Power Industry Lobbying Efforts Support Senate Climate Bill

Electrical generation industry leaders at the twelfth annual Electric Power Conference executive forum in Baltimore yesterday rallied behind the Kerry/Lieberman American Power Act, the Senate’s alternative to the Waxman/Markey cap and trade bill passed last year by the House. Urging his colleagues to get behind passage of the Kerry/Lieberman legislation, James Connaughton, Executive Vice President of Constellation Energy Group, told the assembled power industry executives: “In Washington, difficult legislation is often declared dead – right before it is passed.”

Lamenting that heavy handed USEPA regulation of carbon dioxide emissions is the likely alternative should Congress fail to pass any climate change bill this session, Connaughton told the power industry leaders that in his experience USEPA rules usually accomplish about a quarter of their goals at four times the estimated cost to industry.

During the executive round table on climate change legislation, Connaughton’s sentiments in support of the Kerry/Lieberman bill were echoed by Keith Trent of Duke Energy.

New Climate Bill At Odds With Copenhagen Developments

The only really useful document coming out of the U N climate change negotiations in Copenhagen this week is a draft of the REDD draft, Reducing Emissions From Deforestation and Forest Degradation, which will be delivered today to leaders of the 200 or so nations participating in the discussions. This draft document sets up a program for paying developing nations for conserving natural assets which reduce accumulations of carbon dioxide in the atmosphere. The payments are to be funded by industries in developed nations who contribute by purchasing offsets for their carbon emissions into the atmosphere. One top U N official, when asked about the status of talks on other issues, gave a disheartening one word response: “Terrible.” U N Secretary General Ban Ki-moon, speaking of the plan to defer conclusion of a treaty to replace the Kyoto Protocol for another year, said “We do not have another year to deliberate. Nature does not negotiate.”

Meanwhile, back in Washington, Senators Maria Cantwell and Susan Collins have introduced an alternative to the climate change legislation passed earlier by the House, called CLEAR, for Carbon Limits and Energy for America’s Renewal. Directly contrary to the policy emerging in Copenhagen, CLEAR would prohibit American industries from purchasing carbon emission credits based on offsets, such as reforestation or forest conservation in other countries. Under CLEAR, the only trading in emission credits would be permitted among fuel producers, excluding both speculators and energy users from trading in carbon emission credits. The Cantwell/Collins bill would not allow large energy consumers from trading emissions credits as a hedge against rising fuel and power prices. Why is it that some elements in the United States Senate seem to be two steps behind the rest of the world when it comes to twenty first century energy policy?

Lobbyists Drafting Climate Change Treaty

International treaties are a lot like Congressional legislation: if you want a preview of what will be in them, you need to get to be close friends with a lobbyist. The lead lobbying organization at the Copenhagen climate change talks starting next week will be the Climate Action Network, an amalgam of 450 environmental, business and scientific groups worldwide. CAN is already circulating a proposed draft of the new treaty to replace the Kyoto Protocol among delegates and hangers on at the Copenhagen conference.

The CAN draft treaty comes complete with all the required legal language to embody international commitments on greenhouse gas reductions, economic wealth transfers to pay for the costs of environmental controls in developing nations, and a framework for a global cap and trade system of emissions futures. Of course, blanks in the draft exist where diplomats and other government functionaries from participating nations can fill in numbers representing each country’s emission and financial commitments, but except for some minor tweaking to satisfy this or that nation’s particular wants or needs, no government leader or group of leaders from the 192 participating nations needs to bother his or her staff with the details of drafting such an important international treaty – the draft already exists, and the tweaking will be mostly handled by lobbyist cell phone conversations, E-mails and twitter tweets from hallway to hotel room during the conference.

Anyone with a blackberry, a laptop and the price of air fare to Denmark can seek to participate in the real, though informal, corridor conversations which will finalize the details of the next climate change treaty, but only those folks who have already worked at establishing trust and confidence from world leaders is likely to have significant input. If you can stand the Danish winter weather, though, and you have a subscription to twitter, it would really be fun to eavesdrop on the conversations.

