of eleven wells at depths of up to 2,944 meters (nearly 2 miles) located on the mainland of Haiti and Île de la Gonâve, an island off Haiti located to the northwest of Port-au-Prince in the Gulf of Gonâve.

Oil generally is found in permeable sediments that are soft, not in hard rock. When this soft sediment moves, it releases a small amount of energy, which can lead to a "mini-seismic event" that is generally undetected on the Richter scale. Thus, it is highly unlikely that oil drilling would cause a magnitude-7 earthquake, such as the one that occurred on January 12th.

In fact, in 2008, geologists predicted that such a quake would eventually occur. During the 18th Caribbean Geological Conference in March 2008 in Santo Domingo, five scientists presented a paper stating that a fault zone on the south side of Haiti posed "a major seismic hazard." They predicted that a magnitude-7.2 earthquake would result if all of the strain along the fault were "released in a single event today." However, the occurrence of the earthquake was difficult to predict since fault systems like the Enriquillo-Plaintain Garden fault can remain dormant for hundreds of years and the last earthquake in the Port-au-Prince area was in 1770.

american.redcross.org/supporthaiti

On Passing a Climate Bill on 59 Votes

David Frenkil — Wed, 27 Jan 2010 15:38:07 -0500

In an article about healthcare earlier this month, Hendrik Hertzberg wrote in the New Yorker,

On May 20, 1962, at Madison Square Garden, John F. Kennedy spoke to some twenty thousand people at a rally in support of a bill to provide hospital care for the aged [Medicare], one of forty-five such rallies around the country. In his speech, President Kennedy acknowledged that his bill would fall short of meeting every need. “We’ve got great unfinished business in this country,” he said, “and while this bill does not solve our problems in this area, I do not believe it is a valid argument to say, ‘This bill isn’t going to do the job.’ It will not, but it will do part of it.”

Somehow, the validity of climate change - an issue which will impact conservatives and liberals, developed and developing nations, alike - has become a divisive left vs. right issue. And so a failure to pass a climate bill prior to the 2010 elections when the Democrats will probably lose seats in the U.S. Congress, means that a robust cap and trade bill - with a target of more than 17 percent reductions in greenhouse gases below 2005 levels by 2020 - is unlikely.

While 17 percent seems like a respectable number at first glance, the Intergovernmental Panel on Climate Change (IPCC) reported in 2007 that catastrophic climate change would result unless developed countries, including the United States, reduced greenhouse gas (GHG) emissions by 25- 40 percent below 1990 levels by 2020, and 80-95 percent below 1990 levels by 2050. However, the goal of 17 percent below 2005 levels by 2020 translates to just a 4 percent reduction below 1990 levels.

A cap-and-trade program would be a crucial part of any federal climate bill because history shows that industry can cost-effectively adapt to market-based systems that help to mitigate emissions of harmful pollutants in the atmosphere. For example, when Congress passed the Clean Air Act Amendments in 1990 - which provided the Environmental Protection Agency (EPA) with authority to set a national cap-and-trade scheme for emissions of sulfur and nitrogen oxides (that result in in acid rain) - the Congressional Budget Office (CBO) estimated that the program would cost U.S. industry $6 billion each year. However, the annual cost was a fraction of that estimate - $1.1 to $1.8 billion "because the program enabled emitters to choose their own solutions to the problem."

Since a Republican carried the U.S. Senate election in Massachusetts last week, thus spoiling the Democratic party's ability to use their 60 seats to vote by party lines and break a filibuster in the Senate, commentators and Congressmen alike have projected a certain death for the cap-and-trade provision in the Senate's climate bill.

This argument, which assumes that a super-majority is necessary to pass major, economy-wide legislation in the Senate, fails to recognize that some of the most important legislation in U.S. history passed the Senate without the controlling party enjoying a super-majority. For example, the Federal Reserve Act passed the Senate in 1913 with the Democrats 8 seats shy of the ability to break a filibuster.

Two other major issues might stand in the way of senators hoping to pass a climate bill that includes a cap-and-trade program. First, the Democrats might exhaust whatever political capital remains in their arsenal in an attempt to pass health care reform. Second, the cost of the climate bill is viewed as prohibitively expensive. However, to quote an editorial in the New York Times from earlier this week, the first hurdle "is defeatist, the second greatly exaggerated" because numerous government studies have shown that the cost of the bill will be minimal for U.S. households and, although cliché to state at this point, it is nonetheless true that studies have shown time and again that the climate bill will create more jobs than it will send overseas.

An administration that often paraphrases Voltaire, "let not the perfect be the enemy of the good" - and that showed a willingness to compromise in order to achieve some semblance of progress in Copenhagen - perhaps might also lead Congress to reach a bi-partisan compromise on a climate bill that "isn’t going to do the job" but that will "do part of it.”

