MPC Cleantech Wire

Obama expected to act quickly on climate change regulation

2008-11-13T12:51:00.003-06:00

Jason Grumet, President-Elect Obama's lead adviser on energy and environmental issues, reaffirmed that the new administration will make federal regulations on greenhouse gas emissions a priority. Speaking before the Point Carbon Conference on GHG markets and carbon trading, Grumet said "The president-elect will move quickly on climate change." Though he gave no details, both Senator Jeff Bingaman (D-NM) and Eileen Claussen, president of the Pew Center on Global Climate Change, think that cap-and-trade legislation is most likely to pass in 2010.

The full Reuters article from November 12, 2008 can be found here.

Grumet is widely believed to be on the short-list of candidates for Secretary of Energy in the new cabinet. His background can be seen here.

Dingell-Boucher Cap and Trade Legislation Circulates as "Discussion Draft"

2008-11-10T14:42:00.010-06:00

Congressman John Dingell (D-Michigan), Chairman of the House Energy & Commerce Committee, and Congressman Rick Boucher (D-Virginia), Chairman of the House Subcommittee on Energy & Air Quality, recently released a 461-page "discussion draft" of a bill that aims to cut greenhouse gas emissions in the US 80 percent by 2050.

“Politically, scientifically, legally, and morally, the question has been settled: regulation of greenhouse gases in the United States is coming,” Dingell and Boucher wrote to fellow committee members in early October 2008. “The only remaining question is what form that regulation will take.”

The bill would introduce a "cap-and-trade" system in which companies could buy or sell GHG emissions allowances on the open market depending on whether their reported annual emissions are greater than or less than emissions caps established by federal regulators. According to the draft version of the Dingell-Boucher bill, the "covered entities" that would be subject to compliance with the federally mandated caps would be:

COVERED ENTITY.—The term ‘covered entity’ means each of the following:

(A) Any electricity source.

(B) Any stationary source that produces, and any entity that imports, for sale or distribution in interstate commerce in 2008 or any subsequent year, petroleum-based or coal-based liquid fuel, the combustion of which will emit more than 25,000 tons of carbon dioxide equivalent, as determined by the Administrator.

(C) Any stationary source that produces, and any entity that imports, for sale or distribution in interstate commerce in 2008 or any subsequent year more than 25,000 tons of carbon dioxide equivalent of—
(i) fossil fuel-based carbon dioxide;
(ii) nitrous oxide;
(iii) perfluorocarbons;
(iv) sulfur hexafluoride;
(v) nitrogen trifluoride;
(vi) any other fluorinated gas that is a greenhouse gas, as designated by the Administrator under section 701(b) or (c); or
(vii) any combination of greenhouse gases described in clauses (i) through (vi).

(D) Any geologic sequestration site.

(E) Any stationary source in the following industrial sectors:
(i) Adipic acid production.
(ii) Primary aluminum production.
(iii) Ammonia manufacturing.
(iv) Cement production, excluding grinding-only operations.
(v) Hydrochlorofluorocarbon production.
(vi) Lime manufacturing.
(vii) Nitric acid production.
(viii) Petroleum refining.
(ix) Phosphoric acid production.
(x) Silicon carbide production.
(xi) Soda ash production.
(xii) Titanium dioxide production.

(F) Any stationary source in the petrochemical sector that, in 2008 or any subsequent year—
(i) manufactures acrylonitrile, carbon black, ethylene, ethylene dichloride, ethylene oxide, or methanol; or
(ii) manufactures a petrochemical product not manufactured as of the date of enactment of this title, if the Administrator determines that manufacturing that product results in annual process emissions 6 of 25,000 or more tons of carbon dioxide equivalent.

(G) Any stationary source that—
(i) is in one of the following industrial sectors: ethanol production; ferroalloy production; food processing; glass production; hydrogen production; iron and steel production; lead production; kraft pulp and paper manufacturing; and zinc production; and
(ii) has emitted 25,000 or more tons of carbon dioxide equivalent in 2008 or any subsequent year.

(H) Any fossil fuel-fired combustion device or grouping of such devices that—
(i) is all or part of an industrial source not specified in subparagraph (E), (F), or (G); and
(ii) has emitted 25,000 or more tons of carbon dioxide equivalent in 2008 or any subsequent
year.

