Sustainability & Climate Change Reporter

Australia Adopts Carbon Tax, Why Can’t U.S.?

Posted in Cap & Trade

The Australia Senate’s passage November 8 of the Clean Energy Bill legislative package containing a carbon tax  marked a significant step by a major industrial nation to regulate greenhouse gas emissions. Yet, it received scant attention in the U.S. even though this was a major step the likes of which the U.S. has studiously avoided so far. Australia’s path to regulating carbon has been every bit as controversial as in the U.S., indeed it cost two prime ministers their jobs and could imperil the current prime minister’s as well. Nevertheless, after much debate and passion, Australia stands ready to tax carbon while the U.S. still can’t or won’t.

Australia’s Program

The law has two major components — a carbon tax starting July 2012 of AUS$23 per ton, followed by a carbon trading program in 2015. Although the country’s 500 largest polluters will be covered, the package of laws also provides for compensation to soften the blow. For example, for the first three years almost all carbon permits will be free to high-emissions exporters, such as aluminum and steel, while subsidies will be provided to the coal and steel industries to reduce their emissions. Furthermore, businesses and consumers will receive compensation if electricity prices rise and workers will get a small tax cut. Renewable energy also gets help in the form of a Clean Energy Finance Corporation to promote private investment along with a federal-level renewable energy agency that will provide R&D grants.

Why Not Here?

Australia’s carbon tax debate was every bit as heated as that in the U.S., if not more so. In the 2010 federal election campaign, candidate Julia Gillard said there would be no carbon tax under any government she led. But the elections resulted in an even split with Liberals, leaving Gillard needing to partner with the Green Party to form  a coalition government. In February 2011, she reversed course and proposed the carbon program. The subsequent debate not only featured the standard job-killing-what-about-the-rest-of-the-world rhetoric, for example by the Australia Trade and Industry Alliance but also characterizations of Gillard as JuLIAR and death threats against members of parliament and climate scientists.

Here in the U.S., the legislative efforts to regulate carbon emissions reached their height with the Waxman-Markley bill passing the U.S. House in 2009, but failing to clear the Senate due to the unique filibuster-cloture rules that virtually require 60 votes to move any meaningful legislation. Having spent a significant amount of political capital on health care reform and facing the prospect of a double-dip recession, President Obama has been unlikely to press for any climate legislation that includes cap-and-trade. Furthermore, with a presidential election now underway and the Republicans uniformly disavowing climate change as real, let alone something they would tackle, a move like Australia’s won’t be matched in the U.S. anytime soon.

Challenges Ahead

Even so, Australia’s carbon tax is not a sure thing. For one, Prime Minister Gillard’s government has a slim one-vote majority that could topple anytime before 2013 elections. The opposition party leader, Tony Abbott, has vowed, “I am giving you the most definite commitment any politician can give that this tax will go. This is a pledge in blood this tax will go.” Polls taken the same week as the carbon tax passage showed Gillard’s party trailing 47 percent to 53 percent.

In addition, there are concerns that the program won’t have any meaningful effect due to the rebates, subsidies and compensation to offset the costs of carbon permits. Even one of the supporters likened it to a government trying to tax cigarettes by giving most of the tax dollars back to smokers, compensating the handful of tobacco companies who were required to pay the tax and not requiring many other tobacco companies to pay anything. However, because this represents a significant change from the status quo, some form of transition is necessary.

Finally, there is some question about the AUS$23 per ton price for carbon, which is significantly higher than the European Union’s US$12.60 per ton, now at a 33-month low. If Australia’s price is nearly double the EU’s, that could put Australia at a competitive disadvantage, but talks are underway to link Australia’s carbon market with the EU and New Zealand and conceivably by 2015 the price of carbon may increase to the levels set in the Australian measures.

Meanwhile, President Obama visits Australia this week and the opposition Liberal Party and some commentators think Prime Minister Gillard should extract a promise from the President that the U.S. will adopt a carbon tax or cap-and-trade by 2016. Otherwise, they say, the cost of Australia’s carbon tax will go up. The two leaders’ agenda won’t be set by the opposition or commentators, but if nothing else Australia’s carbon tax could position it to take a higher profile in the upcoming UN Convention on Climate Change talks in Durban, South Africa, and eventually lead to a global agreement.

 

California Passes Cap and Trade. Now What?

Posted in Cap & Trade

When the eighth largest economy in the world, and one that happens to occupy a large portion of the western U.S. coastline, adopts a groundbreaking set of rules, you would think that would get a lot of attention. Yet, after the California Air Resources Board’s landmark decision on October 20 to adopt the first of its kind in the U.S. economy-wide cap and trade rules for the state, the occasion seemed to prompt little notice.

