Study Says Carbon Cycling Models Ignore Role Of Inland Waters

Sep 2: In the paper, The Boundless Carbon Cycle, published in the September issue of Nature Geoscience, scientists from the University of Vienna, Uppsala University in Sweden, University of Antwerp, and the U.S.-based Stroud(TM) Water Research Center argue that current international strategies to mitigate manmade carbon emissions and address climate change have overlooked a critical player -- inland waters. Streams, rivers, lakes, reservoirs, and wetlands play an important role in the carbon cycle that is unaccounted for in conventional carbon cycling models. According to a release, the commentary comes just months before COP15, the December 2009 UN Climate Change Conference in Copenhagen where representatives from 192 countries will gather to decide upon a 2012 climate agreement that will succeed the Kyoto protocol.

Dr. Tom J. Battin of the department of Freshwater Ecology at the University of Vienna and lead author of the paper states that, "While inland waters represent only 1% of the Earth's surface, their contribution to the carbon cycle is disproportionately large, underestimated, and not recognized within the models on which the Kyoto protocol was based." The team of scientists points out that all current global carbon models consider inland waters static conduits that transfer carbon from the continents to the oceans. In reality, inland waters are dynamic ecosystems with the potential to alter the fates of terrestrial carbon delivered to them including: burial in sediments leading to long-term storage or sequestration; and metabolism in rivers and subsequent outgassing of respired carbon dioxide to the atmosphere. Dr. Lars Tranvik, Professor of Limnology at Uppsala University in Sweden said, "Twenty percent of the continental carbon sequestration actually occurs as burial in inland water sediments."

Dr. Anthony K. Aufdenkampe, a scientist at the Stroud Water Research Center said, "River outgassing of respired carbon contributes carbon to the atmosphere in an amount equivalent to 13% of annual fossil fuel burning." The researchers indicate that because the amount of atmospheric carbon is well-known and conservation of matter requires a balanced global carbon budget, this previously unaccounted-for source of carbon to the atmosphere implies the existence of an additional continental carbon sink such as higher rates of biomass accrual in forests. Dr. Sebastian Luyssaert of the department of Biology at University of Antwerp in Belgium said, "A larger accumulation of carbon in forest ecosystems that could offset the outgassing from rivers would be more consistent with current independently-derived estimates of carbon sequestration on the continents."

The authors indicated they feel that a Boundless Carbon Cycle -- that accounts for carbon transfers between the land-freshwater boundary, the freshwater-atmosphere boundary, and regional boundaries within continents -- presents opportunities and challenges for scientists and policy makers alike. They stress the need for collaborative scientific investigations augmented by new observatories and experimental platforms for long-term research to improve insights into carbon cycles across terrestrial and aquatic ecosystems. For policy makers, the authors note that riverine transport presents a bookkeeping challenge as carbon in rivers that escapes burial or outgassing flows downstream, traversing geographic regions and political boundaries, and thus altering regionally-based carbon accounts.

Access a release from Stroud (click here). Access a related illustration of the Boundless Carbon Cycle (click here). Access Nature Geoscience for information on obtaining the full paper (click here).

UNEP/TEEB "Climate Issues Update" Calls For Investment In Ecosystems

Sep 2: A new climate issues update by The Economics of Ecosystems and Biodiversity (TEEB), a project launched by Germany and the European Commission in response to a proposal by the G8+5 Environment Ministers (Potsdam, Germany 2007), indicates that investing in restoration and maintenance of the "Earth's multi-trillion dollar ecosystems" -- from forests and mangroves to wetlands and river basins -- can have a key role in countering climate change and climate-proofing vulnerable economies. TEEB designed to develop a global study on the economics of biodiversity loss is hosted by the United Nations Environment Programme (UNEP). The issues update was launched by TEEB study leader Pavan Sukhdev, with German Federal Environment Minister Sigmar Gabriel; Director-General for Environment, European Commission, Karl Falkenberg; and UN Under-Secretary General and Executive Director of UNEP, Achim Steiner.

The update says the planet's biological diversity and 'ecological infrastructure' are increasingly being put at risk from the impact of climbing greenhouse gases. The update indicates that "natural systems represent one of the biggest untapped allies against the greatest challenge of this generation." The paper is part of a stream of work towards a final study in 2010.

The update underlines that an agreement on funding for forests is a key priority for governments attending the crucial United Nations COP15 climate convention meeting in Copenhagen in December -- just 95 days away. An estimated 5 gigatonnes or 15 per cent of worldwide carbon dioxide emissions are being absorbed or sequestrated by forests every year, making them the "mitigation engine" of the natural world. A release indicates that this could also be described as "green carbon."

Investing in ecosystem-based measures such as financing Reduced Emissions from Deforestation and forest Degradation (REDD) could thus not only assist in combating climate change but could also be a key anti-poverty and adaptation measure. Forests also provide services such as freshwaters, soil stabilization, nutrients for agriculture, eco-tourism opportunities and food, fuel and fiber -- all of which will be key to buffering vulnerable communities against the climate change already underway.

The TEEB team indicates in the Climate Issues Update that a more complete report on these and several other areas of relevance to national and international policy-makers will be published in November 2009. "However, in view of the climate change conference in Copenhagen, Denmark, in December 2009, we thought it appropriate to publish our climate-related conclusions and recommendations more urgently for policy-makers, negotiators, and the general public."

The Update addresses ongoing work in four domains which TEEB says it believes need to be highlighted in the run-up to Copenhagen as follows: "(1) Coral reefs: We now understand that the survival of these ecosystems is at risk. (2) Forest carbon: including forests in mitigation is a cost-effective way of preventing further emissions and removing CO2. Forests also provide cobenefits in the form of other ecosystem services. Giving rewards for these benefits is an important step towards a greener global economy. (3) National accounts: these currently do not measure natural capital, so it can not be managed well. The most urgent step is to include adequate measurement of carbon storage as this is an institutional prerequisite for a serious payment scheme for tropical forests. [and]

"(4) Public investment in ecological infrastructure: This has demonstrable value for adaptation to climate change, not only in terms of relevance and effectiveness but also in terms of cost-effectiveness. In the context of the current economic crisis and the fiscal stimulus packages unveiled by many nations, ecosystems represent an attractive area for high-return investment. our ‘natural capital’ can be a much-needed source of growth in a time of recession, a provider of new and decent jobs in a time of increasing unemployment, and a solution to persistent poverty, a vast human problem which we cannot ignore."

UNEP head Achim Steiner said, "It is clearly emerging that investments in the planet's ecosystem infrastructure can deliver the twin, Green Economy gains of curbing and cutting emissions while assisting vulnerable communities to adapt. Currently governments are considering multi-billion dollar investments in carbon capture and storage at power stations. Perhaps it is time to subject this to a full cost benefit analysis to see whether the technological option matches nature's ability to capture and store carbon -- a natural system that has been perfected over millions of years and with the multiple additional benefits for water supplies up to reversing the rate of biodiversity loss."

In the meantime, the United Nations Secretary-General Ban Ki-moon on September 2, standing on the Polar Ice in Norway said, "I feel the power of nature, and at the same time, a sense of vulnerability. This is a common resource for human beings, and we must do all we can to preserve this Arctic ice. The Arctic is ground zero for analyzing the impact of climate change. In the Arctic, climate change is accelerating much faster than in any other region in the world. I am here to see for myself just how much damage this fragile Arctic is suffering from as a result of climate change. The ice is melting faster -- drifting, you have seen while coming here -- many icebergs, the glaciers are drifting and retreating; this is a very alarming situation.

"I'm sending [a message] from the Arctic to all world citizens, particularly world leaders, to draw urgent attention to take action immediately, to preserve Planet Earth, to preserve all that we can do to help our succeeding generations to be able to live in a hospitable environment in a sustainable way. . . we are losing the glaciers at the rate of 150 cubic km per year, that is 150 billion tonnes a year. . . To generate political will, the United Nations is going to convene a summit meeting on September 22 in New York; we have invited all world leaders, we expect more than 100 world leaders to participate. I expect them to demonstrate their political leadership. I expect them to play [their role] as global leaders, addressing these challenges, which require global leadership, global solidarity. We do not have any time to lose. The time is short. We must seal the deal in Copenhagen in December. . ."

