Preview Newsletter
PM ACC 7/12/2016
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This Story of Bipartisanship Will Make You Believe in Government Again
Jul 12, 2016 | Environmental Defense Fund
By Fred Krupp
A professor of mine at the University of Michigan Law School once said that problems become more solvable when people lower their voices and work things out. -
(ACC Mentioned) California Kids Have Higher Levels Of Flame Retardant Chemicals In Bodies Than East Coasters
Jul 11, 2016 | CBS Local San Francisco
By Julie Watts
Just weeks after congress passed a law giving the Environmental Protection Agency more power to ban harmful chemicals; a new study demonstrates just how much chemical regulations can impact the health of our nation’s youth. -
How the North Face is Reshaping Its Supply Chain Through Chemical Responsibility
Jul 12, 2016 | Edie News
By George Ogleby
For nearly a decade, outdoor wear giant North Face has been committed to a responsible chemistry programme which aims to create significant environmental savings that go beyond compliance, to identify environmentally preferable chemicals... -
Advice to Switch to ORs Outside the UK is ‘Unfounded’
Jul 12, 2016 | Chemical Watch
By Luke Buxton
Suggestions that companies with an only representative (OR), based in the UK, should consider a “defensive switch” to one based elsewhere in the EU, following the UK’s vote on 23 June to leave the EU, are “unfounded from a regulatory and commercial perspective”... -
Getting the Energy Bill Moving
Jul 12, 2016 | Politico - Morning Energy
By Eric Wolff
Energy bill negotiators say they’re going to cut the veto bait and get on with a conference committee, Pro’s Nick Juliano reports. Sens. Lisa Murkowski and Maria Cantwell reached an agreement Monday that should set up a vote in the Senate as soon as today. -
McConnell Names Bill Conferees; Votes Set for This Afternoon
Jul 12, 2016 | E&E Greenwire
By Hannah Hess
Senate Majority Leader Mitch McConnell (R-Ky.) today named seven senators to a conference committee that will attempt to reconcile the chamber's energy package with the House's version. -
Energy Group Gives Trump Its First-Ever Endorsement
Jul 12, 2016 | The Hill - E2 Wire
By Timothy Cama
The American Energy Alliance is giving presumptive Republican presidential nominee Donald Trump its first-ever endorsement of a political candidate. -
Adviser Says EPA Undecided Whether to Finish Model Carbon Trading Rule
Jul 12, 2016 | E&E Climatewire
By Elizabeth Harball
One of U.S. EPA's top legal advisers said yesterday the agency has not decided whether to finalize a model rule for carbon trading that states could use under the Clean Power Plan. -
Gov. Pushes for Bigger Role in LNG Megaproject Amid Uncertainty
Jul 12, 2016 | E&E Energywire
By Margaret Kriz Hobson
Big oil producers here are expressing serious doubts about moving forward with a multibillion-dollar liquefied natural gas export project in the state at a time when world energy markets are flooded with fuel and natural gas prices are half of what they were... -
Environmental Groups Plan $1.8 Million Pro-McGinty July Campaign
Jul 12, 2016 | PoliticoPro - Whiteboard
By Kevin Robillard
The League of Conservation Voters and Environmental Defense Fund are spending $1.5 million on a television ad attacking GOP Sen. Pat Toomey, while LCV is launching a separate $300,000 canvassing effort to boost Democrat Katie McGinty. -
Future of Natural Gas Hinges on Stanching Methane Leaks
Jul 12, 2016 | New York TImes
By Clifford Krauss
In the energy business, natural gas is supposed to be one of the good guys — the cleaner-burning fossil fuel that can help wean the world from dirty coal during the transition to a low-carbon future. -
EPA Hedges on Whether to Finalize Climate ESPS Model Trading Rules
Jul 12, 2016 | Inside EPA
By Abby Smith
EPA is hedging on whether to finalize its proposed model trading rules for its existing power plant greenhouse gas rule while the Supreme Court's stay of the rule is in place, with one top official saying the agency could take a “less formal” step to provide further detail -
US Methanol Projects Find economics Changed on Oil, Gas Prices
Jul 12, 2016 | Platts
By Thad Walker
Over the past five years, interest in US methanol production has exploded. There has been the reopening of mothballed plants, relocation of southern-hemisphere plants and billion dollar investments in brown and greenfield projects. These investments were all predicated... -
EPA Should Do More to Prevent Chemical Disasters That Threaten Local Economies
Jul 12, 2016 | The Hill - Congress Blog
By David Levine
Chemical disasters can be devastating to local economies. Just ask West Virginia businesses whose economy lost $19 million per day after the Elk River spill in 2015. -
Regulators Cite Progress as Oil Train Derailments Continue
Jul 12, 2016 | Fargo Forum (In E&E Energywire)
By John Hageman
Three years after the Lac-Mégantic, Quebec, oil train disaster, while some regulators and lawmakers say new rules will make transporting oil safer, derailments and explosions continue to happen. -
Aurora Mayor Likes Plan for New Rail Line Outside Suburban Area
Jul 11, 2016 | Chicago Tribune
By Steve Lord
Aurora Mayor Tom Weisner said the idea of a new freight railroad line west of Chicago's suburban areas "makes a lot of sense in a lot of ways." -
Senate Dems Claim ExxonMobil, Energy Industry Deception Blocking Climate Change Legislation
Jul 12, 2016 | Natural Gas Intelligence
By Carolyn Davis
Nineteen Democratic senators are taking to the Senate floor this week to call out ExxonMobil Corp. and industry-backed groups for spinning a "web of denial" to block legislative action on climate change. -
EPA Tweaking New Source Performance Standards for Refineries
Jul 12, 2016 | E&E Greenwire
By Sean Reilly
U.S. EPA is proceeding with a battery of ostensibly minor changes to refinery emissions limits that were most recently tightened late last year. -
EPA Publishes SO2 Compliance Findings, Opening Lawsuit Window
Jul 12, 2016 | E&E Greenwire
By Sean Reilly
U.S. EPA has formally published a roster of attainment designations for compliance with its sulfur dioxide (SO2) standard, opening a 60-day window for any legal challenges to be filed. -
Why Are the World’s Cap-and-Trade Markets Struggling to Keep Prices Up?
Jul 12, 2016 | Sacramento Bee
By Adam Ashton
The cost of sending a ton of greenhouse gas emissions into the air isn’t what it used to be, at least not in the handful of markets that are putting a price on climate change.
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This Story of Bipartisanship Will Make You Believe in Government Again
Jul 12, 2016 | Environmental Defense Fund
By Fred Krupp
A professor of mine at the University of Michigan Law School once said that problems become more solvable when people lower their voices and work things out.
Few in Washington have been lowering their voice in recent years. As I noted in a recent Wall Street Journal op-ed, Congress rarely produces little more than partisan rancor, which made the recent passage of a historic chemical safety law so exceptional – and inspiring.
I’m referring to the Lautenberg Act, the most important environmental legislation in two decades, which the House and Senate passed overwhelmingly and President Obama signed into law last month.
In the midst of the final negotiations over that bill, I found myself on the phone with Sen. James Inhofe, the conservative Oklahoma Republican best known in my circles for throwing a snowball on the Senate floor to mock global warming. But we didn’t talk about any of that.
Instead we discussed our shared commitment to finding a way forward to reform an outdated law that failed to keep toxic chemicals out of homes, schools and workplaces.