It wasn’t until nearly five days after CARB’s action that a San Francisco Chronicle editorial cautiously praised the move: "There is nothing simple about the cap-and-trade approach. There will be a need to tinker and adjust a complex answer to the world’s worst environmental problem. But at a time when other governments are hiding from reality, California has shown a willingness to lead." Anne Carlson in the Legal Planet: Environmental Law and Policy blog was more effusive, calling CARB’s leadership on the issue "extraordinary," and concluding: "It’s common place to attack government as inefficient, bloated and even corrupt and California itself has borne more than its share of attacks as a place where government has gone awry.  CARB defies those characterizations.  Corny as it sounds, I’m proud today to be a Californian." But the Climate Progress blog only included the adoption in its daily news summary, while devoting a lengthy column to an analysis of media coverage about Solyndra and several posts about the Keystone XL tar sands pipeline.

To be sure CARB’s action is not a surprise; it has been in the works ever since California passed AB 32 in 2006, which mandates a reduction in greenhouse gas emissions to 1990 levels by 2020. Even though cap and trade is only one piece of the AB 32 puzzle, it has been the most controversial. The relative quiet in the wake of cap and trade’s final adoption perhaps is the understandable result of exhaustion after years of arguments (including an expensive initiative campaign last year and a last-minute legal challenge this year) and the sheer complexity of the program. But now that California has adopted cap and trade, what happens next?
 

Cap & Trade Outline

Beginning January 1, 2012, 350 California businesses representing approximately 600 facilities, will be covered by the program. Electric utilities and large industrial facilities will come into the program the following year and distributors of transportation, natural gas and other fuels will start in 2015. The cap for 2013 is set at two percent below the forecast for 2012 emissions and will decline two percent in 2014 and three percent each year after until 2020.

Allowances, representing about 90 percent of average emissions, will be allocated free to large industrial facilities initially, but later they will have to buy those allowances at auction. The first auctions will occur in August and November 2012, with the first compliance obligation beginning January 1, 2013.

The trade part of the program will involve banking of allowances to guard against shortages and price swings, with a four percent reserve to contain costs and three-year compliance periods to minimize annual swings in production outputs.

Facilities will be allowed to offset up to eight percent of their compliance obligation, but can only buy offsets for emission-reductions projects in the U.S.  The offsets initially will be limited to projects in forestry, urban forestry, dairy digesters and destruction of ozone-depleting substances. There must be independent verification of offsets.

Beyond California

Frequently as goes California, so goes (eventually) the rest of the U.S. Whether or not that is true for cap and trade remains to be seen. Efforts to adopt a national cap and trade program failed in Congress and the debate there has shifted to whether climate change is even an issue of concern.

The most likely venue for expansion of cap and trade is in the Western Climate Initiative (WCI). So far, however, none of the other U.S. members, including Washington and Oregon, have signed on yet and some have expressed serious reservations about ever participating.

Other WCI members, such as the Canadian provinces of British Columbia, Ontario and Quebec, appear to be moving forward with adopting cap and trade. In Ontario’s recent election, the Liberal party retained its control over the provincial government, although one vote short of a majority in the legislature. While it’s likely the province will continue towards a January 2013 adoption of cap and trade, that will be a year later than California and, in the meantime, the precarious nature of the minority government could change those plans.

Quebec, meanwhile, is about to launch cap and trade, first with a one year pilot program in 2012, that will not set caps but will include allowance auctions, followed by a three-year full cap and trade compliance program.  British Columbia went through an election last spring and, after some initial uncertainty, appears to be continuing its efforts to start a cap and trade program although no regulations have been issued yet.

For now, it looks like California will be the laboratory for cap and trade.  The path forward is bound to be bumpy as the state once again breaks new ground.  

 

Opinion Says U.S. and Canada Airlines Are Subject to EU Emissions Program

Posted in Cap & Trade

U.S. and Canadian airlines can be required to surrender greenhouse gas emissions allowances for their flights into and out of Europe according to an October 6 opinion by the Advocate General for the European Court of Justice. The opinion concluded that international laws and treaties do not bar application of the European Union’s emissions trading scheme (EU ETS) to international air carriers. If foreign airlines are subject to  the EU ETS, then starting January 1, 2012, they will have to buy and surrender emissions allowances for all their European flights, even those that originate or land outside of the EU.

Background

The EU ETS is a cap-and-trade program to limit and reduce greenhouse gas emissions through issuance, trading and surrender of allowances. The EU ETS initially did not include aviation emissions, but in Directive 2008/101 (Directive) the EU added airlines starting the first of next year.