Access a lengthy release from UNEP with links to additional information (click here). Access the 34-page TEEB Climate Issues Update (click here). Access the TEEB Study website for extensive information (click here). Access a release and link to the complete statement from the UN Secretary-General (click here).

FOIA Information Reveals More Problems With Coal Ash Sites

Aug 31: According to a release from the nonprofit law firm Earthjustice, U.S. EPA has released information to environmental groups about America’s toxic coal ash dumps after months of data collection and inquiry. The groups, after a Freedom of Information Act (FOIA) request, discovered that there are 584 coal ash dump sites across the country -- almost twice as many as previously identified. These sites pose significant cancer and health risks that so far have gone unchecked. The groups said that because the EPA does not regulate the waste from coal-fired power plants, the agency had no information on the location and nature of the 584 wet ash dumps located throughout the EPA has acknowledged that wet disposal of coal ash presents a greater risk to human health and the environment than dry landfills because hazardous chemicals are more likely to migrate from such dumps and the large impoundments present a risk of catastrophic failure.

On June 30, 2009, following pressure from legislators and environmental organizations [See WIMS 6/22/09], EPA posted a list of 44 “high hazard potential” impoundments containing coal combustion residuals, commonly referred to as coal ash, at 26 different coal burning electric utility facilities [See WIMS 6/30/09]. The groups indicated that the FOIA data the obtained note ownership, location, hazard potential, year commissioned, type and quantity of coal combustion waste disposed, dates of the last regulatory or company assessment, and in some instances whether an unregulated discharge of coal ash had occurred. Some critical data were not included because companies claimed the data as "Confidential Business Information."

According to a release, states with coal ash sites included in the list are: Alabama, Arkansas, Arizona, Colorado, Delaware, Florida, Georgia, Iowa, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, North Dakota, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Wisconsin, West Virginia, and Wyoming. Lisa Evans, an attorney at Earthjustice said, "There is no lingering doubt, these coal ash dumps are dangerous and must be regulated immediately. The EPA list provides a clear view of the substantial extent of the threat. Now the agency needs to take the next step and ensure that communities are informed and protected against the possibility of another TVA-like tragedy."

On March 9, the EPA sent letters to hundreds of power generating facilities requesting information about coal ash surface impoundments [See WIMS 3/10/9]. The letters were in response to the disaster that occurred on December 22, 2008, at the Tennessee Valley Authority’s Kingston Fossil Plant in Harriman, TN [See WIMS 1/9/09]. Over 1 billion gallons of coal ash sludge flooded 300 acres in and near the Emory River when a dike at a coal ash pond collapsed, destroying homes and property and poisoning surrounding waters and wildlife.

The groups said the FOIA data just released reveal the problems are much more widespread than EPA previously thought. The wet disposal of coal ash and affect communities in 35 states, with concentrations of dangerous dumps in the Midwest, Appalachia, Intermountain West and Southeast. The data reveal that the majority of dump sites are over three decades old -- raising questions about the structural integrity of their dams and whether the waste ponds are adequately lined. Most older dump sites are not lined to prevent the migration of harmful chemicals to drinking water. The data reveal also that regulatory inspections of these dams by state and federal agencies are infrequent or non-existent.

EPA's data also indicate that many of the wet dumps are very large, with over a hundred exceeding 50 acres, including numerous sites comprising several hundred acres. Furthermore the largest dumps tend to be the older sites with the least amount of protection. The groups said, "The problems are likely underestimated by the present data set because companies like Duke Energy, Alabama Power, Georgia Power and Progress Energy have withheld information on 74 dump sites, including some of the largest dump sites in the U.S, claiming the information is 'confidential business information.'"

The groups said that despite the obvious threats posed by coal ash dumps, 25 senators (nine Democrats and 16 Republicans) signed a letter supporting Federal regulation that would let the utility companies off the hook. Mary Anne Hitt, Deputy Director of the Sierra Club’s Beyond Coal Campaign said, "Research has made it clear that coal ash is becoming increasingly toxic. In fact the cancer risk of people living near some coal ash sites is a staggering 1 in 50. Despite those chilling statistics, there are still no federal rules in place for safe disposal of coal ash. Coal ash should be treated like the hazardous substance it is, governed by strong rules to protect communities and hold the coal industry accountable for the risks posed by its toxic waste."

Access a lengthy release from Earthjustice with links to the FOIA data and related information (click here). Access information from EPA on the list of the units and other information related to coal ash (click here). Access EPA's Fossil Fuel Combustion Waste website for more information (click here). Access EPA's Coal Ash request website with links to the letter, facilities, corporations, Environmental Council of the States, and more (click here).

Business Groups Step Up Fight Against Climate Legislation

Aug 27: As the U.S. Senate prepares to consider its version of a climate change and energy bill, and the United Nations Secretary-General is telling countries that the major climate change agreement to be considered later this year in Copenhagen "will determine the future of our planet,” major business organizations including the National Association of Manufacturers (NAM), National Federation of Independent Business (NFIB), the U.S. Chamber of Commerce (USCC), the American Petroleum Institute (API) are stepping up their fight in opposition to climate change legislation and regulation of greenhouse gas (GHG) emissions. Even with near filibuster-proof numbers, Senate Democrats will find it difficult to pass climate legislation amidst the backdrop of a struggling economy, high unemployment, contentious political divides over the cost of health care reform and regional political differences among their own ranks.

On August 27, NAM and NFIB launched a multi-state, multi-million-dollar comprehensive advertising campaign opposing the American Clean Energy and Security Act (H.R. 2454, ACES), the House-passed Waxman-Markey climate change bill [See WIMS 6/26/09]. Joining in opposition are several state manufacturing associations in Indiana, Michigan, Missouri, Nebraska, North Dakota, Ohio and Virginia. The groups are encouraging manufacturers, small business owners and the public to "Speak Out" against the bill and its potentially devastating impact on the economy. The advertisements will run through September 4 and will include television, radio and Internet. The initial phase of the campaign will be conducted in the following states: Alaska, Arkansas, Indiana, Missouri, Michigan, Montana, Nebraska, North Carolina, North Dakota, South Dakota, Ohio, Virginia and West Virginia.

NAM Executive Vice President Jay Timmons said, “Our message to senators is that the Waxman-Markey bill is an ‘anti-jobs, anti-energy’ piece of legislation. It will shrink our nation’s economy, make us less competitive with foreign countries, raise energy costs for consumers and businesses, take away disposable income for Americans and cause significant job loss. Our country needs a growth strategy as we struggle to come out of the worst economic downturn since the Great Depression. What we do not need are policies and regulations that will cost millions of jobs and harm our overall economy.”

NFIB president and CEO Dan Danner said, “We’re very concerned about the impact of the legislation on small businesses. America’s job creators are struggling enough in this economy and don’t need additional burdens. Small business owners are not able to adjust the price of their goods and services quickly enough to match potentially steep energy cost increases without hurting their customer base. The Waxman-Markey bill would significantly raise energy-related costs and lead to considerable job losses.” Earlier this month, the NAM, in partnership with the American Council for Capital Formation (ACCF), released a study that assesses the impact the Waxman-Markey bill would have on manufacturing, jobs, energy prices and the overall economy [See WIMS 8/13/09]. NAM said the bill would cause losses in GDP up to $3.1 trillion (2012-2030); employment losses up to 2.4 million jobs in 2030; and increase residential electricity price increases up to 50 percent by 2030.

Throughout the month of August the API has been releasing state-specific information on what it calls "the devastating impact" of job losses and reduced household purchasing power if ACES were implemented. The information is results from an API-commissioned analysis by CRA International. Information release thus far includes the states of TX, NM, NC, OH, TN, IN, CO,MO, FL, ND, AK, ND, and SC.

On August 24, API release information from another analysis by global consulting firm EnSys Energy of the impact of ACES on the U.S. refining sector which they say indicates "that investment in U.S. refining capacity could plummet because the cost of doing business could soar." API said the study shows that the "United States will be more dependent on imports of gasoline and other petroleum fuels while U.S. refining production would be shifted overseas" if ACES becomes law.

API and many other business organizations are funding a nationwide coalition effort called "Energy Citizens" which says it is "voicing their concerns about the impact climate legislation passed by the U.S. House of Representatives would have on American jobs, families and businesses." Also, the U.S. Chamber has organized, The Alliance for Clear Climate Economics and Science Solutions (ACCESS) "to ensure that any regulation of greenhouse gases using existing environmental laws not harm the economy and American jobs."

