On June 1, President Trump declared that he would withdraw the United States from the Paris Climate Accord (the “Agreement”). His announcement, though not unexpected, raises a host of questions on several legal, technical, and policy fronts. And while the news and commentary on President Trump’s position continues to change, three fundamental questions are worth asking:
By, K&L Gates
Global policy on climate change and greenhouse gas regulation is poised to take a significant step forward as the Paris Agreement (“Agreement”) enters into force just before international climate negotiations resume in Morocco next month. The 22nd “conference of the parties” (“COP-22”) will be held in Marrakech, Morocco, November 7 through 18, 2016, and will be the first time that parties to the Agreement gather after its ratification. Signatories to the Agreement include 191 countries and represent 95 percent of global greenhouse gas emissions. Now the hard work of implementing the Agreement begins. Parties are expected to start to reduce emissions under the Agreement in 2020, with a long-term goal of holding global temperature increase well-below 2 degrees Celsius. Meeting this goal requires steep reductions in carbon—for the United States, this will impact sectors of the economy that have not yet seen significant carbon regulation, such as oil refineries, cement makers, paper processers, chemical companies, and other manufacturers and will require continued reductions via the deployment of renewable energy, energy efficiency, decreasing use of hydrofluorocarbons and methane, and motor vehicle emissions regulations.
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On August 2, 2016, the White House Council on Environmental Quality (CEQ) published a final version of its guidance to federal agencies requiring the consideration of greenhouse gas (GHG) emissions and effects on climate change when evaluating potential impacts of a federal action under the National Environmental Policy Act (NEPA). CEQ explains that it does not expect the Final Guidance to be applied to federal actions for which a NEPA review has been concluded or actions for which a final environmental impact statement or environmental assessment has been issued. As discussed in greater detail below, although the Final Guidance is not legally binding on federal agencies, various aspects of the document have the potential to delay permitting timelines as agencies determine whether and how to incorporate the Final Guidance into their reviews and very likely will add to the level of review that agencies undertake.
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On June 1 the Washington State Department of Ecology (“Ecology”) reissued a draft Clean Air Rule (“CAR”). A prior iteration of the rule was filed on January 6, 2016, but was withdrawn by Ecology to address and incorporate feedback from stakeholders and covered parties. Ecology anticipates that the revised CAR will be finalized sometime in September 2016; comments on the proposed rule are due by July 22, 2016.
Like the withdrawn rule, the intent of the reissued CAR is to establish emission standards to cap and reduce greenhouse gas (“GHG”) emissions from in-state stationary sources, petroleum product producers and importers, and natural gas distributors. The CAR would cover two-thirds of all in-state GHG emissions, including both public and private sector parties.
According to Ecology, some of the changes in the reissued rule include “incorporating mechanisms to ensure emissions are reduced while supporting business growth; recognizing early actions already taken to reduce emissions; and an effective pathway for power plants.”
Reactions to the reissued CAR have been mixed. Some stakeholders have raised concerns about the costs of implementing the program and the potential costs to energy customers. Others have asserted that the proposal would not sufficiently reduce emissions to protect the environment.
Below, we address what parties could be affected by the reissued rule, how the rule would operate, and the different options for compliance. We also outline the significant changes and significant omissions in the reissued CAR as well as the key dates for stakeholder input and covered party compliance.
On February 9, 2016, in an historic and unprecedented decision, the U.S. Supreme Court blocked the U.S. Environmental Protection Agency (“EPA”) from implementing the Clean Power Plan (“CPP”) while the rule is challenged in lower courts. The decision is a victory for twenty-nine states and state agencies, along with several industry and trade groups (the “Petitioners”), who appealed the D.C. Circuit’s January 21, 2016 decision not to stay the CPP.
The Petitioners argued to the Supreme Court that the EPA does not have the Clean Air Act authority to implement the CPP, which they assert would reorganize the entire electric power sector of the U.S. economy. The petitioners persuaded the U.S. Supreme court that there was a reasonable probability that four justices would agree to hear the case, that there was a fair prospect that the majority of the court would find that the CPP was unlawful, and that irreparable harm would have resulted from the denial of the stay.