Climate Change Advocates Move Slowly, Embracing Nuclear Power

Now that world leaders have acknowledged the impossibility of coming to any binding agreement at next month’s Copenhagen conference, Senate action on climate change legislation has lost its urgency for the time being. The Obama administration, however, still wants a comprehensive cap and trade measure, like the House bill passed earlier this year, rather than a more limited measure targeted at the electric power production industry, as some legislators have been heard to suggest.

White House climate adviser Carol Browner said last week that incremental greenhouse gas emission reduction measures are not in the cards. “We need comprehensive energy reform,” she said, including power plants, refineries, factors, farms and other sources of carbon emissions. She said she expects negotiation of an international climate treaty to replace the Kyoto Protocol will take up to a year after the Copenhagen conference.

Meanwhile, former Greenpeace commando Stephen Tindale, who once broke into a nuclear power facility to scrawl “Danger” on the side of the reactor building, acknowledges that significant greenhouse gas emission reduction in future years will depend upon construction of a large number of nuclear generating plants around the world. “It’s really a question about the greater evil – nuclear waste or climate change. But there is no contest any more. Climate change is the bigger threat, and nuclear is part of the answer,” Tindale says. “Like many of us, I began to slowly realize we don’t have the luxury any more of excluding nuclear energy. We need all the help we can get.”

Copenhagen Climate Change Summit Expectations Slashed

The Obama administration is backpedaling rapidly on the eve of the Copenhagen conference for negotiating a replacement for the soon to expire Kyoto Protocol on greenhouse gas emission controls. Deputy National Security Adviser for Economic Affairs Michael Froman said Monday “It was unrealistic to expect a full, legally binding international agreement to be reached between now and when Copenhagen starts in 22 days.”

Congressional leaders acknowledge that climate change measures in the Senate have been bumped off the fast track by the extended health care reform debate and the need to focus on job creation and financial market reform before any detailed cap and trade emissions program can be put into place. UN Secretary General Ban Ki-moon expects the Copenhagen talks to result in little more than a political agreement to continue negotiations on the terms of a potential binding replacement treaty.

Senator Dick Lugar acknowledges that the present is an especially difficult time for US negotiators to enter into discussions about payments to developing nations to help them convert to clean technologies and cope with already occurring climate changes. “There’s the thought of transfer of wealth to so-called developing countries and billions of dollars in the midst of this [American unemployment at 10.2 %]. This is real money. All I’m saying is, get real,” Lugar pronounced. President Obama and other world leaders are now looking for a two step process, with Copenhagen representing the first step: a nonbinding political agreement calling for greenhouse gas reduction and aid to developing economies. Step two will be another meeting late next year to negotiate a binding treaty, presumably after Congress has committed the US to specific emission reduction goals.

Back To Square One On Climate Change

Senator Barbara Boxer’s action in discharging the climate change bill from her Environment and Public Works Committee without and Republican committee members in attendance has angered so many leaders on both sides of the aisle in that chamber that three Senate leaders have determined to go back to the drawing boards and craft an entirely new measure for consideration, rather than continuing to advance the Kerry/Boxer bill reported out Thursday.

Democrat John Kerry, Republican Lindsey Graham and Independent Joe Lieberman are already working on Plan B, a bill to promote green job creation while protecting the coal and steel industries, expanding nuclear power production, authorizing more offshore oil drilling, and subsidizing renewable energy research and development.

The possibility that plan B will focus on job creation rather than reducing carbon emissions and fighting climate change has fractured the environmental interests into warring factions. One side of the fissure, including the Environmental Defense Fund, is already putting out ads featuring energy made in America, 1.7 million “green jobs,” and reduced dependence on foreign oil. The other side, including the World Wildlife Fund and the Center for Biological Diversity, excoriates what they see as dilution of the global warming alarm message in favor of soft soaping ads they call “climate-light.”

Meanwhile, with Senate leaders acknowledging that a floor vote in any sort of climate change bill in the Senate won’t likely happen this year, energy lobbyists are ramping up their spending, and representatives of African nations are walking out of negotiations in Barcelona preliminary to the UN conference on a replacement agreement for the Kyoto Protocol set for December in Copenhagen. It remains to be seen whether the Boxer maneuver is a complete barrier, or just a speed bump on the road to Congressional action later in the calendar.