On August 15, the U.S. Chamber announced that it was requesting that EPA conduct a formal on-the-record hearing on the evidence underlying its so-called "endangerment finding" under the Clean Air Act [See WIMS 4/27/09]. The Chamber said, "EPA wants to use the Clean Air Act to regulate CO2 emissions from cars. Before it can do this, EPA must first find, as a matter of law, that U.S. greenhouse gas emissions from new motor vehicles endanger U.S. public health and welfare. Because EPA has proposed that man-made greenhouse gas emissions cause or contribute to rising global temperatures, to make the endangerment finding EPA must now establish that the rising temperatures threaten public health and welfare—that is their burden of proof. EPA is, by all accounts, on the verge of answering this question in the affirmative. We don’t think the evidence EPA set forth meets the legal criteria to support such a finding, and we think a judge would agree with us."

Meanwhile, on August 28, the United Nations Secretary-General Ban Ki-moon today underscored the need for countries to "seal the deal" at the COP 15 climate change conference in Copenhagen in December. Ban said, “We have about three months until the [Conference] -- three months to reach an agreement that will determine the future of our planet.” The UN has launched "Global Climate Week" from September 21 to 25. Events are planned in more than 120 countries for this first Global Climate Week, which coincides with the summit on climate change, convened by Ban on September 22, in New York.

In an effort that attempts to counter the business groups' activity, Al Gore's Alliance for Climate Protection's (ACP) Repower America campaign, in partnership with the Blue Green Alliance and its labor and environmental partners, have embarked on a nationwide "Made in America Jobs" tour, highlighting the benefits to American workers and businesses of transitioning to a clean energy economy that will create millions of jobs. Maggie Fox, President and CEO of the Alliance for Climate Protection said, "The Alliance for Climate Protection and the Blue Green Alliance are crossing the country to show Americans -- through tours of clean energy businesses, conversations with workers making the parts that harness clean energy and rallies with local residents -- that the benefits of transitioning to a clean energy economy are available today through good-paying jobs which are giving new meaning to the term Made in America."

The Blue Green Alliance Launched by the United Steelworkers and the Sierra Club in 2006, now includes the Natural Resources Defense Council, Communications Workers of America, Service Employees International Union, Laborers' International Union of North America, Utility Workers Union of America and American Federation of Teachers. An article in today's [August 31] Washington Post suggests that environmental and labor groups may be losing the campaign delivering a much more subtle message and being far out-spent by the business groups (See links below).

Access a release from NAM (click here). Access links to individual state releases and reports from API (click here). Access a release and link to the API EnSys Energy study (click here). Access the Energy Citizens website and list of participating organizations (click here). Access the ACCESS website (click here). Access blog comments from the Chamber on its petition to EPA (click here). Access more Chamber comments and link to the complete 23-page petition (click here). Access the EPA docket on CO2 regulation EPA-HQ-OAR-2009-0171 (click here). Access a release from UN and link to further information (click here). Access a release from UNEP on the Climate Week initiative with links to additional information (click here). Access the Made In America tour schedule and information (click here). Access the Blue Green Alliance website (click here). Access the ACP website (click here). Access the Washington Post article (click here).

Climate Chief Reports “Limited Progress” On UNFCCC Talks

Subscribers & Readers Note: WIMS will be on break for the next two weeks. We'll be back on Monday, August 31, 2009. Have a safe and enjoyable end of summer.




Aug 14: Following earlier more positive reports [See WIMS 8/13/09], at a sobering press briefing, Yvo de Boer, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC) reported that only “limited progress” was made at the most recent, week-long climate change talks in Bonn, Germany. The international negotiations are expected to culminate in December in Copenhagen with a new pact on slashing greenhouse gas emissions that will replace the Kyoto Protocol, whose first commitment period ends in 2012.

In an end of meeting press briefing de Boer stressed that "a climate deal in Copenhagen this year is an unequivocal requirement to stop climate change from slipping out of control." However, de Boer went so far as to say that, "while selective progress had been made to consolidate the huge texts on the table, at this rate, we will not make it.” With only two more conferences, totaling 15 days, scheduled before the start of the critical COP 15 meeting, he said, “negotiations will need to considerably pick up speed for the world to achieve a successful result at Copenhagen.” The next informal meetings, prior to Copenhagen, are scheduled for Bangkok from September 28 to October 9, and Barcelona from November 2 to 6.

De Boer indicated that some accomplishments were made in the areas of adaptation, technology and capacity building, however, other issues such as how mid-term (2020) emission reduction pledges of industrialized countries could be translated into legally binding targets as a key component of the Copenhagen deal continue to be more difficult. He said, "Industrialized countries need to show a greater level of ambition in agreeing to meaningful mid-term emission reduction targets. The present level of ambition can be raised domestically and by making use of international cooperation. We also need a clear indication of the finance and technology industrialized countries are ready to provide to help developing countries green their economic growth and adapt to the impacts of climate change."

He continued, saying, "In the context of the G8 and Major Economies Forum, I see a group of countries considering actions that would allow them to profit from the boom in clean technology. The question is how all nations can profit from this development. Poorer countries risk being left by the wayside without access to technology and finance. International cooperation needs to provide them with the means to enable them to green their economies and to adapt to the inevitable effects of climate change. In order for that support to be financed, I believe that countries need to be more specific about what they want supported and how."

In addition to the two informal work meeting mentioned above, a major opportunity for all Heads of State and governments of the world to provide clear political guidance to negotiators ahead of the UN Climate Change Conference in Copenhagen will be the UN Secretary-General’s Climate Change Summit for world leaders September 22 in New York. The New York meeting will assemble Heads of State and Government from all 192 Parties to the UNFCCC.

The World Resources Institute (WRI) has prepared a useful 77-page tabulated summary of the various country/Party submissions for consideration that have been made from August 2008 through August 2009. Section I contains submissions as they relate to measurable, reportable and verifiable (MRV) support and actions; Section II contains submissions related to shared vision; Section III contains the legal aspects of proposals for an agreed outcome; Section IV contains submissions on finance; and Section V summarizes submissions on technology. WRI indicates that the table summaries represent WRI’s interpretation of a selection of Party submissions, and do not necessarily reflect the complete views of the Parties.

Access a closing release on the UNFCCC meeting (click here). Access a webcast of the de Boer closing press briefing (click here). Access complete information on the current meetings and on-demand webcasts (click here). Access the UNFCCC website for more information (click here). Access details of five proposals by Parties for a protocol to the Convention (click here), including a draft 23-page implementing agreement from the U.S. (click here); and twelve proposals by Parties for amendment to the Kyoto Protocol (click here). Access the complete WRI summary of submissions (click here).

NAM Says ACES Is "Anti-Jobs, Anti-Growth" Legislation

Aug 12: The National Association of Manufacturers (NAM) and the American Council for Capital Formation (ACCF) unveiled a comprehensive study on the impact of The American Clean Energy and Security Act of 2009, also known as the Waxman-Markey Bill (HR 2454, or ACES). The legislation calls for a cap and trade program and other provisions governing fuel choices available to businesses and consumers. The bill passed the House of Representatives by a slim margin (219-212) [See WIMS 6/26/09] and the Senate is expected to release its version of climate legislation in September.

The study, which was commissioned by NAM and ACCF and conducted by Science Applications International Corporation (SAIC) using NAM and ACCF input assumptions, assesses the impact of the Waxman-Markey Bill on manufacturing, jobs, energy prices and our overall economy. The NAM and ACCF released national data as well as the analysis for 15 industrial states that would be impacted greatly if this or similar legislation is signed into law. NAM said the full report, including the data covering the remaining 35 states will be released in the coming weeks.

The NAM/ACCF study is in addition to other recent studies on the economic impacts of climate legislation. On August 4, the Energy Information Administration (EIA) released a report -- Energy Market and Economic Impacts of H.R. 2454 [See WIMS 8/5/09]. On June 22, the Congressional Budget Office (CBO) released an analysis of the potential effects on households of the cap-and-trade program that would be implemented pursuant to H.R. 2454 [See WIMS 6/23/09]. Also, on June 23, U.S. EPA released a new 53-page report with a 107-page appendix entitled, EPA Analysis of the American Clean Energy and Security [ACES] Act of 2009 H.R. 2454 in the 111th Congress [See WIMS 6/24/09].

