global warming implications and opportunities for your practice n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Global Warming Implications and Opportunities for Your Practice PowerPoint Presentation
Download Presentation
Global Warming Implications and Opportunities for Your Practice

Loading in 2 Seconds...

play fullscreen
1 / 48
cher

Global Warming Implications and Opportunities for Your Practice - PowerPoint PPT Presentation

0 Views
Download Presentation
Global Warming Implications and Opportunities for Your Practice
An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

  1. Global Warming Implications and Opportunities for Your Practice Meritas Annual Meeting April 23, 2009 Orlando, FL Barry S. Neuman Merrill J. Baumann, Jr.

  2. 2008 2

  3. 2030? 3

  4. The International Context • United Nations Framework Convention On Climate Change • 1992 UN Rio De Janeiro Conference On Environment And Development • Developed And Developing Countries Have “Common But Differentiated” Responsibilities • Established Annual Conference of Parties (COP) • Legislative-Type Body to Implement Goals • Negotiated Kyoto Protocol At 1997 COP Meeting 4

  5. Kyoto Protocol • Became Effective In 2005 • 183 Countries Have Ratified • U.S. Is Only Major Industrialized Country Not to Sign • Sets Binding Emissions Limits On Developed Countries • Must Be Met By 2012 • Different Countries Must Reduce Emissions By Different Percentages Below 1990 Emissions(U.S. Figure Was to Be 7% Below 1990) • Overall Goal: to Reduce Emissions By 30% Below “Business As Usual” 5

  6. Flexibility • Each Country Decides How to Meet Its Limits • International Emissions Trading System • Clean Development Mechanism (CDM) • Developed Country Invests in Project In Developing Country • Countries Can Band Together As One Unit • European Union 6

  7. Looking Towards Post-2012 Commitment Period • Bali Conference (December 2007) • First Comprehensive Negotiations For Post - 2012 • U.S. Declines to Agree to Binding Emissions Reductions • Discussions Continued In Poznan, Poland In December 2008 • Next Conference -- Denmark (December 2009) 7

  8. E.U. Trading Scheme • Opened for business January 1, 2005 • One of the policy measures to enable E.U. to meet Kyoto Protocol targets • In effect in 25 E.U. member states 8

  9. E.U. Trading Scheme Sectors Covered: • Electric Power (20 MW capacity plants) • Oil Refineries • Coke Ovens • Metal Ore and Steel • Cement Kilns • Glass • Ceramics • Paper and Pulp 9

  10. E.U. Trading Scheme Timetable: Phase I: 2005 – 2007 • Implement National Allocation Plans • Assess Reliability of Emissions Data • 362 Metric Tons Traded 1st Year Phase II: 2008 – 2012 • Coincides with Kyoto Renegotiation • Aviation Sector Included • Norway, Iceland, Liechtenstein Join • Litigation against Austria, Czech Republic, Denmark, Hungary, Italy and Spain (late NAPs) • Target Reductions: 7% 10

  11. E.U. Trading Scheme Distribution of Allowances • Phase I: Most Given Away Free • Auctioning of Allowances Later • Banking and Borrowing Allowed 11

  12. E.U. Trading Scheme Criticisms: First Year: • Data Collection Problems • Overallocation of Allowances • Cap Too High • No Incentives to Reduce • Phase I Allowances – Worthless Claims of Allowance Double-Counting 12

  13. Possible U.S. Legislation • Waxman-Markey Draft (March 31, 2009) • Subcommittee Mark-Up This Month • Committee Mark-Up In May • Title I and II: Clean Energy & Energy Efficiency • Incentives/Requirements for Carbon Capture And Sequestration (CCS) • Promote Smart Grid • Grants/Loans to States, Munis And Private Companies For Large-Scale Demonstration of Electric Vehicles • Funding to Retrofit Existing Buildings 13