Senators Rip Texas Wind Farm Use Of Chinese Made Turbines

In a blinding flash of protectionism, New York Senator Charles Schumer has written a letter to Energy Secretary Steven Chu, asking Chu to block federal funding for development of a huge $1.5 billion Texas wind farm which will be build using turbines manufactured in China. The project is expected to create 330 jobs in Texas and 800 jobs in the Chinese factory which will build the turbines. “The purpose of the Recovery Act was to jump start the economy to create and save jobs – American jobs,” Schumer wrote. “American taxpayer dollars should not be used to finance those Chinese jobs.”

Walt Horniday, president of one of the U. S. partners in the project, responded, “This project will not take place without the planned benefits of the American Recovery and Reinvestment Act. Any characterization of this planned project as anything other than an economic development lifeline to the wind industry during tough economic times is just inaccurate.”

National Republican Senatorial Committee Chairman John Cornyn of Texas used the wind farm project as one example of a failure of Obama administration economic policies. “This just shows how ridiculous this whole stimulus proposal was,” Cornyn said, acknowledging, however, that “Texas would like to have the investment.” Cornyn seems to forget that the American Recovery and Reinvestment Act was crafted in Congress, and apparently passed without much thought by Senators and Representatives as to what American businesses would do with the $787 billion they were doling out.

Boxer’s Committee Reports Out Climate Change Bill, Hopes For Copenhagen Conference Dim

The Senate Environment and Public Works Committee chaired by Barbara Boxer reported out the Kerry/Boxer climate change legislation on a vote 0f 11-1, with none of the Republican members in attendance. The lone Democrat voting against the bill was Senate Finance Committee Chairman Max Baucus, who strongly opposes the bill’s 20% greenhouse gas emission requirement. Baucus’ opposition to the bill will make it difficult to secure passage in a floor vote.

The 950 page legislative measure must still be pieced together with the work product of five other Senate committees having some sort of jurisdiction over global warming and greenhouse gas emission legislation, and a floor vote in the Senate looks unlikely before next year.

State Department Special Envoy on Climate Change Todd Stern holds out little hope of any significant action on an international climate change treaty at the Copenhagen conference coming up next month. The current treaty, the Kyoto Protocol, which the U.S. refused to ratify, expires in a little over a year. Noting that developing nations see carbon emissions as a problem created by developed economies, and worry that their own economic growth will be suppressed by a climate change agreement restricting their emissions, Stern said “The mentality that looks at the world through those lenses will not produce results.”

Nevertheless, in the absence of US action establishing a basis for belief that the economies of the first world are willing to negotiate in good faith, there is little chance that anything will come out of Copenhagen beyond a calendar for future talks.

Greenhouse Gas Limit Debate Moves To Senate

How far should the United States reduce greenhouse gas emissions below their 2005 levels? This issue has plagued the drafters of climate change legislation in the House, which ultimately passed a measure establishing the goal of a 17% reduction by 2020. Now, in the Senate Environment and Public Works Committee hearings on the Kerry/Boxer bill proposing a 20% reduction, Senate Finance Committee Chairman Max Baucus says he believes the proposed 20% reduction will be too much of a drag on economic recovery, and that he has serious reservations about the Kerry/Boxer bill.

Senate Environment and Public Works Chair Barbara Boxer can get her bill reported out of her committee without Baucus’ vote, but doing so would highlight a leadership split which would make floor debate rancorous and passage difficult. Meanwhile, the Obama administration’s budget called for only a 14% reduction. Seems like lawmakers have a long and winding road to travel before a final piece of legislation materializes on this issue.

Senate Cap And Trade Hearings Highlight Democratic Party Fault Lines

Ongoing hearings in the Senate Environment and Public Works Committee on the Kerry/Boxer cap and trade bill are bringing to light fissures in the Democratic Party block regarding the proposed climate change legislation. Opposition to Senator Barbara Boxer’s chairman’s mark of the 923 page bill, released Friday, was voiced by both Senator Arlen Specter and Senate Finance Committee Chairman Max Baucus. Baucus says he has serious reservation about the measure’s goal of reducing U.S. greenhouse gas emissions 20% below 2005 levels by a 2020 deadline. Specter wants Congress, rather than USEPA, top set the emission limits. “There’s a great deal to be gained by certainty so people can make plans,” Specter told USEPA Administrator Lisa Jackson. “That’s our job.”

