Most of the Congressional attention in Washington D.C. over the last three months has been directed solely on Health Care Reform. As the dust settles, the Senate Climate Bill will soon emerge as the next landmark decision awaiting the Obama Administration. As opposition to EPA regulatory measures continues to rise and as mid-term elections draw closer, the hope for the passage of a similarly contentious piece of American legislation hangs in the balance. Despite the challenges ahead, the latest news indicates that passage of the Senate Bill could still be a possibility in the coming months. 

One source of pressure fueling movement on the Senate Climate bill is the EPA’s GHG Endangerment Finding. This ruling requires the Federal agency to regulate GHG emissions in the economy under the authority of the Clean Air Act (CAA). The EPA has come under fire from business lobbyists, the oil industry and conservative senators, among others, who have issued letters, lawsuits and plans to thwart the Agency’s attempts at regulating GHG emissions. Those in opposition cite the potential for economic collapse and the stalling of investments as a primary reason to avoid regulation. Summarizing the thoughts of those against Agency regulation, Senator John D. Rockefeller IV (R-W.Va.) said “E.P.A. actions in this area would have enormous implications, and these issues need to be handled carefully and appropriately dealt with by the Congress, not in isolation by a federal environmental agency,” (NYTimes, 2010).

The EPA has responded to such criticism by relaxing the threshold for emissions reporting and has decided to delay the initial timetables for regulating industry emissions. EPA Administrator Lisa Jackson confirmed on March 30th 2010 that no stationary sources would face regulation this year, as was originally determined. Instead, plans have been put in place that will target large facilities in early 2011, medium-sized emitters in late 2011, and smaller emitters by 2016. Both Senators John D. Rockefeller and Lisa Murkowski (R-Alaska) have expressed approval of the EPA’s efforts to relax their initial implementation plan.

As EPA efforts to regulate GHG emissions flounder, a more commercially palatable Senate Bill equipped with a cap and trade approach has been brewing behind closed doors. Senators John Kerry (D-Mass), Joe Lieberman (I-Conn.), and Lindsey Graham (R-S.C.) have been working for months to put together a “hybrid” Climate Bill that infuses elements from a number of pieces of draft energy and climate legislation. Energy efficiency and renewable energy language for the bill is being pulled from the American Clean Energy Leadership Act which passed the Senate Energy and Natural Resources Committee in 2009. Ideas on “cap and dividend” carbon market regulation crafted by Senators Maria Cantwell (D-Wash.) and Susan Collins (R-Maine) in the CLEAR Act are also being considered.

The latest news from Environment and Energy (E&E) Daily indicates that the Senators plan to unveil their draft bill on the 40th anniversary of Earth Day, on April 22nd 2010. While the Senate Bill waits in the wings, the EPA continues to plan the implementation of its regulations against GHG emissions under the Clean Air Act. It is clear that climate policy in the United States will come alive in some form or another in the next year. Businesses will have to wait with baited breath to see what form it will take and what impact it will have on them. Do you think a Climate Bill will actually come to fruition in 2010? Which GHG regulatory method do you anticipate coming into action first: EPA emissions regulations under the Clean Air Act or a yet to be named Senate Climate Bill?

Photo credit: Margot Wolfs via Flickr CC

In the late evening on December 18th, 2009, all eyes were on Copenhagen waiting to see if the Conference of the Parties 15 (COP15) of the United Nations Framework Convention on Climate Change (UNFCCC) would produce a global climate treaty that would require the nations of the world to reduce their output of greenhouse gas (GHG) emissions. The outcome of COP15 was expected to impact every aspect of society, and most prominently, the corporate world. At the end of a two week long negotiating session, Copenhagen produced a non-binding “agreement” void of any real emissions reduction targets or timetables to achieve them. The Copenhagen Accord was a decision made by the 193 nations participating in the Conference to “take note of” for further review in 2010. The Accord recognizes the following major action items:

• There is a scientific case for keeping global temperature rise to no more than 2°C.
• Developed Nations (Annex 1 Parties – the largest emitters) will determine economy-wide emissions reduction targets for 2020 by January 31, 2010. 
• Developing nations (Non-Annex 1 Parties) will determine methods to implement mitigation actions by January 31, 2010. 
• Developed nations will collectively generate USD $30 billion for the period 2010 through 2012 and USD $100 billion from 2012 to 2020 to assist developing nations in their climate change adaptation and mitigation activities.