  14. Title III: Climate Change • Cap-And-Trade Program • Silent On Free Allocation vs. Auctioning of Allowances • Covers 85% of U.S. GHG Emissions • By 2050, 83% Reduction In Emissions Below 2000 Levels • Preempts State Cap-And Trade Programs For 5 Years • Prohibit EPA From Regulating Carbon Emissions From Stationary Sources 14

  15. International Trade Implications • Various Proposals to Protect U.S. Industry • Border Adjustments On Imports From Countries Lacking “Comparable” Controls • Internal Subsidies For Disadvantaged U.S. Companies • H.R. 1759 (Reps. Inslee And Doyle) 15

  16. International Trade Implications • May Be Necessary to Enact Legislation • But: • Are Vulnerable Under WTO/GATT • Ignite Trade Wars? • Recent Threat of E.U. vs. U.S.. 16

  17. Prospects For Passage • On One Hand: • Complex Effort/Broad Impacts on U.S. Economy • Never Been Subject to Full Debate • Republican Committee Members Oppose Cap and Trade • Moderate Democrats Reluctant • Obama Stepping Back? 17

  18. Prospects For Passage • On Other Hand: • Bill Goes Far to Accommodate Moderate Concerns • Reflects Many Recommendations of Climate Action Partnership • The Alternative -- Direct Regulation by EPA 18

  19. EPA Regulatory Initiatives • Massachusetts v. EPA (2007) • 5-4 Decision • EPA Has Authority to Regulate GHG Emissions From Motor Vehicles Under The Clean Air Act • EPA Must Determine Whether GHG Emissions From Motor Vehicles Pose A Danger, And, If So, It Must Regulate • Endangerment Finding Is Imminent • The Real Kicker: • Logic of Decision Applies to “Stationary Sources” -- Factories, Industrial Plants, Any Source of GHG That Doesn’t Move 19

  20. GHG Emissions Inventory • EPA Proposed Rule • Would Require Annual GHG Emission Reporting • Purpose: “To Support A Range of Future Climate Change Policies And Regulations • Applies To: • Suppliers of Fossil Fuels And Industrial Chemicals, • Manufacturers of Motor Vehicles And Engines • Facilities That Emit 25,000 Metric Tons Per Year of CO2 Equivalents 20

  21. GHG Emissions Inventory • Would Cover About 13,000 Entities Emitting About 85% of GHG Emissions In The U.S. • Cement Production • Electricity Generation • Ethanol Production • Electronics Manufacturing • Pulp And Paper Manufacturing • Petroleum Refining • Petrochemical Production • Reporting Would Be Required At The Facility Level 21

  22. Regional Greenhouse Gas Initiative (RGGI) • The First Mandatory Cap-And-Trade Program In U.S. For C02 • Ten States • CT; DE; MA; MD; ME; NH; NJ; NY; RI;VT • Applies to Electric Power Generation • Account For 25% of C02 Emissions In The Region • ≥ 25 Mw • 225 Facilities 22

  23. Regional Greenhouse Gas Initiative (RGGI) • Aggregate Regional Cap of 188 Million Tons • Each State Is Allocated A Share of The Cap • Each State Then Issues C02 Allowances In A Number That Is Proportional to Its Share • Each Allowance Equals A Permit to Emit One Ton of C02 • Cap On C0 Emissions Will Be 10% Lower In 2018 Than 2009 • Revenues From Auctions Allowances Invested In Energy Efficiency And Renewable Energy 23

  24. Regional Greenhouse Gas Initiative (RGGI) • Allowance Market • States Distributes Allowances Through Regional Auctions • Allowances Can Also Be Traded On Secondary Market • Power Plants That Obtain More Allowances Than They Need Can Sell Excess Allowances; Those Needing More Allowances Can Buy Them 24

  25. Regional Greenhouse Gas Initiative (RGGI) • Emission Offsets Allowed • Can Be Used to Meet 3.3% of Compliance • Limited GHG Reduction Projects Outside The Electricity Generation Sector 25

  26. Regional Greenhouse Gas Initiative (RGGI) • Allowance Auctions • Quarterly Auctions • Minimum Clearing Price $1.86/Ton • Independently Monitored • Three Auctions Thus Far 26