Republican critics of the Kerry/Boxer bill are threatening to delay forward movement of the proposed law by skipping meetings of the Committee scheduled to mark up the bill, thereby denying Boxer the quorum required for holding a mark up under Senate rules. They complain about USEPA’s failure to run any economic modeling of the Kerry/Boxer bill, which EPA justified based on the similarity of the measure to the House passed bill EPA already analyzed. In the face of such a maneuver, Boxer’s committee could report the bill out without a markup, under Senate Rule 14.

EPA Sees 180 New Nuclear Power Plants Over The Horizon

USEPA’s analysis of pending climate change legislation predicts construction of 180 new nuclear power reactors by 2050, more than doubling the currently operating 104 reactors in 31 states, which provide 20% of the nation’s electric power. Presently the Nuclear Regulatory Commission has only 30 applications pending for new reactor construction. At an estimated investment of $10 billion each, the projected increase represents total projected cost of nearly two trillion dollars.

It will be interesting to see whether environmental groups come out in greater force against nuclear waste storage or carbon sequestration as the debate over details of greenhouse gas reduction legislation proceeds in Congress. Either way, nasty stuff is getting buried underground in someone’s back yard.

Climate Change Initiatives Still Face Major Hurdles

In a speech at MIT Friday, President Obama praised the efforts of Congressional leaders to move forward climate change legislation, ahead of hearings this week in the Senate Environment and Public Works Committee on the Kerry/Boxer cap and trade bill. Environment and Public Works Chair Barbara Boxer will preside Tuesday, Wednesday and Thursday over hearings which will include 54 witnesses from various federal agencies to be involved in administering the proposed legislation, business and industry leaders who will be affected by the measure, and analysts involved in predicting its costs to various sectors of the American economy.

Boxer hopes to mark up the bill in her Committee the first week in November, but Environment and Public Works ranking member James Inhofe is threatening to withhold the required quorum for a markup unless the complete text of the bill is released, together with details of the USEPA cost analysis of the proposal. Other government climate change initiatives also face strong opposition.

Wisconsin Congressman David Obey is heading up a contingent of Great Lakes Democrats seeking to block a new USEPA rule on ship diesel fuel sulfur content, The EPA proposal would prohibit ships operating within 200 miles of US coastlines from burning high sulfur diesel fuel. The effect of the 200 mile limit would mean all lakers would be required to burn only low sulfur diesel, significantly increasing shipping costs over competing rail and highway transportation of cargo. James Weakley, president of the Lake Carriers Association, estimated that compliance would cost $210 million annually in increased fuel costs, bankrupting 24% of the lake carrier fleet. On the opposite hand, EPA estimates the rule will prevent at least 13,000 air pollution related deaths by 2020.

Paper mill “black liquor” burned as alternative fuel at the mills, produces tax credits of $2.5 billion annually for the paper industry. An IRS memo made public last week appeared to qualify black liquor for a $1.01/gallon tax credit as a cellulosic biofuel, which would magnify tax credits for paper mills by a factor of ten. However, before that can happen, USEPA will need to approve black liquor under the Clean Ari Act, and the agency has no procedure for registering non-transportation fuels. Current technology makes it impossible to use black liquor as a motor fuel.

President Obama wants to end the existing tax credit for black liquor, and Senate Finance Chairman Max Baucus and ranking member Charles Grassley have drafted legislation to do just that.

Some Senate leaders are pressing the committees with jurisdiction over climate change legislation to report out their bills by Thanksgiving, so the bills can be combined and brought to the Senate floor before the end of this year. After that, a conference committee would have to merge any Senate bill with the measure already passed by the House, and bring it up for final votes in both chambers.

Can The Government Regulate Cap And Trade When It Can't Handle Energy Star?

