It’s not as catchy as “Drill, Baby, Drill” but it’s actually where we’re going in the developed world. There have been a number of important developments recently entirely worthy of note. (See observations I’ve made previously in this area under Carbon Markets.)
Energy and Commerce – The US House of Representatives’ Energy and Commerce Committee has issued a discussion draft to its members and the public on climate change legislation. See this from Bloomberg News and this from Gristmill.
As I noted here in July, this powerful committee seems the likely bet as the principal venue in which cap-and-trade legislation is going to be substantially shaped. The Senate and the new President will, of course, have their say. The next President, as you know, be he either of the two candidates, will be considerably more favorable to a substantive climate change package than the present occupant of 1600 Pennsylvania Ave. The new President will also very possibly go to the table in Copenhagen in December of 2009 armed with a new US law. This will be a critical element in getting nations emitting even more dangerous amounts of GHG than the US and Europe, namely China and India, to come under an international regulatory umbrella.
Rich Boucher, chairman of the subcommittee on Energy and Air Quality, and John Dingell, chairman of the full committee, have issued a memo to their members describing the discussion draft. (For all the relevant Energy and Commerce documents, including the excellent series of white papers they’ve issued, you can go here.)
Let me note what I regard as some salient points from the memo. It says, for instance: “Politically, scientifically, legally, and morally, the question has been settled: regulation of greenhouse gases in the United States is coming.” There is a repeated emphasis on the importance of energy efficiency and clean energy technology. There is also a considerable emphasis on the development and deployment of carbon capture and sequestration (CCS) technology. This appears integral to the program that the draft legislation will create. Boucher and Dingell note that they “expect to quickly pass the bipartisan “Carbon Capture and Storage Early Deployment Act'” in the next Congress. The memo also calls for “strict oversight of the carbon market to ensure its efficient operation without market manipulation.” The Federal Energy Regulatory Commission would be the designated executive agency for this oversight. (Enhanced regulation of financial markets will be, I daresay, a recurring theme in the next Congress.) Another noteworthy point is that the draft makes international reforestation and afforestation projects eligible for offsets. This is going to be a key element in the Copenhagen treaty.
The memo further notes that some of the groundwork for this initiative has already been done with the passage of the energy bill in December of 2007. I would note that the energy provisions of the recent “Emergency Economic Stabilization Act of 2008” also move us further down the road to a comprehensive federal climate change policy.
Europe – I mentioned in my previous post that the EU Environment Committee was gearing up for some critical votes. Well, they came through a little better than might have been expected yesterday. See Europe backs carbon capture with €10bn in today’s “FT.” The money to finance CCS projects will come from the auction of permits in an expanded European Trading Scheme (ETS). In this release from the European Parliament, some of the details of the proposed expanded ETS are laid out. This release talks about the CCS plan. It says “The Environment Committee wants all larger power stations built from 2015 onwards to be equipped with the new carbon capture and storage technology (CCS) ”
I’ve noted my skepticism about CCS a number of times, the last time here. I am entirely willing, however, to be proven wrong. Certainly, the most promising approach in this regard is the gasification of coal and then using the gas for combustion. Gas can be much more easily “cleaned” of the carbon dioxide and other pollutants. Integrated Gasification Combined Cycle (IGCC) could prove the way forward. See this from GE, for example, this from Siemens or this from DOE.
In any event, the deepening of GHG-emission reductions in Europe and the institution of a federal regulatory regime in the US will certainly drive these technological innovations.
RGGI – Ten Northeastern and Mid-Atlantic states have decided not to wait for a federal law. The Regional Greenhouse Gas Initiative has a more modest framework, certainly, than the federal scheme that is coming or the ETS. Nevertheless, it will require a cap on carbon dioxide emissions from power plants. See this from the NY State Department of Environmental Conservation (my old employer) for a look at how the program will be managed. The RGGI has just had its first auction of allowances and realized $38,575,783 for the six states participating this time around. The press release quotes NYSDEC Commissioner Pete Grannis: “The first RGGI auction has successfully used market forces to set a price on carbon, and this will send a clear market signal to support the investment in clean energy technologies.” There was a better-than-expected demand for the allowances according to this article from the “FT.” For more on the RGGI, go to their website and this recent “NY Times” article.
Not to be outdone, the Western Climate Initiative, a compact of seven Western states and four Canadian provinces, is well along in creating its own robust regulatory regime.
There doesn’t appear to be any turning back from cap-and-trade. “Tis a consummation devoutly to be wished I might add.