Jay Timmons, executive vice president of the NAM said, “Climate change is a very complex issue and I hope Senators will look closely at this study as they consider climate change legislation this fall. At a time when our country is struggling to come out of our longest and deepest economic downturn since the Great Depression, lawmakers should be focused on policies that provide incentives for businesses so they can create jobs and grow. Unfortunately, this study confirms that the Waxman-Markey Bill is an ‘anti-jobs, anti-growth’ piece of legislation. Further, leaders of countries such as China and India have made it clear they have no intention of reducing their own emissions. Waxman-Markey would give an edge to overseas competitors, discouraging domestic investment and the creation of American jobs.”

According to a release from NAM, the NAM/ACCF study accounts for all Federal energy laws and regulations currently in effect. It accounts for increased access to oil and natural gas supplies, new and extended tax credits for renewable generation technologies, increased World Oil Price (WOP) profile, as well as permit allocations for industry and international offsets. Additionally, the provisions of the stimulus package passed in February are included in this study.
Key findings of the NAM/ACCF study include: Cumulative Loss in Gross Domestic Product (GDP) up to $3.1 trillion (2012-2030); Employment losses up to 2.4 million jobs in 2030; Residential electricity price increases up to 50 percent by 2030; and Gasoline price increases (per gallon) up 26 percent by 2030.

Dr. Margo Thorning, senior vice president and chief economist for ACCF said, “This data shows that we cannot divorce the environmental impacts from potential economic damages. Policymakers may have the best of intentions when it comes to the environment, but it’s crucial that we compare the economic cost to the legislation’s actual impact on global GHG reductions. Considering that developing countries such as China and India have publicly stated that they will not undertake similar emissions policies, there would be almost no global environmental benefits from the bill. Ultimately, this study shows that Waxman-Markey, would significantly decrease employment and increase energy prices at a time when we can least afford it.”

The study also indicates that industrial states would be "disproportionately impacted by high energy prices, loss of jobs and income." The 15 states analyzed in the initial study include: AR; IL, IN; IA; KY; MI; MN; MO; NC; OH; PA; TN; VA; WV; AND WI. SAIC used a modified version of the National Energy Modeling System, NEMS/ACCF-NAM 2, and the NAM and ACCF input assumptions, to quantify the impact of the Waxman-Markey bill.

In advance of the NAM/ACCF study, the Environmental Defense Fund (EDF) issued a release providing links to several contradictory studies. EDF said, "NAM/ACCF's study from last year, which was seriously flawed. It looked at the earlier Lieberman-Warner bill, but it ignored important provisions of the legislation and imposed artificial constraints on the economy's ability to reduce emissions."

Access a release from NAM (click here). Access links to the national and 15 state-by-state economic impacts as well as a PowerPoint presentation and executive summary and more (click here). Access a release from EDF with links to additional studies (click here). Access EPA's website for various climate change legislation economic analyses (click here).

Article: Bringing The Peak Oil Debate Into Focus

Aug 10: The Federal Reserve Bank of Atlanta Economic Review has published a 16-page article entitled, "The Peak Oil Debate." According to an overview of the article, for the past half-century, a debate has raged over when "peak oil" will occur -- the point at which output can no longer increase and production begins to level off or gradually decline. Determining how long the oil supply will last has become even more pressing because the world’s energy supply still relies heavily on oil, and global energy demand is expected to rise steeply over the next twenty years.

The article seeks to bring the peak oil debate into focus. The author notes that a number of factors cloud the energy outlook: Estimates of remaining resources are typically given as a range of probabilities and are thus open to interpretation. Variations also occur in estimates of future oil production and in the ways countries report their reserve data. The lack of a common definitional framework also confuses the debate. The author provides definitions of frequently used terms, delineating types of reserves and conventional versus nonconventional resources. The article also discusses how technological innovations, government policies, and prices influence oil production.

The article concludes, ". . .regardless of the exact timing of peak oil production -- be it this year or fi fty years down the road --
the world faces the challenge of adapting to a new model of energy supply. Although the peak oil literature tends to concentrate heavily on the scenarios of peaking world oil production, the true underlying issue is a fear that the transition from conventional oil to substitutes will be expensive and chaotic, leaving insuffi cient time for supply substitution and adaptation.

"This adaptation process -- which involves using more renewable resources and conservation and developing new technology and processes to better access hydrocarbon deposits and more effi ciently extract and refi ne nonconventional sources -- has already begun. But the road to the future energy balance -- one with dwindling amounts of conventional oil -- is far from mapped out.

"It is possible that the world’s vast endowments of hydrocarbon resources will be heavily relied upon to answer this growing call for substitutes for the conventional oil supply. However, there is also potential for an energy future largely diversified away from hydrocarbon use. Most likely, future energy sources will be a combination of the two. Perhaps the peak oil literature would better serve society by being more solution-oriented, focusing on discovering the best way to transition to a world with less conventional oil rather than locking horns about discrepancies in terminology."

Access the complete article (click here).

Moderate Democratic Senators Will Shape Climate Legislation

Aug 7: Senator Evan Bayh (D-IN) and nine of his Senate Democratic colleagues wrote to President Barack Obama on Thursday (August 6) to outline the need to maintain a level playing field for American manufacturing in any climate change legislation to come before the Senate in the fall. The Senators expressed their support for a border adjustment mechanism and other initiatives that would ensure the future competiveness of U.S. manufacturing. The letter was signed by Bayh and Senators Sherrod Brown (D-OH), Debbie Stabenow (D-MI), Russell D. Feingold (D-WI), Carl Levin (D-MI), Robert P. Casey (D-PA), Robert C. Byrd (D-WV), Arlen Specter (D-PA), John D. Rockefeller IV (D-WV), and Al Franken (D-MN).

As WIMS has previously noted on Mar 18, 2009, a group of 15 Senators -- 14 "moderate" Democrats and Joe Lieberman (I-CT) announced they were forming a coalition to help shape public policy that will have a major impact on pending proposals for environmental, energy and climate change legislation [See WIMS 3/19/09]. The original Group of 15, including some strong supporters of President Obama lead by Bayh of Indiana, Tom Carper (D-DE) and Blanche Lincoln (D-AR); and also included Mark Udall (D-CO); Michael Bennet (D-CO), Mark Begich (D-AK); Kay Hagan (D-NC); Herb Kohl (D-WI); Mary Landrieu (D-LA); Joe Lieberman (I-CT), Claire McCaskill (D-MO); Ben Nelson (D-NE); Bill Nelson (D-FL); Jeanne Shaheen (D-NH); and Mark Warner (D-VA). Comparing the original group of 15, with the new coalition of 10 Senators, it now appears that the "moderate" group has become much larger and will have an even greater influence on any energy and climate change legislation.

In the August 6 letter the senators wrote, “As Congress considers energy and climate legislation, it is important that such a bill include provisions to maintain a level playing field for American manufacturing. We must not engage in a self-defeating effort that displaces greenhouse gas emissions rather than reducing them and displaces U.S. jobs rather than bolstering them. Domestic manufacturers and the workers they employ can and must play a vital role in our nation’s clean energy future.”

The Senators also outlined initiatives to ensure manufacturers are not disproportionately affected by climate change legislation. They said, “Any climate change legislation must prevent the export of jobs and related greenhouse gas emissions to countries that fail to take actions to combat the threat of global warming comparable to those taken by the United States. It is essential that climate change legislation include a border mechanism, sufficient allowances to energy intensive industries and other effective measures that encourage international agreements and maintain a level playing field for American manufacturers.”

Access a release from Senator Bayh (click here). Access the Aug. 6 letter from the Senators (click here). Access a revealing March 2009 "Hardball" interview with Senator Evan Bayh (click here).

$2 Billion Clunkers Funding Approved; Only 6 GOP Votes

Aug 6: Although the Car Allowance Rebate Systems (CARS) or “Cash for Clunkers” program has been overwhelmingly popular with consumers, it was able to secure additional funding with the help of just six Senate Republicans [See WIMS 8/3/09]. The funding authorization bill, H.R. 3435, a supplemental appropriations for FY 2009, that passed the House 316-109 last week (incl. 77 Republicans), passed the Senate with 60 votes, including only six Republican votes. Republican Senators Lamar Alexander (R-TN), Christopher Bond (R-MO), Susan Collins (R-ME), Bob Corker (R-TN), Olympia Snowe (R-ME), and George Voinovich (R-OH) voted for additional funding that is expected to carry the program through the Congressional summer recess. Because no amendments were approved, the bill has been sent to the President’s desk to be signed into law.