While in the business of handing out $300 million in stimulus rebates to consumers who purchase Energy Star rated appliances, the US Department of Energy acknowledges in an internal audit that that it does not properly track whether products labeled with the Energy Star actually meet the required specifications for energy efficiency. Windows, and certain lighting products carrying the Energy Star label have to be tested by independent labs, but manufacturers can self-certify refrigerators, washing machines, dishwashers, water heaters and room air conditioners, and certain manufacturers, as well as Consumer Reports, note that tests have shown certain Energy Star labeled appliances do not live up to federal requirements.

The internal audit noted that promised retail assessments of Energy Star labeled products have often not materialized, and that when the Department of Energy does find non-conforming products in stores, it is not following through to see that the Energy Star labels are removed from the non-conforming goods.

Economic Factors Could Stymie Climate Change Accord

CBO Director Douglas Elmendorf testified yesterday to the Senate Energy and Natural Resources Committee that overall employment may not be significantly impacted by cap and trade legislation, but that particular industries heavily reliant on production or consumption of fossil fuels will be hard hit as employment shifts away from them toward renewable energy sectors of the economy. "The shifts will be significant," Elmendorf said, and added that addressing climate change will require "some cost to the economy."

At the same hearing, Senator Sam Brownback of Kansas said Kansas City utilities predict a 44% increase in energy prices under the Kerry/Boxer proposal, while Senator Mary Landrieu of Louisiana said oil refinery operating cost increases under the measure could force Louisiana refineries out of business, resulting in more foreign gasoline imports. Adding to the confusion, Larry Parker of the Congressional Research Service, when asked by the committee to review various cost estimates released by federal agencies and private interests, testified that "long term cost projections are at best speculative, and should be viewed with attentive skepticism."

The same sort of troubling economic uncertainties plague the run up to the UN Copenhagen conference on climate change. The range of economist predictions regarding the world wide cost of greenhouse gas emission reduction runs from a low of $100 billion per year by 2020 to a high of $1 trillion per year. Luiz Alberto Figueiredo Machado, the lead climate negotiator for Brazil, sums up the global situation succinctly: "The level of ambition in funding is not matching up to the sense of urgency everyone now has. ... Developing countries are not convinced that the market will find them the $100 billion they need. They want guarantees."

At the same time, pledges from the governments of industrialized nations to the UN Adaptation Fund for fighting climate change have almost completely failed to materialize. And, some planned clean energy projects already on the drawing boards are being scuttled because lack of growing demand for power has scotched their project financing. Dong Energy of Denmark is pulling investment out of two planned clean coal power plants, in Scotland and Germany, though it remains involved as a design consultant on the Scotland project. E.On AG of Germany has shelved plans to build a controversial Kingsnorth clean coal power facility in southeast England.

However, one California company, eSolar Incorporated of Pasadena, has partnered with Clean Energy Solutions of South Africa to distribute eSolar's power technology in a seven nation swath across sub-Saharan Africa. Earlier this year eSolar licensed its solar thermal power plant technology to Acme Group for development of power facilities in India over the next decade.

Cap And Trade To Save The Jungles?

Climate change legislation lobbying has taken a different twist this week as advocates from the Commission on Climate and Tropical Forests, including Michael Morris, CEO of American Electric Power, urge the Senate to allocate 5% of emission allowances to international forest conservation programs aiming to save the world's jungles. The Committion proposes that the U. S. invest substantially in programs to reduce jungle deforestation, beginning with $1 billion per year in 2012 and increasing to $5 billion per year by 2020.

The House climate change bill allows American energy companies to purchase carbon emission cresidt from programs reducing deforestation, and lobbyists want the Senate measure to allow emission offsets purchased by maintaining tropical rain forests.

Agriculture Industry Split On Climate Change

Echoing the deep divisions within the industrial sector of our economy over climate change legislation working its way through Congress, the agriculture industry is also split over Congressional proposals for greenhouse gas emission limits. In an effort to keep a seat at the table while legislative policy continues to be formed in Washington, the National Corn Growers Association has taken a wait and see position respecting the Kerry/Boxer Senate climate change bill. At the opposite extreme, the American Farm Bureau Federation says it will oppose the Senate version of climate change legislation even more fiercely than it lobbied against the bill which has already passed the House.