That conversation helped me realize how right my teacher had been. Despite our profound and public disagreements over the years on climate change, we had found a way to work together and make progress.
It reminded us of old-fashioned legislating, where parties work toward common ground rather than jockey for partisan advantage. The subsequent victory showed that some of the oddest bedfellows in Washington can, in fact, deliver major reform.
Two developments broke the stalemate
Health and environmental advocates had spent more than two decades pushing for an overhaul of the Toxic Substances Control Act, our main chemical safety law that had remained unchanged since the era of bell-bottoms and disco. Despite the law’s obvious flaws, efforts at reform stalled.
In every Congress for the past decade, Democrats introduced strong legislation, bills that my organization supported. And each time they were blocked by those worried about overregulating the chemical industry.
That’s until two developments tipped the scale.
First, consumers’ rising concerns over unregulated chemicals in everyday products began to register with retailers, product manufacturers and state lawmakers. Companies beganreformulating products to remove certain ingredients, and retailers asked suppliers to do the same.
Spurred by activists, states stepped in to fill the void left by the broken federal system that couldn’t even regulate a known danger like asbestos. This, in turn, created a patchwork of overlapping rules that manufacturers found confusing and onerous, adding more pressure on lawmakers from both parties to craft a national solution.Second – and here’s the clincher – negotiating partners sought and found common ground.
Like the old days on Capitol Hill
The late Sen. Frank Lautenberg, a New Jersey Democrat and public-health champion who got smoking banned on airplanes in the 1980s, introduced the first bipartisan reform bill with Sen. David Vitter, a Republican Louisiana legislator typically more concerned with reducing environmental regulations.
When Sen. Lautenberg died in 2013, Sen. Tom Udall, a New Mexico Democrat and long-time environmental advocate, stepped up to lead the effort to advance and improve the legislation.
Democratic Sens. Sheldon Whitehouse, Ed Markey, Jeff Merkley, Tom Carper and Cory Booker threw their support behind the bill after securing changes to strengthen the role of states, among other improvements. Sen. Barbara Boxer, after attaining concessions preserving additional authority for her home state of California and other states, eventually signed on as well.
Sen. Inhofe, who had recognized that a national regulatory program would bring greater certainty to the business community, led negotiations on the Republican side.
The House assembled its own set of unusual partners: Republicans John Shimkus and Fred Upton worked with Democrats such as Frank Pallone, Nancy Pelosi and Steny Hoyer.
Broad, bipartisan coalition demanded progress
Bipartisan negotiations ultimately produced legislation that won near unanimous support in Congress – and, critically, a strong endorsement from the White House. It worked because we built a broad coalition demanding progress on this issue, and because lawmakers worked hard to navigate outside interests and pressures.
For too many in Washington, even talking to the opposition, much less working across the aisle, is a sin. In an era of narrow majorities and divided government, that is a recipe for certain failure.
It appears some are looking at the moral calculation in the wrong way. Because if a willingness to work with people you normally oppose leads to fewer hazardous chemicals in our children’s lives, we have all won.
https://www.edf.org/blog/2016/07/12/story-bipartisanship-will-make-you-believe-government-again
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Jul 11, 2016 | CBS Local San Francisco
By Julie Watts
Just weeks after congress passed a law giving the Environmental Protection Agency more power to ban harmful chemicals; a new study demonstrates just how much chemical regulations can impact the health of our nation’s youth.
From couch cushions, to baby products, to kid’s pajamas, chemical flame retardants are widely used in consumer goods. As a result, the average American infant has the highest recorded levels of these chemicals in their body. However, a peer-reviewed biomonitoring study by theEnvironmental Working Group found that government regulations can increase those “potentially harmful exposures.”
EWG found that children in California have twice the levels of concerning flame retardants in their bodies as kids on the East Coast. The study, published in Environment International today, links the increased levels in California kids to a recently-revised California flammability regulation that—for decades—led to added flame retardants in products sold in the state.
The group tested mother-child pairs in California for a series of flame retardants in their bodies, and compared the results to those from New Jersey mothers and kids.
“Until 2014 California was the only state with regulations that led to (flame retardant) use in virtually all foam cushioning for furniture.” Researchers believe those regulations contributed to higher levels of the cancer-causing and hormone disrupting chemicals found in kids in the golden state.
While it is virtually impossible to eliminate exposure to the chemicals that are pervasive in consumer goods, the higher levels in California kids indicates that regulations encouraging added chemicals can significantly increase unnecessary exposure.
“We really believe that this report is a good example of how misguided regulations can increase exposure, and good regulations can actually decrease exposure, said Johanna Congleton, EWG senior scientist and co-author of the new study.
The report comes at a time when the U.S. Consumer Product Safety Commission (CPSC) is considering a national furniture flammability standard that could lead to increased use of flame retardants nationwide.
The CPSC is also considering a petition to ban “a class of toxic chemicals called organohalogens from four types of consumer products: upholstered furniture, children’s products, electronics, and mattresses or mattress pads.” EWG has collected more than 10,000 signatures on a petition in support of the ban.
Similarly, a recent KPIX investigation shed light on an unrelated federal flammability standard for children’s car seats that critics say is unnecessarily exposing every child in the country to potentially harmful chemicals. The CPSC does not have jurisdiction over car seats; however, the National Highway Traffic Safety Administration is now reviewing the regulation that has not been updated since 1972. Like the national furniture flammability standard, a possible revision to the car seat standard has the potential to increase–or decrease–exposure to concerning chemicals nationwide.
Rep. Jared Huffman (D-CA 2nd District) recently introduced legislationinto the House Commerce Committee that would require NHTSA to update its 44-year old flammability standard for car seats so that flame retardants would no longer be necessary.
“The big picture is, the government needs to change standards,” said Arlene Blum of the Green Science Policy Institute.
Blum was instrumental in getting California’s controversial flammability standard revised so that it no longer encourages flame retardants. The standard, and flame retardants added to meet it, was found to be unnecessary for real-world fire safety.
The chemicals in question have been linked to developmental delays, reproductive impacts and cancer but until recently, the EPA had limited authority to ban the chemicals or create regulations that reduce exposure. A recent overhaul of the federal toxic substance law gives the agency new authority to regulate concerning chemicals. It also allows the EPA to give special consideration to the effect of the chemicals on vulnerable groups like children and pregnant women.
The American academy of pediatrics has joined EWG and others in petitioning the EPA to ban some of the most concerning chemicals that are still found in furniture, children’s products and car seats.
“Currently you can’t shop your way out of the problem,” notes the EWG’s Congleton. However, she points out that there are steps parents can take to reduce exposure.
The study found a correlation between age and high levels of the chemicals; the younger the child the higher the levels in their body. Researchers believe that the increased exposure is likely associated with more hand to mouth contact and a greater tendency for younger children to spend time on the floor where dust settles.
Additionally, while kids who sucked their thumb tested positive for higher levels of the chemicals, hand washing was associated with lower levels.
The World Health Organization finds that nearly 1 in 5 cancers are caused by chemicals and environmental exposures. EWG notes that antismoking efforts cut lung cancer rates more than 25 percent. The group believes that reducing chemicals in our kids’ environment could help cut cancer rates over all.