Senate Majority Leader Harry Reid (D-NV) released a statement saying, “Cash for Clunkers is an extraordinarily popular program that is a good example of a public-private partnership where both consumers and business win, and one that contributes to Americans’ confidence in our continuing economic recovery. This program gives a much needed jolt to our economy and our manufacturers at a critical time. Retiring and recycling older, less efficient cars and trucks and replacing them with higher fuel economy models reduces oil consumption and air pollution. Beyond helping our domestic auto industry, this program will stimulate other sectors of the auto supply chain like mechanics and auto parts manufacturers.”

Senator Snowe issued a statement saying, “I believe it is unfortunate that we hastily approved this program in the first place. This rush explains the difficulties experienced by our dealers in Maine; hour-long waits to approve a single transaction, the consistent crashing of government websites, and a lack of clarity in terms of how much money has been spent. Yet, our auto dealers are fronting the cost of this program, and are participating in good faith with the expectation they will be reimbursed; Congress cannot afford to let them down.”

Senator Lamar Alexander (R-TN) said, "This program obviously stimulates the economy, and the money to pay for it comes from the earlier stimulus bill that isn’t working. It is especially important in Tennessee where one out of every three manufacturing jobs is auto-related. I strongly oppose any effort now or in the future to pay for ‘cash for clunkers’ by adding to the debt.”

Senator Carl Levin (D-MI) delivered a statement on the Senate floor just prior to the vote saying, "Rarely has this body passed legislation that has so clearly and quickly met our goals than when it approved the first installment of money for this program earlier this summer. The program offered rebates of $3,500 or $4,500 for consumers who traded in old, inefficient vehicles for new cars or trucks with higher mileage. Thousands of consumers who hoped to take advantage now wonder if they will have the opportunity. . . The impact has been so striking that one private economist has raised his estimate for economic growth in the third quarter of this year by more than 50 percent, based solely on the success of 'cash for clunkers.'

"This program accomplished what it was intended to accomplish. In just a few days, a quarter of a million Americans traded in their old car for a new model using the credits available from this program. That’s a quarter of a million American families that more fuel-efficient transportation; a quarter of a million transactions that will pump new money into local economies; and an incalculable boost to this nation’s struggling auto industry. . ."

Senator Levin reminded members that while some amendments may be "well intentioned. . . any amendment that is adopted here would be the death knell for this program. It would have to end immediately because of the uncertainty over whether any funds remain."

Senator Claire McCaskill (D-MO), one of four Democrats to vote against the bill, posted her rationale in advance of the vote saying, "Of course the cash for clunkers program is popular, we’re giving away money. My concerns are first, that we are just moving demand around, and that the sales in this program are robbing sales from 2, 3, or 12 months from now when we are going to still need sustained growth in our economy. Remember, around 60,000 to 70,000 people are trading their cars in for new ones every month without this program. Second, I haven’t yet gotten clear answers on how many deals are currently in the pipeline and how they will wind this program down in a way that will give certainty to buyers and dealers. Third, I’m worried that an extension right now will penalize the two companies that we just made huge taxpayer investments in. I’m trying to verify, but I believe, based on my conversations with dealers and other research, that Chrysler and GM both have inventory issues with the cars that qualify for this program. . ."

Access the Senate roll call vote on H.R. 3435 (click here). Access the statement from Senator Reid (click here). Access the statement from Senator Snowe (click here). Access the statement from Senator Alexander (click here). Access the floor statement from Senator Levin (click here). Access a release from Senator McCaskill explaining her no vote on August 4 (click here). Access legislative details for H.R. 3435 (click here). Access the CARS website for additional information (click here).

Bipartisan Center Report On Science In Federal Regulation

Aug 5: A bipartisan panel of top scientific and regulatory experts released recommendations calling on the White House and Federal agencies to make specific changes in the regulatory process to clearly distinguish scientific questions from policy disputes. The report comes from the Science for Policy Project (SPP), a project of the Bipartisan Policy Center (BPC). BPC is a non-profit organization that was established in 2007 by former Senate Majority Leaders Howard Baker, Tom Daschle, Bob Dole and George Mitchell to provide a forum where tough policy challenges can be addressed in a pragmatic and politically viable manner.

The SPP is co-chaired by former Rep. Sherwood Boehlert (R-NY), past chair of the House Science Committee, and Donald Kennedy, former editor of Science; and eleven other ideologically diverse members from business, academia, government and non-profits. Boehlert said, "The fundamental theme of the report is that the Administration needs to put in place procedures to try to distinguish science questions from policy questions. Often, policy disputes are cast as fights over science. This damages the credibility of science and obscures the real issues that ought to be debated. For example, how much risk a substance poses to human health or the environment is a science question; how much risk is acceptable is a policy question."

The report recommends requiring new information when regulations are proposed by agencies such as U.S. EPA and the FDA, and enhancing the credibility of Federal advisory committees to ensure the integrity of science in regulatory policymaking. Many of these recommendations are relevant to the White House and Federal agency effort to implement President Obama's March 9, 2009 Presidential Memorandum on Scientific Integrity [See WIMS 3/10/09]. An interim version of the SPP report was released in March, and the White House has reviewed that report as part of its work to issue guidelines on scientific integrity and regulatory reform, which are expected soon. The report's recommendations include:

• Clarity regarding key science questions needed to write specific regulations. Federal Register notices for proposed regulations should make clear what science questions and what policy questions needed to be answered to formulate the regulation and what science was most influential in drafting the regulation. The notices might also make clear what additional science would help resolve remaining questions and might offer policy alternatives that are consistent with the science.
  
• Greater focus on science in advisory committees. Federal agencies should empanel scientific advisory committees – committees that are composed solely of members with relevant scientific expertise – to address science questions relevant to policy, and those panels should not make policy recommendations. Members of such committees should be Special Government Employees, a category that makes them subject to conflict of interest and other ethics rules.
  
• Greater transparency in committee appointment process. The process for appointing committees should be more transparent, with agencies taking steps including seeking names through the Web and asking for comments on proposed individuals on the Web.
  
• More disclosure by committee members. Members of scientific advisory committees should be required to disclose to the government and to the public far more information on their backgrounds than is currently the case so the government and the public can evaluate their qualifications and determine whether their service raises any concern about conflicts of interest or bias.
  
• Clearer conflict of interest rules. The government should set clear rules about what constitutes a conflict of interest for a member of a scientific advisory committee. The government should distinguish clearly between conflict of interest and bias.
  
• Greater transparency in committee selection might allow a limited number of closed committee meetings. If procedures are put in place to make the selection of advisory committee members more transparent, then the government could consider allowing scientific advisory committees to have a limited number of closed meetings under specific circumstances.
  
• Transparency in the use of scientific literature. The process agencies and scientific advisory committees use to review the scientific literature should become more transparent and thorough. In general, papers that have not been peer reviewed should be treated with skepticism, but they should not be automatically excluded.
  
• Legitimate use of Confidential Business Information. The Confidential Business Information designation, which limits public access to information, is legitimate but appears to be overused.
  
• Greater participation in, and improved quality of peer review. Federal agencies, universities and scientific journals need to experiment with ways to encourage more scientists to act as peer reviewers and to experiment with different peer review procedures to see what will improve the quality of reviews.

The Science for Policy Project is funded by the David and Lucile Packard Foundation, the William and Flora Hewlett Foundation, and ExxonMobil Foundation. The project was directed by David Goldston, the former chief of staff of the House Science Committee.

Access a release from BPC (click here). Access the complete 47-page report (click here). Access the BPC website for more information (click here).

EIA Report On ACES Market and Economic Impacts

Aug 4: The Energy Information Administration (EIA) released a report -- Energy Market and Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 2009 -- prepared at the request of House Energy & Commerce Committee Chairman Henry Waxman (D-CA) and Subcommittee Chairman Edward Markey (D-MA) for an analysis of H.R. 2454, the American Clean Energy and Security Act of 2009 (ACES). EIA indicates ACES, which narrowly passed the House of Representatives on June 26, 2009, is a complex bill that regulates emissions of greenhouse gases through market-based mechanisms, efficiency programs, and economic incentives [See WIMS 6/26/09].

