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Policy News Update

February 12, 2010

In this issue: [Contract All : Expand All]

SENATE CLIMATE BILL: FUTURE OF BILL REMAINS UNCERTAIN AS OBAMA, CLIMATE BILL AUTHORS LOOK TO COMPROMISE

Although the focus in Washington is on jobs and the economy, the Senate climate debate continues to grow more complex. Majority Leader Harry Reid (D-NV) still plans to hold a floor debate this spring, but there is little consensus among senators as to when a climate and energy bill could win over the necessary 60 votes. This year’s midterm elections present a significant near-term obstacle - moderate lawmakers up for reelection will be less likely to risk a controversial vote - and could shift the political landscape considerably down the road, given the possibility of a Republican shakeup as voters respond to the ailing economy. And if the debate draws out too long, it may run into President Obama’s own re-election campaign, which could bump a climate bill to 2013, if not later.

Obama’s leadership in the Senate debate will be critical in advancing a climate and energy bill - something he named a top priority in his recent State of the Union address. The President did a great deal of lobbying for the House climate bill (HR 2454), which narrowly cleared the chamber last summer. But since then, his primary legislative focus has been healthcare, although he has been active on climate in other capacities:

Many moderate Republicans and Democrats have been urging Obama to abandon a comprehensive package and push for a standalone energy law this year. Although he has been clear that he wants Congress to keep energy efforts coupled with an emission cap, the President recently suggested that an energy measure may be the only realistic option for taking legislative action on climate in 2010.

This concession is representative of a recent trend toward compromise among key players on climate. During his State of the Union address, Obama received hearty Republican applause when he highlighted nuclear power and offshore drilling as part of the nation’s energy future. And Senators John Kerry (D-MA), Joe Lieberman (I-CT), and Lindsey Graham (R-SC), who have been working to draft the Senate’s latest cap-and-trade effort, are now meeting with senators who favor alternative strategies, such the a power plant-only approach advocated by several manufacturing state lawmakers and the “cap and dividend” approach proposed by Senators Maria Cantwell (D-WA) and Susan Collins (R-ME). For more information about the options currently under consideration, see the January 22 edition of the ESA Policy News at: www.esa.org/pao/policyNews/pn2010/01222010.php

Graham, meanwhile, has been outspoken in his opposition to energy-only approaches, making it clear that his support for climate action hinges on handing energy and emissions together. "To jump-start nuclear power, wind and solar and the green economy, you've got to price carbon," he said. "How you do it is subject to discussion and open debate. But the idea of not pricing carbon, in my view, means you're not serious about energy independence. The odd thing is you'll never have energy independence until you clean up the air, and you'll never clean up the air until you price carbon." Still, the senator says that neither of last year’s cap-and-trade bills - HR 2454 and S 1733, its Senate counterpart, passed by the Environment and Public Works Committee - are business-friendly enough to be practical. Graham has been in closed-door talks with several of his Senate colleagues, as well as a variety of interest groups, and he says that he is gathering support for a bipartisan climate and energy effort.

The possibility of compromise has brought several lawmakers back to the table, including Senators Ben Nelson (D-NE), who says he could support an emissions cap but remains wary of a trading system, and Mary Landrieu (D-LA), who says she would much prefer a legislative approach to regulatory action from EPA - see the January 22 edition of the ESA Policy News (www.esa.org/pao/policyNews/pn2010/01222010.php). But others, including some moderate Democrats like Senator Evan Bayh (D-IN), say that the struggling economy precludes any near-term action on climate. Particularly since heavy emitters like China and India refuse binding targets, many lawmakers fear that regulating emissions will take a heavy toll on American competitiveness.

2011 BUDGET: WHITE HOUSE BUDGET REQUEST SHOWS STRONG COMMITMENT TO SCIENCE IN SPITE OF BELT-TIGHTENING ACROSS AGENCIES

President Obama’s $3.834 trillion 2011 budget request shows continued support for science, in spite of the three-year freeze on nondefense discretionary spending that he has proposed.

To keep spending at 2010 levels, the budget blueprint proposes to cut funding for over 120 federal programs, which would save $20 billion. Many of the programs slated to be eliminated duplicate larger efforts elsewhere or include problematic loopholes in the payment structure (e.g. an Interior Department program to fund abandoned mine cleanup). In addition, the proposal does away with tax preferences for the fossil fuel industry, a cut that would save the US an estimated $40 billion over the next decade. Six billion dollars of the 2011 savings would go towards clean energy projects.

Republicans have supported the overall reduction in spending, although many would like to see more frugality in other areas, as well. The budget is now headed to Congress, where many of the cuts are likely to face opposition from both parties. Last year, the legislative branch supported roughly 60 percent of Obama’s proposed reductions, rejecting cuts to fossil fuel subsidies. This year, though, Obama promised to use his veto power if Congress fails to reign in spending.

