Hill Heat

At yesterday’s Investor Summit on Climate Risk, McKinsey’s economic research arm, the McKinsey Global Institute, released the report The Case for Investing in Energy Productivity (lead authors Jaana Remes and Diana Farrell).

The report finds that global investments on the order of $170 billion annually through 2020 ($38 billion in the US) in energy efficiency (what they call “energy productivity”) would deliver annual returns at a rate of 17 percent. Furthermore, these investments would reduce energy demand at half the cost of building out infrastructure to meet that demand. (For a sense of scale, $170 billion is 1.6 percent of global fixed-capital investment today.)

MGI finds some key energy-market failures that block the needed capital outlays:

Fuel subsidies that directly discourage productive energy use; a lack of information available to consumers about the kind of energy productivity choices that are available to them; and agency issues in high-turnover commercial businesses.

The report’s top-line recommendations for repairing these failures:

• Set energy efficiency standards for appliances and equipment
• Finance energy efficiency upgrades in new buildings and remodels (see Architecture 2030)
• Raise corporate standards for energy efficiency
• Invest in energy intermediaries (such as energy service companies aka ESCOs)

For more, read the full report.

The Sierra Club, until today, has stayed on the sidelines during the contretemps over Lieberman-Warner (S. 2191) fueled by a campaign by Friends of the Earth asking Sen. Barbara Boxer (D-Calif.) to “fix or ditch” the bill. The 1.3 million member organization has now made its position clear.

In an essay posted to Grist’s Gristmill blog this afternoon, Sierra Club executive director Carl Pope delineates clear principles for endorsing climate legislation, all of which Lieberman-Warner currently fails to satisfy:

• Reductions in total emissions on the order of 80 percent by 2050 and 20 percent by 2020
• All allowances should be auctioned or otherwise used to benefit the public
• Revenue should fund “highest-value solutions”, not coal or nuclear energy
• Ensure a just transition for workers, protect vulnerable groups, and help induce world action

He compares the current political situation to the one that led to the Clean Air Act in 1971, saying that “Maine Sen. Edmund Muskie, fearing that industry would block him on other points, acceded” to the industry insistence to grandfather old plants, and that environmentalists like the 25-year-old Pope went along.

He then responds to Sen. Barbara Boxer and advocates of pushing a climate bill this year hell or high water:

Fast-forward to present day: the carbon industries are lobbying to get a deal done this year that would give away carbon permits free of charge to existing polluters – bribing the sluggish, and slowing down innovation. And politicians are telling us that while it would be better to auction these permits and make polluters pay for putting carbon dioxide into our atmosphere, creating that market unfortunately gets in the way of the politics. We are being urged to compromise – to put a system in place quickly, even if it is the wrong system.

On February 4, 2008, Transportation Secretary Mary Peters released the 2009 fiscal year (FY) budget request for the U.S. Department of Transportation (DOT) to fund construction, maintenance, and operation activities for the nation’s roadways, railways, and air transportation. The proposed $68.2 billion total represents a $2.13 billion decrease from the FY 2008 appropriations bill enacted in December 2007. Moreover, proposed budget rescission measures totaling $3.89 billion would further reduce the budgetary resources available to DOT in FY 2009 to $64.31 billion.

The Administration is again proposing dramatic cuts in federal support for Amtrak. Congress appropriated $1.3 billion for Amtrak in FY 2008 with $850 million going to capital and debt service and $475 million to operating subsidies. The Administration’s budget proposes a total of $800 million, a cut of $525 million or 40 percent. The Administration proposes $525 million for capital and debt service grants and $275 million for “efficiency incentive grants” which would replace direct operating subsidies and give the Secretary of Transportation discretion in how the funds are used.

Other highlights in the Department of Transportation (DOT) budget include:

• Congestion Mitigation and Air Quality Improvement Program (CMAQ) – $1.8 billion. CMAQ supports transportation projects that assist in meeting and maintaining national ambient air quality standards.
• Clean Fuels Grant Program – $51 million to support transit operators in transitioning to cleaner and more efficient buses and fuels, an increase of $2 million from $49 million appropriated in FY 2008.
• Transit Planning – $113.5 million to support the activities of regional planning agencies and states to plan for transit investments, an increase of $6.5 million from $107 million appropriated in FY 2008.