  27. Regional Greenhouse Gas Initiative (RGGI) • December ’08 Auction: • Demand Was 3.5 X Supply • Low Concentration of Bids • Distribution of Bid Prices Indicates That Prices Were Elastic And The Results Were Competitive • 76% of Bids From Regulated Entities • 24% of Bids From Env. Groups And Financial Institutions • Clearing Price of $3.38 • Raised $106.5 million 27

  28. Western Climate Initiativewww.westernclimateinitiativbe.org • Signed on February 26, 2007 by Washington, Oregon, California, Arizona and New Mexico • Allows other U.S. states, tribes, Canadian Provinces and Mexican states to observe and join • WCI goal set August 2007: reduce region-wide GHG emissions to 15% below 2005 levels by 2020 28

  29. WCI Participants U.S. Partners: • Arizona, California, Montana, New Mexico, Oregon, Utah, Washington Canadian Partners: • British Columbia, Manitoba, Ontario, Quebec Observers: • Alaska, Colorado, Idaho, Kansas, Nevada, Wyoming, Saskatchewan, Baja California, Chihuahua, Coahuila, Sonora, Nuevo Leon, Tamaulipas 29

  30. WCI Significance • Together the WCI Partners represent over 70 percent of the Canadian economy and 20 percent of the U.S. economy • Collectively would be the 3rd largest economy in the world • Will influence U.S. and Canadian national GHG reduction programs 30

  31. WCI Design Recommendations • Released September 23, 2008 • Broader Scope than RGGI: when fully implemented, the WCI cap & trade program will cover nearly 90% of the GHG emissions in the WCI region • The cap & trade program will work with other “complementary” policies to reach the WCU regional goal 31

  32. Scope of the WCI Cap & Trade Program • By January 1, 2012: • Electricity • Combustion at industrial and commercial facilities • Industrial process emission sources • By January 1, 2015: • Emissions to be covered upstream • Transportation fuel combustion • Residential and commercial fuel combustion • Threshold coverage level: 25,000 MT CO2e or more per year 32

  33. Offsets & Other Allowances • Program will include a rigorous offsets system to reduce compliance costs • Will also recognize allowances from other GHG trading systems • WCI will develop criteria for offsets and other system allowances • WCI will limit offsets and allowances from other trading systems to no more than 49% of the total emissions reductions from 2012 – 2020 • Purpose to ensure that a majority of emissions reductions occur at WCI covered entities and facilities 33

  34. Reporting • Mandatory measurement and monitoring of GHG emissions to start in January 2010 • Mandatory reporting to start in January 2011 • Threshold coverage level: entities and facilities with annual emissions equal to or greater than 10,000 MT CO2e 34

  35. Other State Initiatives • Many states developing or implementing cap & trade • California Global Warming Solutions Act of 2006 • Enacted September 2006 • Requires GHG emissions reduced to 1990 levels by 2020 • Early Action measures (low carbon fuel standard, mobile air conditioning, tire pressure program, shore power for ocean-going vessels) • Governor has “safety valve” in the event of extraordinary circumstances 35

  36. Other State Initiatives The Oregon Standard • Enacted 1997 • All new power plants required to offset part of their CO2 emissions • Payment of Mitigating Funds allowed 36

  37. The Oregon Standard • Early trading in U.S. of carbon dioxide offsets • Quantification of emission reductions (usually in metric tons) achieved by new actions 37

  38. Offset Criteria • Real Reductions – Activity must be lower aggregate emissions from an agreed-upon baseline emissions level in the past • Permanence – Activity cannot be easily undone (efficiency upgrades, reforestation projects) • Quantifiability and Verifiability – Detailed monitoring and verification plan specific to that particular project that defines how, when and by whom the quantification and verification will be done • Additionality –Offset producer must prove that the emission reductions reflected in the offset would not otherwise have been realized under a “business as usual” scenario. In many cases, additionality is established by confirming that the emission reduction project would not get off the ground but for receipt of offset funding • Registration – to ensure they are not sold multiple times and double-counted 38