In response to the EWG report, the American Chemistry Council told KPIX 5, “Flame retardants provide an important layer of fire protection and help save lives.” The group that represents chemical manufactures also pointed out that “The U.S. Centers for Disease Control and Prevention has stated that ‘the presence of a chemical does not imply disease. The levels or concentrations of the chemical are more important determinants of the relation to disease, when established in appropriate research studies, than the detection or presence of a chemical.”
For a links to the full report, the EWG’s petition to the U.S. Consumer Product Safety Commission to limit the use of toxic flame retardants, and for resources on how to reduce your child’s exposure, see EWG’s research page here.
http://sanfrancisco.cbslocal.com/2016/07/11/california-kids-have-higher-levels-of-flame-retardant-chemicals-in-bodies-than-east-coasters/
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How the North Face is Reshaping Its Supply Chain Through Chemical Responsibility
Jul 12, 2016 | Edie News
By George Ogleby
EXCLUSIVE: For nearly a decade, outdoor wear giant North Face has been committed to a responsible chemistry programme which aims to create significant environmental savings that go beyond compliance, to identify environmentally preferable chemicals and to reduce overall chemical use in its supply chain.
By taking a holistic approach to chemistry which focuses on helping its mills to reduce their impact by using water and energy more efficiently and by addressing harmful chemicals at the fabric level, the company has been able to create products that safeguard the environment while maintaining high-performance clothing and equipment.
Speaking exclusively to edie, the company’s senior sustainability manager James Rogers insisted that environmental concerns lie at the heart of the programme’s agenda.
“For us the main driver is the environmental impact of the chemistry,” Rogers explained. “The main benefit is that we’re reducing our own impact. It was not financially driven but rather from an environmental perspective that we decided it was the right thing to do.”
Long-term approach
Since 2008, North Face has been partnered with industry-leading experts at Bluesign Technologies, a third-party organisation that audits mills and have their own approved chemical list.
The Bluesign system has resulted in significant increase in efficiency at mills engaged in the programme, removing potentially harmful process chemicals that are used in the manufacturing of the garment. The programme has served to reduce supply chain impacts in numerous areas such as resource productivity, air emissions, worker health and safety and water emissions.
Rogers believes that the transition has been made significantly easier by the proactive engagement of its supply chain partners, most of whom have responded positively to the North Face’s long-term approach by participating voluntarily with the programme.
He continued: “I think the key is proper partnerships and really working with your supply chain and making sure they understand why you’re making the transition. It’s important to think holistically about making the transition in a way that you’re not acting too quickly.
“If you just try and force it upon your supply chain and play the card of telling them that they’ll lose business if they don’t do it and just walk away, it’s not going to be helpful because you run into a lot of issues, production issues and issues of people maybe applying the chemicals incorrectly.
“It really does take direct partnership with your supply chain in order to make something like this successful.”
Technical challenges
Last year, North Face shared its concerns about perfluorinated compounds (PFCs) found in some Durable Water Repellency (DWR) treatments and the potential threat they pose to the environment in high concentrations.
The company phased out long-chain PFCs in its technical apparel beginning with the Spring 2015 line and transitioned all apparel products to more environmentally friendly short-chain fluorinated compounds by the end of 2015.
By 2020, The North Face aims to move completely away from fluorinated chemistry in apparel products. Rogers revealed that the company are on track to hit that goal but insisted that the process has been made more difficult due to a variance of supplier machinery.
Rogers said: “There is a technology difference between our suppliers so some are a little bit more advanced in terms of their technology, and we have learned that makes the transition easier based on what types of technology they have in their fabric mill, so that’s one issue we have to address.
“In learning from that we’re working with our chemical suppliers and having them work directly with the fabric mill to apply the proper instruction in the way to use the chemistry so that they don’t have to just use more of it.
“The technical side of how they have to change their process is probably one of the biggest challenges and that’s why we’re partnering with them so closely in this transition.”
Chemical testing programme
To facilitate this transition, The North Face is proceeding to pre-screen all DWR treatments with its chemical management programme, CHEM-IQ, to ensure that they don’t contain other potentially harmful chemicals and meet the firm’s requirements for chemical responsibility.
Rogers explains that some fabric mills have gone a step further and submitted their entire chemical inventory for a CHEM-IQ screening, which has resulted in significant environmental savings. Each sample is screened for more than 430 substances and each chemical formulation is given a rating of preferred, allowed, due diligence required, or prohibited. Due to these efforts, there are 230 tonnes of non-preferred chemicals being phased out of The North Face’s supply chain.
The responsible chemistry programme could prove extremely beneficial for the entire outdoor retail industry, says Rogers, as other brands begin to eliminate non-preferred chemicals.
“If we drive this change, which admittedly we can do because we’re one of the largest companies in the industry so we have the ability to partner with our mills and influence them to move in that positive direction - I think one of the benefits not just for us but for the entire industry is that any of the other brands using the mill now are benefitting from the mills using responsible chemistry and eliminating all of the non-preferred chemicals,” Rogers said.
“They’re not just going to have a separate set of chemistry for those brands; we’re actually making sure that they use the chemicals for everybody.”
'No silver bullet'
Rogers conceded that some performance differences exist when companies move from fluorinated chemistry, as some of the stain and oil repellancy characteristics are inevitably lost.
Nevertheless, he vowed that The North Face would continue to work diligently to incorporate sustainable solutions and share best practices with other brands to ensure that the company meets its goal of transitioning to 100% non-fluorinated DWR used on apparel by 2020 and potentially go beyond the target to adopt the programme on other products.
“Right now there’s no silver bullet,” Rogers concluded. “There’s no easy switch out with non-flourinated chemistry that has all of the same benefits and so we have said we won’t sacrifice technical performance and transition everything tomorrow which is a process we have to look at all of our products and specific for the product.
"We have to make an educated decision on where we can make this transition now and where we have to work with our mills to develop technology to the level that we feel comfortable with for maybe some of our other products.”
http://www.edie.net/news/7/How-The-North-Face-is-reshaping-its-supply-chain-through-chemical-responsibility/
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Advice to Switch to ORs Outside the UK is ‘Unfounded’
Jul 12, 2016 | Chemical Watch
By Luke Buxton
Suggestions that companies with an only representative (OR), based in the UK, should consider a “defensive switch” to one based elsewhere in the EU, following the UK’s vote on 23 June to leave the EU, are “unfounded from a regulatory and commercial perspective”, said the trade body representing ORs.
The Only Representative Organisation (Oro) was responding to comments by law firm Steptoe & Johnson that even if the UK joins the European Economic Area (EEA) – and thus continues to be bound by REACH and other EU chemicals legislation – “many companies will consider that a 'defensive' switch of their OR to a non-UK based entity is now necessary.”
Speaking to Chemical Watch immediately after the Brexit vote, Jean-Philippe Montfort of law firm Mayer Brown made similar comments to Steptoe & Johnson, saying that, unless the UK joins the EEA, “any company trading with the UK will need to review its situation.”
Oro agrees that, under this scenario, REACH registrations covered by UK-based ORs would become “null and void” and be subject to legal entity transfers to EU-based organisations. But, it added that “even in the event of this improbable (though not impossible) scenario, UK-based registrants or preregistrants, including ORs that have (pre)registered on behalf of non-community manufacturers, will have some time to manage a transfer process.”
And as most ORs have legal entities in EU member states, which intend to remain part of the EU, “internal transfers will not generally be problematical”.
