The New Carbon Cycle

US States and Canadian Provinces Discussing Merging Climate Change Programs

What if one third of the states and most of the Canadian provinces formed a single cap and trade program to control greenhouse gas emissionss from a significant portion of North America?  The discussions have reportedly begun according to ClimateWire in a January 28, 2009 story.  For industry, this would create one of the largest cap and trade systems, second only to the EU Emissions Trading System.  It would also put tremendousus pressure on Congress to pass new legislation that would provide a nationwide consistent greenhouse gas regulatory system.

The pressure by states to develop their own systems, started with the Regional Greenhouse Gas Initiative governing coal-fired power plants in ten northeastern states followed by the development of the California economy wide system and the Western Climate Initiative and the Midwestern Greenhouse Climate Accord.

In response, many large industries formed the US Climate Action Partnership issued its USCAP Blueprint for Legislative Action.  On the organization's website, Duke Energy's President and Chief Executive Officer states, "Climate and economic challenges are twin ills and we should not treat either in isolation. The cure for one will help us heal the other."

The membership of this group includes some of the largest companies in the United States and several environmental groups.  The Blueprint is the result of two years of discussions and negotiations between these companies and environmental groups.

The Blueprint will likely influence not only climate debate in Congress, but the developing multi-state, multi-province negotiations to establish a cap and trade system to control greenhouse gases.  Whether the national governments in the US or Canada take action, the states and provinces will push ahead.  These programs also address energy issues and establish energy efficiency and renewable energy portfolio standards.

The fact that the state-based groups are discussing a unified approach is not only a significant development in terms of greenhouse gas controls, it appears to be an unprecedented step by the states to regulate an area typically addressed by Congress at a national level.  That the states are banding together to establish a regulatory system themselves raises questions of the efficacy of Congress and the Presidency on a matters of immense importance to this country and the world, namely climate change, energy policy, and energy security.  Political scientists will find great fodder for research and writing on how the states stepped in to fill the void left by our national government.

Dallas Area Rapid Transit May Switch Plans and Buy Natural Gas Buses, Reducing Their Carbon Footprint

The Dallas Area Rapid Transit (DART) was preparing to decide to purchase hundreds of millions of dollars of new diesel buses.  As a citizen in the fair City of Dallas, I decided to write an editorial to argue that DART should reconsider and purchase natural-gas-powered buses.  The President and Executive Director at DART wrote a counter editorial arguing for diesel buses.

Fortunately, the DART board voted to have the DART staff reevaluate the recommendatoin to purchase diesel buses and to spend more time evaluating the total costs and environmental impact of turning to natural gas buses.  Public pressure has been put upon the DART board to purchase natural gas buses.

Natural gas is abundant in the Dallas area, where the Barnett shale contains large volumes of the gas.  Hopefully, the DART board will make the right choice and vote for natural gas buses and reduce greenhouse gas emissions and use a fuel from the United States, rather than diesel refined from imported oil. 

Will the Obama Administration Return to a Focus on Science in Policy Decision Making?

An article that appeared in USA Today asked a series of very important questions and raised numerous issues relating to topics such as climate change and the role science and scientists play a role in federal policy and regulatory decisions.  The article is entitled Budget, Politics Have Roles in Obama's Agenda for Science.  The role of science should be returned to the forefront of decision making and ideology and political agendas moved back.  Science should not be a mere pawn for ideological goals as it often was during the Bush Administration.   No more clear example was the attack on climate science.

Under the Obama Administration, it is important to return to an acceptance of the results of peer-reviewed scientific studies and the faith in science and scientists.  The National Academy of Science and the American Association for the Advancement of Science have both issued their views on climate change and the human contribution to climate change.  The means by which Congress or the new President act to address these issues will clearly involve political as well as economic concerns and influences.  However, denying and attacking scientists from the National Academy of Sciences or the American Association for the Advancement of Science as "climate alarmists" or otherwise attacking their credibility, if not science in general, should have no place in the debate.

U.S. Issues Base Quantity of Ethanol That May Be Imported without Tarriffs

On December 9, the United States International Trade Commission ("USITC") issued Investigation No. 332-288, which determines the base quantity of imports of ethyl alcohol for fuel use ("base quantity"). To view Investigation No. 332-228 in the Federal Register, published on December 12, please click here.  The base quantity is what can be imported to avoid certain tariffs on ethanol if the ethanol is imported under certain conditions through the Caribbean Basin countries.

The base quantity for the 2009 calendar year is 621.5 million gallons, which can be imported by the U.S. from U.S. insular possessions or Caribbean Basin Economical Recovery Act ("CBERA" or "CBI") beneficiary countries that are exempt from import tariffs. This base quantity is calculated as 7% of U.S. consumption of fuel ethanol for the period of October 1, 2007 through September 30, 2008, which amounted to 8.88 billion gallons.

Unofficially, the current capacity of hydrous fuel ethanol dehydration in the CBERA and insular possessions (such as those in Saint Croix) is estimated to be roughly 630 million gallons with another 60 million gallons/year from Trinidad and Tobago, which should be operational in the second quarter of 2009.

In summary, this means there is already capacity in the CBERA countries to fulfill the base quantity. Nevertheless, the imports from the U.S. under the CBERA are usually below the base quantity. For the current 2008 calendar year, the authorized volume was 452.5 million gallons, and from January through October of 2008, imports under this scheme reached exactly 300 million gallons.

This summary was prepared by Paulo Costa in Thompson & Knight's  Sau Paulo office and Tim Brown and Pablo Ferrante in our Houston office.