  39. Examples of Offset/Emission Reduction Projects • Traffic signal optimization • Energy efficiency • Reforestation • Truck Stop Electrification • Biodigesters 39

  40. Climate Change Litigation • National Environmental Policy Act (NEPA) • Requires Preparation of Environmental Impact Statement For Every “Major Federal Action” That “Significantly Affects The Quality of The Human Environment” • Permitting, Licensing, Proposals For Action, Funding of Projects 40

  41. Climate Change Litigation • NEPA • Impacts of Global Warming Must Be Addressed • Border Power Plant Working Group v. DOE, 260 F.Supp. 2nd 997 (S.D. Cal. 2003)(Transmission Line) • Mid States Coalition For Progress v. STB, 345 F.3d 520 (8th Cir. 2003) (Rail Line For Transportation of Coal) • Friends of The Earth v. Mosbacher, 488 F.Supp.2d 889 (N.D. Cal. March 20, 2007) (Financing of Overseas Project By OPIC And Export-Import Bank) • Bravos v. Bureau of Land Management (D.N.M. Filed Jan. 2009 (Oil And Gas Leases) • But: Analysis Can Be Cursory 41

  42. State “Mini-NEPA Laws” • California Environmental Quality Act (CEQA) • State of Cal. v. San Bernadino • State A.G. Sues County • Settlement: County to Develop GHG Emissions Inventory Re Land-Use Decisions And County Operations, Set Emissions Reduction Goals And Adopt Mitigation Measures 42

  43. State “Mini-NEPA Laws” • Massachusetts Environmental Policy Act (MEPA) • Exec. Office of Energy And Environmental Affairs -- GHG Policy (April 23, 2007) • Applies to Many Projects Subject to Review Under MEPA • Requires Quantification of Project-Related GHG Emissions • Requires Consideration of Mitigation Measures And Alternatives • Harvard University Expansion of Alston Campus • First Project In Nation to Legally Bind A Developer to Reducing GHGs Beyond Current Standards • Voluntary Commitment to Cap GHGs Below Existing Standards In Implementing 20-Year Master Plan 43

  44. State “Mini-NEPA Laws” • New York State Environmental Quality Review Act (SEQRA) • March 2009 Proposed Guidelines Issued By State DEC • Protocols For Analysis Vary • Direct Operational Impacts • Purchased Electricity • Induced Vehicle Trips • Construction Impacts 44

  45. Common Law Litigation • Public Nuisance: Unreasonable Interference With Public Safety or Health • Connecticut v. American Electric Power Co., 2005 U.S. Dist. Lexis 19964 (S.D.N.Y. Sept.. 22, 2005) (Appeal Pending) • Eight States Sue Five Biggest Power Companies • Allege GHG Emissions Constitute Public Nuisance By Contributing to Global Warming • District Court Dismisses Based On Political Question Doctrine • Appeal Argued In 2d Cir. In June 2006 45

  46. Common Law Litigation • California v. General Motors Corp., 2007 U.S. Dist. Lexis 68547 (N.D. Cal. Sept. 17, 2007) • Same Result • Native Village of Kivalina v. ExxonMobil Corp., Cv 08-1138 (N.D. Cal., Filed 2/26/08) • Alleges GHG’s From Oil, Electric Utility And Coal Companies Are Nuisance • Village Sits 10 Feet Above Sea Level And Is Threatened By Flooding • Seeks $400 Million In Damages As Cost of Relocating The Entire Village • Motions to Dismiss Pending 46

  47. The Far Reach of Climate Change • Securities Laws:  When and how to disclose climate risk? • Contracts, Property, Energy:  Get used to it • Insurance:  Unpredictability of climate events creating pricing challenges; potential new products • Stimulus Funds:  Opportunities 47

  48. Thank you. Merrill J. Baumann, Jr. mjb@dunn-carney.com 503-242-9620 Barry S. Neuman neuman@clm.com 202-623-5705