The New Carbon Cycle

British Columbia Premier Announces Goal for Aggressive Greenhouse Gas Reductions

The Premier of British Columbia Gordon Campbell laid out more details of his green plan Friday, including the promise of legislation to reduce greenhouse-gas emissions by 33 per cent below current levels by 2020.   During a highly anticipated speech at the Union of British Columbia Municipalities annual meeting in Vancouver, Campbell said a specially appointed climate action team will look at how that target will be reached.  A variety of other aggressive goals were announced:

• Further legislation will be passed to make B.C. the first province in Canada to legally cap greenhouse gas emissions, using an undisclosed carbon trading system, said Campbell.
• All energy produced in the province will have to have a net balance of zero greenhouse gas emissions by 2016, promised the premier.
• His government would introduce legislation this fall requiring all public sector organizations, including schools and Crown corporations, to be carbon neutral by 2010.
• B.C. will become the first province to adopt California's tailpipe emission standards for vehicles and the state's low-carbon fuel standards, he said.
• All government travel would be greenhouse-gas neutral starting this year. Twenty-five dollars for every tonne of greenhouse gas generated by government travel will be invested in projects to offset the impact of greenhouse gases.
• The premier said the provincial power company, BC Hydro, will be required to install "smart meters" that will allow all customers to better track energy use and put power they generate themselves back into the system for credit.

To what extent the B.C. Premier will be able to pass this legislation remains to be seen, but reflects one of the most aggressive climate change agendas in any Canadian province or US state.  Like the US States, many of the Canadian provinces have begun to plan climate change legislation in the absence of a national government plan, despite the fact that Canada signed the Kyoto Protocol.

Mexico Becoming an Attractive Country for CDM Projects

In recent work we are doing for our Mexican clients, I am finding that the carbon credit investment community and the carbon credit brokers are very interested in projects in Mexico.  As head of our Climate Change and Renewable Energy Practice, I have been discussing the carbon credit prospects in Mexico under the Clean Development (CDM) process of the Kyoto Protocol with our Firm's Mexican offices.  Based on my experience so far, there appears to be significant opportunities to reduce greenhouse gas emissions in Mexico.  With thirty or more Mexican lawyers in our Monterrey and Mexico City offices, and numerous Mexican clients, I think we will see more and more opportunities to work with them on carbon offset projects.

Speaking with investors and hedge funds, the future may be very bright for carbon investment in Mexico.

Stay tuned for further posts in this area.

German Environment Minister Suggests Bush Will Find It Hard to Go Back Now That He Is Engaging Other Countries on Climate Change

In the meetings President George Bush has called with the countries that are the highest emitters of greenhouse gases, the President is under a significant amount of pressure to commit to binding limits on greenhouse gas emissions.  The Administration has insisted countries agree to non-binding voluntary limits. 

German Environment Minister Sigmar Gabriel said the fact that Bush was speaking showed the White House would not return to its previous skepticism about the seriousness of the issue.

"This is a big step," he told reporters. "The more you have official discussions about climate change ... the more difficult it is to go backwards."

The original approach of the White House was to question the science on human contribution to climate change.  However, Secretary of State Condoleezza Rice on Thursday acknowledge the human contribution to climate change and asserted the US is committed to taking action on climate change.

"I want to stress that the United States takes climate change very seriously, for we are both a major economy and a major emitter," Secretary Rice said at the start of the two-day conference.  "Climate change is a global problem and we are contributing to it," Rice said. "Therefore, we are prepared to expand our leadership to address the challenge."

The outcome of these meetings is unclear at this early stage.  However, the White House may find it difficult to sell voluntary or aspirational goals as the basis of a post-Kyoto climate change agreement.

Lehman Brothers Hires Carbon Chief

In the ever growing list of investment firms expanding their business into climate change business and carbon trading, Reuters reported that Lehman Brothers has hired a global head of carbon emissions, Laurent Segalen.  Segalen was formerly managing director of the European Carbon Fund, and will be based in London.  The announcement was made on Wednesday, September 26, 2007.  Clearly, the investment community is gearing up for ever growing carbon credit trading markets.