Intense climate negotiations in Paris have now concluded for the 21st “conference of the parties” (or COP-21) under the United Nations Framework Convention on Climate Change. Until quite late in the process, many big-picture questions remained unresolved, including the enforceability of emissions limitations plans under the agreement, compensation for loss, and the target limit for global temperature rise. The resolution of these questions will be summarized below, with initial commentary on the results of the negations and questions going forward.
Leading up to and during the negotiations, media reports reflected optimism among global stakeholders seeking limits to greenhouse gas emissions, and expectations for an historic deal ran high. This ambitious agenda redoubled during the talks themselves, when low-lying island nations and scientists sought to tighten temperature increase targets from 2 degrees Celsius to 1.5 degrees Celsius. As discussed below, while the agreement reflects a new level of commitment to cutting carbon, the high expectations were not met entirely in the final accord.
EPA published the Clean Power Plan (“CPP”) regulations in the Federal Register late last month. The CPP is the landmark climate change rule championed by the Obama Administration that requires reductions in greenhouse gas emissions from existing power plants nationwide. Almost immediately, opponents lodged petitions seeking review of the rule, with some petitioners also seeking a stay of the rule.
EPA issued the Clean Power Plan in its final form today, August 3, 2015. The rule in effect reshapes energy policy nationwide by setting state-by-state carbon emission standards that all states must achieve through a combination of producing energy more efficiently, reducing energy demand, shifting away from coal-fired generation toward natural gas, nuclear power, and renewable energy, and encouraging state and regional policies such as renewable portfolio standards and cap-and-trade programs. The final rule contains significant changes from the version proposed in 2014, including backing down from an initial earlier deadline for compliance, axing energy efficiency as the fourth “building block” for state targets, increasing the targeted GHG reductions to 32% below 2005 levels by 2030 (up from 30%), and using uniform carbon emissions rates for similar types of power plants. Read More
A bipartisan agreement on the revised Renewable Energy Target (RET) was finally reached between the Australian Government (represented by Industry Minister, Ian Macfarlane and Environment Minister, Greg Hunt) and the Opposition (represented by Mark Butler and Gary Gray) on the morning of 18 May 2015 in Melbourne. There have been reports that the agreement was reached with intervention from the Prime Minister Tony Abbott’s office.
As contemplated by the in principle agreement reached between the Government and the Opposition on 8 May 2015, the existing target of 41,000 GWh of large scale renewable energy by 2020 will now be reduced to 33,000 GWh. This reduction will be effected by way of legislative amendment to the Renewable Energy (Electricity) Act 2000 (Cth).
Australia is the first developed country to formally reduce its renewable energy target. There are suggestions the reduced RET will cause investment in Australian renewable energy projects to fall from an expected AUD20.6 billion by 2020 to AUD14.7 billion.
The Government has agreed not to pursue its proposal to continue reviewing the target every two years. This alleviates concerns over the retention of the two-yearly reviews of the scheme. These reviews have arguably been the predominant cause of the current investment freeze in the renewable energy industry. In lieu of the two-yearly reviews, annual statements detailing achievement towards meeting the RET and impacts on electricity prices will be provided by the Clean Energy Regulator.
Despite lack of support from the Opposition, the Greens and the renewable energy industry, the Government’s plan to include native forest wood waste in the range of energy sources that are eligible to contribute to the RET will be included in the relevant amending legislation which is expected to be presented to Parliament next week. The Government intends to pass this proposal with support from the Senate crossbench.
It is expected the revised RET should be passed by both the House of Representatives and the Senate before the winter recess on 25 June 2015.
The Opposition has indicated that it would increase the 2020 target if it wins the next election, which is to be held on or before 14 January 2017.
After months of negotiations, Industry Minister Ian Macfarlane has confirmed that on 8 May 2015 the Australian Government and the Opposition have agreed in principle a revised Renewable Energy Target (RET) of 33,000 gigawatt-hours (GWh) of large scale renewable energy by 2020. Read More