Although legally-binding emissions reduction targets were not included in the Accord, most nations have proposed unofficial emissions reduction commitments which they claim they will implement through domestic policy. Most nations, like the United States and China, are steadfast in their position to achieve the following goals:

• USA proposed to cut GHG emissions to 17% below 2005 levels by 2020, pending congressional approval (this is equivalent to 4% below 1990 levels).
• China: Proposed to cut CO2 emissions per unit of GDP by 40-45% below 2005 levels by 2020.
• European Union proposed to cut GHG emissions by 20% from 1990 levels by 2020, or 30% if other big emitters take tough action as well.
• India proposed to cut CO2 emissions per unit of GDP by 20-25% from 2005 levels by 2020.

The current emissions targets on the table are expected to lead the world on a path toward a global temperature rise of 3°C. Stronger commitments are needed from the largest emitters, including the United States and China, to reach the goals set out in the Copenhagen Accord. As of January 29th, the United States appears to remain firm on its 17% target reduction in emissions by 2020 from 2005 levels. In a letter to U.N. Climate Officials, President Obama pledged to uphold our target emissions reduction goal set out at Copenhagen, and that more details were to follow pending Congress’ decision on the Climate Bill.

Despite this positive and ambitious first step, it is still uncertain as to when the “details” of the U.S. commitment will be worked out. As climate legislation sits idle in Congressional subcommittees, Corporate America waits with baited breath to follow through on Cleantech investments. In a recent press release, Alstom Power President Philippe Joubert said that “Uncertainty about the legal and regulatory framework around carbon dioxide emissions is holding back needed investments”. In a letter to President Obama, a group of 80 U.S. companies stated that “[Climate] legislation would spur a new energy economy and with it create 1.7 million new American jobs, many in struggling communities across the country” (Environmental Leader, 2010). In addition to the desire for a green light on Cleantech investment, corporations are pushing for Congressional movement on a more flexible and “business-friendly” Climate Bill for fear of being pinned under the strict and expensive regulatory thumb of the EPA.

No matter how the U.S. decides to regulate carbon dioxide emissions, the world will be holding us responsible for upholding the pledge President Obama made to the U.N. Climate Officials this week. U.N. Climate Chief Yvo de Boer said recently that "Whatever route is taken, the president of the United States committed to a 17 percent emissions reduction in Copenhagen. The president of the United States committed to more ambitious emissions reductions for 2030 and 2050. And it is those statements to which the international community will hold the government of the United States accountable” (Greenwire, 2010).

Without the support of congressional legislation, President Obama met the U.N.’s January 31st deadline by confirming to uphold the United States’ pledge at Copenhagen. The details surrounding the implementation of that emissions target and the accompanying timetable are yet to be determined. The waiting game for the creation of solid and defensible action to regulate carbon emissions at home and abroad continues…

Conventional “business wisdom” suggests that a company can increase its cost savings and improve its bottom line by just becoming more energy efficient. The Cable Television Industry, for example, uses Network and Facility Efficiency Studies as an effective means to identify these opportunities. However, contrary to this belief, a Carbon Impact Assessment can actually help create a more complete picture of the savings possibilities. In fact, it can actually expand a company’s profits in their top line. Here is why conventional “business wisdom” may have gotten it wrong:

Using the Cable Television Industry’s Network and Facility Efficiency Studies as an example, one would discover that, by nature, they are inextricably linked to the Carbon Impact Assessment. The purpose of both efforts is to identify types of energy sources, gather data about frequency and degree of consumption, discover areas where inefficiencies dominate, and determine comparative references which articulate those inefficiencies. The primary difference between the Network and Facility Studies and the Carbon Impact Assessment is that energy efficiency is articulated in terms of cost, rather than carbon emissions. The same information needs to be generated to calculate either reference. Therefore, the example CATV company is already doing 80% of the work needed to create a Carbon Impact Assessment when they conduct the Network and Facility Studies. The marginal cost of completing the extra 20% is worth the added benefit the CATV company will receive should it choose to complete the Carbon Impact Assessment.