The Directive applies to any air carrier flying into and out of an EU member state, and not just to European-based air carriers. The Air Transport Association of America (ATAA), together with American Airlines, Continental Airlines and United Airlines brought an action in the High Court of Justice of England and Wales against the United Kingdom’s regulations implementing the Directive. The U.K. court referred the case to the European Court of Justice, which was organized by the EU members to interpret and apply the EU treaties in a uniform manner. Numerous parties intervened in the case.

Challengers’ Claims

The primary issue raised by the ATAA and airlines is whether customary international law, and various international agreements, such as the Convention on International Aviation (Chicago Convention), the Open Skies Agreement and Kyoto Protocol, invalidate application of the Directive to flights outside of the EU. The ATAA and airlines contend that (a) the EU exceeds its powers by failing to restrict the EU ETS only to flights within Europe, (b) the International Civil Aviation Organisation, and not the EU unilaterally, should negotiate and adopt an emissions trading scheme, and (c) the EU ETS amounts to a tax prohibited by international agreements.

Advocate General Opinion

In the October 6 opinion, the Advocate General rejects those arguments:

  • EU is not a party to, and therefore, not bound by the various international agreements. The Advocate General also concludes that the EU is not the functional successor of the member states when it assumed some powers in the air transport sector that were exercised by members states before joining the EU, although it may be bound by principles of good faith. 
  • There is no conflict between the Directive and the Chicago Convention, Open Skies Agreement or the Kyoto Protocol. 
  • The calculation of emissions allowances to be surrendered based on the total flight distance, including over the high seas outside of EU territory, does not improperly confer extraterritorial effect on the Directive;
  • The Open  Skies Agreement and Chicago Convention prohibitions on excise duties on fuel does not apply to the EU ETS because the purpose of the treaty provision is to protect airlines from having aircraft and stores treated as "imported" and subject to duty when they land versus the EU ETS objective of protecting the environment and climate by assessing allowances based on emissions, not merely fuel consumption.

Next Steps

The Advocate General’s opinion is not the final word from the European Court. His opinion, while accorded weight by the judges, can be disregarded or modified in their final decision. The Guardian quotes the ATAA as downplaying the opinion, concluding "In complex cases such as this one, it would not be unusual for the full court’s final opinion to vary from the preliminary opinion." However the full court decides, its decision must be unanimous and opinions are issued anonymously. If the ultimate ruling is adverse to the airlines, there may be few remaining options. Ultimately, should the ruling stand, the airlines’ costs for emissions allowances are likely to be passed on to passengers. 

California Moves (Slightly) Closer to Cap-and-Trade

Posted in Cap & Trade

California’s cap-and-trade program, targeted for startup on January 1, 2012, inched forward when the state Supreme Court on September 28th rejected the Association of Irritated Residents’ petition for review and application for stay of the Scoping Plan issued by California Air Resources Board (CARB). The Scoping Plan is CARB’s outline for implementing AB 32, the measure that requires reduction of California greenhouse gas emissions to 1990 levels by 2020 and ultimately 80 percent of 1990 by 2050. The centerpiece of the Scoping Plan is cap-and-trade, but CARB still needs to adopt formal rules to implement it. The state Supreme Court’s ruling allows CARB to continue its rule-making process and adopt final rules before an October 28, 2011, deadline. However, there are likely to be more legal hurdles that must be cleared before cap-and-trade becomes a reality in California.

The case is complicated procedurally and UCLA’s Anne Carlson has a good summary on the Legal Planet blog. Still pending is an appeal of the May 20, 2011, trial court ruling that CARB failed to consider alternatives to cap-and-trade in its Scoping Plan. Subsequently, CARB adopted a supplement to the Scoping Plan, including an more detailed analysis of the feasibility of a carbon tax as an alternative (CARB’s conclusion: it isn’t due to requirements for approval of tax and fee increases by a supermajority in the legislature or voter initiative). Once CARB adopts the final cap-and-trade rules there are sure to be more lawsuits, not just by environmental justice groups but also by industries affected by the program. 

Finally, even though January 1, 2012, may be the start date for implementing cap-and-trade in order to comply with AB 32, CARB already has postponed full enforcement to 2013, although it will hold two auctions of allowances next year.

Taking the Great Leaf Forward into the EV World

Posted in Electric Cars

Electric cars are back according to Jerry Hirsch in the L.A. Times‘ August 28 Consumer Guide to Electric Vehicles. Deliveries of Nissan’s Leaf, in particularly, have ramped up considerably after a slow start due to the Japan earthquake and a technology glitch. With EVs becoming more readily available, the Times’ Guide discusses several factors to consider when shopping for an EV or plug-in hybrid — cost, philosophy, economics, usage, charging and incentives. Having just taken delivery of a new Leaf, our experience is both similar and different to the Times’ and, for us, favors the EV side of the equation.

