Hill Heat

Reporting yesterday on this week’s developments in the California clean cars saga, the Wall Street Journal’s Stephen Power revealed that “the EPA is expected to fire back this week by publishing data and research to support Mr. Johnson’s decision.” Today’s Philadelphia Inquirer confirmed that such a document should “be released by tomorrow” via Johnson’s response to grilling on the waiver decision during a Senate hearing on EPA’s budget. (Regular readers may recall that his December announcement of the waiver denial was notably brief, resulting in much speculation since as to whether Johnson had fully determined his legal rationale before he made his mind up.)

We’ve been anticipating EPA’s belated justification, which is expected to be placed in the Federal Register, for some time now—both in terms of Johnson’s public promises and as a legal strategy in fighting California’s lawsuit. In a move that is probably not coincidental, EPA filed a motion last week asking the 9th Circuit to dismiss the existing case. Warming Law is still working to obtain EPA’s motion, but we’ve written previously on both its likely rationale, and on the unprecedented legal argument that Johnson will likely make to claim his actions can be justified under the Clean Air Act.

If Johnson goes this route, the legal effect would be one of giving the Administrator’s judgment extremely strong deference under Section 209 of the Clean Air Act. He would be interpreting the law in a way that his staff told him is legally impossible even if they accepted the auto industry’s criteria for judging waiver requests, and doing so based on the arguments that he:

1) Is legally empowered to break with agency precedent regarding what constitutes “compelling and extraordinary” conditions—instead adopting the “exclusive and unique” argument that Tuesday’s document release shows was first advanced in March 2006 by Bill Wehrum, a political appointee with prior ties to the auto industry (Wehrum has since left the EPA, and was recently spotted testifying in favor of a pair of coal-fired plants that Kansas regulators shot down last year based on global warming concerns).

Former EPA Administrator William Riley, who served under President Bush’s father, highlighted the historic scope of Johnson’s actions when he revealed yesterday that he was the receipient of impassioned talking points that agency staff prepared for him to press with Johnson. In his conversations with Johnson, Reilly focused on the argument that legal text, congressional intent and longstanding precedent all point to extreme deference for California’s wishes, and noted that the administrator need not agree with the state in order to let it move forward (emphasis added):

The Democratic House leadership sent a letter today challenging Bush to sign the House oil-for-renewables tax package (H.R. 5351) passed by their chamber yesterday.

Promotion of the renewable energy industry is the goal of the Washington International Renewable Energy Conference, which your Administration hosts next week. The conference offers a remarkable world platform to support a fiscally responsible commitment to these industries and technologies and the jobs they will produce. We urge you to reconsider your previous opposition to fiscally sound incentives for American renewable energy, and lend your support to this historic legislation in time for this occasion.

At today’s press conference, President Bush parried a question about his threatened veto of bill (after admitting ignorance about the likely $4 gallon gas this spring).

He claimed the cost-neutral bill would “cost the consumers more money and we need more oil and gas being explored for, we need more drilling, we need less dependence on foreign oil.” With respect to renewable energy, he discussed cellulosic ethanol and other biofuels, nuclear energy, and carbon sequestration, but not solar, wind, or energy efficiency.

Former Massey Energy executive Stanley Suboleski, who was nominated by the president to be the Department of Energy assistant secretary for fossil energy, was scheduled for his nomination hearing before the Senate today. The Office of Fossil Energy funds advanced coal technology efforts and recently received fire for discontinuing the FutureGen coal-tech initiative.

E&E News reports that the White House withdrew his nomination last night, saying that Suboleski asked to be withdrawn “for personal reasons” Monday afternoon.

JW Randolph, Appalachian Voices Legislative Associate, made the following statement before his withdrawal was made public:

In 2000 in Martin County Kentucky, despite repeated warnings about the serious violations where the impoudment broke, Massey Energy was responsible for a slurry spill that was 30 times larger than the Exxon Valdez disaster. The EPA called it the “worst environmental disaster in the history of the Southeast.” Massey called it “an Act of God.”

Now, President Bush wants to promote a Massey Executive to “Assistant Secretary of Energy (fossil energy).” While we are extremely disappointed, we can’t act as though we are surprised. The promotion of Stanley Suboeski is consistent with the Bush Administration’s vigorous efforts to remove every shred of responsibility and decency from the process of extracting coal, ignoring the human cost at every turn.

By promoting mountaintop removal mining, the Bush Administration and Massey Energy have transferred the dangers inherent in coal-mining from the professional miners doing the work onto the surrounding civilian communnities who now have to deal daily with fly rock, poisoned water, and toxic coal waste. Putting Stan Suboleski at the top of the fossil energy food chain is yet another reckless example of the President rewarding his friends and contributors in the fossil fuel industry, and ignoring the true cost of coal to the people in the Appalachian region.

In a press conference yesterday, Senate Environment and Public Works chair Barbara Boxer (D-Calif.) revealed internal EPA documents from the agency’s deliberations whether to grant California’s Clean Air Act waiver request to regulate tailpipe greenhouse gas emissions. Administrator Stephen Johnson denied the waiver in December, the day the president signed the energy bill into law.

