The New Carbon Cycle

China Offers Reductions in Carbon Intensity, Not Cuts in Overall Emissions

China through its State Council pledged to cut the amount of carbon dioxide produced for each yuan of national income 40-45 percent by 2020, compared to 2005 levels.  This does not necessarily mean the emissions would decrease overall, just that the amount of emissions per unit of national income would be reduced.  This is a first step by China in advance of the UN meetings in Copenhagen to discuss the outlines of a new climate change treaty.

Critics responded that the Chinese emissions could increase and perhaps double by 2020.  Thus, it is unclear how China will make any significant steps to reducing greenhouse gas emissions globally.  China is also only stating these as voluntary steps, not those legally imposed through any international treaty.

The State Council also announced that Premier Wen Jiaboa would join the meeting in Copenhagen on December 7-18.  China as does the United States feels the pressure by other countries to pledge some action toward climate change and reducing greenhouse gas emissions.

Energy Storage Transaction May Indicate Beggining of Future Boom in Mass Energy Storage

While wind energy is a widely supported and a rapidly growing renewable energy source, it is well known that most land-based wind blows at night.  The problem is peak energy usage is during the day, and peak prices are paid for electricity during the day.  The diurnal movement of power from night to day, thus, presents a huge future opportunity for the wind and renewable energy industry.  Mass storage in the many megawatt (MW) level is a critical next step in the renewable energy industry.  A recent transaction may bode well for this nascent industry.

FirstEnergy Generation Corp., a subsidiary of Akron, Ohio-based FirstEnergy Corp. ( purchased the rights to develop a compressed-air electric generating plant on a 92-acre site in Norton, Ohio, from CAES Development Company, LLC. The transaction includes rights to a 600-acre underground cavern, formerly operated as a limestone mine, to be used for energy storage.

"The compressed-air technology envisioned at this site would essentially operate like a large battery, storing energy at night for use during the day when it is needed," said Anthony J. Alexander, president and chief executive officer of FirstEnergy. "Because many renewable energy sources - such as wind - are intermittent, they don't always produce power when electricity demand is high. The energy storage aspects of this project would provide a way to harness renewable energy to be used when customers need it, making this project a key component to our region's overall renewable energy strategy."

"This project has the potential to create hundreds of construction jobs and provide support for the development of a vibrant renewable energy business - and additional 'green energy' jobs - in Ohio," said Ohio Governor Ted Strickland. "This is an example of how we can leverage technology and our natural resources to grow our economy and ensure our energy future."

Similar to pumped-hydro storage - where water is pumped up to a reservoir then released through a turbine to produce electricity during peak periods - compressed-air technology involves compressing air in an underground cavern or other chamber during the evening - when electricity demand is lower - and releasing it during the day, when the need for electricity is greater.

"A compressed-air energy storage project of this size has the potential to be a major step in advancing electricity storage and balancing load demand," said Arshad Mansoor, vice president of Power Delivery and Utilization at the Electric Power Research Institute. "This could be a key component in integrating large-scale intermittent renewables onto the nation's grid system."

The company is evaluating its options related to the project, but has not yet committed to development scope or timing. However, an initial phase could involve installing two to four units capable of generating a minimum of 268 megawatts (MW) of electricity. With 9.6 million cubic meters of storage, the Norton Energy Storage Project has the potential to be expanded to up to 2,700 MW of capacity.

Currently, there are two commercial-scale compressed air electric generating facilities: a 110 MW plant in McIntosh, Ala., operated by PowerSouth Cooperative that began service in 1991; and a 290 MW facility in Bremen, Germany, that has been in operation since 1978. While there are other compressed-air projects under development, none is expected to be comparable in size and scope to the Norton facility.

Compressed-air storage, when combined with renewable energy resources, provides for low-emitting power generation that is dispatched when customers need it. FirstEnergy currently has more than 800 MW of renewable capacity, including pumped-storage hydro and wind power. By the end of 2012, when the biomass project at the Burger Plant is complete, the company's renewable capacity could be more than 1,000 MW.

Other energy storage technologies under development include heat storage in molten salt and heat storage in rock, fly wheels, water storage behind dams or water towers, and large "batteries".  The Department of Energy is investing in research in some of these areas, but more incentives, private investment, and research are needed to further develop storage technology.

EPA Holds Hearings on Proposed Greenhouse Gas Regulation under Clean Air Act

The US Environmental Protection Agency (EPA) is holding hearings this week on it proposed "Tailoring Rule ", that would regulate certain sources that emit more than 25,000 tons of carbon dioxide equivalent of greenhouse gases identified in the proposed rule.

