The Climate Report Summer 2015
Legal and Political Fights Loom for Clean Power Plan
At a White House ceremony on August 3, 2015, President Obama and the U.S. Environmental Protection Agency issued the Clean Power Plan, the administration's regulatory plan to reduce carbon dioxide emissions from existing fossil fuel power plants to 68 percent of their 2005 levels by 2030. The plan does not directly regulate any sources. Instead, EPA has specified emission rates that each state in the continental U.S. must achieve and a set of regulatory methods that the states may use to achieve those rates. EPA also issued a proposed "federal implementation plan" that would be used to achieve the necessary reductions in states that either decline to participate or fail to submit a state implementation plan that EPA finds approvable.
U.S. Regulatory Developments
The U.S. Supreme Court's recent invalidation of mercury emission standards for power plants in Michigan v. EPA could affect legal challenges to the Clean Power Plan, since a key issue argument is whether adoption of such standards legally precludes EPA from also regulating the same sources under the provision of the Clean Air Act on which the CPP is based. EPA has proposed a finding that greenhouse gas emissions from certain types of aircraft contribute to climate change and endanger public health and welfare, and it has proposed to join forthcoming international rules on such emissions. California is developing plans for reducing emissions of "short-lived climate pollutants" and preparing to adopt a new low carbon fuel standard.
Climate Change Issues for Management
The investor group Ceres has a report on the impact to date of its Carbon Asset Risk Initiative, which seeks to discourage fossil fuel companies from investing in the development of reserves that will ultimately be "unburnable," and to spur companies to plan for the physical effects of climate change. The report concludes that the initiative has led to new or accelerated action by such companies in a number of ways. The "Risky Business" initiative launched by hedge fund billionaire Tom Steyer, former Treasury Secretary Hank Paulson, and former New York City mayor Michael Bloomberg has issued a report finding that California faces significant economic threats from climate change, particularly in the agricultural sector.
Renewable Energy and Carbon Markets
Continued growth in the utilization of renewable, but intermittent, energy sources like solar and wind, along with frequency regulation and grid stability considerations, requires an abundance of standby power capacity. As the cost of battery storage continues to fall, the technology provides a compelling alternative to traditional gas-fired peaking facilities. Battery storage has no fuel cost and, due to fewer moving parts, a more predictable and likely less burdensome operating cost. A battery bank can respond to power demand far more rapidly, under a millisecond as opposed to minutes. Finally, battery storage can serve both as a load resource—storing wind and solar energy, for example—and a generation resource.
Climate Change Litigation
The U.S. Court of Appeals for the District of Columbia Circuit dismissed as premature challenges by coal producer Murray Energy and a number of states to EPA's authority under the Clean Air Act to promulgate the Clean Power Plan, holding that such challenges must wait until EPA issued the final Plan. The D.C. Circuit also rejected environmental groups' request for an emergency stay of the Federal Energy Regulatory Commission's approval of a plan to repurpose the Cove Point, MD liquefied natural gas terminal for export purposes. Finally, the D.C. Circuit dismissed for lack of standing a petition by a group of industry parties to review EPA's final rule regulating the geologic sequestration of carbon dioxide.
Climate Change Regulation Beyond the U.S.
In response to a suit filed by the nonprofit Urgenda Foundation, the Hague District Court ruled that the government of the Netherlands has a duty of care to mitigate the impact of climate change and that the government's current target of a 14–17 percent reduction in the country's greenhouse gas emission rates, compared to 1990 levels, by 2020 would cause harm to humans and the environment. Accordingly, the court ordered the government to reduce such emissions by 25 percent by 2020. In anticipation of the United Nations climate change conference this December in Paris, the French Parliament is considering the Energy Transition Bill, which would set carbon budgets for key sectors and guidelines to meet the defined targets.