Echa does not know how many ORs are established in the UK because companies do not provide this information, when opening an account in REACH-IT.
But it says that as of May 2016, UK-based ORs had submitted 2,315 registrations, covering 1,115 substances.
Speaking in a recent REACHLaw webinar, the company’s global compliance head, Riku Rinta-Jouppi, said if a non-EU manufacturer wants to switch to another OR, the consent of the current UK-based OR “is an Echa guidance construct for which Echa sees no exceptions”.
And a recent statement from UK law firm Eversheds on the post-Brexit implications for chemicals policy says “it is unlikely to be possible simply to transfer registrations from the UK entity to a non-UK entity, unless this is permitted pre-Brexit in accordance with Echa guidance.”
https://chemicalwatch.com/48491/advice-to-switch-to-ors-outside-the-uk-is-unfounded
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Getting the Energy Bill Moving
Jul 12, 2016 | Politico - Morning Energy
By Eric Wolff
LET’S MAKE A DEAL: Energy bill negotiators say they’re going to cut the veto bait and get on with a conference committee, Pro’s Nick Juliano reports. Sens. Lisa Murkowski and Maria Cantwell reached an agreement Monday that should set up a vote in the Senate as soon as today. As part of the deal, “House Republicans have also agreed a final conference report will not contain measures the president would veto,” according to an Energy and Natural Resources Committee spokesperson. It's not clear what has changed in the three weeks since Reps. Fred Upton and Rob Bishop, the lower chambers’ lead GOP negotiators, said that their goal was to send the president a bill he would sign. Senate aides said Cantwell secured additional process commitments from Murkowski that were important to Democrats.
So what’s likely out? Of the 37 measures included in the House amendment to the Senate energy bill, at least three attracted White House veto threats, including the original House-passed energy bill, H.R. 8. The administration, among its objections, singled out provisions in that bill that would limit the federal government’s influence over local building codes, block implementation of an efficiency rule for gas furnaces and undo a planned phase-out of fossil fuels from federal buildings. The administration also said it would veto a California drought bill, H.R. 2989, because it eliminates too many environmental protections, as well as H.R. 1806, the America Competes Act, because it would hamstring federal research. It remains to be seen whether other provisions of those bills make it into a conference report.
Plenty left to fight over: Four other bills in the House package drew varying levels of opposition from the administration that fell short of all-out veto threats. The administration said it “strongly opposes” pieces of an outdoor recreation bill, H.R. 2406, that undermine the National Environmental Policy Act. Similar NEPA-related objections accompanied its opposition to H.R. 1937, which aims to increase production of critical minerals; to H.R. 538, a Native American energy bill; and to H.R. 2647, a wildfire and forest-management bill. While the administration did not take a firm stance on the Senate’s energy bill, S. 2012, it did note “concerns” related to NEPA limitations and a few other provisions. Those items will remain open to discussion, alongside pieces of the Senate bill that rankle Republicans, such as its permanent reauthorization of the Land and Water Conservation Fund, which Bishop has said is a nonstarter.
WELCOME TO TUESDAY! I'm your host Eric Wolff, and I caught a bulbasaur. Now what? Send your tips, quips, and comments to ewolff@politico.com, or follow us on Twitter @ericwolff, @Morning_Energy, and @POLITICOPro.
WILL THIS BE THE YEAR? The House Interior-EPA appropriations bill has cleared its first hurdle (which is also the easiest). The House Rules Committee lined up 131 amendments to be considered during floor debate on the $32 billion measure to fund the Interior Department, EPA and related agencies in fiscal 2017. The list is a familiar grab-bag of Democratic amendments to strip policy riders blocking Interior and EPA rules, Republican efforts to further restrict the agencies’ activities and amendments from members in both parties targeted to priorities back home.
Spotted: Among the items that caught our eye, Rep. Richard Hudson withdrew his amendment to block EPA law enforcement officers from carrying guns, but he will get a vote on his bid to block agency employees from traveling by air for official business. California Democrat Jerry McNerney will get votes on a series of amendments to remove GOP-backed provisions aimed at addressing the drought in his home state. And Rep. Doug LaMalfa will get a vote on whether to block federal funding for a controversial proposal to remove four dams in the Pacific Northwest. Democrats submitted amendments to bar display of the Confederate Flag at national parks and sales of the flag in gift shops, but the measures will not receive a vote after similar measures helped bring down the whole appropriations process last year.
A final vote is expected Wednesday at the earliest. If it passes, it would be the first such bill to clear the House since 2009. But with Congress about to go on summer break, final funding for those agencies and the rest of the government will almost certainly be provided via a stopgap continuing resolution when lawmakers reconvene in September. For good measure, the White House on Monday threatened to veto the Interior-EPA bill as written. Democrats submitted amendments to bar display of the Confederate Flag at national parks and sales of the flags in gift shops, but those will not receive a vote after similar measures helped bring down the whole appropriations process last year.
SENATE DEMS HIT CLIMATE SKEPTICS ON FLOOR: A band of Democrats took to the Senate floor Monday night to denounce a “web of denial” spun by think tanks and other groups with ties to the fossil fuel industry that question the urgency of the climate change threat. Led by Sen. Sheldon Whitehouse, the senators charge that these elements are beholden to corporate profits and seek to undercut the wide scientific consensus that the planet is warming as a result of human activity like the burning of fossil fuels. The speeches, which will continue today and Wednesday, come as Democrats and activists push for a federal investigation into whether ExxonMobil misled the public about internal research detailing the climate change threat.
— “It is time to stand up to the fossil fuel industry and its well-funded PR efforts and say, enough is enough,” Sen. Elizabeth Warren said.
— Sen. Tim Kaine, a leading contender to be Hillary Clinton’s running mate, said rising sea levels are already threatening his home state of Virginia. “Climate change is not an abstraction; climate change is not a next year or a next decade issue. Climate change in Virginia is a today issue,” he said, adding that “greed” is motivating fossil fuel-funded groups to obscure climate science.
GOP PLATFORM BREAKS WITH TRUMP ON FEDERAL LANDS: The Republican National Committee’s platform panel adopted an amendment Monday afternoon that calls on the federal government to hand over public land to the states, putting the party at odds with previous comments from Donald Trump. In a January interview with Field & Stream magazine, Trump said he opposed the concept of transferring federal land to the states. “I don’t like the idea because I want to keep the lands great, and you don’t know what the state is going to do,” Trump said, according to a transcript. “I mean, are they going to sell if they get into a little bit of trouble? And I don’t think it’s something that should be sold. We have to be great stewards of this land.”
With help from Andrew Restuccia, Annie Snider, Darius Dixon, Nick Juliano, and Sara Stefanini
http://www.politico.com/tipsheets/morning-energy/2016/07/getting-the-energy-bill-moving-215281
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McConnell Names Bill Conferees; Votes Set for This Afternoon
Jul 12, 2016 | E&E Greenwire
By Hannah Hess
Senate Majority Leader Mitch McConnell (R-Ky.) today named seven senators to a conference committee that will attempt to reconcile the chamber's energy package with the House's version.
In announcing the conferees, which include Majority Whip John Cornyn (R-Texas) and Republican Policy Committee Chairman John Barrasso of Wyoming, McConnell scheduled two votes on going to conference.
The Senate easily passed a bipartisan energy bill, S. 2012, on a 85-12 vote in April Greenwire, April 20). A month later, the House moved to start negotiations but also significantly amendedits legislation, causing concern among Senate Democrats (Greenwire, May 26).