Nissan Leaf

Purchase price

The Times says an EV costs more, and that’s true to a point.  The sticker price for an EV certainly is higher than a gasoline or hybrid car, but federal and state incentives can offset that partially: 

  • EVs qualify for up to a $7500 federal tax credit. Edmunds.com has a good summary of the in’s and out’s of the federal credit.  Some important caveats to note – one, the credit only offsets taxes owed for the year of purchase and if you owe less than $7500 in tax, the unused credit will not show up as a refund; second, the credit applies only to the original buyer; and third, the credit will not be around forever.   
  • Most states also have incentives for EVs.  For example, here in Washington an EV purchase is exempted from the state sales tax, which at .095 percent is a significant savings on a $30,000+ EV.  California, by contrast, requires payment of sales tax, but offers a $2,500 rebate for battery electrics. The U.S. Energy Department has a handy, interactive chart to find out about the various state incentives.

Usage

The Times article says you’d be better off with a hybrid or high-efficiency gas vehicle if you have a mega commute (and in L.A. is there anything other than a mega commute?). L.A. excepted, 90 percent of U.S. cars are driven less than 30 miles each day, and more than half of all U.S. vehicle trips are under six miles. For example, our commute (Bellevue to Seattle and back) is 26 miles round trip each day.  So, for us, and for most people, an EV makes sense.

There is the inevitable argument made about "range anxiety," but frankly that’s more of an excuse  than a realistic factor unless you live in L.A. or somewhere with a mega commute. Not only do most of us not have to drive LA-scale distances on a regular basis, but according to a 2008 study, nearly 35 percent of Americans have three or more cars, and 31 percent have two cars. That means many people already have non-EV backup available for longer trips. Even so, while we’re not planning on making a habit of long trips in our Leaf, we are going to be testing its limits with some carefully planned outings and the handy trickle charge cord that came with the car. If nothing else that should give us many fine adventures for blogging!

Charging

The Times notes one important difference between an EV and a gasoline-powered car is the estimated $2,000 cost of a home charging unit. That’s a valid consideration because you can’t own an EV without a home charger, particularly until public charging stations are more readily available. With federal stimulus funding, the EV Project is working on the public infrastructure, deploying approximately 14,000 charging stations in Washington, Oregon, California, Arizona, Texas and Tennessee and, for now at least, installing home units to qualifying residences for free. The latter, however, won’t be available for much longer, and so the charging unit cost is not to be overlooked.

Electricity rates are another item noted by the Times.  EVs come out ahead in the article comparison of the annual fuel costs — $571 for the Leaf (at 11.2 cents/kWh) versus $991 for a Prius (at $3.67/gallon for gas) and $1,906 for a Fusion gas-powered car.  The EV advantage is even better in the Seattle area where electricity costs through Puget Sound Energy are slightly lower than the Times’ figure (8.3518 cents for the first 600 kWh and 10.15 cents above 600 kWh), while the average price for regular gas in Seattle today is $3.797. 

Taking the Leap

The Times points out that it’s always risky adopting a new technology, but EVs really are not that new. A hundred years ago, in the early days of the automobile, electric cars were popular. For example, according to the website, Conceptcarz.com, the original EVs, such as the 1903 Baker Electric Stanhope,1903 Baker Stanhope @ Frick Car & Carriage Museum in Pittsburgh were popular with "fashionable women and urban professionals, who used the cars to visit acquaintances, go shopping or to work, and other short trips." The website notes that some city business districts had charging stations installed to allow drivers to ‘refuel’ while they completed errands. That’s not much different from today, although today’s EVs represent a quantum leap in technology and performance over the electrified buggies of 1903 (just see how the Leaf responds when you step on the accelerator)!

The Times suggests that a good way to go is to lease an EV and in three years, when the lease is up, you can either see what the latest EVs are like or "maybe you will be ready to check out the first of the hydrogen fuel-cell autos."  Technology, particularly with battery storage and range is bound to improve.  But, on the hydrogen fuel cell point, see Dan Neal’s February 2009 Times article that summarized the hydrogen future: "Hydrogen fuel-cell technology won’t work in cars. It’s a tragic cul-de-sac in the search for sustainable mobility, being used to game the California Air Resources Board’s rules requiring carmakers to build zero-emission vehicles. Any way you look at it, hydrogen is a lousy way to move cars." 

Dan Neal and Jerry Hirsch can wrestle it out on the pages of the Times, meanwhile we’ll be motoring along in our Leaf happy, in the words of  Firesign Theatre, that the future is now and it’s electric!