Budget Freeze Will Not Leave Fed's Energy Efficiency Goals Out in the Cold

David Frenkil — Tue, 26 Jan 2010 22:46:30 -0500

On October 5, 2009, President Obama signed Executive Order 13514, which provided that "Federal agencies shall increase energy efficiency." Although the Executive Order did not set a specific target for achieving this goal, in a speech earlier in the year, President Obama called on the Federal Government to improve its energy efficiency by 75%. This ambitious plan, which will cost billions of dollars to implement, is important because the U.S. Federal Government is the nation’s largest energy consumer, spending $17.7 billion on energy in fiscal year 2006.

However, in his State of the Union Address this evening, the President will propose a three-year freeze on most domestic spending, with exemptions for military, veterans, homeland security, international affairs, Medicare and Social Security.

Even despite the "budget freeze," Federal agencies can continue to improve the energy efficiency of their facilities through the use of Energy Saving Performance Contracts (ESPCs). In order to achieve energy efficiency at Federal buildings and facilities, Congress has authorized Federal agencies to use ESPCs, a fundamentally different financing method from direct appropriations—the traditional way in which the U.S. Government funds capital-intensive projects.

Federal agencies may enter into an ESPC with an energy service contractor (ESCO) that privately evaluates, designs, finances, acquires, installs, and maintains energy conservation measures (ECMs) in Federal buildings and facilities. ESCOs guarantee a certain amount of cost savings to be delivered by their ESPC projects, based on their estimates of energy and cost savings that the project will deliver. Thus, the ESCO assumes the risk that the improvements will generate sufficient savings to pay for the projects during the life of the contract. In return, the ESCO receives specified shares of any resulting energy cost savings. After the ESCO is paid, the government owns the new equipment and all the savings. As of June 2008, the Federal Government's net savings from projects funded using ESPCs has been $1.4 billion.

Since ESPCs provide Federal agencies with the ability to spread the acquisition costs of a capital asset over part of the life of the asset, instead of absorbing the entire cost of these relatively high-priced assets in a single year’s budget (which can be prohibitively expensive), the Federal Government has the means to improve its energy efficiency by 75%, even during a "budget freeze."

Delhi, World's 4th Largest City, Will Switch from Coal to Natural Gas

David Frenkil — Mon, 25 Jan 2010 17:18:40 -0500

Although Indian Prime Minister Manmohan Singh said that his country would not commit to a greenhouse gas (GHG) mitigation plan by the deadline of January 31st, as set in last month's Copenhagen Accord, Delhi, India's second largest city, has announced plans to switch its three coal-generated power plants to a cleaner fuel: natural gas.

With a population of over 12 million inhabitants, which increased by a third this past decade, the city of Delhi's energy needs continues to rise. Therefore, Delhi's leaders decided to substitute natural gas for coal over the next four years because a failure to mitigate the rapid increase in GHGs from the city's coal-fired power plants would only further exacerbate the city's air pollution problem.

Currently, consumers in Delhi pay 2 rupees per unit cost of power ($0.04) generated by coal, but that figure will increase to 3.5 rupees ($0.07) when their energy is generated using natural gas. While this move will make energy nearly two-times more expensive for consumers, Rakesh Mehta, Delhi's Chief Secretary, explained that his constituents "would be willing to pay more for [a] cleaner atmosphere."

It is certainly encouraging that leaders from the world's 4th largest city (which is 50% larger than New York City) prioritize a clean atmosphere over the cost of energy. Perhaps leaders in the United States should take note, considering that progress on the proposed U.S. climate bill has been slow, at best, since the summer when the Congressional Budget Office released a study showing that the cost of the plan to mitigate U.S. GHGs would increase the price of energy for U.S. households by $175 in 2020, which translates to the cost of a stamp per day.

According to the U.S. Environmental Protection Agency, power plants using natural gas produce half as much carbon dioxide, less than a third of the nitrogen oxides, and one percent of the sulphur oxides as coal-fired power plants. Even if the four-year timeline for switching all power plants from coal to natural gas is unrealistic due to the legal and economic hurdles associated with building the natural gas pipelines necessary to support the plan, the rapidly growing city will significantly reduce its GHGs by the end of this new decade.

It is important now, more than ever, for cities, states and regions to follow Delhi's lead, considering that a new international climate deal remains uncertain and members of the U.S. Congress continue to hold-up both legislative and executive efforts to mitigate GHGs.

Copenhagen Accord's January 31st Deadline in Jeopardy

David Frenkil — Sun, 24 Jan 2010 22:12:31 -0500

Last month's United Nations climate meetings in Copenhagen yielded an agreement referred to as the "Copenhagen Accord," which included a pledge by developing countries (listed in Annex I of the Kyoto Protocol) such as the United States to outline a range of emission reductions targets up to 2020 by January 31, 2010. Developing countries also promised to submit action plans to mitigate greenhouse gas (GHG) emissions by this date.