The budget request also repeats the President’s call for a comprehensive cap-and-trade bill. Having faced political heat in 2010 for assuming specific revenues from an emissions auction, Obama took a much less controversial stance this year by leaving the revenue amounts blank. For more information, see the “SENATE CLIMATE BILL” update in this edition.

Highlights from the request:

NSF: The National Science Foundation would receive $7.424 billion - 8 percent above 2010 levels. All accounts would see at least modest increases; Major Research Equipment & Facilities Construction (MREFC) would receive a boost of more than 40 percent. Research and Related Activities would see an 8.2 percent increase; Education & Human Resources, 2.2 percent. Areas of interest:

INTERIOR DEPARTMENT: $12.04 billion (a small cut from $12.15 in 2010). The budget increases fees on oil and gas companies, calling fossil fuel industry incentives “counterintuitive” to the national goal of a clean energy economy. Meanwhile, several of the Administration’s priorities would receive boosts, including land acquisition, climate change research, and renewable energy. Areas of interest include:

NOAA: The National Oceanic and Atmospheric Administration would receive $5.5 billion - a 17-percent boost - with a strong emphasis on climate change and fisheries sustainability. Proposed increases include:

EPA: $10 billion (a proposed $300 million cut from 2010 levels). Observers were not surprised by this cut, given that the Environmental Protection Agency received a considerable boost in 2010, compared to previous funding levels, which had remained close to $7.5 billion for the last several years of the previous administration. The agency’s operating budget would see a small decrease, as would water infrastructure and Superfund cleanup programs; several other areas would see increases:

ENERGY DEPARTMENT (DOE): $28.4 billion (an almost 5 percent increase from 2010 levels), which includes significant boosts for nuclear power and energy research. The increases are aimed at increasing American competitiveness in the clean energy arena and producing “jobs of the future” - Obama said his budget will "build on the largest investment in clean energy in history, as well as increase investment in scientific research."

Notable areas receiving increases include:

AGRICULTURE DEPARTMENT (USDA): $132 billion. Federal farm subsidies would see substantial cuts as would some farm bill conservation programs. Although both areas are mandatory spending set in the farm bill and distinct from the discretionary spending that Obama wants to freeze, the cuts could be used to offset expansions in other programs.

BIOFUELS: NEW EPA REGULATIONS TO ADDRESS INDIRECT LAND-USE WHILE KEEPING AN OPEN MIND TOWARDS ETHANOL

On February 3, the US Environmental Protection Agency (EPA) released a set of regulations to implement the renewable fuels standard established in a 2007 energy bill. The standard requires the US to increase its annual biofuel production to 36 billion gallons (including up to 15 billion gallons of corn ethanol) by 2022, with the stipulation that most newly produced ethanol have a carbon footprint smaller than that of gasoline. But how should carbon footprints be calculated? This question has been the source of a fierce debate between environmental and industry interests, with the former arguing that it should factor in emissions from changes in land-use driven by increase agricultural biofuel production. For more information on the indirect land-use debate, see the March 5 edition of the ESA Policy News at: www.esa.org/pao/policyNews/pn2009/03052009.php

The draft rule, proposed last year, drew widespread criticism from the ethanol industry and farm state lawmakers, who argued that it was unfair to producers. At that time, calculations considering land-use indicated that the high carbon footprint of corn-based ethanol largely disqualified it from the renewable fuel standard. But science has advanced rapidly, and the most current analyses - which include data from 160 rather than 40 countries - show that ethanol, if developed in an energy-efficient manner, can weigh in below the gasoline threshold.

The final rule reflects these findings and has therefore won over many of its opponents, most notably ethanol producers, who say they are glad to see that their product could still have a place in a low-carbon economy. But some lawmakers have vowed to continue fighting the rule, including House Agriculture Chair Collin Peterson (D-MN). Stressing opponents’ central concern - that current scientific understanding cannot accurately quantify the impact of indirect land-use - he said he would “continue to push for legislation that prevents unreliable methods and unfair standards from burdening the biofuels industry." He has since introduced a bill to do just that, although it will be difficult to block EPA action with legislation now that the final rule is in place. But lawmakers could attempt to use the appropriations process to limit funding, preventing EPA from implementing the new regulations. They could also try to move similar bills to keep EPA from expanding the regulations or modifying them as the science develops. Indeed, Congress could see a number of legislative maneuvers aimed at removing land-use from the equation - in an effort to limit such efforts, EPA Administrator Lisa Jackson has promised to conduct an “uncertainty analysis" on the matter.