A major benefit to the CATV industry, as well as all other industries, is that the company performing the Carbon Impact Assessment will have a clearer knowledge and awareness of all of their associated emissions across their entire operation. Their knowledge base for energy savings will not be limited to only the facility, network, or transportation sector, for example. Another major benefit is that it will further improve a company’s “top line” by increasing the competitiveness of their business in a more environmentally-aware marketplace. We are in the “Age of Accountability”. Our interdependent and wired world has changed the market landscape to one where consumers are more aware and educated about the operations of the businesses they patronize. According to Andrew Savitz and Karl Weber, authors of The Triple Bottom Line: How Today’s Best-Run Companies are Achieving Economic, Social and Environmental Success, “Transparency is increasing just as corporate reputation, brands, and other intangible assets are becoming dominant value drivers” ¹. Conducting a Carbon Impact Assessment serves to add to a company’s transparency and “green” reputation. These “intangible assets” associated with this exercise are only net positives for an organization. The active efforts taken by an organization to improve energy efficiency for both their network and facility operations will lead to immediate and recognizable reductions in carbon emissions in addition to cost savings.  Communicating these successes effectively will help the company build brand loyalty and gain new customers.

The true opportunity for all companies is to adopt a holistic approach that goes beyond the sole recognition of the traditional financial impact to the bottom line. The Carbon Impact Assessment will add to the credibility of a company’s green image by addressing the financial bottom and top lines, as well as the environmental and social bottom lines identified in The Triple Bottom Line. The question now is, “Why wouldn’t a company want to conduct a Carbon Impact Assessment?”

¹Savitz, Andrew W., and Karl Weber. The Triple Bottom Line: How Today's Best-Run Companies Are Achieving Economic, Social, and Environmental Success - And How You Can Too. San Francisco: Jossey-Bass, 2006. Print.

This is what the Chamber of Commerce is chanting lately. The National Association of Manufacturers is threatening to sue. Yet the Environmental Protection Agency has announced that if Congress won’t legislate to cut green-house gases, they will regulate.

The EPA’s announcement is the ace Obama’s administration has been holding in its pocket, an ace that may trump the US’s attempts to control carbon emissions. A Supreme Court decision earlier this year has empowered the EPA to assert that CO2 is a pollutant, and as such must be regulated from vehicles. Now, the administration has authorized the agency to start regulating GHG’s from power stations and industry, the backbone of the US economy.  "We are not going to continue with business as usual," said Lisa Jackson, EPA’s chief, to the New York Times. “We have the tools and the technology to move forward today, and we are using them."

The new rules would cover plants that emit at least 25,000 tons of carbon dioxide a year. The regulation primarily focuses on 400 power plants, which will suffer fines if they fail to utilize the cleanest available technology. In addition to the power plants, another 14,000 or so facilities and smaller power plants will also face the threat of fines, and would need to renew construction and operating permits based on their ability to cut their emission of carbon dioxide, methane, nitrous oxide, and other GHG.

The rules could take effect as soon as 2011, unless Congress legislates. "The Economist" argues that businesses would prefer the carrot of a cap-and-trade legislation to the stick of government regulators nosing around their plants and telling them what technologies to use.

Senators John Kerry and Barbara Boxer have stepped up and published their own version of the cap-and-trade bill previously know as Waxman-Markey. They upped the ante by proposing a 20% GHG reduction by 2020 over 2005, rather then the 17% previously proposed.

The stakes are high and the battle over them is turning fierce. The Chamber of Commerce is opposing cap-and-trade, stating that corporations do not need to pay for the right to emit carbon. According to the "WSJ," that was enough for giants such as PG&E, Exelon and Nike to resign their membership and weaken one of the best funded opponents of climate legislation.

Suddenly, “no regulation without legislation” is beginning to sound climate friendly.

David Manor