Although U.S. Climate Envoy Todd Stern explained earlier this month the importance of meeting this deadline, Yvo De Boer, Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), stated in a January 20th webcast that “I think you could describe it as a soft deadline."

The deadline's downgrade from "hard" to "soft," which comes less than two weeks before the target date of January 31st that has thus far been met by only nine out of 192 countries, is a critical misstep by the lead climate change official at the UN. Given the nature of the Accord (not a legally-binding document) and the disastrous negotiating process in which it was created, it is crucial that world leaders encourage the fulfillment of deadlines set out in the agreement because a "soft" deadline can amount to no action at all.

The so-called "BASIC" developing countries - Brazil, India, China and South Africa - initially indicated that they would jointly release their mitigation plans by the deadline. However, following Mr. de Boer's comments, Indian Prime Minister Manmohan Singh recanted on that position, saying that he would wait to release his country's mitigation plans until receiving clarification on the legal status of "certain issues" in the Copenhagen Accord.

On December 29, 2009, Brazilian President Luiz Inacio Lula da Silva signed a law requiring Brazil to cut GHG emissions by 39 percent by 2020. Although the law is subject to several decrees setting out responsibilities and regulations for the farming, industrial, energy, and environmental sectors, President Lula vetoed three of the bill's provisions, including a reference to “promoting the development of clean energy sources and the gradual phasing out of energy from fossil fuels.” The release of Brazil's mitigation plan - hopefully by the January 31st deadline - will provide a much clearer picture of how the developing nation will fulfill its goal of reducing GHG emissions by 39 percent before the end of this new decade.

Update from the Floor of the Investor Summit on Climate Risk

David Frenkil — Thu, 14 Jan 2010 17:27:52 -0500

Today, Ceres, a national network of investors, environmental organizations and other public interest groups, hosted the fourth Investor Summit on Climate Risk at the United Nations headquarters in New York City. Participants at the Summit - which was attended by hundreds of global institutional investors and asset managers - discussed ways to leverage private investment in the transition to a low-carbon economy.

Former Vice President Al Gore was the featured speaker at the Summit's luncheon, which was closed to the press. U.N. Secretary-General Ban Ki-Moon opened the luncheon, addressing both the climate change challenge following the Copenhagen Accord and the U.N.'s concern for victims of the earthquake in Haiti. Ted Turner, Chairman of the United Nations Foundation, introduced Vice-President Gore, who discussed the importance for institutional investors to provide the marketplace with information on their sustainable activities and climate risks. Mr. Gore also stressed that institutional investors take various measures (i.e. long-term fee structures) to promote better environmental governance within the financial sector.

Prior to the luncheon, Mindy S. Lubber, President of Ceres and Director of the Investor Network on Climate Risk, announced that investors representing $13 trillion in assets agreed to implement aggressive policies that would serve as an impetus for stimulating investment in low-carbon technologies and mitigating greenhouse gas emissions. The "2010 Investor Statement on Catalyzing Investment in a Low-Carbon Economy" can be found here.

Other highlights from today's Summit include remarks by George Soros and:

Jeremy Oppenheim, Director of the Climate Change Special Initiative at McKinsey & Company, provided a very impressive presentation regarding the role of energy efficiency in the global economy. A highlight from the detailed presentation was the projection that carbon prices will not reach the $30 price range within the next decade - which is significant because this means that the cost of compliance in an emissions trading regime would be lower than originally-expected by leaders and investors in the climate community. On the other hand, the relatively low price of carbon projected over the next ten years weakens the argument furthered by climate change detractors that carbon trading will be a cash cow for investors who are pushing the global warming agenda.

Todd Stern, U.S. Special Envoy on Climate Change, gave his first speech since the lamentable conclusion in Copenhagen. He explained that the alliance between Democratic U.S. Senator John Kerry (D-MA) and Republican Sen. Lindsey Graham (R-SC) "is tremendously important" for moving a climate bill through the Senate. However, Mr. Stern spent the better part of his 25 minute speech explaining (i) how the Copenhagen meeting unfolded, (ii) its positive and negative take-aways and (iii) what must be done going forward. [Todd Stern's speech can be viewed by clicking here, or please feel free to send an e-mail to dfrenkil@law.gwu.edu to request a "Cliffs Notes" version.] Most importantly, Mr. Stern stressed that countries that signed on to the Copenhagen Accord must meet the January 31, 2010 deadline for providing an action plan to mitigate their greenhouse gas emissions (see Copenhagen Accord, paragraph 4).