Salivating over a potential 25 billion gallon ethanol market once cap and trade legislation passes, the corn growers want to keep whatever influence they may have over provisions in a final measure respecting indirect land use analysis. Corn farmers object to including the effects of increased ethanol use outside the U.S. on denuding of tropical rain forests when computing the "carbon footprint" of corn based ethanol production. The Farm Bureaus, already disappointed with that possibility, see the legislative measures only getting worse for American farmers.

Apple Quits U. S. Chamber of Commerce Over Climate Change

The latest major business to resign from the U. S. Chamber of Commerce over the Chamber's opposition to pending climate change legislation announced it's immediate resignation in a letter suggesting the Chamber should take a more positive role in efforts to control greenhouse gas emissions. In a letter sent yesterday to U. S. Chamber of Commerce President Thomas Donahue, Apple, Inc.'s vice president for worldwide government affairs Catherine Novelli wrote that Apple "would prefer the Chamber take a more progressive stance ... and play a constructive role" in the climate change regulation process. Apple's resignation is effective immediately.

A Chamber spokesperson issued a brief response stating that it represents "the broad majority of our membership" on ths issue, but that "there are some companies who stand to gain more than others with the current options on the table."

Business Leaders Jumping On The Cap And Trade Bandwagon

Executives from businesses in several different sectors of the American economy are letting their senators and representatives know this week that their companies support cap and trade legislation to curtail climate change. Over 150 busniess people wi8ll swarm Capitol Hill tomorrow and Wednesday - from companies including eBay, Hwelett PAckard, Gap, and PAcific Gas & Electric - to meet with at least 35 different legislators in support of cap and trade legislation. Separately, other businesses - including United Technologies, Johnson & Johnson, General Electric, and Weyerhauser - are teaming up with environmental groups - including The Nature Conservancy and Environmental Defense Action Fund - to launch a million dollar advertising campaign promoting climate change legislation in Congress.

Chicago based Exelon is participating in both efforts. Exelon CEO John Rowe explains the motivation behind these business campaigns: "Companies need the legislative certainty to start making the substantial investments needed to jump-start a low carbon economy and create jobs." Jeff Swartz, CEO and PResident of Timberland (yes, the shoes and boots) expressed a somewhat more jaded view of the legislative process: "I wish the government thing was a lot simpler - an 800 page bill! Come on, guys - 800 pages. What the hell does that mean? It means you don't really want change, It means you want to get re-elected."

Senate Cap And Trade Bill Faces Uphill Battles

Senate Foreign Relations Committee chairman John Kerry and Senate Environment and Public Works Committee Chairman Barbara Boxer unveiled an 800 page partially complete draft of their cap and trade climate change proposal today, but the measure faces strong opposition even within their own party. Democratic Senators Jay Rockefeller of West Virginia and Kent Conrad of North Dakota expressed objections to the bill's requirement of a 20% reduction in greenhouse gas emissions by 2020, a 3% increase over the terms of the measure passed this summer in the House. According to coal state Senator Rockefeller, the higher goal "is unrealistic and harmful -- it is simply not enough time to deploy the carbon capture and storage and energy efficiency technologies we need. Period."

Democratic Senators Kent Conrad, Byron Dorgan and Maria Cantwell object to the measure's lack of provision for oversight of the carbon allowance market, fearing market manipulation harmful to their states' argicultural interests. Other democrats object to the fact that the draft includes no details yet on how free and auction based carbon credits will be allocated among businesses in various segments of the economy which will be affected wither by the carbon emission restrictions or the higher enegry costs resulting from emission caps.

Senate Version Of Climate Change Bill Due Out Tomorrow

Senate Envorinmental and Public Works Chairman Barbara Boxer is set to release that committee's version of climate change legislation tomorrow. Boxer's bill is expected to seek to increase the Waxman/Markey goal of 17% greenhouse gas emissions by 2020 to a 20% reduction. Still secret, however, are the industry by industry allocations of initially free emissions credits Boxer and her committee propose. Apparently Boxer wants to bring industry lobbyists to the table and garner maximum support for the Senate version of this legislative measure by passing out free emissions credits to those lobbyists first to the bargaining table.