EIA says the cap-and-trade program for greenhouse gas (GHG) emissions, which covers roughly 84 percent of total U.S. GHG emissions by 2016, is in many respects the centerpiece of the bill and the primary driver of the results presented in this report. The program subjects covered emissions to a cap that declines steadily between 2012 and 2050. The cap requires a 17- percent reduction in covered emissions by 2020 and an 83-percent reduction by 2050, both relative to a 2005 baseline. The cumulative GHG emissions covered by the Title III cap-and-trade program over the 2012 to 2030 period are estimated to be 113.4 billion metric tons (BMT) in CO2-equivalent terms.

EIA lists the key provisions of ACES that are represented in the policy cases developed in this analysis include: the GHG cap-and-trade program for gases other than HFCs, including provisions for the allocation of allowances to electricity and natural gas distribution utilities, low-income consumers, State efficiency programs, rebate programs, energy-intensive industries, and other specified purposes; the combined efficiency and renewable electricity standard for electricity sellers; the carbon capture and storage (CCS) demonstration and early deployment program; Federal building code updates for both residential and commercial buildings; Federal efficiency standards for lighting and other appliances; technology improvements driven by the Centers for Energy and Environmental Knowledge and Outreach; and the smart grid peak savings program.

EIA prepared a range of analysis cases for the report. The six main analysis cases discussed in the Executive Summary, while not exhaustive, focus on two key areas of uncertainty that impact the analysis results: The role of offsets is a large area of uncertainty in any analysis of ACES; and the other major area of uncertainty in assessing the energy system and economic impacts of ACES involves the timing, cost, and public acceptance of low- and no-carbon technologies. Several key findings include:

• Given the potential of offsets as a low-cost compliance option, the amount of reduction in covered emissions is exceeded by the amount of compliance generated through offsets in most of the main analysis cases. Cumulative compliance between 2012 and 2030, including reductions both in domestic emissions of covered gases and in domestic and international offsets, ranges from 24.4 BMT to 37.6 BMT carbon dioxide (CO2)-equivalent emissions in the main analysis cases, representing a 21-percent to 33-percent reduction from the level of cumulative covered emissions projected in the Reference Case.
• The vast majority of reductions in energy-related emissions are expected to occur in the electric power sector. Across the ACES main cases, the electricity sector accounts for between 80 percent and 88 percent of the total reduction in energy-related CO2 emissions relative to the Reference Case in 2030.
• If new nuclear, renewable, and fossil plants with CCS are not developed and deployed in a timeframe consistent with emissions reduction requirements under ACES, covered entities are expected to respond by increasing their use of offsets, if available, and by turning to increased natural gas use to offset reductions in coal generation.
• Emissions reductions from changes in fossil fuel use in the residential, commercial, industrial and transportation sectors are small relative to those in the electric power sector. Taken together, changes in fossil fuel use in these sectors account for between 12 percent and 20 percent of the total reduction in energy-related CO2 emissions relative to the Reference Case in 2030.
• GHG allowance prices are sensitive to the cost and availability of emissions offsets and low-and no-carbon generating technologies. Allowance prices in the ACES Basic Case are projected at $32 per metric ton in 2020 and $65 per metric ton in 2030. Across all main analysis cases, allowance prices range from $20 to $93 per metric ton in 2020 and from $41 to $191 (2007 dollars) per metric ton in 2030 (Figure ES-3). The lower prices in the range occur in cases where technological options such as CCS and adoption of new nuclear power plants can be deployed on a large scale before 2030 at relatively low costs.
• ACES increases energy prices, but effects on electricity and natural gas bills of consumers are substantially mitigated through 2025 by the allocation of free allowances to regulated electricity and natural gas distribution companies. Except for the ACES No International/Limited Case, electricity prices in five of the six main ACES cases range from 9.5 to 9.6 cents per kilowatt-hour in 2020, only 3 to 4 percent above the Reference Case level. Average impacts on electricity prices in 2030 are projected to be substantially greater, reflecting both higher allowance prices and the phase-out of the free allocation of allowances to distributors between 2025 and 2030. By 2030, electricity prices in the ACES Basic Case are 12.0 cents per kilowatt-hour, 19 percent above the Reference Case level, with a wider band of 11.1 cents to 17.8 cents (10 to 77 percent above the Reference Case level) across all six main policy cases.

ACES increases the cost of using energy, which reduces real economic output, reduces purchasing power, and lowers aggregate demand for goods and services. The result is that projected real gross domestic product (GDP) generally falls relative to the Reference Case. Total discounted GDP losses over the 2012 to 2030 time period are $566 billion (-0.3 percent) in the ACES Basic Case, with a range from $432 billion (-0.2 percent) to $1,897 billion (-0.9 percent) across the main ACES cases.

Consumption and energy bill impacts can also be expressed on a per household basis in particular years. In 2020, the reduction in household consumption is $114 (2007 dollars) in the ACES Basic Case, with a range of $26 to $308 across all main ACES cases. In 2030, household consumption is reduced by $288 in the ACES Basic Case, with a range of $133 to $722 per household across all main ACES cases.

The report notes that the modeling horizon for this analysis ends in 2030. Unless substantial progress is made in identifying low- and no-carbon technologies outside of electricity generation, the ACES emissions targets for the 2030-to-2050 period are likely to be very challenging as opportunities for further reductions in power sector emissions are exhausted and reductions in other sectors are thought to be more expensive.

Environmental Defense Fund (EDF) issued a release say the EIA report indicates that "for $83 per year per household – or a dime a day per person we can solve climate change, invest in a clean energy future, and save billions in imported oil." EDF indicated that the EIA analysis "has similar findings to two other impartial and substantive studies done recently, from the Environmental Protection Agency and the Congressional Budget Office." EDF said, "This analysis confirms what every other credible study has found, and it -- once again -- refutes the widely reported scare tactics about the cost of the cap and trade bill. Opponents of action will always try to cherry-pick the numbers and use models with biased assumptions. The EPA, EIA and CBO are the non-biased standard for economic analysis."

Access the complete report or individual sections as well as spreadsheets and appendices (click here). Access the EDF release (click here).

Senate Hearing On Climate Law Allowance & Revenue Distribution

Aug 4: The Senate Finance Committee, Chaired by Senator Max Baucus (D‐MT) held a hearing on Allowance and Revenue Distribution Under Climate Change Legislation. Witnesses testifying at the hearing included representatives from the: Government Accountability Office (GAO); Resources for the Future (RFF); American Enterprise Institute (AEI) for Public Policy Research; and Environmental Defense Fund. Chairman Baucus and Ranking Member Chuck Grassley (R-IA) delivered opening statements.

Chairman Baucus explained that most major climate change bills place a limit -- or “cap” -- on carbon dioxide. Companies subject to the cap must buy permits -- often called “allowances” -- to emit greenhouse gases. One key issue in such a system is: How much of these allowances should the government sell at auction? And how much should the government give away for free?

He said, "Economists expect that these allowances will have a value, like cash. Thus, many argue that the government should not just give these allowances away. Many argue that the government should auction them, and return the proceeds to consumers. Others argue that the government should allocate a portion of the allowances to regulated companies. Doing so would soften the effects of putting a price on carbon." Under the House-passed, H.R. 2454 (ACES), at the outset, the government would freely allocate about 85 percent of the emission allowances.

Baucus indicates that, "Allowances will have significant value. In 2012, the first year of the program in the House‐passed bill, the Congressional Budget Office [CBO] puts their value at about $60 billion. For the period of 2010 to 2019, they amount to more than $870 billion." Baucus cites the CBO which says, “[T]he creation of allowances by the government should be recorded as revenues. That logic does not hinge on whether the government sells or, instead, gives away the allowances. Allowances would have significant value even if given away because the recipients could sell them or, in the case of a covered entity, use them to avoid incurring the cost of compliance.”

Baucus said that there are a number of ways to use allowance revenues to mitigate the cost of climate legislation on consumers and businesses. He cited for example, that "Congress could use the money from auctioning allowances to cut taxes: by cutting marginal rates, by cutting capital gains rates, by cutting payroll taxes. Or we could do all of the above. . . Congress could compensate consumers through rebates or fixed payments per‐capita. . . We could also devote allowance proceeds to helping low‐income Americans. We could expand the Earned Income Tax Credit. . . The House bill provided solid relief to low‐income Americans through these means. The Senate should match it, or build on it. Still another approach would be to dedicate a share of revenues to investment in energy efficiency."