The Office of Special Counsel has concluded its investigation into EPA administrator Stephen Johnson’s March 9, 2006 appearance at a fundraiser for Rick O’Donnell, a Republican candidate for Colorado’s 7th District. In its press release, the OSC declared that Johnson did not violate the Hatch Act.

The complaint, filed by Colorado Democratic Party chair Pat Waak, noted that an e-mail by former Colorado health department Doug Benevento had the subject line, “Fundraiser with Administrator of EPA Stephen L. Johnson for Rick O’Donnell,” with an attachment entitled “Fundraiser with Administrator of EPA.”

The act forbids fundraiser invitations that include the federal employee’s official title.

However, the OSC found:

that while Mr. Johnson’s official title was used in an e-mail invitation for the fundraiser, the invitation was sent by an organizer of the event, who was not covered by the Hatch Act. Moreover, as the individual did not consult, or receive approval from the EPA or Mr. Johnson, he was not responsible for the use of his official title in the e-mail used to distribute the invitation.

OSC also found that the EPA staff, in approving Mr. Johnson’s participation in the fundraiser, had not reviewed the list of the attendees, nor informed him of who would be attending the fundraiser, or where they were employed. Therefore, OSC found no evidence that Mr. Johnson had knowingly solicited or discouraged the political activity of persons with business before the EPA.

While Mr. Johnson did not violate the Hatch Act, OSC found deficiencies in EPA staff review processes, and recommended that EPA staff be aware of all parties and their roles in political events, including the attendees, and consider this information when advising on participation. Also, OSC advised EPA staff to review the invitation, along with its cover letter or e-mail, to ensure it complies with the Hatch Act.

Following the second one-vote defeat of the renewable tax package in the Senate last week, House leadership let slip they planned to re-introduce the oil-for-renewables legislation some time this week, for passage before the President’s Day recess.

Today Katherine Ling reports in E&E News that timeline is now in doubt:

The death of Rep. Tom Lantos (D-Calif.) and last-minute negotiations may delay House plans to take up a renewable energy tax incentive package later this week. Lantos died yesterday morning due to esophagus cancer complications. . .

The bill was expected to be introduced this morning, according to Matthew Beck, a spokesman for House Ways and Means Committee Chairman Charlie Rangel (D-N.Y.). Beck said the committee was writing the bill but had not completed it yet as they were waiting for decisions from the leadership.

Ed. —I would like to welcome the participation of the Environmental and Energy Study Institute on Hill Heat. EESI was founded in 1984 by a bipartisan group of members of Congress concerned about energy and environmental issues. Their initial series of guest posts will be drawn from their briefings on the president’s proposed FY 2009 budget.

The President’s FY 2009 Environmental Protection Agency (EPA) budget request remains relatively flat compared to the FY 2008 request and is down slightly from FY 2008 appropriations. The FY 2009 budget request is $7.14 billion, which is $56.9 million (0.80%) less than the FY 2008 budget request and $330 million (4.4%) less than FY 2008 appropriations.

The President’s FY 2009 budget request for Clean Air and Global Climate Change (EPA Goal 1) is $939 million. This is $33 million (3.4%) less than the FY 2008 appropriations.

Looking at the EPA budget by goals, the Reduced Greenhouse Gas Intensity program within Goal 1 has a FY 2009 budget request of $121 million, which is $9.0 million (6.9%) less than the FY 2008 appropriations of $130 million and $1.7 million (1.4%) less than the FY 2008 budget request of $123 million.

Looking at the EPA budget by program and project, the FY 2009 budget request for Climate Protection programs includes a Science and Technology component, requested at $11.4 million, and an Environmental Program and Management component, requested at $87.0 million. Taken together, these were cut $10.3 million (9.5%) from FY 08 appropriations. The Climate Protection Programs include Energy Star, SmartWay Transport, the Methane to Markets Partnership and Asia-Pacific Partnership. There were a number of cuts, as well as a few increases to the programs, as illustrated below:

Climate Protection Programs

• $10.3 million cut overall (9.5% cut from FY 08 appropriations)
• Zeroing out the Greenhouse Gas Reporting Registry (100% cut from $3.4 million in FY 08)
• $6.9 million cut in Climate Science and Technology program (38% cut from FY 08 appropriations)
• $4.0 million cut in Energy STAR (8.3% cut from FY 08 appropriations)
• $177,000 increase in Methane to Markets (4.1% increase from FY 08 appropriations)
• $5.0 million increase in Asian Pacific Partnership (no previous FY 08 appropriation amount)

Clean Air Rules

Clean Air Rules are a major component of EPA’s Clean Air and Global Climate Change Goal, and include the Clean Air Interstate Rule, the Clean Air Mercury Rule and the Clean Air Nonroad Diesel Rule. These rules work towards the improvement of the United State’s air quality. Additionally, reductions on particulate matter from diesel engines will continue to be addressed through the Diesel Emissions Reduction Grants program of the Energy Policy Act of 2005 (P.L. 109-58), which authorizes $200 million annually (2007-2011). However, the President requests just $49.2 million for the FY 09 EPA Clean Diesel grant, 25% of the authorized amount.