The documents include a presentation prepared by Chris Grundler, deputy director at the National Vehicle and Fuel Emissions Laboratory, for Margo Oge, the director of EPA’s Transportation and Air Quality, intended to be given to Johnson. The presentation states “it is obvious to me that there is no legal or technical justification for denying” the waiver, and that in the case of a waiver denial “I fear the credibility of the agency that we both love will be irreparably damaged.”

The documents also include an itinerary for the administrator showing that on May 1, 2007, he received an internal briefing on the California waiver before attending a White House meeting.

From the beginning of her tenure, Speaker Nancy Pelosi (D-Calif.) has attempted to pass legislation cutting billions in tax breaks and royalty payments to oil and gas companies to invest in renewable energy and energy efficiency. The legislation has died twice by a single vote in the Senate – in December as part of the energy bill (H.R. 6), and three weeks ago as part of the economic stimulus legislation (H.R. 5140).

House leadership announced plans to immediately reintroduce the legislation as a standalone bill, named the Renewable Energy and Energy Conservation Tax Act of 2008 (H.R. 5351).

Debate on the bill is now taking place, with a final vote scheduled for some time after 3 PM EST.

Update: HR 5351 passed by a roll call vote of 236-182. 17 Republicans joined the Democratic majority; 8 Democrats (Barrow, Boren, Cuellar, Gene Green, Lampson, Melancon, Ortiz, Rodriguez) voted against passage.

In the middle of September 2007, Rick Boucher (D-W.Va.), chair of the the the Energy and Air Quality Subcommittee of John Dingell’s Energy and Commerce Committee, announced he would be releasing a series of white papers “over the next six weeks” on issues related to the development of climate change legislation. The third such paper, Appropriate Roles for Different Levels of Government, has now been released.

• Oct. 3, 2007: Scope of a Cap-and-Trade Program
• Jan. 31, 2008: Competitiveness Concerns/Engaging Developing Countries

After reviewing state, local and regional initiatives to combat global warming emissions, in its discussion of the possible costs of local regulations in addition to a federal cap-and-trade system, the 25-page white paper bores in on the question of federal preemption. This issue was highlighted in December by EPA administrator Stephen Johnson’s denial of California’s waiver request under the Clean Air Act to regulate tailpipe greenhouse gas emissions. Johnson’s decision spurred a multi-state lawsuit, an investigation by House Oversight chairman Henry Waxman (D-Calif.), and contentious Senate hearings.

The paper follows statements made previously by committee chairman John Dingell (D-Mich.) supporting Johnson’s stated justification for denying the waiver:

One key factor that distinguishes climate change from other pollution problems our country has tackled is that local greenhouse gas emissions do not cause local environmental or health problems, except to the extent that the emissions contribute to global atmospheric concentrations. This characteristic of greenhouse gases stands in contrast to most pollution problems, where emissions adversely affect people locally where the emissions occur. The global nature of climate change takes away (or at least greatly minimizes) one of the primary reasons many national environmental programs have provisions preserving State authority to adopt and enforce environmental programs that are more stringent than Federal programs: States have a responsibility to protect their own citizens.

In its concluding remarks, the paper summarizes the internal committee battle:

As the debate over whether the Federal Government should preempt California’s greenhouse gas motor vehicle standards has shown, Committee Members balance these various factors in a way that can lead to different conclusions that will need to be worked out through the legislative process. Chairman Dingell has made it very clear that he believes that motor vehicle greenhouse gas standards should be set by the Federal Government, not by State governments: greenhouse gases are global (not local) pollutants, multiple programs would be an undue burden on interstate commerce and would waste societal and governmental resources without reducing national emissions, and the competing interests of different States should be resolved at the Federal level. Other Committee Members have reached the opposite conclusion given the severity of the climate change problem, the need to push technological development, and the benefits of having States act as laboratories.

Randall Luthi, the controversial chief of the Department of Interior’s Minerals Management Service, will be testifying at a Senate Appropriations subcommittee tomorrow morning. His decision to hold the Chukchi Sea drilling lease sale two weeks ago, the first offshore sale in over a decade, while the Fish & Wildlife Service continues to delay its ruling on the endangerment of polar bears, has garnered protests from government scientists, environmental groups and Congressional Democrats.

Sen. Feinstein, the chair of the subcommittee, released the following statement:

At the hearing, Chairman Feinstein will call for passage of legislation she has sponsored to close a loophole that has allowed oil and gas companies to pay no royalty payments for drilling on the Outer Continental Shelf for leases negotiated in 1998 and 1999. This measure to close the loophole was stripped from the FY2008 Interior Appropriations bill.

Feinstein has been pushing for this legislation at least since 2006, since the loophole in 1998 and 1999 leases issued under the Deep Water Royalty Relief Act of 1995 was discussed in Congressional hearings.