Ranking Member Grassley said, "The President supports 100 percent auction of allowances." He cited, Treasury Secretary Geithner's testimony before the House Budget Committee earlier this year when he said, “This program should include a
100 percent auction of emissions allowances -- ensuring that the biggest polluters don't profit on the basis of past pollution…” He also cited Dr. Peter Orszag, OMB Director who said, “…if you didn’t auction the permit, it would represent the largest corporate welfare program that has ever been enacted in the history of the United States.”

Grassley said, "the allowance value. . . is in effect a national energy tax on all Americans -- one that will exacerbate the negative impact of other taxes on economic growth and jobs. This means that above all, we have a responsibility to mitigate, as much as possible, those painful effects on the American people."

GAO testified that, "The method for allocating allowances in a cap-and-trade program can have significant economic implications for the government, regulated entities, and households. Most importantly, a cap-and-trade system would create a market for a valuable new commodity: emissions allowances."

GAO indicated "A cap-and-trade program would increase the cost of burning fossil fuels and other activities that generate emissions and potentially raise costs for consumers. A key decision is the extent to which the government offsets these costs. For example, the government could sell the allowances and then return the revenues to covered entities or households. The government could also give away some or all of the allowances. According to the Congressional Budget Office, the value of the allowances could total $300 billion annually by 2020. Today’s testimony provides preliminary results of ongoing work assessing the potential effects of (1) allowance allocation methods, and (2) options for distributing program revenues or the economic value of allowances."

RFF testified that, "A simple per-household rebate of allowance revenue raised by the government through auction, coupled with a more moderate allocation to local distribution companies, can achieve distributional and regional goals at less cost and with greater administrative simplicity and predictability." AEI said, "Auctioning the allowances can address both the efficiency and distributional concerns, if the auction proceeds are properly used. Marginal tax rates can be reduced and compensation can be provided to vulnerable consumers."

EDF testified that, "The principles are straightforward: Protect consumers. Preserve and strengthen American competitiveness. And invest in the transition to a new, growing clean-energy economy. . . My conclusion is that the House bill strikes a sound balance, with the appropriate emphasis on the individual American family. Indeed, what is commonly overlooked is the extent to which HR 2454 channels allowance value to households . fully 43% of the total value over the life of the program."

Access a webcast of the hearing (click here). Access the hearing website for links to opening statement and all testimony (click here).

Senate "Cash For Clunkers" Debate Should Be Interesting

Aug 3: The overwhelming consumer response to the Car Allowance Rebate Systems (CARS) or “Cash for Clunkers” program, and the House approval of an additional $2 billion to extend the program has set the stage for an interesting Senate debate on the continuation of the program [See WIMS 7/31/09]. The future of the program hinges on a positive Senate vote, which appears likely, but, not without controversy and debate extending across party and philosophical lines.

Some Senators are arguing that the program is simply another auto company "bailout" while, others are arguing that requirements of the program should be insisting on upgrading to cars with better gas mileage. The Senate is expected to vote on the measure this week before it adjourns for the August recess. The CARs website reports that the program is still operating, but it is expected to be out of funds very soon.

The House voted 316 to 109 on July 31 to extend the program with an additional $2 billion in funding. The funding authorization is included in H.R. 3435, a supplemental appropriations bill for fiscal year 2009 for the Consumer Assistance to Recycle and Save Program. The 316 votes from approval consisted of 239 Democrats and 77 Republicans. 95 Republicans and 14 Democrats voted against the passage. The House Republican Leader John Boehner (R-OH) voted against the measure.

Senator John McCain (R-AZ) called the House approval of the $2 billion extension "another outrageous act of generational theft!" and said he "will oppose any move to take up the House bill." Senator Jim DeMint (R-SC) indicated he will support McCain's effort to defeat the bill. Senator Claire McCaskill (D-MO) has indicated she will support no "new" spending for cash for clunkers. She may support if it is funding already appropriated for stimulus, but she wants to see how the program will be ended.

Senator George Voinovich (R-OH) Ranking Member of the Senate Transportation and Infrastructure Subcommittee, the Subcommittee on Clean Air, Climate Change and Nuclear Safety and co-chair of the Senate Auto Caucus, praised the House approval of funds to continue the program. Senator Voinovich was a co-sponsor of the original legislation creating the program, with Sens. Debbie Stabenow (D-MI) and Sam Brownback (R-KS).

Senators Dianne Feinstein (D-CA) and Susan Collins (R-ME), Charles Schumer (D-NY), Thomas Carper (D-DE), and Bill Nelson (D-FL) are all among a group of Senators calling for the program to require the purchase of new cars which get better gas mileage.

Senator Voinovich said, “I am glad the House passed an additional $2 billion to fund the cash for clunkers program, which I co-sponsored with Sen. Stabenow and Brownback. As is evident from the extraordinary response to the program, it is a win-win -- it will stimulate our American economy, provide much needed jobs and it will promote fuel efficient cars to benefit our environment. I am thankful the House understood that this money should be taken from the already-enacted stimulus bill, which I voted against earlier this year. Unfortunately, programs such as ‘cash for clunkers,’ as well as robust highway and infrastructure spending were not part of the original stimulus proposal. This type of investment provides not only jobs, but tangible assets for taxpayer dollars. I look forward to this program making its way to our American citizens to reinvigorate jobs for our auto workers, especially in Ohio during these hard economic times.”

President Obama issued a statement on July 31, following the House approval of funding expansion and said, ""I want to thank leaders in the House of Representatives for working quickly and in a bipartisan way to pass legislation that will use Recovery Act funds to keep 'Cash for Clunkers' going. This program has been an overwhelming success, allowing consumers to trade in their less fuel efficient cars for a credit to buy more fuel efficient new models. It has given consumers a much needed break, provided the American auto industry an important boost, and is achieving environmental benefits well beyond what was originally anticipated. The program has proven to be a successful part of our economic recovery and will help lessen our dangerous dependence on foreign oil, while reducing greenhouse gas emissions and improving the quality of the air we breathe. I urge the Senate to act with the American consumers in mind to pass this important legislation."

Access the House roll call vote (click here). Access a release from Senator Voinovich (click here). Access a Twitter statement from Senator McCain (click here). Access a Twitter statement from Senator McCaskill (click here). Access a release and the DOT letter from Senators Feinstein and Collins(click here); and another release (click here). Access the Fox News report with comments from Senator McCain (click here). Access the CARS website for additional information (click here). Access a release from the President (click here). Access legislative details for H.R. 3435 (click here).

"Cash for Clunkers" - Economic Stimulus That Works

Jul 30: Less than five days old, the Car Allowance Rebate System (CARS, aka Cash for Clunkers) was supposed to stimulate the buying of about 250,000 new, more fuel-efficient cars and last until November 2009. However, the $1 billion program has become perhaps the most successful economic stimulus effort yet, as the "cash" is nearly gone and auto dealers are warning of limited choices due to shortages in inventory. Under the program consumers receive a $3,500 or $4,500 discount from the car dealer when they trade in their old, low mileage vehicle and purchase or lease a new, more fuel-efficient one.

U.S. Senator Debbie Stabenow (D-MI) issued a statement saying, “It is amazing that ‘Cash for Clunkers’ would be this successful this quickly. Many people talk of the need for a short-term stimulus for the economy. Well, we have found it in the CARS program. With over 200,000 cars sold, thousands of employees on the job serving customers, millions of dollars in advertisement spending, and sales tax income flowing into struggling states, CARS has injected money into communities across America. From Maine to California, from Michigan to Texas the impact is dynamic. It took a lot of hard work to get the votes to pass this program into law, so I am grateful that consumers love it.

"I am delighted to hear dealers say that all of their salespeople are busy and they are selling more cars in a day than they had been selling in a month. That is terrific news and I hope the sales continue even though the initial funding for the CARS program has been suspended. This program has helped bring people back to showrooms to see what incredible cars and trucks we make in this country. I urge Congress and the Administration to provide additional funding so that ‘Cash for Clunkers’ may continue under its original authorization until November."