Kevin Parker, Global Head of Asset Management at Deutsche Asset Management, explained that, despite the worst economic downturn since the Great Depression, progress in mitigating climate change has continued unabated, with over 300 climate bills passing various legislatures globally over the past 18 months. He asserted that a new era has commenced post-Copenhagen in the investment community, which requires investors to "understand, recognize and take advantage of" this new market-place.

Abby Joseph Cohen, President of the Global Markets Institute and Senior Investment Strategist at Goldman Sachs described "seven wedges" for addressing global climate change and the role of the investor in the climate change arena. She explained that there is certainly an incentive for companies to disclose their climate risks and sustainability data to investors because "companies that pay attention to good governance, including environmental governance, have outperformed other companies by ten percentage points - not just ten percent."

Earth Aid Takes Energy Efficiency Mainstream

David Frenkil — Sun, 10 Jan 2010 13:35:50 -0500

The International Energy Agency (IEA) reported in December that energy efficiency can do more than all other low-carbon energy sources combined (such as wind, solar, nuclear, clean coal and natural gas) to reduce greenhouse gases over the next two decades. While energy efficiency could save 7.1 gigatonnes of carbon emissions by 2030, only 6.6 gigatonnes would be saved using low-carbon energy sources—and much of that can be achieved in the residential sector.

Although environmental stewardship is an important consideration, the primary motivation for energy efficiency among most homeowners is often the money saved from reduced energy consumption. Tax credits and economic assistance offered by federal, state and local governments often make investments in new, energy efficient appliances and equipment even more attractive. However, since the launch of its new platform in 2009, a start-up company called Earth Aid (www.earthaid.net) has offered yet another reason for homeowners to improve their energy efficiency.

Earth Aid enables households to track their usage online, compare to friends and neighbors, and earn rewards for saving energy—and in so doing, is taking energy efficiency mainstream.

When a District resident received an e-mail from Earth Aid informing him that his energy consumption exceeded average levels for his community, he made adjustments to his energy usage, reducing his costs for the next month - and then he earned points from Earth Aid for each kilowatt-hour of electricity, ten cubic feet of natural gas, and twenty gallons of water that he saved relative to his baseline.

This is how it works: when an individual – a homeowner or renter who pays his or her utility bills directly – signs up for a free membership with Earth Aid, the member links his utility accounts to Earth Aid’s platform (the information shared is protected by a strict privacy agreement), which allows Earth Aid to compare the member's current energy consumption to that of the previous year. Using the previous year's utility bill as a baseline, Earth Aid calculates the member's energy savings, and then provides rewards for reducing consumption of electricity, natural gas and water with coupons and gift cards that can be redeemed at local stores and restaurants. Thus far, participants include over 100 businesses across the country, including Founding Farmers, Local 16, Logan Hardware, and dozens of others in the DC area alone.

The genius of Earth Aid's concept is that it makes the benefits of energy efficiency tangible. Earth Aid complements the traditional incentive of a lower utility bill with actual rewards for saving energy -- not to mention, a "tips" page, which provides a comprehensive list of energy-saving measures and the associated cost and difficulty of implementation. And, of course, each of these measures can help members earn more rewards, too.

Clean Technology Investment and Carbon Trading Show Mixed Results in 2009

David Frenkil — Sat, 09 Jan 2010 08:59:51 -0500

CLEAN TECHNOLOGY INVESTMENT

In a year marked by a recession and false hopes for a deal in Copenhagen, venture capital investment in clean technology companies fell in 2009 to $5.6 billion from $8.5 billion the previous year. This 33 percent drop set the clean technology industry back to 2007 investment levels, but the industry outperformed all other sectors in venture capital spending.

The $787 billion American Recovery and Reinvestment Act of 2009 ("Stimulus Bill") provided $36.7 billion for energy funding, which certainly mitigated the decrease in clean technology investment. Nevertheless, North America's share of venture capital spending dropped 42 percent to $3.5 billion, while China's level of investment in clean technologies remained steady - although relatively low - at $331 million.

The largest shares of clean technology venture funding was closely split between solar ($1.2 billion), transportation ($1.1 billion) and energy efficiency ($1 billion).

CARBON TRADING

The global carbon market, which is expected to reach $395 billion by 2014, was valued at $136 billion in 2009, up from $133 billion in 2008 and $58 billion in 2007.

Although the trading volume of the global carbon markets increased by 68%, average carbon prices dropped nearly 40% from $27.15 in 2008 to $16.40.

Next Week: Investor Summit on Climate Risk

David Frenkil — Tue, 05 Jan 2010 21:44:41 -0500

On January 14th, the United Nations Headquarters in New York City will host the fourth Investor Summit on Climate Risk. Participants at the previous summits, held in 2003, 2005 and 2008, included institutional investors, fund managers, financial advisors and others from around the globe, representing trillions of dollars in assets.

The agenda includes speakers such as U.N. Secretary-General Ban Ki-moon, Former Vice-President Al Gore, U.S. Climate Envoy Todd Stern and Media Executive/Philanthropist Ted Turner.