Now momentum appears to be building for another strong Senate show of support, despite efforts by environmentalists to sink a conference over controversial House provisions.
"Yes, I'm going to vote for it," Sen. Chuck Schumer of New York, the Senate's No. 2 Democrat, told Greenwire.
Late last month, Schumer predicted President Obama would veto whatever came out of a potential conference committee, calling it "doomed to failure" (E&E Daily, June 29).
However, Schumer is convinced the chairwoman and ranking member of the Energy and Natural Resources Committee have talked their way to a solution.
"Sen. [Maria] Cantwell's done a great job working with Sen. [Lisa] Murkowski in an effort to move things forward in a bipartisan way -- not the kind of craziness that came out of the House," Schumer said during a brief interview. "You know, there's so many amendments that are just unpalatable. So let's give it a shot."
After months of negotiating, Murkowski said none of the provisions Democrats have raised alarm about -- measures on drought, wildfire and riders related to the National Environmental Policy Act -- is being singled out ahead of the conference. In other words, even controversial policies are on the table.
But Schumer expressed confidence in the outcome. Aides have spoken about lawmakers sending the president something he could sign. And Democrats could always block the legislation down the line if negotiations go down.
"It is my understanding that both Cantwell and Murkowski will have to agree to anything that happens. I have a lot of faith in Cantwell making sure bad amendments don't happen," he said.
Rank-and-file Democrats, like Sen. Chris Coons of Delaware, say they understand the hesitancy from some environmental advocates to even engage with the House because its bill has so many "bad policy proposals" in it. But Coons said last night that conference talks were the only way to work those differences out.
"I am confident that the Senate Democratic caucus and President Obama will block any truly objectionable policy proposals that might come out of conference," Coons said.
With the exception of Cornyn, all seven Senate conferees are members of the Energy Committee. The lineup includes Murkowski and Cantwell, and Sens. Jim Risch (R-Idaho), Ron Wyden (D-Ore.) and Bernie Sanders (I-Vt.).
http://www.eenews.net/greenwire/2016/07/12/stories/1060040143
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Energy Group Gives Trump Its First-Ever Endorsement
Jul 12, 2016 | The Hill - E2 Wire
By Timothy Cama
The American Energy Alliance is giving presumptive Republican presidential nominee Donald Trump its first-ever endorsement of a political candidate.
The AEA, the advocacy arm of the conservative Institute for Energy Research, said Tuesday that Trump would undo President Obama’s policies that have harmed fossil fuels, unleashing massive economic growth.
“Donald Trump has put forth a plan that would move our country forward by opening up more federal lands and waters for energy exploration of all kinds, utilizing cutting-edge technologies to tap into our vast resources, unwinding the Obama administration’s harmful regulations, and subjecting the Paris Agreement to the scrutiny it deserves,” Tom Pyle, the group’s president, said in a statement.
“These policies will usher in an era of prosperity that will strengthen our economy, put more money in the pockets of American families, and lift many struggling Americans out of poverty.”
By contrast, presumptive Democratic nominee Hillary Clinton “offers the American people a plan that would move our country backwards — hurting all American families, but especially the poorest among us,” Pyle said.
In a May speech, Trump outlined an energy policy vision that focused on increasing development of oil, natural gas and coal, rolling back Obama policies and completely eliminating any dependence on imported energy, actions he said would spur hundreds of billions of dollars in economic development.
Trump called Obama’s climate change regulations “stupid” and has previously called global warming a “hoax” perpetuated by China.
Earlier Tuesday, the Sierra Club published a report saying that if he were president, Trump would stand alone as the only world leader who does not believe in climate change.
The AEA, founded in 2008, is a self-described free market advocacy organization. It’s funded heavily by fossil fuel interests and their business allies and has received support from the billionaire conservative brothers Charles and David Koch.
Trump has also been endorsed by the West Virginia Coal Association.
Clinton has received the backing of major environmental groups, including the Sierra Club, the League of Conservation Voters and the Natural Resources Defense Council’s political arm, the NRDC Action Fund.
http://thehill.com/policy/energy-environment/287360-conservative-energy-group-backs-trump
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Adviser Says EPA Undecided Whether to Finish Model Carbon Trading Rule
Jul 12, 2016 | E&E Climatewire
By Elizabeth Harball
One of U.S. EPA's top legal advisers said yesterday the agency has not decided whether to finalize a model rule for carbon trading that states could use under the Clean Power Plan.
"At this point, we still have not made a decision, given the pendency of the stay, what our next step is going to be -- whether we are going to move from proposal to final rule or whether we are going to devise some other, less formal instrument to move the ball forward in terms of the issues that were raised in the model trading rule," Joe Goffman, senior counsel in EPA's Office of Air and Radiation, said during a panel discussion at the 2016 EIA Energy Conference in Washington, D.C..
The Supreme Court in February stayed the Clean Power Plan, the Obama administration's rule to reduce carbon emissions from the U.S. power sector, after a large number of states and industry groups sued to challenge the rule.
Following the stay, EPA's opponents have argued the agency should halt all work on the rule. EPA, on the other hand, has insisted the agency is not enforcing the Clean Power Plan by releasing further information on the rule for states and organizations that have requested more details.
Last month, Republicans criticized EPA when it formally released a proposal for the Clean Energy Incentive Program, an optional program for states to get credit for work to reduce emissions before the Clean Power Plan begins in 2022. Sen. Jim Inhofe (R-Okla.), for example, said EPA "has no respect for the rule of law or decisions from the Supreme Court of the United States and would rather progress a political priority at the expense of American taxpayers" (ClimateWire, June 17).
At yesterday's conference, Goffman said EPA is not implementing the rule but is providing information that states and others requested.
"Even since February, even since and notwithstanding the issuance of the stay, we have been approached, addressed, engaged with by a number of actors in the power sector, both on the state government side, with respect to other operators in the power system and even with respect to some companies about ways that we can -- at their behest -- provide technical support or general information on activities they can continue to pursue or are already pursuing, that have the effect of reducing CO2 emissions in the power sector in ways that might ultimately be compatible with the implementation of the CPP," Goffman said.
Despite the stay, Goffman said, many states are very interested in the outcome of EPA's model carbon trading rule, which would offer states a blueprint for how to implement carbon trading under the Clean Power Plan. He cited a letter 14 states wrote to EPA in April asking the agency for more information on the Clean Energy Incentive Program and the model carbon trading rules (ClimateWire, April 29).
"We were urged by the states that signed the letter ... to address the proposal of the model [trading] rule and, in effect, address the rich record of public comments we received as of January" on how the rule should work, Goffman said. "Indeed, since January of this year, a number of parties have asked to meet with us to emphasize various points of their comments or explain the ideas that they concluded in their comments."
Goffman concluded that "clearly we will make some decisions at some point about how to respond" to the many comments EPA received on the model trading rule.
This story also appears in EnergyWire.
http://www.eenews.net/climatewire/2016/07/12/stories/1060040084
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Gov. Pushes for Bigger Role in LNG Megaproject Amid Uncertainty
Jul 12, 2016 | E&E Energywire
By Margaret Kriz Hobson
Big oil producers here are expressing serious doubts about moving forward with a multibillion-dollar liquefied natural gas export project in the state at a time when world energy markets are flooded with fuel and natural gas prices are half of what they were two years ago.