  

9th Circuit Fast Tracks Nevada Wind Farm Construction

Posted in Wind Power

Nevada’s first utility-scale wind farm, the Spring Valley Wind Energy Facility, already on a fast track approval process through the federal Bureau of Land Management (BLM), apparently also has been on a fast track through the courts as well. The U.S. Ninth Circuit Court of Appeals on July 15 affirmed a March 28 decision by the U.S. District Court for Nevada that refused to block the 66-turbine project to be located about 30 miles east of Ely, Nevada.

The plaintiffs, Western Watersheds Project and the Center for Biological Diversity, contended that the BLM’s fast track process failed to adequately assess impacts to the greater sage-grouse and bat populations. 

Sage Grouse

According to the plaintiffs, the project’s significant effects on wildlife required that BLM do a full Environmental Impact Statement (EIS), rather than a more limited Environmental Assessment (EA).   The district court ruled, however, that there were no sage-grouse mating grounds (called "leks") in the project area, existing highways separated leks from the project boundaries and, in any event, the BLM had implemented mitigation measures that would reduce impacts on sage-grouse. Accordingly, the court said the plaintiffs had not raised substantial questions that the project would cause significant deterioration to the sage-grouse population and habitat and, therefore a more detailed EIS was not required.

Bats

The plaintiffs also argued that an EIS was necessary due to the presence of the Rose Guano Cave nearby (a seasonal roost to more than a million Brazilian free-tailed bats during the August-September migration season) and the likelihood that bats would fly near the project site while foraging or migrating.  The court disagreed and said that BLM had provided "persuasive scientific data" that the impact on bats, particularly with mitigation measures imposed on the project, will not be significant and, therefore, BLM was not required to do an EIS.

Ninth Circuit

On appeal, the Ninth Circuit panel issued a memorandum (unpublished) decision (PDF) agreeing with the district court, although Judge Susan Graber (a former Oregon Supreme Court justice and Clinton appointee) wrote a concurring opinion.  Judge Graber agreed that the project’s construction was unlikely to cause irreparable harm, but she wrote that EA was not legally adequate in its consideration of the cumulative impacts.  Judge Graber pointed out that the BLM estimated future projects would add another 995 wind turbines to the region, 225 of which would be in Spring Valley, but the EA only stated this "would result in further mortality" to bats, while future projects would contribute to greater habitat fragmentation for sage-grouse.  Judge Graber said: "BLM’s statements regarding ‘further mortality,’ a ‘somewhat larger percent increase in mortality,’ and ‘greater habitat fragmentation’ are precisely the type of ‘general statements about possible effects and some risk’ that we have rejected as legally insufficient in the absence of an explanation as to why more definitive information was unavailable."

Going Forward

The plaintiffs have limited court options left to block the project.  They will have until the end of July to petition for rehearing by the panel and/or by the court en banc, both of which are uphill battles.  Meanwhile, grading work has begun on the site and, if no delays are encountered, the project is supposed to start operating in the summer of 2012.

 

 

U.S. Supreme Court Tosses Federal Nuisance Claims in Climate Change Lawsuits

Posted in Climate Change

The U.S. Supreme Court threaded the needle in its 8-0 decision in AEP v. Connecticut.  The Court unanimously ruled that the Environmental Protection Agency’s greenhouse gas rulemaking under authority of the Clean Air Act has displaced federal common law nuisance claims by states and private parties, but the Court also let stand the lower court’s decision that at least some of the plaintiffs would have standing to bring the case, and that the viability of state common law claims would have to be determined by the lower courts first. 

The decision written by Justice Ruth Bader Ginsberg, together with a one-paragraph concurrence by Justices Alito and Thomas, recognizes that "Congress designated an expert agency, here, EPA, as best suited to serve as primary regulator of greenhouse gas emissions.  The expert agency is surely better equipped to do the job than individual district court judges issuing ad hoc, case-by-case injunctions.  Federal judges lack the scientific, economic, and technical resources an agency can utilize in coping with issues of this order."  

The Court did not rule that the states and private parties lacked standing to bring their claims or that the political question doctrine precluded those claims.  Indeed, that portion of the Second Circuit decision stands because the justices split evenly, with Justice Sotomayor recused.  Dan Farber at the Berkley/UCLA Legal Planet blog notes that the Court’s punting of the jurisdictional question and then decision on the merits was unusual and that the Court should simply have dismissed certiorari as improvidently granted rather than rule on the merits. 

Issues Unanswered

The Court’s ruling leaves some intriguing issues for further debate.  First, the majority did not say how far EPA must go in regulating greenhouse gas emissions.  It simply held that the Clean Air Act gives EPA the authority to consider GHG regulations,and the Court’s earlier ruling in Massachusetts v. EPA said the agency should decide one way or another.  By issuing rules, such as the cause and contribute/endangerment finding, medium- and heavy-duty light vehicle emissions and fossil-fuel power plant emissions, the Court said that EPA actions "displace any federal common law right to seek abatement of carbon-dioxide emissions from fossil fuel power plants." 