The list of investors expected at the Summit underscores how climate change, an environmental issue, is increasingly gaining traction as a business issue. For example, Texas Instruments, a microchip maker, is poised to profit from the shift to a low-carbon economy due to increased demand for its microchips, which are used in low-carbon technologies, such as photovoltaic solar panels, smart meters and energy efficient appliances. However, climate change also poses various risks for the company - a leading emitter of greenhouse gases (GHGs) - since it will likely be required to comply with potential regulation of GHG emissions in the near future. (Source: EENews - subscription required)

Sound business judgment requires a bifurcated response to climate change – companies must consider not only how climate change impacts its business; companies must also take into account how its own business practices contribute to climate change. Thus, climate change impacts corporate strategy, risk, opportunity, financial performance and shareholder value.

Please check back on January 14th for coverage from the floor of the 2010 Investor Summit on Climate Risk where these important issues will be discussed among leaders in the global economy.

Overview of the Copenhagen Accord

David Frenkil — Mon, 21 Dec 2009 05:28:19 -0500

"Mr. Premier, are you ready to see me? Are you ready?" In a dramatic moment, President Barack Obama entered the room uninvited, where a secret meeting was underway, organized by Chinese Premier Wen Jiabao without notifying U.S. officials. At the meeting along with Premier Jiabao, were Indian Prime Minister Manmohan Singh, Brazilian President Luiz Inacio Lula da Silva and South African President Jacob Zuma.

Prior to this meeting, in order to continue working on a deal with fellow world leaders, President Obama extended his trip in Copenhagen, at the risk of flying back to Washington, DC in the middle of a blizzard. The Chinese Premier twice sent representatives on his behalf to meet with President Obama. In the second meeting, the Chinese representative was an even lower-level official than during the first, thus prompting a typically calm President Obama to reveal his frustration to aides, “I don’t want to mess around with this anymore. I want to talk to Wen.”

And so went 12 days in Copenhagen, which were marked by chaos and dissent. Dubbed a "wild roller coaster ride" by a leading U.N. official, negotiators from 192 countries met to discuss a successor treaty to the Kyoto Protocol. Ultimately, this process came to an end after most countries voted in favor of a non-binding, three-page document called the "Copenhagen Accord," created at the secret meeting hosted by Chinese Premier Jiabao.

The Copenhagen Accord has been referred to as a "new beginning," a "modest step forward," and “grossly insufficient.” Although the meaning of Copenhagen is not yet clear, it is certain that the Accord, and the process leading up to it, were unprecedented both substantively and procedurally.

Substantive

Why the Copenhagen Accord is a “modest step forward”:

(1) The Accord marks the first time that developing countries have made promises to reduce their greenhouse gas emissions from a business-as-usual scenario.

(2) Developing countries (listed in Annex I of the Kyoto Protocol) such as the United States promised to outline a range of emission reductions targets up to 2020 by February 1, 2010.

(3) The Accord provides a system for monitoring and reporting progress toward these national pollution-reduction goals.

(4) It outlines a scheme for transferring technology from Annex I to developing countries and creates a financial package aimed at assisting developing countries to begin mitigating, and adapting to, climate change.

The Copenhagen Green Climate Fund, created under the Accord, would provide immediate help to developing countries through an initial, “fast-start” fund worth $10 billion annually that would operate from 2010 to 2012, when the Kyoto Protocol expires. The European Union has pledged $3.6 billion annually to the fast-start fund. Both Japan and the United States have also pledged to contribute to the fast-start fund.

Further, Annex I countries have agreed to support a goal of jointly mobilizing $100 billion a year by 2020 to address the needs of developing countries. However, critics of the plan argue that it is under-funded by between $40 billion and $100 billion.

Part of the plan for technology transfer would include the development of technologies and techniques to mitigate emissions from crop and livestock cultivation, and adapting agricultural systems to rising temperatures. This is important because the global population is projected to grow to 9 billion by 2050. Although rising temperatures are expected to lower crop yields, the population growth will require a 70 percent increase in food production, which is already a major source of greenhouse gas emissions (14 percent) and is expected to rise at least two-fold.

(5) The process leading up to the U.N. climate meetings in Copenhagen concentrated minds on this challenge, which had previously been largely ignored by most countries. Copenhagen not only encouraged world leaders to ]discuss these difficult issues; it also raised awareness among their constituents that climate change must be addressed.

For example, just two years ago, the U.S. had yet to take the official position that climate change is anthropogenic. We have certainly come a long way.

Downsides to the Copenhagen Accord:

(1) The Accord is merely a political statement and not a legally-binding treaty that establishes firm commitments by Annex I countries, nor developing countries, to reduce their greenhouse gas emissions.