But that isn't stopping Alaska Gov. Bill Walker (I), who insists the state can commercialize the 34 trillion cubic feet of natural gas available on the North Slope even if one or more of its oil industry partners decides not to move forward with the proposed project.
Walker and Keith Meyer, the new head of the state's independent Alaska Gasline Development Corp., are promoting a plan to change the way the gas export project is financed in hopes of getting the facility online by the mid-2020s. At that point, Meyer predicts, world demand for gas is likely to escalate.
Currently, the state is part of a public-private coalition with Exxon Mobil Corp., BP Alaska and ConocoPhillips Co. to build North America's largest gas export venture, known as Alaska LNG.
The project, managed by Exxon Mobil, would consist of a gasification plant on the North Slope, an 800-mile pipeline with off-take points for state residents, and a liquefaction plant and export terminal complex on Alaska's southern coast.
Under the terms of the alliance's 2014 joint operating agreement, each partner would own roughly a quarter of the gas running through the pipeline and would pay a quarter of the construction costs. Project officials estimate the current price tag at just over $45 billion.
The Alaska LNG team has nearly completed the preliminary engineering and design studies on the megaproject and is submitting a series of draft resource reports to the Federal Energy Regulatory Commission. But beyond that work, the project's future is uncertain due to the collapse of world oil and gas prices.
In an effort to maintain the project's momentum, the Walker administration is proposing a new plan for bankrolling construction. The governor and Meyer are promoting a plan to underwrite Alaska LNG by raising funds from long-term, third-party investors. They suggest that pension funds or Asian utilities might be interested in backing the project.
Meyer argues that this new financial model, more commonly used to build other state and municipal infrastructure projects, would give the state greater control over the project while lowering its fiscal risk. Under that approach, the oil companies would be gas shippers instead of equity owners in building the project.
"We need to recognize that under the current path, this project is not going forward," Meyer told state legislators at a recent joint hearing of the Alaska House and Senate resources committees.
"So this is an attempt to say, wait a minute, do we slow down the project? Or should we try something different?"
Just how much Walker can do on his own is unclear. The new financing proposal would require fundamental changes to the original business plan for the Alaska LNG alliance, which might require the state Legislature's approval.
In a statement last week, the governor's office said Walker has received a series of questions on the proposed financing plan from the Legislature and expects to release more information in the coming week.
Market challenges compound risk
The current Alaska LNG partnership agreement was negotiated and shepherded through the Legislature by former Gov. Sean Parnell (R).
During his 2014 campaign for governor, Walker accused Parnell of giving away too much control over the gas export project to the industry. Walker vowed that if elected governor, he would renegotiate the terms of the gas line contracts.
Once in office, however, Walker assured nervous state lawmakers and industry executives that he would stick with the original partnership agreement as long as it was moving forward. All that changed when oil and gas prices fell and the project began slowing down.
But Walker, who has long favored a state-run project, faces an uphill battle in selling his new financing and management model to the oil producers and the Republican-led Legislature.
Representatives of the three oil companies recently told state legislators they're willing to hear more about Walker's proposal. BP senior manager Dave Van Tuyl said he recognizes Walker's eagerness to commercialize Alaska's natural gas reserves at a time when state oil production is declining.
"BP understands the state's fiscal need for a new revenue source in the mid-2020s," Van Tuyl said. "But we don't want to rush into the largest energy project in North America that only ends up losing lots of money for all of us."
He said BP recently hired the consulting firm Wood Mackenzie to study the commercial viability of the Alaska LNG project. That report is expected by the end of the month.
BP and Exxon Mobil officials say they're willing to consider moving forward with the next stage of technical studies under the existing Alaska LNG business plan. Those advanced front-end engineering and design, or FEED, studies are expected to cost up to $2 billion.
But ConocoPhillips officials say they aren't ready to commit to that expensive research. Darren Meznarich, ConocoPhillips' project integration manager for Alaska LNG, told state legislators that the company "has to be realistic about the project in the current price environment. We expect the market to strengthen at some point, but the timing of that is difficult to predict."
Alaska LNG project manager Steve Butt, an Exxon Mobil engineer, also offered a sobering assessment of the project's near-term prospects.
"I have every confidence that at the right time, this project will happen, because the resources are there. The folks involved are committed to monetizing the gas," he said. "It's just that in today's market with the challenges and the unresolved risk, I don't know if that day is today."
'Well-intentioned desperation'
State legislators are dubious about Walker's proposal to change the Alaska LNG partnership.
At a recent hearing, lawmakers criticized the governor for seeking to take control of the gas export venture at a time when Alaska's industry partners are worried about its economic feasibility.
"You've seen a fundamental change in market conditions," state Sen. Peter Micciche (R) said. "And if the people that have the most experience on the planet are concerned about the viability of this project, I think we should share in that concern."
Kenai Peninsula Borough special assistant Larry Persily noted that lawmakers "are skeptical of this notion of the state taking a larger stake or even taking control of the project. They are very worried about risk, even though Keith Meyer assured them that the state won't do the project if the market is not there."
Walker and Meyer insist that long-term investors, particularly Asian utility companies, would be eager to buy a piece of the Alaska LNG project. Some companies could end up investing in the pipeline while also buying gas from the Alaska LNG project, they argue.
But Alaska Senate Resources Committee Chairwoman Cathy Giessel (R) warned against inviting potential customers to partner on the project. "If Tokyo Power owns a piece of our LNG project, they are going to demand the lowest possible cost," Giessel said in an opinion piece in the Alaska Dispatch News.
"I want the jobs, the gas and the revenue for Alaska as badly as anyone else. However, the Alaska go-it-alone plan we are hearing is full of well-intentioned desperation. How can a pipeline fund[ed] by someone else come with no strings attached?
"If there was a significant profit to be made with an Alaska LNG line, I am confident that Exxon would be chasing it. They aren't. And if Exxon's shareholders don't want the company losing money in an Alaska LNG megaproject, why should the shareholders in Alaska's future, you and me, take such a risky gamble?"
Deadlines loom
While Walker promotes his new funding proposal, the original Alaska LNG alliance is approaching a series of critical decisions that will determine the fate of the ambitious gas export venture.
By the end of September, the project research team is due to complete the preliminary engineering and design work on the venture and submit that data to the state of Alaska and the oil producers.
Once those studies are in hand, the partners will have 120 days to decide whether to commit to the next round of more-advanced FEED studies. That costly work would take three years to complete and lead to the final investment decision on whether to build the colossal project.
At the same time, funding for the Alaska LNG research group is set to end Jan. 1. Project manager Butt estimates that by the end of the year, the partners will have spent about $600 million on the export project.
If Alaska and the oil companies want the staff to continue working on the project into 2017, they must approve a new budget by mid-November.
Butt's team recently submitted thousands of pages of project information to FERC, with more data expected to be passed on to federal regulators in the weeks ahead.
But the partners have not yet decided when -- or whether -- they will formally apply for a FERC permit to build the Alaska LNG project. That step would trigger an expansive federal environmental impact review that Alaska and oil producers would be required to pay for.
At the same time, another major deadline is looming on the horizon. The joint operating agreement, which defines the relationship between the four partners, ends in July 2017.
If the state and the oil companies don't extend the agreement, the public-private coalition will dissolve. At that point, the partners would face serious legal issues over who owns the scientific and engineering studies, as well as hundreds of acres of Kenai Peninsula land that the partnership has acquired to build the project.