The EPA regulations are part of a larger Obama Administration push for biofuel development and green job creation. Other efforts include rules from the Agriculture Department, which provide incentives for farmers to grow crops for next-generation biofuels, and a new interagency report that details how federal agencies can accelerate the commercial development and deployment of such biofuels. The report, a joint effort of EPA and the Energy and Agriculture departments, indicates that the country is not on track to meet the biofuels production goals laid out in the 2007 energy bill, but provides a market development plan to help boost production. Meanwhile, EPA has reduced the 2010 requirements for cellulosic fuels from 100 million to 6.5 million, because of limited supply.

AIR POLLUTION: EPA STRENGTHENS NO2 STANDARD FOR THE FIRST TIME

On January 25, the US Environmental Protection Agency (EPA) tightened the national public health standard on nitrogen dioxide (NO2) for the first time in almost 40 years. The changes focus on short-term exposure to the pollutant, which has been linked to a variety of human health problems.

The final rule will:

Institute a short-term limit on NO2 levels: No more than 100 parts per billion (ppb) in any given hour. EPA’s existing standard, which limits annual levels to 53 ppb, will remain in place.

Require cities to install additional roadside monitors: Since the majority of short-term NO2 exposure occurs near major roadways, the new rule calls for urban areas with more than 500,000 people to install at least one monitor near a major road - amounting to 126 new monitors in 102 urban areas. Cities of a million or more will continue their monitoring efforts, as stipulated in the original rule.

The monitoring requirements in the final rule are somewhat more lenient than those in EPA’s initial proposal, which would have mandated monitors in areas with more than 350,000 people. The increased threshold amounts to roughly 40 fewer monitors, encompassing 66 rather than 71 percent of the nation’s population. But the final rule gives regional agency chiefs the authority to place up to 40 additional monitors as they deem necessary.

EPA will use the existing network to determine compliance with the one-hour standard by January 2012; it will reevaluate after collecting three years worth of data from the new monitors, which must be up and running by January 2013. According to existing data, Chicago is the only large metropolitan area that consistently violates the new standard.

NEGOTIATIONS: MORE THAN 50 NATIONS FOLLOW THROUGH ON STEP ONE OF THE COPENHAGEN ACCORD

When the UN climate summit in Copenhagen concluded last December, 28 world leaders and representatives for blocs of nations created the “Copenhagen accord,” a nonbinding plan for moving forward in international climate action. First among the benchmarks outlined in the accord was a call for major emitters to submit emissions reduction targets by January 31, 2010. Since the accord is not binding, observers looked to the deadline as a critical test of the agreement’s strength, which many have questioned in light of the contentious circumstances under which it was forged. For more information on the Copenhagen talks, see the December 22 edition of the ESA Policy News at: www.esa.org/pao/policyNews/pn2009/12222009.php

For its part, the United States has vowed to reduce greenhouse gas emissions approximately 17 percent below 2005 levels over the coming decade. US climate envoy Todd Stern submitted the pledge to the UN, noting that the final figure remains dependant on the outcome of US climate legislation. In spite of this caveat, analysts say that the Obama administration will face major diplomatic challenges if it the country fails to act on its promise. But the prospect of a climate law in 2010 is growing increasingly unlikely, with President Obama admitting recently that a stand-alone energy bill may be this year’s only feasible option for climate action in Congress. For more information on the congressional climate debate, see the “SENATE CLIMATE BILL” update in this edition.

In total, more than 50 countries - 78 percent of the world’s energy users - submitted pledges. The list includes the “BASIC” countries (Brazil, South Africa, India, and China), major developing nations that formed an alliance in Copenhagen to oppose binding targets and hold wealthy nations to earlier promises of financial aid for poorer nations transitioning to low-carbon economies. Reiterating that their pledges were voluntary, the BASIC countries set the following targets:

Even some of the world’s poorest and/or smallest nations made pledges - both Bangladesh and the Marshall Islands said they would be willing to cut emissions if they receive financial assistance.

Developed countries, meanwhile, have submitted pledges largely reflecting vows made before Copenhagen. Australia, for example, adhered to its plan to cut emissions by 5 percent, and the European Union promised a reduction to 20 percent below 1990 levels. Both countries said they could strengthen their targets if other countries were willing to do the same. Although many wealthy countries arrived at December’s negotiations with a range of possible targets, submitted targets reflect the least ambitious options. Still, observers say that at this stage, it’s most important that nations confirm their commitment by entering the registry.

CURRENT POLICY


Sources: Environment and Energy Daily, Greenwire, ClimateWire, federal agency budget websites.

Send questions or comments to Piper Corp, Science Policy Analyst, piper@esa.org or Nadine Lymn, ESA Director of Public Affairs, Nadine@esa.org

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