This is important because it will take several years to implement a new global treaty on climate change. Since the Kyoto Protocol expires in just two years, time is no longer on our side.

(2) The emissions cuts tentatively agreed to in the Accord would lead to a global increase in average temperatures of 3 degrees Celsius, as opposed to the Accord’s goal of 2 degrees Celsius.

A confidential UN document marked "do not distribute" and "initial draft" shows a gap of up to 4.2 gigatons of carbon emissions between the pledges made in Copenhagen and the required level of 44 gigatons that is necessary to stay below a 2 degree temperature rise. The 2 degree target is linked by the Intergovernmental Panel on Climate Change (IPCC) to keeping the concentration of carbon dioxide in the atmosphere below 450 parts per million (ppm). Current levels are at 390 ppm, while they were 270 ppm prior to the industrial revolution. Cynthia Rosenzweig, a researcher on climate impacts at NASA explains, “[g]oing above 450 parts per million will change everything. There will be changes in water, food, ecosystems, health, and those changes also interact with each other.”

The Sudanese delegate at Copenhagen, Lumumba Di-Aping, expressed concern that the 2 degree target in the Accord demonstrates that “[t]he developed countries have decided that damage to developing countries is acceptable." As an alternative, leaders from African and small island states that are vulnerable to rising sea levels will only agree to a treaty that has a target of 1.5 degrees Celsius or lower.

(3) The Accord’s design of the Clean Development Mechanism (CDM) – which promotes the investment of clean energy projects in developed countries – does not include carbon capture and storage (CCS), often referred to as “clean coal technology,” which traps greenhouse gases from coal-generated power plants before they are emitted into the atmosphere, and stores them in underground geological formations.

Countries such as Brazil have voiced opposition to the inclusion of CCS in the CDM because it would undermine funds for other clean energy projects, such as forest protection.

(4) The Copenhagen Green Climate Fund (discussed in item #4 above) may be inadequately funded, and new climate-related projects like flood defenses could end up diverting money from education and health care projects in developing countries.

The source of revenue for the fund will be, in part, private-sector activities such as taxes on trading in greenhouse gas emission allowances. However, given that the price of these allowances fluctuates, forecasting the precise amount of revenue for the fund could prove difficult.

Procedural

As discussed, only five countries were represented in the meeting in which the Copenhagen Accord was created. This means that 187 countries were not at the negotiating table, which is certainly a departure from the negotiating process of previous U.N. climate meetings.

Speaking in Copenhagen on behalf of the Bolivarian Alliance for the Americas (which includes, among other states, Bolivia, Cuba, Ecuador and Nicaragua), Venezuelan President Hugo Chávez accused President Obama of behaving like an emperor “who comes in during the middle of the night” and for leading a conference that has “a real lack of transparency.”

Offering a less extreme perspective, while referring to the closed-door meeting that produced the Accord and the bilateral negotiations preceding the Copenhagen meetings (e.g. between the U.S. and China and the U.S. and India), Michael Levi, Senior Fellow at the Council on Foreign Relations, explains that the “climate treaty process isn’t going to die, but the real work of coordinating international efforts to reduce emissions will primarily occur elsewhere.”

The next U.N. climate meeting will be held November 29 to December 4, 2010 in Mexico City. It will be preceded by a major negotiating session in Bonn, Germany, scheduled for May 31 to June 11, 2010.

Text of the Copenhagen Accord

David Frenkil — Mon, 21 Dec 2009 02:58:08 -0500

The Copenhagen Accord is a legally non-binding agreement made at the U.N. climate meetings in Copenhagen on December 19th.

The text of the Copenhagen Accord, which can be downloaded by clicking here, is also copied below.

The Copenhagen Accord is referred to in the text as the "decision x/CP.15 on the Ad hoc Working Group on Long-term Cooperative Action and decision x/CMP.5."

The Conference of the Parties, Takes note of the Copenhagen Accord of 18 December 2009.

The Heads of State, Heads of Government, Ministers, and other heads of the following delegations present at the United Nations Climate Change Conference 2009 in Copenhagen:

In pursuit of the ultimate objective of the Convention as stated in its Article 2, Being guided by the principles and provisions of the Convention, Noting the results of work done by the two Ad hoc Working Groups,

Endorsing decision x/CP.15 on the Ad hoc Working Group on Long-term Cooperative Action and decision x/CMP.5 that requests the Ad hoc Working Group on Further Commitments of Annex I Parties under the Kyoto Protocol to continue its work,
Have agreed on this Copenhagen Accord which is operational immediately.