The scheduled speakers include the following:

November 18, 2009 – Arlington, VA

Howard J. Feldman, Speaking on behalf of the American Petroleum Institute
Carl Pope, Sierra Club
David Friedman, National Petrochemical Refinery Association
Emily Figdor, Environment America
Mary Anne Hitt, Sierra Club
Bahri Aliriza, Polytrade International Corporation
Virginia Vennett, Private Citizen
Mike Fusco, Safety-Kleen Systems, Inc.
Robert West, Private Citizen
Julian Carmona, Sierra Club
Rhea Hale, American Forest and Paper Association
Ellen Bateman, Institute for Conflict Analysis & Resolution
Al Burt, Private Citizen

November 19, 2009 – Rosemont IL

David Sykuta, Illinois Petroleum Council
Tony Fuller, Volunteer with the Sierra Club
Sandra Kaptain, Elgin Climate Change Organization
Rob Burke, Midwest Union of Concerned Scientist
Susan Lannin, Private Citizen
Kerwin Olson, Citizen Action Coalition in Indiana
Grant Smith, The Clean.Org
Verna Owen, Sierra Club
Cynthia Linton, Medill School of Journalism
Laurel Kroack, Illinois Environmental Protection Agency
Laura Knezevic, Illinois Student Environmental Coalition
David Archer, University of Chicago
Barbara Hill, Private Citizen
Mark Whitehead, Private Citizen
Joyce Bluenshine, Illinois Chapter Sierra Club
Tracy Fox, Private Citizen
Steve Niehoff, Weaver Boos Consultants
Nicole Pattison, Weaver Boos Consultants
Helen Costello, Private Citizen

Deatherage Named as the “Dallas Best Lawyers Environmental Lawyer of the Year” for 2010

I was recognized by the Best Lawyers in America and thought I would share this with the followers of this blog, and let you know that I am honored as there are so many excellent environmental lawyers in Dallas.

Best Lawyers, the oldest and most respected peer-review publication in the legal profession, has named Scott D. Deatherage as the “Dallas Best Lawyers Environmental Lawyer of the Year” for 2010.

After more than a quarter of a century in publication, Best Lawyers is designating “Lawyers of the Year” in high-profile legal specialties in large legal communities. Only a single lawyer in each specialty in each community is being honored as the “Lawyer of the Year.”

Best Lawyers compiles its lists of outstanding attorneys by conducting exhaustive peer-review surveys in which thousands of leading lawyers confidentially evaluate their professional peers. The current, 16th edition of The Best Lawyers in America (2010), is based on more than 2.8 million detailed evaluations of lawyers by other lawyers.

The lawyers being honored as “Lawyers of the Year” have received particularly high ratings in our surveys by earning a high level of respect among their peers for their abilities, professionalism, and integrity.

Steven Naifeh, Managing Editor of Best Lawyers, says, “We continue to believe – as we have believed for more than 25 years – that recognition by one’s peers is the most meaningful form of praise in the legal profession. We would like to congratulate Scott D. Deatherage on being selected as the ‘Dallas Best Lawyers Environmental Lawyer of the Year’ for 2010.”

EPA Reportedly Has Sent the Final Endangerment Finding on Greenhouse Gases to the White House for Final Review

EPA earlier this year proposed its endangerment finding under the federal Clean Air Act in response to the U.S. Supreme Court's finding in Massachusetts v. EPA that permitted EPA to regulate greenhouse gases under the Act.  The endangerment finding is a precursor to regulating greenhouse gases under the Act, although EPA has already taken steps to regulate greenhouse gases.  For example, EPA proposed its "Tailoring Rule" to regulate greenhouse gas emissions from stationary sources if they exceed 25,000 tons under the Act's New Source Review provisions of the Prevention of Significant Deterioration and the Title V permitting provisions.  EPA has reportedly sent its final endangerment finding for review to the White House, and is seeking a quick review and final issuance of the rule.

EPA also sent its rule to OMB for review that would regulate greenhouse gas emissions from automobiles, which was the issue before the Supreme Court in Massachusetts v. EPA.  EPA is seeking to finalize this rule in order to provide automakers the restrictions that would be imposed by March of 2010.

The final rules for greenhouse gas monitoring and reporting recently were issued in final form and go into effect in January 2010.

The agency is moving quickly to establish a greenhouse gas regulatory system under the Clean Air Act, if Congress does not act in the interim.  The U.S. Chamber recently sent a letter to Congress urging action on climate change legislation to avoid an EPA program.  They also criticized the approach under Waxman-Markey , the bill passed out of the House, and advocated the approach that Senators John Kerry and Lindsey Graham proposed in an editorial in the New York Times.  The issues the Senators are discussing include incentives for nuclear power, on and offshore drilling, and natural gas use in producing electricity and fueling vehicles.  Other issues may include the stringency of the cap on emissions and allocation of allowances to various industries.