A table reviewing changes in the Goal I and overall EPA budget is below the jump.

From the AP:

General Motors Corp. CEO Rick Wagoner urged a group of auto dealers Saturday to lobby against individual states trying to set their own limits on greenhouse gas emissions.

Wagoner, speaking to the National Automobile Dealers Association convention in San Francisco, said several states want to go beyond requirements passed by Congress.

If that happens and automakers must focus on state regulations, they won’t be able to focus as much on alternative fuel vehicles to reduce oil consumption and pollution, he said.

“We’re not going to be able to accomplish everything that we otherwise could,” Wagoner said. . .

“We need to work together to educate policymakers at the state and local levels on the importance of tough but national standards,” Wagoner told the dealers group.

He also said dealers and automakers should push for infrastructure to handle new technologies including hydrogen and ethanol fueling stations and charging stations for electric vehicles.

GM is the official vehicle provider for the Democratic National Convention, a decision highlighted as part of the DNC’s “green” mission:

“GM’s leadership in this area will play a critical role in our event – helping us make this the ‘greenest’ political convention our country has ever seen, while providing our guests with yet another convenient option for getting around Denver.”

– Leah Daughtry, DNC CEO

Once we talked to them about how we really wanted to push the environmental piece, they were 100 percent on board.

– Cameron Moody, the DNCC’s director of operations

This will be a great showcase to change perceptions about GM and to show we are taking leadership.

– GM spokesman Greg Martin

In a move that has been discussed for some time on both sides of Capitol Hill, Rep. Henry Waxman (D-CA) has grown tired of waiting around for EPA to fully cooperate with his investigation of California’s EPA waiver denial:

Escalating the fight over the decision, Rep. Henry A. Waxman (D-Beverly Hills), chairman of the House Oversight and Government Reform Committee, directed the EPA to provide uncensored copies of its staff recommendation to agency Administrator Stephen L. Johnson before he rejected California’s request to enact tailpipe emission standards stricter than the federal government’s. The EPA was told to respond by noon Tuesday.

“The committee is simply trying to understand if the decision to reject California’s plan was made on the merits, so I’m especially disappointed that EPA is refusing to provide the relevant documents voluntarily,” Waxman said. “But we will to try to get to the bottom of this.”

[...]

The EPA has also turned over some documents, but they were heavily redacted, so much so that some pages were largely blank. The agency has resisted turning over nonredacted documents to Congress, contending that they are protected under attorney-client privilege. California and more than a dozen other states that want to enact similar laws have sued to overturn Johnson’s decision.

The agency has also argued that releasing the documents could have a “chilling effect” on candid discussions within the EPA. Vice President Dick Cheney also cited the need to keep internal deliberations private in fighting congressional efforts to force him to disclose details of private meetings he held as the White House drafted its energy policy, an initiative sparked in part by another California issue – the 2000-01 electricity crisis.

Waxman’s deadline isn’t the only one EPA must meet this week. Senator Barbara Boxer (D-CA) has given it until Friday to turn over documents related to potential White House involvement, and she has now spearheaded a call for the Government Accountability Office to look into factors influencing the waiver decision.

Johnson’s spokesman stood by the decision and said he wouldn’t be changing his mind anytime soon, but that hardly seems to be the California delegation’s point here. They’re building a careful case for congressional intervention via Senator Boxer’s legislative remedy overturning the decision, and both the slow pace of legal proceedings (which California is trying to hasten)and EPA’s foot-dragging play right into their hands.

Following the one-vote failure on Wednesday of S. Amdt 3983 to H.R. 5140, the Senate stimulus package that contained $5.6 billion in “green” incentives, various environmental organizations, including the Sierra Club, called Sen. John McCain (R-Ariz.) for missing the vote.