Persily, who previously served as head of the White House Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects, notes that even if the current Alaska LNG partnership doesn't continue, the state and the oil companies will keep trying to monetize the immense reserves of North Slope natural gas.
"There's a lot of gas up there, and it's worth a lot of money," he said. "They want to sell the reserves. So I don't think this new turn in the politics in Alaska kills the project.
"I believe it will get built when the market economics are solid enough that the producers can find buyers to sign contracts and they start ordering steel. It's not going to happen this year or next."
http://www.eenews.net/energywire/2016/07/12/stories/1060040076
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Environmental Groups Plan $1.8 Million Pro-McGinty July Campaign
Jul 12, 2016 | PoliticoPro - Whiteboard
By Kevin Robillard
The League of Conservation Voters and Environmental Defense Fund are spending $1.5 million on a television ad attacking GOP Sen. Pat Toomey, while LCV is launching a separate $300,000 canvassing effort to boost Democrat Katie McGinty.
LCV and EDF Action are airing the spot on broadcast and cable in the Pittsburgh, Wilkes-Barre and Harrisburg markets. The 30-second ad will start airing Wednesday and run until the end of the month.
"Big oil polluters," a narrator says at the start of the ad. "They have a friend in Pennsylvania: Millionaire Pat Toomey." The narrator, over black and white images of Toomey, the Capitol building and oil platforms, accuses Toomey of voting to protect tax breaks for "big oil" and notes oil producers have given Toomey $700,000 in campaign contributions.
"Tax breaks for them, campaign contributions for him," the narrator says.
Watch the ad, "Friend," here: https://youtu.be/Due54BHdraA.
LCV's canvassing effort is focused on voters in Pittsburgh and the rest of Allegheny County in Western Pennsylvania. The effort will focus on McGinty's history of supporting environmental regulations and Toomey's "record of leading the charge against critical clean air and water protections."
https://www.politicopro.com/energy/whiteboard
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Future of Natural Gas Hinges on Stanching Methane Leaks
Jul 12, 2016 | New York TImes
By Clifford Krauss
In the energy business, natural gas is supposed to be one of the good guys — the cleaner-burning fossil fuel that can help wean the world from dirty coal during the transition to a low-carbon future.
But when natural gas escapes unburned, as it often does during production and distribution, it is a big troublemaker. Its essential component, methane, is particularly pernicious — a greenhouse gas that is more than 80 times as potent as carbon dioxide over 20 years as it dissipates.
That is why, on a recent sweltering day, a team of Southwestern Energytechnicians went hunting for leaky pipes and wells on the rolling cow pastures of northern Arkansas. They rode in pickup trucks, outfitted with infrared cameras and laser-beam scanners.
Wearing hot, fire-retardant suits, they pulled up to a compressor station called Yogi 1, and, enduring the station’s deafening noise, spent 90 minutes with their high-tech detection gear looking for leaks. Finally finding one, on a gas line connector, they made a quick repair.
Then one team member performed a decidedly low-tech test, pouring a bottle of soapy water over the patch. Although popping bubbles indicated methane was still seeping, one more turn of the wrench made the bubbles disappear.
“In the war against methane emissions,” Eric Davis, a member of the Southwestern team said, smiling, “we won this battle.”
But the war is far from won, and the reputation of natural gas — not to mention a big part of the global effort against climate change — may hang in the balance.
Methane has many sources, including flatulent cows and decomposing landfills. But the oil and gas industry may be the nation’s biggest emitter of leaked methane, gas that might otherwise stay underground for eons.Continue reading the main storyRELATED COVERAGEE.P.A. Methane Leak Rules Take Aim at Climate Change MAY 12, 2016Environmental Activists Take to Local Protests for Global Results MARCH 19, 2016
While coal still predominates in many parts of the world, especially in emerging economies, natural gas has already replaced coal as the United States’ leading fuel for power plants. But the American energy industry lets enough natural gas escape each year to meet the heating and cooking needs of about seven million homes annually.
That runaway gas also creates about the same short-term climate impact as 240 coal-fired power plants, according to the Environmental Defense Fund.
So federal regulators have begun cracking down, especially since the climate conference in Paris last December, when the United States and most other nations committed to controlling global warming.
In May, the Environmental Protection Agency announced the first federal regulations aimed at curbing the escape of methane from new wells and equipment by requiring emissions-control devices and regular monitoring.
The Bureau of Land Management plans to write rules this year to reduce methane leaks from oil and gas wells on federal and tribal lands.
Even more sweeping could be an E.P.A. data collection program underway on the country’s tens of thousands of oil and gas operations, an effort that could lead to far broader regulations on the industry in the next few years.
The November election may determine the eventual potency of any new regulations. Hillary Clinton backs efforts to curb climate change, while Donald J. Trump disputes evidence of global warming.
Without explicitly endorsing new rules, Southwestern Energy — the No. 3 natural gas producer in the United States after Exxon Mobil and Chesapeake Energy — is among several prominent companies that agree that more methane controls are necessary.
Southwestern is helping to lead an industry group, One Future, which aims to reduce methane leakage to less than 1 percent of total national gas production. Some estimates put the current amount at nearly twice that level or more. Other members of the group include Apache, BHP Billiton, Hess, Kinder Morgan and AGL Resources.
“Natural gas is a natural bridge to a low-carbon future, but if it’s a rickety bridge that leaks methane, why would you take that bridge?” said Mark K. Boling, executive vice president of Southwestern, which is based in Houston. “The Paris climate accord tells us we have got to do something about this.’’
Here in the giant Fayetteville shale field that spans northern Arkansas, Southwestern has upgraded pumps and compressors, and has deployed new tanks to capture surges of gas that belch out of wells after they are hydraulically fractured. It has even replaced leaky gas-powered control equipment with gear powered by solar panels and fuel cells.
Southwestern says the more than $14 million it has spent on equipment, studies and other efforts to stem gas leaks has nearly paid for itself with the methane captured and sold.
But some others in the industry are pushing back. They say new, more efficient extraction methods make additional oversight unnecessary — and too expensive, given the collapse of natural gas prices in recent years that has bankrupted scores of producers and saddled hundreds of others with debt.
Smaller companies say they simply do not have an extra $100,000 to spend on an infrared camera, or the personnel to do extra inspections and paperwork. They predict that operators will close thousands of wells rather than pay the extra costs. Each well that is closed means 12 fewer industry jobs, they say.
“It’s going to be extremely onerous, and it’s going to put a lot of people out of business,” said Patrick M. Montalban, chief executive of Mountainview Energy, which operates wells in Montana and North Dakota.
Environmentalists counter that many solutions are not expensive.
Replacing a control device on a gas storage tank that vents methane can cost as little as $3,000, for instance. And in cases where companies vent their gas wells, another big source of escaping methane, drillers can use the cheap and time-honored method of flaring — burning it off. That produces carbon dioxide, but it is less environmentally damaging than raw methane.
Meanwhile, service companies are cropping up around the country to do the inspection and repair work more cheaply than small drillers can do it themselves.
“If the industry doesn’t take this seriously, you are going to continue to have tighter and tighter regulations,” said Richard Hyde, managing director for federal and government affairs at one of the One Future members, AGL Resources.