1. We underline that climate change is one of the greatest challenges of our time. We emphasise our strong political will to urgently combat climate change in accordance with the principle of common but differentiated responsibilities and respective capabilities. To achieve the ultimate objective of the Convention to stabilize greenhouse gas concentration in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system, we shall, recognizing the scientific view that the increase in global temperature should be below 2 degrees Celsius, on the basis ofequity and in the context of sustainable development, enhance our long-term cooperative action to combat climate change. We recognize the critical impacts of climate change and the potential impacts of response measures on countries particularly vulnerable to its adverse effects and stress the need to establish a comprehensive adaptation programme including international support.

2. We agree that deep cuts in global emissions are required according to science, and as documented by the IPCC Fourth Assessment Report with a view to reduce global emissions so as to hold the increase in global temperature below 2 degrees Celsius, and take action to meet this objective consistent with science and on the basis of equity. We should cooperate in achieving the peaking of global and national emissions as soon as possible, recognizing that the time frame for peaking will be longer in developing countries and bearing in mind that social and economic development and poverty eradication are the first and overriding priorities of developing countries and that a low-emission development strategy is indispensable to sustainable development.

3. Adaptation to the adverse effects of climate change and the potential impacts of response measures is a challenge faced by all countries. Enhanced action and international cooperation on adaptation is urgently required to ensure the implementation of the Convention by enabling and supporting the implementation of adaptation actions aimed at reducing vulnerability and building resilience in developing countries, especially in those that are particularly vulnerable, especially least developed countries, small island developing States and Africa. We agree that developed countries shall provide adequate, predictable and sustainable financial resources, technology and capacity-building to support the implementation of adaptation action in developing countries.

4. Annex I Parties commit to implement individually or jointly the quantified economy-wide emissions targets for 2020, to be submitted in the format given in Appendix I by Annex I Parties to the secretariat by 31 January 2010 for compilation in an INF document. Annex I Parties that are Party to the Kyoto Protocol will thereby further strengthen the emissions reductions initiated by the Kyoto Protocol. Delivery of reductions and financing by
developed countries will be measured, reported and verified in accordance with existing and any further guidelines adopted by the Conference of the Parties, and will ensure that accounting of such targets and finance is rigorous, robust and transparent.

5. Non-Annex I Parties to the Convention will implement mitigation actions, including those to be submitted to the secretariat by non-Annex I Parties in the format given in Appendix II by 31 January 2010, for compilation in an INF document, consistent with Article 4.1 and Article 4.7 and in the context of sustainable development. Least developed countries and small island developing States may undertake actions voluntarily and on the basis of support. Mitigation actions subsequently taken and envisaged by Non-Annex I Parties, including national inventory reports, shall be communicated through national communications consistent with Article 12.1(b) every two years on the basis of guidelines to be adopted by the Conference of the Parties. Those mitigation actions in national communications or otherwise communicated to the Secretariat will be added to the list in appendix II. Mitigation actions taken by Non- Annex I Parties will be subject to their domestic measurement, reporting and verification the result of which will be reported through their national communications every two years. Non- Annex I Parties will communicate information on the implementation of their actions through National Communications, with provisions for international consultations and analysis under clearly defined guidelines that will ensure that national sovereignty is respected. Nationally appropriate mitigation actions seeking international support will be recorded in a registry along with relevant technology, finance and capacity building support. Those actions supported will be added to the list in appendix II. These supported nationally appropriate mitigation actions will be subject to international measurement, reporting and verification in accordance with guidelines adopted by the Conference of the Parties.

6. We recognize the crucial role of reducing emission from deforestation and forest degradation and the need to enhance removals of greenhouse gas emission by forests and agree on the need to provide positive incentives to such actions through the immediate establishment of a mechanism including REDD-plus, to enable the mobilization of financial resources from developed countries.

7. We decide to pursue various approaches, including opportunities to use markets, to enhance the cost-effectiveness of, and to promote mitigation actions. Developing countries, especially those with low emitting economies should be provided incentives to continue to develop on a low emission pathway.

8. Scaled up, new and additional, predictable and adequate funding as well as improved access shall be provided to developing countries, in accordance with the relevant provisions of the Convention, to enable and support enhanced action on mitigation, including substantial finance to reduce emissions from deforestation and forest degradation (REDD- plus), adaptation, technology development and transfer and capacity-building, for enhanced implementation of the Convention. The collective commitment by developed countries is to provide new and additional resources, including forestry and investments through international institutions, approaching USD 30 billion for the period 2010 ñ 2012 with balanced allocation between adaptation and mitigation. Funding for adaptation will be prioritized for the most vulnerable developing countries, such as the least developed countries, small island developing States and Africa. In the context of meaningful mitigation actions and transparency on implementation, developed countries commit to a goal of mobilizing jointly USD 100 billion dollars a year by 2020 to address the needs of developing countries. This funding will come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance. New multilateral funding for adaptation will be delivered through effective and efficient fund arrangements, with a governance structure providing for equal representation of developed and developing countries. A significant portion of such funding should flow through the Copenhagen Green Climate Fund.