Signs are pointing to a potential passage of a climate bill in early 2010, perhaps by March or April. The pressure to pass something by industry that is believed to be more industry friendly than what EPA would formulate is a critical factor.  The negotiations between Senators Kerry, Graham, and Lieberman may be the deciding factor in whether a bill passes or not in 2010.

SEC Issues Policy That May Make It More Difficult to Exclude Certain Environmental Shareholder Petitions from Proxy Statements

The SEC guidance was issued on October 27, 2009.  The main portion of the Staff Legal Bulletin No. 14E (CF) is provided below:

Over the past decade, we have received numerous no-action requests from companies seeking to exclude proposals relating to environmental, financial or health risks under Rule 14a-8(i)(7). As we explained in SLB No. 14C, in analyzing such requests, we have sought to determine whether the proposal and supporting statement as a whole relate to the company engaging in an evaluation of risk, which is a matter we have viewed as relating to a company's ordinary business operations. To the extent that a proposal and supporting statement have focused on a company engaging in an internal assessment of the risks and liabilities that the company faces as a result of its operations, we have permitted companies to exclude these proposals under Rule 14a-8(i)(7) as relating to an evaluation of risk. To the extent that a proposal and supporting statement have focused on a company minimizing or eliminating operations that may adversely affect the environment or the public's health, we have not permitted companies to exclude these proposals under Rule 14a-8(i)(7).

We have recently witnessed a marked increase in the number of no-action requests in which companies seek to exclude proposals as relating to an evaluation of risk. In these requests, companies have frequently argued that proposals that do not explicitly request an evaluation of risk are nonetheless excludable under Rule 14a-8(i)(7) because they would require the company to engage in risk assessment.

Based on our experience in reviewing these requests, we are concerned that our application of the analytical framework discussed in SLB No. 14C may have resulted in the unwarranted exclusion of proposals that relate to the evaluation of risk but that focus on significant policy issues. Indeed, as most corporate decisions involve some evaluation of risk, the evaluation of risk should not be viewed as an end in itself, but rather, as a means to an end. In addition, we have become increasingly cognizant that the adequacy of risk management and oversight can have major consequences for a company and its shareholders. Accordingly, we have reexamined the analysis that we have used for risk proposals, and upon reexamination, we believe that there is a more appropriate framework to apply for analyzing these proposals.

On a going-forward basis, rather than focusing on whether a proposal and supporting statement relate to the company engaging in an evaluation of risk, we will instead focus on the subject matter to which the risk pertains or that gives rise to the risk. The fact that a proposal would require an evaluation of risk will not be dispositive of whether the proposal may be excluded under Rule 14a-8(i)(7). Instead, similar to the way in which we analyze proposals asking for the preparation of a report, the formation of a committee  or the inclusion of disclosure in a Commission-prescribed document— where we look to the underlying subject matter of the report, committee or disclosure to determine whether the proposal relates to ordinary business — we will consider whether the underlying subject matter of the risk evaluation involves a matter of ordinary business to the company. In those cases in which a proposal's underlying subject matter transcends the day-to-day business matters of the company and raises policy issues so significant that it would be appropriate for a shareholder vote, the proposal generally will not be excludable under Rule 14a-8(i)(7) as long as a sufficient nexus exists between the nature of the proposal and the company.  Conversely, in those cases in which a proposal's underlying subject matter involves an ordinary business matter to the company, the proposal generally will be excludable under Rule 14a-8(i)(7). In determining whether the subject matter raises significant policy issues and has a sufficient nexus to the company, as described above, we will apply the same standards that we apply to other types of proposals under Rule 14a-8(i)(7).

In addition, we note that there is widespread recognition that the board's role in the oversight of a company's management of risk is a significant policy matter regarding the governance of the corporation. In light of this recognition, a proposal that focuses on the board's role in the oversight of a company's management of risk may transcend the day-to-day business matters of a company and raise policy issues so significant that it would be appropriate for a shareholder vote.

Thompson & Knight Climate Change and Renewable Energy Newsletter

Thompson & Knight LLP, an international law firm, has issued the most recent issue of its Climate Change and Renewable Energy Newsletter.  The Newsletter discusses recent developments in Congress, EPA, the courts, and the states.

Senate Environment and Public Works Committe Releases Climate Bill

The Senate Environment and Public Works Committee released its version of a climate change bill despite the fact that Republican senators on the committee were boycotting the mark up hearings.  The Senate apparently has an informal rule that two senators of the opposing party need to be present to make a quorum.  Senator Barbara Boxer decided to move forward based on the apparent actual rules that allows the committee to vote out a bill if there is a quorum of any party members.  The Democrats on the Committee voted unanimously to move the bill out of the Committee.

The bill will know be considered by other committees in the Senate.  If a bill is presented to the full Senate, it will probably be in 2010.