EfficiencyLaw.com

Agreements aimed at reducing greenhouse gas (GHG) emissions have been delayed in the international arena and the U.S. Congress.  The timing of the international climate deal is particularly important given both:

(i) the cost of delay in mitigating climate change ($500 billion will be added to the $10.5 trillion needed between 2010 and 2030 to reduce GHG emissions such that the global temperature increase will be limited to 2 degrees Celsius); and

(ii) the lead time required to ratify and implement a successor treaty to the Kyoto Protocol, which is set to expire in 2012.

The following actions suggest that agreements to mitigate climate change are on the horizon:

INTERNATIONAL

(1) Post-Kyoto Treaty

As noted in the previous post, world leaders announced this past weekend that the meetings in Copenhagen, which were originally intended to produce a climate treaty to succeed the Kyoto Protocol, will serve merely as the first of a two-stage process in forming a global agreement designed to mitigate climate change.

This new plan provides more time for the 192 countries involved in the global climate negotiations to come to agreement on key issues, including emissions reduction targets, financing and technology transfer.  These negotiations are more complex than those that established the Kyoto Protocol in 1997 because only 47 countries were involved in that process.

The two-stage plan will also allow more time for the U.S. Congress to pass legislation that would establish a national GHG emissions trading scheme, thus allowing the Obama administration to bring both a GHG emissions reduction target and financing pledges to the table at the second-stage negotiations, which may occur at the next scheduled U.N. climate meeting in Mexico City, which is scheduled for November 8-19, 2010.  The timing of this meeting is such that the negotiations will not be disturbed by the November 2nd U.S. congressional mid-term elections.

(2) U.S.-China Clean Technology Agreement

An amicable chapter was added this week to the storyline of the emerging CleanTech “Arms Race” between the U.S. and China when U.S. President Barack Obama and Chinese President Hu Jintao laid out a comprehensive program to address the clean technology challenge facing both nations.  The agreement includes:

• A joint clean energy research center with each country pledging $75 million in funding over the next five years. This center’s research priorities include: energy efficiency in buildings; low-carbon vehicles; and clean coal.  The use of coal is the most significant challenge in achieving GHG emissions reductions in both countries because it generates half of all power in the U.S. and 80 percent in China.
• Electric vehicle demonstration projects and the development of joint standards for the new technology;
• Joint building efficiency standards, including inspector and auditor training;
• Renewable energy development roadmaps for both countries, including grid modernization;
• Corporate and government cooperation on “21st Century Coal,” such as developing carbon capture and storage at the GreenGen plant in China and gasification of coal to help remove pollution before combustion.
• U.S. assessment of Chinese shale gas potential as well as help with development of this lower carbon fuel; and
• 22 U.S. companies to help develop clean energy projects in China, including alternative energy, a “smart” grid and greater energy efficiency.

Because this agreement could go a long way toward reducing GHG emissions in both countries, it is an important step in the international effort to mitigate climate change since the U.S. and China are collectively responsible for 40 percent of global GHG emissions.

UNITED STATES

The “climate triumvirate” of Sen. John Kerry (D-MA), Sen. Lindsey Graham (R-SC) and Joe Lieberman (I-CT) are expected to produce a legislative outline that will provide a blueprint to U.S. negotiators at the U.N climate meetings in Copenhagen, which begin December 7th. They are also reportedly working with senators on both sides of the aisle to design a new climate bill in the hopes that it will garner the 60 votes necessary to break a filibuster in the Senate.  The bill will serve as a more agreeable alternative to the current climate bill, S.1733, the Clean Energy Jobs and American Power Act (also referred to as the “Kerry-Boxer Climate Bill”), which has been marked by controversy and dissent.

The cost of the Kerry-Boxer bill was the most contentious issue in recent weeks.  In fact, Republican members of the Senate Environment and Public Works (EPW) Committee decided to boycott all hearings related to the bill until the U.S. Environmental Protection Agency (EPA) would provide additional analysis of the bill’s economic impact.  Committee Chairwoman Sen. Barbara Boxer (D-CA) called for a vote on the bill anyway, meaning that S.1733 passed the EPW Committee without any Republican members in attendance.  In order to avoid similar controversy by providing clarity on the question of the bill’s cost, the Climate Triumvirate plans to send the draft of their new climate bill to both the EPA and Congressional Budget Office (CBO) for analysis.

The EPA and CBO are likely to take up to five weeks to study the new climate bill, which is why the three senators want to draft the bill as soon as possible in order to be ready for a floor debate by the end of March 2010.  This timeframe will be crucial due to next November’s mid-term elections.  Sen. Ben Cardin (D-MD) explains that, in an election year, “[c]onventional wisdom is that you have until the spring to get controversial issues moving.”  Further, waiting until the spring will allow members of Congress to see the result of this December’s Copenhagen meetings, which will provide a better idea of  what major developing countries (such as China, India, Brazil and Russia) are willing to do to reduce GHG emissions.

Passing a U.S. climate bill through Congress by the spring will increase the likelihood of success in achieving an international climate deal at the second stage of the U.N. climate negotiations next November.