According to the Court, if EPA does not set emissions limits for a particular pollutant or source, the remedy for states and private parties is to petition the agency for rulemaking and have a federal court review that decision under the statute, not common law nuisance.  In the Court’s words, "The [Clean Air] Act itself thus provides a means to seek limits on emissions of carbon dioxide from domestic power plants — the same relief the plaintiffs seek by invoking federal common law.  We see no room for a parallel track."  But that leaves unanswered what would happen if a different administration comes in and pulls EPA out of the regulation of greenhouse gases entirely?  The Green Blawg concludes that this might strengthen state-level efforts to regulate greenhouse gases, for example through the RGGI and Western Climate Initiative programs.

State Common Law Claims

A second question that the AEP decision raises is whether state common law nuisance claims are preempted by the Clean Air Act.  The Second Circuit decision did not reach that issue because it held that federal common law governed.  The Court’s ruling sends the state claims back to the lower courts to decide.  Michael Gerrard in the Columbia Law School Climate Blog suggests that some plaintiff group probably will test that on remand and they’ll have to survive what’s likely to be a vigorous preemption battle in the lower courts. 

Massachusetts Lives

A third issue AEP raises is whether there is a majority on the Court that still supports Massachusetts.  The Court’s decision in AEP said that the viability of Massachusetts was not in question because it had not been raised by any of the parties.  The concurrence by Justices Alito and Thomas said they agreed with the judgment and the displacement analysis on the assumption for the sake of argument that the majority decision in Massachusetts was correct.  When the Court decided that case in 2007, Justice Stevens wrote the majority opinion and Justice Souter participated in the majority.  Justices Roberts, Scalia, Thomas and Alito dissented in Massachusetts.  Stephens and and Souter from the 2007 majority retired and have been replaced by Justices Sotomayor and Kagan.  Although it would appear still that there are five justices who would uphold Massachusetts, the decision in AEP indicates that even with Massachusetts the EPA might have considerable room to act or not act.

Congressional Action

Fourth, the AEP decision comes amid a high visibility effort in Congress to eliminate EPA’s ability to regulate greenhouse gas emissions.  Republicans and some coal-state Democrats have been making various forays to try to block the EPA – from outright bans on its authority to issue climate change regulations to restricting the agency’s budget.   While none of those have been successful yet, a report out today indicates that even without direct attacks on the agency, proposals to implement spending caps could hamper climate change regulation for a decade or more.   If EPA can’t occupy the greenhouse gas regulation field due to Congressional restraints, would that revive the common law nuisance claims?  Michael Gerrard’s blog post indicates that could be the case, but it’s unclear just what action by Congress might free up those claims.  Would it be through general spending caps, the effect of which might make it impossible to institute cap-and-trade or a carbon tax, along with a host of other non-climate-related measures; or would it take actual prohibitions preventing the EPA from regulation?

Effect on Kivalina

Finally, it’s unclear what effect the decision will have on the Kivalina case pending in the Ninth Circuit.  A lower court dismissed the native village’s public nuisance claims on the grounds of standing and jurisdiction, but the limited ruling in AEP sidestepping those issues means the Ninth Circuit does not have any guidance.  Could the Ninth Circuit do as the Supreme Court did and decide the substantive legal issue using AEP as justification, or would it issue a decision on the standing and jurisdictional grounds alone that could set up another Supreme Court case?

 

 

Public Trust Climate Change Lawsuit Strikes Out in Montana

Posted in Climate Change

The U.S. Supreme Court is expected to rule any day now on the climate change public nuisance case  in AEP v. Connecticut, in the meantime the State Supreme Court of Montana has dealt a blow to a separate lawsuit that sought to order the state to regulate greenhouse gas emissions under the public trust doctrine.  The Montana Supreme Court in a three-page order issued June 15 denied a petition by Montana children asking the Court to exercise its original jurisdiction.  Although similar cases are pending in eight other jurisdictions, the Montana case was the only one seeking to sidestep the trial court level entirely and have a state’s highest appellate court rule.  The Montana Petitioners’ case was a long-shot to begin with and the justices let very little time pass before denying the petition.  Even so, the narrow, procedural grounds for the Montana ruling should not adversely affect the remaining public trust cases, nor should the U.S. Supreme Court’s eventual ruling in AEP.

Atmospheric Trust Litigation 

The public trust cases, organized by a non-profit called Our Children’s Trust, were filed in May in state courts in Alaska, Arizona, California, Colorado, Minnesota, Montana, New Mexico, Oregon and Washington and in a federal court in northern California.  Each case is brought by or on behalf of children living in those jurisdictions.  The complaints allege that the respective states are trustees of the atmosphere for the benefit of their present and future citizens and that the states have an affirmative duty to establish and enforce limits on GHG emissions to mitigate human-caused climate change.  Similar claims are being made in regulatory petitions in 39 other states. 