Carbon markets allow countries, companies and individuals to shop around for credits reflecting other entities in their own or other countries who have reduced their greenhouse gas emissions, and to use those carbon credits to offset in part their own greenhouse gas emissions.  This is what is known as "cap and trade" or "environmental markets."  Based on the Kyoto Protocol and the UN discussion of a post-Kyoto treaty and the expectation that climate change regulation will only expand, especially in the United States, the investment in the carbon market is booming.

"As carbon emissions trading becomes an increasingly important aspect of managing the challenge of climate change, the opportunities for participating in this market are set to grow exponentially," said Henrik Wareborn, Lehman's managing director and head of commodities in Europe.

United Nations Meeting Set in New York on Monday to Discuss a Post Kyoto Protocol Agreement to Address Climate Change and How to Reduce Greenhouse Gas Emissions

On Monday, U.N. Secretary General Ban Ki-moon plans a meeting in New York to build momentum for a larger U.N. conference in December in Indonesia where negotiators will try to create a post-Kyoto accord. Three days after Ban's meeting, President Bush has called for a two-day climate gathering in Washington with major industrial nations, the United Nations and a few developing countries, including China and India.  This will be a significant step in attempting to develop the international agreement to address climate change and global warming through the United Nations process.  How greenhouse gas or carbon emissions will be reduced, to what extent, and by which countries, developed or developing, will be some of the key questions that will be debated.

Climate Change Disclosure Heats Up: Environmental Groups and State Pension Funds File Petition with SEC for Greater Climate Change Disclosure

Perhaps these two events were coordinated, but within a short time after the Attorney General of New York sent subpoenas under a New York securities statute to five utilitiy companies seeking information on climate change disclosure by those companies, particularly with respect to coal-fired power plants, CERES and various environmental groups and state pension funds filed a petition with the SEC seeking a rulemaking requiring greater climate change disclosure.   The press release from CERES on this issue is posted on my Law and the Environment blog.

New York Attorney General Subpoenas Utilities over Climate Change Disclosure

Please refer to my post on my other blog Law and the Environment that discusses the filing by Andrew Cuomo, the New York Attorney General, of subpoenas against five major utilities and the initiation of a securities investigation into the disclosures made to shareholders regarding climate change risk.  This is one of the first investigations by a securities agency or attorney general of climate change disclosure by public companies.  Environmental disclosure has been a growing concern for publicly traded companies, and as climate change continues to be a public concern and regulation over greenhouse gases expands in the US and internationally, companies will find disclosure regarding climate change to be a growing issue to evaluate in terms of disclosures made in their filings with the Securities and Exchange Commission. 

Alaska Governor Creates a State Body to Prepare a Climate Strategy

Alaska Governor Sarah Palin today signed Administrative Order 238 establishing a sub-cabinet to prepare a climate change strategy.

“Many scientists note that Alaska’s climate is changing,” Governor Palin said. “We are already seeing the effects. Coastal erosion, thawing permafrost, retreating sea ice and record forest fires affect our communities and our infrastructure. Some scientists tell us to expect more changes in the future. We must begin to prepare for those changes now.”

The Climate Change Sub-cabinet will consolidate the state’s knowledge about the expected effects of global warming in Alaska, recommend measures and policies to prepare our communities and residents to respond to expected effects, and guide the state’s participation in local, regional and national efforts to curb and to respond to global warming.

Members of the sub-cabinet include the commissioners of the Departments of Commerce, Community and Economic Development; Environmental Conservation; Natural Resources; Fish and Game; and Transportation and Public Facilities. It is chaired by the Commissioner of Environmental Conservation.

Administrative Order 238 also directs the sub-cabinet to consult with the president of the University of Alaska.

“I am proud of the cutting edge work being done at the University,” Governor Palin said. “Alaska has top-notch scientists working on research and models that will inform and guide climate change decisions.”

Other than making research available, Alaska can help the nation in other ways. Through the administration’s aggressive pursuit of a Natural Gas Pipeline Alaska can provide a clean, domestic, reliable source of energy for decades to come.

The state also has tremendous alternative energy potential. The Department of Natural Resources already has a program to find renewable energy resources around the State. The Climate Change Sub-Cabinet will be looking at ways to develop, support and expand renewable energy resource programs and to promote aggressive development of renewable energy sources such as geothermal, wind, hydroelectric, tidal, and in-stream energy.

