In September 2018, the California Air Resources Board (CARB) approved several significant changes to California’s Low Carbon Fuel Standard (LCFS) that will take affect on January 1, 2019.  The LCFS is California’s “cap and trade” regime for transportation fuels, where fuels are assigned a Carbon Intensity (CI) that varies depending on their feedstock and how they are produced or manufactured. Producers of fuels with a CI under the annual cap (for 2018, 93.55 grams of CO2 equivalent per Megajoule) earn credits while producers of higher-carbon fuels like gasoline and diesel incur deficits and are required to buy offsetting credits to meet the annual average CI value. Credits are bought and sold in the secondary market, and the current LCFS credit price of nearly $200/Metric Ton is driving the development of many facilities that are able to produce transportation fuels with low CI scores.Read More
UPDATE: On July 25, 2017, the New York court issued its decision, which also upheld New York’s ZEC program. We will have more analysis of that decision in a later post.
On July 14, 2017, the U.S. District Court for the Northern District of Illinois issued an opinion dismissing challenges to the state of Illinois’ zero-emissions credit (“ZEC”) program. Illinois’ ZECs are tradable credits created by statute that, in the court’s words, put “money in the coffers of Exelon from the sale of ZECs that will give it a benefit when pricing its energy in the wholesale market relative to competing energy producers that do not receive ZEC payments.” The ZECs represent the zero-emissions attributes of nuclear power and would provide additional revenue for nuclear power plants, whose owners state they are unable to cover their costs in the current low-price wholesale energy and capacity markets.
In its decision in the companion cases Village of Old Mill Creek v. Star and Electric Power Supply Association v. Star upholding the ZEC program, the court rejected arguments that Illinois’ program is preempted by the Federal Power Act and further concluded that ZECs do not discriminate under the dormant commerce or equal protection clauses. If affirmed on appeal, the opinion could have important implications for the future of other states’ programs aimed at supporting at-risk nuclear power plants and may influence the Federal Energy Regulatory Commission’s (“FERC”) outlook on its role in integrating state programs and policies into wholesale energy markets.
To read the full alert on K&L Gates HUB, click here.
President Donald Trump signed an Executive Order on March 28, 2017, entitled “Promoting Energy Independence and Economic Growth” (“Order”), which is designed to prompt reconsideration, and in some cases revocation, of the Obama Administration’s actions to address greenhouse gas emissions and climate change. The Order directs several federal agencies to review, and possibly withdraw, specific policy initiatives like the Environmental Protection Agency (“EPA”) Clean Power Plan rulemaking and the U.S. Department of the Interior (“Interior”) 2015 and 2016 rules on oil and gas production on federal lands. In addition, the Order directs the U.S. Council on Environmental Quality (“CEQ”) to rescind its 2016 final guidance document regarding the consideration of greenhouse gas emissions and climate change impacts in environmental reviews performed under the National Environmental Policy Act (“NEPA”). More broadly, the Order also directs all federal agencies to review “all agency actions” that “potentially burden the development or use of domestically produced energy resources.”
As discussed in greater detail below, the Order may have far-reaching implications for U.S. policy on energy production, greenhouse gas regulation, and climate change that could have spillover impacts for energy infrastructure development. A vigorous debate is certain to follow with interested stakeholders evaluating strategic options including notice and comment rulemaking, litigation, and legislative advocacy.
To read the full alert on K&L Gates HUB, click here.
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.
To read the full alert, click here.
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.
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.
K&L Gates attorneys Ankur K. Tohan, Daniel C. Kelly-Stallings, and Alyssa A. Moir recently penned an article for the Environmental and Land Use Law Section of the Washington State Bar Association (WSBA) analyzing greenhouse gas regulation in Washington. Their article, “Greenhouse Gas Regulation in Washington: What the Clean Power Plan and Washington Clean Air Rule Mean for the State,” is available from the WSBA website.
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.
The latest edition of the K&L Gates Environmental Policy Quarterly focuses on (1) EPA’s Carbon Pollution Standards and Clean Power Plan, (2) congressional efforts to streamline environmental reviews of infrastructure projects, and (3) EPA’s draft Assessment on the Potential Impact of Hydraulic Fracturing on Drinking Water Resources. We are delighted to include contributions by a number of K&L Gates lawyers who focus on these matters on a daily basis.
Washington State is about to become the latest state to take local action to address global climate change. Governor Jay Inslee recently directed the Washington Department of Ecology (“Ecology”) to make new rules aimed at reducing greenhouse gas (“GHG”) emissions in the state. The new rules are scheduled to be adopted in summer 2016 and to take effect shortly thereafter. The result will be called the “Washington Clean Air Rule.”