The public trust doctrine primarily has been applied to cases involving tidal, shore and navigable waters, but it also has been used as a rationale for assessing natural resource damages in pollution cases.  Legal scholars with various philosophical bents debate the doctrine’s historical and legal underpinnings, and efforts to apply the doctrine to the atmosphere has highlighted those differences even more so. 

Montana Decision

The Montana case was unique from a procedural standpoint in its use of a petition for original jurisdiction asking the state supreme court to take the case without  a trial.  The Montana Petitioners asserted that the issues involved purely legal matters with no factual issues to be decided by a trial court and that there is an urgent need to establish GHG regulations that could not await the two to three year process of trial and appeal.  The State countered that there indeed are factual issues and that there is no emergency because the other eight similar cases filed around the country did not seek emergency relief through the appellate courts.

The Montana Supreme Court agreed with the State.  The Court said the factual issues include whether the legislature has prevented the state from regulating GHGs, the role of Montana in the global problem of climate change and the effect on Montana’s climate.  The Court said it is "ill-equipped to resolve the factual assertions presented by Petitioners," and that the  Petitioners had not established urgency or emergency factors that would preclude litigation in a trial court followed by the normal appeal process.  "Petitioners have failed to establish how emergent factors exist in Montana that require this Court’s immediate attention in light of the lack of original litigation in the other forty-nine states."

The justices in Montana did not address the public trust doctrine but, in dueling op-ed columns before the Court’s ruling, one commentator called the claim "implausible and audacious" and argued that use of the doctrine to order the legislature to adopt particular legislation would be unprecedented.  Another commentator countered that use of the public trust doctrine applied to GHG emissions has a sound basis in state law and is necessary to protect the health and lives of children.

Affect on Remaining Cases

These same arguments are likely to play out at the trial court level in the remaining eight cases, as well in the state regulatory proceedings.  Since the Montana Court did not have to rule on the public trust issue, its decision to await the outcome of a trial should not have any affect on the cases pending before trial courts or on the eventual appeals.  

Whatever happens with the public trust cases, the U.S. Supreme Court’s ruling in AEP, which is expected to place some limitations on the states’ right to pursue public nuisance claims against GHG emitters, also should have little affect on the public trust cases.  

The states in AEP are not relying on the public trust doctrine and it was not an issue in the briefing.  Instead, the states in AEP have asserted that they can pursue public nuisance claims under the doctrine of parens patriae, which holds that a state has standing to sue for  injuries to its quasi-sovereign interests, such as the health and welfare of a substantial segment of its population.  Thus, where AEP is a basic standing case to decide whether the states even have the right to pursue public nuisance claims, the public trust cases address whether, in the first instance, the states are trustees of the atmosphere and, if so, whether they should be compelled to  regulate GHG emissions to protect the trust asset.   Those questions eventually could reach the U.S. Supreme Court, but that is likely to be another day no matter how AEP turns out.

 

Canada’s Election Cools Climate Policies

Posted in Climate Change

Canada’s federal election on May 2 giving Prime Minister Stephen Harper’s Conservative Party a majority in Parliament means that it is unlikely Canada’s climate change policies will change much, if at all, from its previous wait-and-see-what-the-U.S.-does approach.   This would leave climate policy up to individual provinces, four of which have said they would join with California in a cap-and-trade program.  Those efforts, however, may have to await the outcome of procedural and appellate challenges to a March 2011 court decision that suspended implementation of California’s AB 32.

Federal election

Monday’s election resulted in Canada’s Conservative Party achieving a solid majority for the first time in Harper’s leadership.  The post-election commentary assesses this as a stay-the-course outcome for Canada’s climate change policy.  The Globe and Mail in an article headlined "Green energy sector not cheering Tory majority," said after years of Prime Minister Harper providing "lukewarm support for green energy" when he had a minority government, industry executives don’t expect the him to "change his stripes" now that he has a majority. 

 George Hoberg, a  professor at the University of British Columbia, in the GreenPolicyProf blog called this "very bad news" for the climate movement:

Climate, and the environment more broadly, was not a significant issue in the election campaign. Canada’s dysfunctional electoral system handed a party that received less than 40% of the vote on the right side of the political spectrum a commanding majority government that will be in power for 4 years. Stephen Harper’s Conservative Party of Canada had the least ambitious climate platform; the parties representing the other 60% of voters had more aggressive policies in their platforms.