In addition to signing the Administrative Order, the Governor is signing a letter that adds Alaska as an observer to the Western Climate Initiative. The Western Climate Initiative is a collaboration launched in February 2007 between the Governors of Arizona, California, New Mexico, Oregon and Washington to meet regional challenges posed by climate change.

The additional steps announced today add to efforts underway. DEC has begun working with other agencies and has formed workgroups, started working with communities, federal agencies, the legislative Climate Impact Assessment Commission and the Congressional Delegation. The Governor’s Washington, D.C. office is already working closely with the Congressional Delegation on federal legislation to ensure that Alaska benefits from any such legislation. The Palin Administration is coordinating with the Arctic Research Commission to identify opportunities for state involvement in research and policy matters in the Arctic as changing conditions draw increased global attention to this area.

Information about the State’s climate change efforts will soon be available to the public via the internet. The Climate Change Sub-Cabinet is creating a web site on which it will post news and information. The internet address will be http://www.climatechange.alaska.gov. The web site will be up and running by Friday, Sept. 21.

Phaseout of Incandescent Bulbs Being Considered by Congress Would Save Energy, Money, and Reduce Greenhouse Gas Emissions

A recent Wall Street Journal article quotes Paul Waide, a policy analyst with the International Energy Agency, based in Paris, who testified before the Senate Energy Committee regarding a phaseout of conventional incandescent with the goal of reducing energy consumption.  Incandescent bulbs are reportedly very inefficient.  The European Union, Canada and Australia are planning similar phaseouts of incandescent bulbs, and China is beginning to consider one.

Mr Waide was quoted as saying, "It is not inconceivable that over the next 10 to 15 years that maybe all incandescent lights will be removed from the global market," he said. If that happened, he added, the resulting reduction in carbon-dioxide emissions might equal almost three-fourths of the reductions that industrial nations have promised under the Kyoto Protocol to curb global warming.

Under the timetable proposed in both House and Senate versions of the phaseout, incandescent bulbs would begin to disappear from U.S. markets beginning in 2012, with 100-watt bulbs going first, then 75-watt bulbs a year later and then the more popular 60- and 40-watt bulbs by 2014. 

Substituting fluorescent bulbs for incandescent bulbs would save energy, reduce greenhouse gas emission, and save consumers collectively a tremendous amount of money.  The U.S., which has four billion electric lights using such bulbs, represents about a third of the world market. Installing more-efficient incandescent or compact fluorescent bulbs would save consumers about $6 billion a year in energy costs, said Jeffrey Harris, a vice president of the Alliance to Save Energy, a nonprofit group based in Washington.

ConocoPhillips May Be First Company in the US Required to Reduce or Offset Greenhouse Gas Emissions at California Refinery

In what may be the first payment for mandatory greenhouse gas emission reduction credits or “carbon credits” in the United States, ConocoPhillips agreed to pay around $10 million to offset greenhouse gas emissions that will be emitted by the expansion of its Bay Area refinery. On Tuesday, September 11, Ed Brown, the California Attorney General, announced that an agreement had been reached between the State and ConocoPhillips by which the company pay over $7 million for a carbon offset program that includes buying and scrapping older cars that generate more greenhouse gas emissions. The company will donate $2.8 million to reforestation efforts in California, donate $200,000 for restoration of the San Pablo Bay wetlands, and conduct an audit all of its California refineries to identify potential additional greenhouse gas reductions that could be implemented. 

The State has agreed to dismiss its appeal of the approvals that the company was seeking in order to expand it Contra County Refinery.  ConocoPhillips' proposed oil refinery expansion, known as the Clean Fuels Expansion Project, includes a hydrogen plant that will help make an estimated 1 million gallons per day of cleaner-burning gasoline and diesel fuels from the heavy portion of crude oil.

Interestingly, the battle was fought over land use, rather than environmental permits, such as air emission permits.  In September 2005, Contra Costa County prepared an environmental impact report, which was later certified by the county's planning commission. However, the Attorney General challenged the environmental documentation for the project this May, saying it did not adequately address the extra 500,000 to 1.25 million metric tons of carbon dioxide that would be emitted each year.

The agreement comes before the California climate change legislation goes into effect. The legislation will call for reducing greenhouse gas emissions in California to 1990 levels by 2020, a 25% reduction. The agreement with ConocoPhillips will stay in effect until 2012, when that mandatory cap goes into effect.