On July 27, the Alliance of Automobile Manufacturers (Alliance) joined Department of Transportation (DOT) Secretary Ray LaHood and other auto industry representatives to officially launch the “Cash for Clunkers” program. The Alliance worked with DOT to ensure what they hoped would be a "successful implementation of the program." Alliance President and CEO Dave McCurdy said, "The 250,000 vehicles this program is designed to sell will be a needed to boost to the entire industry. Automakers will continue working with DOT and Congress to meet the goals of stimulating vehicle sales, reducing greenhouse gas emissions from autos and enhancing energy security.”

A "funding available meter" on the CARS website which still indicated substantial funding available earlier today (July 30), was taken down by 9:30 AM ET. Friday morning, the White House reportedly indicated that it would assure that the CARS program operates through this weekend and would attempt to find funds to continue the program.

On July 31, U.S. Senators Dianne Feinstein (D-CA) and Susan Collins (R-ME) urged the Department of Transportation (DOT) to promptly provide Congress with a detailed evaluation of the effectiveness of the CARS program. In a letter to Transportation Secretary Ray LaHood the Senators renewed their request for a detailed analysis of how the program has worked to date, including the make and model of the vehicles purchased, the fuel efficiency of purchased vehicles, and the condition of vehicles traded-in. The two Senators along with Senator Charles Schumer (D-NY) and Thomas Carper (D-DE), previously authored an alternative “Cash for Clunkers” proposal that they say would have achieved 32 to 38 percent greater oil savings and emissions reductions than the enacted “CARS” program. The Senators have said that any extension of the program must adhere to higher fuel efficiency and greater emissions reductions.

Senator Carl Levin (D-MI) issued a brief statement mid-day on July 31, saying, “The cash for clunkers program has proven hugely successful in its first week. We have been told by the White House that people can keep buying cars under the program until further notice. We don’t know how long it will last, so people should go to their car dealers now if they want to take advantage of the program. We’re also going to seek additional funding to hopefully make the program last longer.”

In unprecedented fashion, the House voted 316 to 109 this afternoon (1:24 PM, July 31) to extend the program with an additional $2 billion in funding. The funding authorization is included in H.R. 3435, a bill to provide supplemental appropriations for fiscal year 2009 for the Consumer Assistance to Recycle and Save Program. The Senate will not take up the bill until next week, but it is not without controversy. Fox News is reporting that Senator John McCain (R-AZ) "will oppose any move to take up the House bill." McCain told Fox earlier today, "I not only wouldn't vote for the extra two billion, I was opposed to the initial billion." McCain, reportedly said, "I can't imagine that any taxpayer of America would have thought that the TARP, the financial recovery money, would be used now to subsidize the sale of automobiles in America."

Access a release from Senator Stabenow (click here). Access a 7/27 release from the Alliance (click here). Access the CARS website for additional information (click here). Access a release and the DOT letter from the two Senators (click here); and another release (click here). Access a release from Senator Levin (click here). Access a lengthy release from House Speaker Nancy Pelosi with videos of floor speeches and links to additional information including the roll call vote (click here). Access the Fox News report (click here).

Senate Hearing On Climate Change & National Security

Jul 30: The Senate Environment and Pubic Works Committee, Chaired by Senator Barbara Boxer (D-CA) held a hearing entitled, Climate Change and National Security. Witnesses testifying at the hearing included former Senator John Warner (R-VA); Vice Admiral Dennis McGinn USN (Ret.) Member, Military Advisory Board, Center for Naval Analyses; and representatives from the Truman National Security Project; and Baker Hostetler.

Ranking Member James Inhofe (R-OK) said, "I’m going to stipulate that the central finding in your reports -- that climate change poses serious national security threats -- is true. I’m even going to stipulate that all of the science informing your reports is true. What I am going to focus on is the link between developing American resources and America’s national security. And I’m going to explain why passing cap-and-trade won’t solve any of the legitimate issues . . ." Inhofe said that EPA Administrator Lisa Jackson agreed that unilateral action to address global warming is futile without meaningful participation from China, India, and other developing countries and that Waxman-Markey "would reduce global temperatures by less than one-tenth of a degree Fahrenheit by 2050."

Senator Inhofe concluded that "passing cap-and-trade will do great harm to our economic security, to our energy security, and therefore to America’s national security. We cannot on the one hand de-industrialize America and on the other hope that America will remain a great power. The sensible solution here is to free ourselves from Middle East oil by producing more of our resources -- all of our resources -- right here at home, and to pursue policies to encourage manufacturing here in the United States."

Senator Warner testified that, "During my fifth and last Senate term, I was privileged to Chair the Armed Services Committee and serve on this Committee [EPW]. Many retired military officers, and concerned citizens visited with me to discuss the concepts of how America’s military policy, energy policy, and climate policy were interrelated. Unquestionably, they are!" Senator Warner quoted a number of high-ranking public officials and experts and said, "As the testimony of this panel today will confirm, it is the men and women in uniform who will likely be called upon by the President to address adverse situations brought on by erratic climate changes."

Senator Warner recommended that the Armed Services Committee, compile a more detailed record on the security issue and said the "Armed Services Committee has a reputation for achieving consensus on vital issues with a high degree of bipartisanship. History records this record over a half century, for that level of bipartisanship is a duty owed on matters relating to our nation’s security, and, especially to the uniformed personnel and their families." He said, "Bipartisanship is key to today’s public acceptance and endurance and implementation in the future of proposed legislation. The challenges and problems must be addressed by all nations – it’s a global problem with consequences and burdens to be shared by all people. . ." He concluded saying, "The United States must lead, and now. Our nation is among the major emitters of pollution. Only if we lead, stepping forward with a long."

Vice Admiral Dennis McGinn testified that the CNA Military Advisory Board has produced two reports, the first in April, 2007 and the latest in May of this year, focused on the topic of this hearing. The first examined the national security threats of climate change, and the most recent analyzed the national security threats of America’s current and future energy posture. He said, "I have to acknowledge the elephant in the room. We are in the midst of the most serious global financial crisis of our lifetimes. After a year of examining our nation’s energy use, it is clear to all members of our military board that our economic, energy, climate change and national security challenges are intertwined and co-dependent. Our past pattern of energy use is responsible, in no small measure, for our economic situation today. If we do not adequately address our nation’s growing energy demand and climate change now, in wise and visionary ways, future financial crises will most certainly dwarf this one. . .

"Without bold action now to significantly reduce our dependence on fossil fuels, our national security will be at greater risk. Fierce global competition and conflict over dwindling supplies of fossil fuel will be a major part of the future strategic landscape. Moving toward clean, independent, domestic energy choices lessens that danger and significantly helps us confront the serious challenge of global climate change." He concluded, ". . .if we act with boldness and vision now, future generations of Americans will look back on this as a time when we came together as a Nation and transformed daunting challenge and worry into opportunity, a better quality of life and a more secure future for our world."

Jonathan Powers, Retired U.S. Army Captain and Chief Operating Officer Truman National Security Project testified that , "When it comes to climate change, we as a nation have been trying to lead by rank for too long. It is time we begin to lead by example. America is at a critical point, and our security relies heavily on how we address this growing threat. A recent report from the Center for New American Security rightly points out that 'Climate change… may not be a threat that soldiers can attack and defeat, but it is likely to affect the safety and prosperity of every American, both through its effects on global stability and on our local environments.' . . This committee will play a critical roll in once again establishing America as a nation that leads by example. It is vitally important that you develop domestic legislation that will protect our environment and ensure our national security. We can only accomplish this by reducing greenhouse gases, providing clean energy incentives, freeing us from foreign dependence, and growing our economy."

David B. Rivkin, Jr. a Partner with Baker & Hostetler LLP and Co-Chairman of the Center for Law and Counterterrorism at the Foundation for Defense of Democracies testified that, "advocates of the unilateral cap-and-trade approach must rely on either the moral example of the United States’ imposing emission limits on itself, or on the threat or use of trade penalties, to induce other countries to reduce their emissions. These strategies are unlikely to work. . . If climate change is really an issue of national security, it must be treated like one. The United States should approach issues of climate change with the same prudence and realism as any other national security issue. A unilateral cap-and-trade regime which would do nothing for the climate is a huge leap in the wrong direction. . ."

Access the hearing website for links to all testimony and a webcast (click here). Access Senator Inhofe statement (click here).