 Time magazine’s Bryan Walsh, in his Ecocentric blog, echoes that assessment:

Canada will continue its antagonism on the global climate stage, where it has long since abandoned any possibility of meeting its Kyoto carbon reduction targets, not that it was going to happen anyway. (Harper, back in a 2002 letter, referred to the Kyoto Protocol as a "socialist scheme.")  Like his ideological counterpart George W. Bush, Harper doesn’t seem to have much interest in dealing with climate change or energy, aside from the oil and gas that has helped Canada thrive recently. His position was in stark opposition to the opposition NDP, which offered more support for clean energy and—importantly—was ready to offer a carbon cap-and-trade program. But the Conservatives argued — in very familiar language — that carbon pricing would be increase energy prices and be a drag on the economy. 

Up to provinces

With the federal government unlikely to act,  the focus returns to the provinces, which previously indicated they would go it alone.  Well before the federal election, British Columbia, Manitoba, Ontario and Quebec  said they would join California’s cap-and-trade program through the Western Climate Initiative.  But, as the January 1, 2012, implementation date draws closer, there has been some uncertainty about which provinces are in and which ones will wait. 

Ontario’s environment minister said last month that it will not be ready to join the program at the targeted January 1, 2012, start date, but remains committed to the WCI.  British Columbia’s  environment minister was quoted in the same article saying that the new B.C. government was reevaluating the cap-and-trade program and had not made a decision whether to proceed.  Subsequently, the minister said the B.C. government is moving ahead with a plan to start carbon trading on January 1.   (The minister also said that the province will keep its carbon tax, the only one of its kind in Canada, which currently charges $20 per ton and will increase to $25 per ton this July.)

Eyes on California

Whether one or more provinces can even start participating in the cap-and-trade program in January 2012 will depend on the outcome of legal disputes in California.  Last March, a California Superior Court judge ruled that the state Air Resources Board ("ARB") violated the California Environmental Quality Act by adopting a scoping plan under the state’s greenhouse gas reduction measure, AB 32.  That law is the authority by which ARB would implement, among other things, the cap-and-trade program.  Several environmental justice organizations challenged the scoping plan and the court ruled that ARB was required to evaluate cap-and-trade’s potential effects to the environment.  ARB has said it will appeal and would be seeking to stay the court’s injunction against implementation.  If a stay is not granted, ARB probably could not go through the evaluation process and adopt final cap-and-trade regulations by October 2011 in order to become effective on January 1, 2012. 

Thus, with the Canadian federal election likely resulting in no change to its national greenhouse gas policies, to the extent some provinces want to go it alone, their participation in cap-and-trade hinges in large part on what happens in California.

 

Electric Vehicles for Earth Day & Beyond

Posted in Tax Credits/Incentives

Good news for anyone thinking about getting an electric vehicle (EV), Nissan has announced it will resume taking applications for its new Leaf starting May 1.  The on-line reservation system for the Leaf will reopen in Arizona, California, Hawaii, Oregon, Tennessee, Texas and Washington.  The company had stopped taking reservations last fall after 20,000 people signed up for the car.  The announcement came at the same time that Nissan said, despite production delays including the March earthquake in Japan,  it expects to deliver 20,000 EVs by September 2011. 

Up to now, the Tesla has gotten the most attention by being first on the road, having a racy design and high performance capabilities, but at $100,000+ the Tesla is out of reach for most people.   Many of the newer EVs, such as the Leaf, the Ford FocusCoda, and the EV/hybrid Chevy Volt, are much more affordable, although at prices in the $30,000 to $37,000 range for those cars, "affordable" still is a relative term.   A federal $7500 tax credit helps bring the price down and some states throw in more incentives.

Part of the issue for marketing EVs is the difficulty up to now of being able to see and drive one.  The Seattle Electric Vehicle Association put on a great open house this last weekend in Woodinville to showcase EVs and charging technologies for the cars.  The flashy Teslas were on display, but the Leaf had to be the real hit as excited new owners took visitors out for a spin and let us get behind the wheel! 

 Marc Gunther has a blog post "What’s the true cost of an electric car?" that asks the reasonable question of whether heavily subsidized EVs can become competitive.  But James Billmaier, founding partner of Charge Northwest, in his book "Jolt! The Impending Dominance of the Electric Car and Why America Must Take Charge," points out that the subsidies level the playing field.  He writes:

Don’t forget the taxpayers currently subsidize oil and gas, with 15 percent of our military budget allocated to the protection of global oil production and supply lines.  In addition, oil and gas companies receive generous government-funded credits.  That said, tax incentives for electric vehicles and the development of their associated ecosystems will only be necessary in the early days of the EV revolution.  Once the cars find acceptance, battery costs drop, and the charging infrastructure is up and running, subsidies can and should be eliminated. 

While we’re still in the early stages of EVs, after years of hearing about "someday," it looks like the future is here.