(I) Any local distribution company that in 2008 or any subsequent year delivers 460,000 cubic feet or more of natural gas to commercial and residential customers.

Source: "Discussion Draft" of Dingell-Boucher GHG Bill

This bill would require all manufacturing facilities with carbon dioxide equivalent emissions of 25,000 metric tons or higher annually to comply with the provisions of the "cap-and-trade" system. Manufacturers in those industries specifically listed would be required to participate regardless of the quantity of annual emissions.

The full text of the Dingell-Boucher GHG Bill "Discussion Draft" is available here.

For comparison of this bill with previous GHG legislation, refer to the Lieberman-Warner-Boxer Climate Security Act (S.2191), which was defeated in the US Senate in June 2008.

Energy-related provisions in "Emergency Economic Stabilization Act of 2008"

2008-10-31T10:26:00.006-05:00

The $700 billion "Emergency Economic Stabilization Act of 2008" that became law on October 3, 2008 contains what is in essence a 2008 Energy Bill. A summary prepared by the United States Senate Committee on Finance explaining the energy-related provisions in the legislation can be found here.

Of specific interest to manufacturers:

Long-term Extension of Energy Credit. Extends the 30% investment tax credit for solar energy property and qualified fuel cell property, as well as the 10% investment tax credit for microturbines, through 2016. The bill also provides a new 10% investment tax credit for combined heat and power systems and geothermal heat pumps.
Steel Industry Fuel. The bill adds a credit for coal used in the manufacture of coke, a feedstock used in steel production. The credit amount is $2 per barrel-equivalent of oil, available for facilities that place in service before January 1, 2010. The estimated cost of this proposal is $61 million over 10 years.
Incentives for Idling Reduction Units and Advanced Insulation for Heavy Trucks. The bill provides an exemption from the heavy vehicle excise tax for the cost of idling reduction units, such as auxiliary power units (APUs), which are designed to eliminate the need for truck engine idling (e.g., to provide heating, air conditioning, or electricity) at vehicle rest stops or other temporary parking locations. The bill also exempts the installation of advanced insulation, which can reduce the need for energy consumption by transportation vehicles carrying refrigerated cargo. Both exemptions are intended to reduce carbon emissions in the transportation sector. The estimated cost of this proposal is $95 million over 10 years.
Refinery Expensing. The Energy Policy Act of 2005 established a temporary expensing provision for refinery property which increases total capacity by 5% or which processes nonconventional feedstocks at a rate equal or greater to 25% of the total throughput of the refinery. This bill extends both the refinery expensing contract requirement and the placed-in-service requirement for this expensing provision for two years. The bill also qualifies refineries directly processing shale or tar sands for this provision.

Paths to Stabilization

2008-10-29T17:57:00.006-05:00

Source: Stern review on the economics of climate change, 2006.

The latest research by climatologists suggests that the atmospheric concentration of CO2 must be stabilized at 450 parts per million (ppm) in order to avoid the most serious impacts of climate change. The graphic above illustrates the reductions in GHG emissions that must occur to reach this stabilization.

Refer to the CO2 ppm counter in the lower right corner of this blog to see the estimated current atmospheric concentration.

Reports and papers by Mike Hoffman

2008-10-29T17:46:00.003-05:00

"Creating a Carbon Capture and Storage Industry in Texas" (UT Austin-LBJ School of Public Affairs, Policy Research Project, 2006)
Best Practices for Reduction of Carbon Emissions by Local Governments (Natural Capitalism Solutions)
Financial Model and GHG Assessment of UT-Austin Membership in CCX (UT-Austin- McCombs School of Business)
"Photovoltaics in Texas: Strategies for Growth" (IC2 Institute)
Policy Proposals for City of Austin Climate Protection Plan (City of Austin)
Cost-Benefit Report of Clean Energy Technology Park in Texas (ATI - Clean Energy Incubator)
Author, "Solar Requirements within the Texas Renewable Portfolio Standard: An Evaluation of Policy Options and Implications" (LBJ School of Public Affairs Professional Report) - Winner of the 2008 Emmette S. Redford Award for Excellence in Research

For information related to any of these topics, please contact Mike at:

mhoffman@mpcenergyllc.com