9. To this end, a High Level Panel will be established under the guidance of and accountable to the Conference of the Parties to study the contribution of the potential sources of revenue, including alternative sources of finance, towards meeting this goal.

10. We decide that the Copenhagen Green Climate Fund shall be established as an operating entity of the financial mechanism of the Convention to support projects, programme, policies and other activities in developing countries related to mitigation including REDD-plus, adaptation, capacity-building, technology development and transfer.

11. In order to enhance action on development and transfer of technology we decide to establish a Technology Mechanism to accelerate technology development and transfer in support of action on adaptation and mitigation that will be guided by a country- driven approach and be based on national circumstances and priorities.

12. We call for an assessment of the implementation of this Accord to be completed by 2015, including in light of the Conventionís ultimate objective. This would include consideration of strengthening the long-term goal referencing various matters presented by the science, including in relation to temperature rises of 1.5 degrees Celsius.

President Obama Changes Itinerary

David Frenkil — Fri, 04 Dec 2009 23:50:16 -0500

The White House initially announced that President Obama would be traveling to the U.N. climate meetings in Copenhagen on December 9th, the day before he accepts his Nobel Peace Prize in Oslo, Norway. However, this evening, the President changed his plans to travel to Copenhagen not until December 18th - the last day of the negotiations.

In a statement, the White House asserted, "continued U.S. leadership can be most productive through his participation at the end of the Copenhagen conference on December 18 rather than on December 9." Danish Prime Minister Lars Løkke Rasmussen called President Obama's decision to attend the conference on December 18th, which is when other world leaders will also be in attendance, "an expression of the growing political momentum toward sealing an ambitious climate deal in Copenhagen."

While President Obama's attendance on the last day of the conference may raise expectations for an agreement in Copenhagen, the change to his itinerary, and the rationale volunteered by the White House, is disappointing.

Although the United States will be represented throughout the entirety of the meetings in Copenhagen by an impressive array of talented and proven leaders, as argued in a previous post, significant progress in Copenhagen would require the very diplomatic skills for which President Obama will be awarded the Nobel Peace Prize. Given the significant risks at stake in forming a global agreement to address climate change, coupled with President Obama's great talents and celebrity status, by waiting to travel to Copenhagen until the final moments of the 12-day conference he will squander the opportunity to actively help broker a deal.

"Climategate" Undermines the Big Picture

David Frenkil — Fri, 04 Dec 2009 17:56:45 -0500

More than 400 negotiators, business leaders, environmental activists and journalists will board the carbon-free "Climate Express" train on December 5th to join approximately 15,000 attendees from 192 countries at the U.N. conference in Copenhagen, beginning December 7th, where leaders will discuss proposals for a successor treaty to the Kyoto Protocol. The Copenhagen meetings, which are expected to establish a framework that should lead to a global climate deal in 2010, is the culmination of months of negotiations between countries to reduce greenhouse gas (GHG) emissions.

As the Copenhagen meetings approached in recent weeks, and media attention began to focus on the Danish capital, it appeared that deniers of human-induced climate change were losing ground. However, on November 19th, a computer hacker allowed these nay-sayers to die another day. The anonymous hacker breached a server used by the Climatic Research Unit (CRU) of the University of East Anglia (UEA) in Norwich, England. The CRU, one of the world's leading research bodies on natural and human-induced climate change, played a key role in the Intergovernmental Panel on Climate Change's (IPCC) Fourth Assessment Report, which is considered to be the most authoritative report on the science of climate change.

The hacker disseminated a number of e-mails obtained in the breach, which include, among other things, discussion of how data was truncated to stop an apparent cooling trend that showed up in a report and encouragement to delete other information. A poll released December 3rd, conducted less than two weeks after reports of the CRU e-mails first surfaced, shows that a majority of Americans now question climate science. Two of these Americans, who are also conservative members of the Academy of Motion Picture Arts and Sciences, asked the Academy to rescind Al Gore's Oscar, which he won for “An Inconvenient Truth,” a movie about climate change.

The scandal has also offered Comedian Jon Stewart a chance to quip on The Daily Show, "Poor Al Gore, global warming completely debunked via the very internet you invented." While "Climategate" has offered such material to comedians, it is no laughing matter because this scandal of sorts has grabbed the spotlight away from the build-up to the Copenhagen meetings - a pivotal moment in the brief history of efforts to mitigate climate change.

The e-mails that were unveiled during this scandal show that a select few scientists chose to deviate from what was right. Perhaps it might even warrant new analysis regarding the reliability, and oversight, of climate science in general. However eager one might be to deny that climate change is human-induced in order to maintain the status quo, the fact remains that the last time carbon dioxide in the Earth’s atmosphere were today's levels of 387 parts per million (up from around 280 parts per million just 200 years ago), was 15 million years ago.