Alex Steffen at WorldChanging in January, with My Other Car is a Bright Green City (edited for publication in BusinessWeek), and Allison Arieff at the New York Times’s By Design blog on Monday, with Is Your House Making You Look Fat?, take involved and interesting looks at the environmental, energy, and health consequences of America’s love affair with sprawl. In Steffen’s words: “The best car-related innovation we have is not to improve the car, but eliminate the need to drive it everywhere we go.” Arieff mirrors his sentiment: “First, let’s talk about cars. Stop designing for them.“

Their excellent essays have spurred varied responses.

Ezra Klein at the American Prospect, yesterday: How We Live Now:

There’s often a tendency to assume that the status quo is the most “natural” way for things to be, and that rejiggering the relevant subsidies is somehow more artificial and presumptuous. But the current system was built atop a massive structure of subsidies and tax breaks. The mortgage tax deduction advantaged bigger homes; funding schools through inequitable property taxes encouraged families to move out of cities where the property taxes were low and into richer suburbs where the schools would be wealthy; putting billions into costly and little-used roads made far-flung developments appear cheap to those who only saw the finished product; underfunding public transportation heavily influenced development patterns, and so on and so forth.

Matt Yglesias picks up at the Atlantic: Dense:

What’s particularly astounding about this stuff, in my view, is that fixing the problem would hardly require some totalitarian density police to come around and force us to all live closer together. Instead, the main step we would need to take would simply be to allow people to build more densely if they want to. As a secondary measure, scrapping or limiting the tax code’s weird and destructive subsidy of big houses would do some good.

Other blogs that picked the thread up include Duncan Black’s Eschaton, 2020 Hindsight, Urban Grounds, Dove’s Eye View, Trinifar’s Some Maintenance Required, The Vigorous North, and The Velorution.

Citing the American Enterprise Institute, the Economist, and the editorial page of the Wall Street Journal, a group of environmental justice organizations including the California Environmental Rights Alliance (CERA) have come out in opposition to carbon trading schemes, in particular the European Union cap-and-trade system (the European Union Greenhouse Gas Emission Trading Scheme or EU ETS) and the Kyoto Protocol’s Clean Development Mechanism for investing in emissions reductions in developing countries. Major signatories include the Rainforest Action Network and the Los Angeles chapter of Physicians for Social Responsibility.

The declaration cites the windfall profits generated by the initial phase of EU ETS and argues that carbon trading “stands in the way of the transition to clean renewable energy technologies and energy efficiency strategies.” CDM is criticized for encouraging “carbon dumps” and financing “private industrial tree plantations and large hydro-electric facilities that appropriate land and water resources”.

The California Environmental Justice Movement will oppose efforts by our state government to create a carbon trading and offset program, because such a program will not reduce greenhouse gas emissions at the pace called for by the international scientific community, it will not result in a shift to clean sustainable energy sources, it will support and enrich the state’s worst polluters, it will fail to address the existing and future inequitable burden of pollution, it will deprive communities of the ability to protect and enhance their communities, and because if our state joins regional or international trading schemes it will further create incentives for carbon offset programs that harm communities in California, the region, the country, and developing nations around the world.

Signatories are below the jump.

ExxonMobil, the world’s largest company by both revenue and market capitalization, has a place on the world stage comparable to a major nation-state (only 23 nations in 2006 had a GDP greater than Exxon’s revenues of $347 billion, which rose 7% in 2007). Only 31 nations exceeded its annual greenhouse gas emissions in 2004 [UN MDG indicators, ExxonMobil CDP response]. If end-use emissions of ExxonMobil’s products are included, its carbon footprint of 1 billion metric tons of CO2 equivalent is exceeded only by five nations.

David Sassoon at Solve Climate asked Mario Lopez-Alcala, a senior analyst with Innovest Strategic Value Advisors, to estimate how the Kyoto Protocol impacts the company. Lopez-Alcala made some counter-intuitive discoveries.

Turns out that under Kyoto, Exxon is responsible for abating only 9 million out of the 138 million tons of its carbon footprint—about 6.9% of its absolute exposure. Mario arrived at this figure by compiling a weighted average of the emissions targets affecting all Exxon operations around the world. His estimate for what it costs Exxon to abate those emissions, assuming it had to purchase carbon credits? About $1 billion a year. (He calculated net present value for the 2008-2012 Kyoto compliance period and applied a standard oil industry discount rate to arrive at the figure, based on an expected price of $28 per ton of carbon. He also had to add in to the calculation, abatement costs for reducing emissions to a baseline year.)

$1 billion annually is not a terribly large liability for a $400 billion company.

Furthermore:

There’s also another aspect to Exxon’s carbon footprint: the 129 million tons of emissions that it is not required to reduce. It is an enormous carbon asset in a world in which carbon has a price, and it presents a tangible opportunity for enhancing profitability – even beyond $40.6 billion. By reducing those emissions – most simply through reduced flaring, co-generation, heat recuperation, and carbon capture and sequestration – Exxon could reap profits from selling carbon credits it generates. Mario reports that BP is the leader in the sector in taking advantage of these opportunities, which are tangible and positive already.

Sassoon concludes that from an investor (as well as moral) standpoint, ExxonMobil’s storied resistance to the science of climate change is a poor corporate position.