On Thursday, the Sierra Club asked its members to call McCain’s office to ask “why he failed to show up for a vote that could have determined the future of green energy in America.”

Today, Executive Director Carl Pope blistered the office response to member calls in a blog post entitled John McCain Should Be Ashamed.

Immediately, people begin calling and emailing me, saying, “The Senator’s office says he voted for clean energy, and that your alert is wrong.” We check. He didn’t. We call his office. Stunningly, his staff has been coached to mislead callers. “That’s not true at all,” they say, “he voted for the bill yesterday.” Well, he voted, yesterday, but for a different bill. However we phrase the question, we get a lie. “No, if he had voted for the bill, it would not have passed. That was purely procedural.” But McCain’s staff knows that if cloture had been invoked, passage of the bill would then only require 51 votes, and the bill with clean energy would have passed. [Ed.- emphasis added.]

Friends of the Earth announced today that it is expanding its web and print “Fix or Ditch” campaign with a local network and cable ad buy before the February 12 Virginia, Maryland, and DC primaries.

The campaign, which challenges Senate Democrats to change Lieberman-Warner’s emissions targets and allowance distribution provisions (S. 2191) to reflect the platforms of the presidential candidates of their party, has drawn fire from Sen. Boxer (D-Calif.) and Environmental Defense as well as a passionate letter of support from Greenpeace.

Meanwhile, American Prospect correspondent (and Tapped co-founder) Chris Mooney challenges the Democratic platforms of 100% auction and 80% reduction in emissions by 2050 in This Will Mean the World to Us (sub. req.):

Many Democratic campaigns, responding to their environmental base, are currently outlining cap-and-trade regimes featuring a highly ambitious 100 percent auction process for the initial pollution allowances or permits, with the proceeds going to other needed public policies, such as investment in the clean-energy technologies that must ultimately supplant fossil fuels. When it comes to specifying precise reductions, meanwhile, the campaigns generally seem to agree that we need something like bringing emissions back to 1990 levels by 2020 and decreasing them by 80 percent by 2050, through a cap that becomes progressively more stringent.

An 80 percent reduction by 2050 does indeed square with what scientists think would be necessary to avoid the worst climate impacts—most notably, the loss of large bodies of land-based ice currently perched atop Greenland and West Antarctica, which, upon sliding into the ocean, would drive catastrophic sea-level rise. It’s one thing to outline a policy in the abstract, however, and quite another to get it through the next Congress. As one climate policy insider says, “The environmental community has a tendency to run their leaders off a plank; that’s what they’re setting up right now with this 80 percent reduction by 2050.”

The more moderate approach of the Lieberman-Warner bill is to reduce capped emissions (and not all emissions are included) by 70 percent by 2050. Lieberman-Warner is also pragmatic in another way: It does not set up a 100 percent auction for emissions allowances, a system that major emitters oppose. They think they should be granted allowances gratis at the outset (or as climate experts say, there should be “grandfathering”). Under Lieberman-Warner, just 24 percent of allowances would be auctioned off initially, though the percentage would increase over time. It’s far easier to get buy-in from industry in this way, and although Lieberman-Warner may have a tough time passing both houses of Congress before the election (or surviving a possible presidential veto), it may be precisely the type of bill that can sail through in 2009.

What’s achievable in climate policy seems to be changing all the time, but still we mustn’t shoot the moon. Consider the perspective of Tim Profeta, current director of Duke’s Nicholas Institute, who previously served as a chief architect of the McCain-Lieberman Climate Stewardship Act, which failed by a 55-to-43 Senate vote in 2003. “As somebody who fought for a freeze of emissions in the 2003 Congress and was told it was too aggressive, it is hard for me to believe where we are now,” Profeta says. “The current movement to require 100 percent auctions and even deeper cuts faces strong political opposition from emitters, many of whom have good arguments about what is economically feasible for their companies. I fear that we might pass up the opportunity for real action now—when it is essential to have the U.S. begin to reduce its emissions—because someadvocatescontinue to shift the objectives to stricter and stricter limits as the debate proceeds.” It’s fine for Democratic candidates, at the moment, to answer the call of environmental groups—the Sierra Club, for instance, has criticized Lieberman-Warner—and present highly ambitious cap-and-trade proposals. But after the election, the new president will need to be flexible and focus on getting a workable bill passed. It can be strengthened later as more science comes in—2050 is, after all, still far away—but we must at least begin ratcheting down emissions now.