Southwestern is participating in projects with the Environmental Defense Fund, General Electric, IBM and a Silicon Valley start-up called Acutect to test continuous methane detection systems around wells and equipment using lasers, sensors and even drones.
“We need to move more rapidly,” said Mr. Boling of Southwestern. “We better do everything we can to ensure that when a decision is made to close a coal-fired plant and replace it with a natural gas plant, we are actually getting the climate benefit we are saying you will get.”
Southwestern’s leak-hunting crews say they can attest to the company’s efforts.
In February, an inspection of the Yogi 1 compressor station revealed half a dozen leaks. The more recent visit, finding only one leak that was fixed to soap-bottle standards, was a sign of progress.
“We’re going down paths others haven’t,” said Douglas Jordan, Southwestern’s corporate environmental program director, as he watched the technicians work. “We’re always chasing methane molecules.”
http://www.nytimes.com/2016/07/12/business/energy-environment/future-of-natural-gas-hinges-on-stanching-methane-leaks.html?_r=0
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EPA Hedges on Whether to Finalize Climate ESPS Model Trading Rules
Jul 12, 2016 | Inside EPA
By Abby Smith
EPA is hedging on whether to finalize its proposed model trading rules for its existing power plant greenhouse gas rule while the Supreme Court's stay of the rule is in place, with one top official saying the agency could take a “less formal” step to provide further detail on the regulation though noting that “no decisions have been made” yet.
“At this point we still have not made a decision given the pendency of the stay [about] what our next step is going to be -- whether we're going to move from proposal to final rule, or whether we're going to devise some other less formal instrument to move the ball forward in terms of the issues that were raised [in comments on] the model trading rule,” Joe Goffman, EPA's associate assistant administrator for climate, told an annual energy conference hosted by the Energy Information Administration in Washington, D.C., July 11.
His comments appear to acknowledge that EPA is wary of critics' charges that finalizing the model trading rules -- which EPA has previously pledged to finalize this summer -- could be inconsistent with the Supreme Court's stay.
However, the remarks also show the agency is recognizing that it needs to take action to address issues raised in comments to the proposed model rules in order to placate environmentalists, states and other supporters calling for more detail.
Since the Supreme Court stayed EPA's existing source performance standards (ESPS) in February, many agency critics have pressed officials to drop efforts to develop related rules and policies, including the model trading rules and the Clean Energy Incentive Program (CEIP).
They have charged that moving forward with such policies is at odds with the stay and unlawful because advancing regulatory processes that are integrally related to the suspended rule would compel states and regulated entities to expend resources to respond -- or otherwise forgo legal rights -- and, indirectly, participate in implementation of the stayed rule.
They have also argued that the high court's stay order includes “inherent” requirements to postpone, or toll, all of the deadlines in the rule to account for the litigation.
But Goffman noted that a number of entities have urged EPA to address the “rich record of public comments” the agency received on its model trading rules, which the agency proposed last summer alongside its final ESPS.
For example, Goffman cited a group of 14 states backing the rule that penned a letter calling on the agency to finalize the model trading rules to provide further information to those states that have decided to voluntarily move forward with ESPS planning despite the stay.
“[W]e request that EPA provide a final model rule or rules. Of course, the relevance of such a rule will depend on the outcome of the litigation; however our states would find the information helpful in the near term for the planning purposes described above,” the states wrote in their April 28 letter
The states' letter came just two days after EPA sent a draft proposal outlining further details of its CEIP to the White House for interagency review. That proposal has since been released, with a comment period that began June 30.
'Less Formal' Instrument
The states and other EPA backers insist agency actions to issue the recent CEIP proposal, as well as the final model trading rules, are wholly consistent with the Supreme Court stay of the ESPS, which they say prohibits the agency from implementing the rule but does not preclude it from continuing to develop related programs.
Agency officials have said as much, as well. For example, acting air chief Janet McCabe wrote in an April 18 letter that the agency “will move forward developing these actions in a way that is consistent with the stay while providing states the tools they have asked for to help address carbon pollution from power plants.”
McCabe added that EPA “has in the past moved forward with preparing for the potential implementation of a rule while it has been stayed, in anticipation of the possibility that the stay could be lifted. Such actions are unaffected by a stay."
However, comments like McCabe's tend to refer to ESPS related actions generally without addressing in particular the fate of the model trading rules, which prior to the high court stay of the rule EPA had pledged to finalize this summer.
Thus, Goffman's comments serve as one of the first indications that the agency intends to take some sort of action on the model trading rules, though he was careful to stress that no formal decisions have yet been made on a path forward.
Goffman declined to answer what form a less formal instrument might take. When asked, he told Inside EPA that EPA Administrator Gina McCarthy had previously told the House Science Committee that no decisions have been made on whether to finalize the trading rules. “For the moment, that's the up-to-date word,” he said.
But one environmental lawyer says that if EPA were to issue a “less formal” action related to the model trading rules, it could take the form of a guidance or memorandum, which the source notes would be somewhere between the proposal and a final rule.
However, the source also says there is “no legal impediment” imposed by the stay that precludes EPA from finalizing the model trading rules, or taking any other steps “including regulatory action that has the effect of helping everyone understand what this program is going to look like.”
CEIP Proposal
Nonetheless, were the agency to take a less formal action instead of finalizing the model trading rules, it could serve to minimize some criticism from opponents that EPA is compelling action from states, thus violating the high court stay.
Rule opponents have argued that the agency's recent CEIP proposal and any final action on the model trading rules “compels” action from states in the form of a comment period and a litigation window, respectively.
In terms of the CEIP proposal, “if you're a state that didn't want to be working during the stay, you have to pick up your pen and write comments and evaluate this rule, otherwise if at the end of the day the rule comes back, you're going to be in a position where you didn't have any opportunity to have any input on this part of the program,” industry attorney Allison Wood told Inside EPA last month.
Likewise, if the agency were to finalize the model trading rules, that triggers under the Clean Air Act a 60-day window in which to file a legal challenge or “otherwise you waive your right to do so,” Wood argued, adding “then suddenly you're in litigation, and that's all very entailed and costly and involves picking up many pens.”
Emissions Leakage Guidance
One issue that EPA could address in any “less formal” action like a guidance in lieu of finalizing the model trading rules is how to deal with emissions leakage, an issue with which Goffman said stakeholders were “particularly fascinated” in comments.
EPA under the ESPS generally requires states that use mass-based compliance approaches to take steps to prevent leakage of emissions from existing plants to new facilities, particularly new natural gas plants that are not subject to the rule's requirements.
“We got plenty of comment on that. We have been the beneficiaries of a lot of analysis and information from the public sector and private sector parties, and clearly we will make some decisions at some point about how to respond to those in the wake of the proposal that was issued last summer and the already-existing and complete comment record that we've got from January,” Goffman told the EIA conference.
One approach states can take to mitigate leakge -- which analysts said is the easiest and most effective -- is to include new sources under the cap, using an approach called the new source complement. But because EPA cannot mandate such a method, it includes in the proposed model trading rules an alternative -- under which 10 percent of all the state's allowances must be divided equally into two set-asides, one for renewable generation and another for existing natural gas units to be distributed through an updating output-based allocation system.
Environmentalists have called on EPA to revisit the issue in the final model trading rules after several analyses found the approach ineffective at preventing leakage, thus undermining the emissions reductions that would be achieved by the rule
Some analysts, however, have expressed uncertainty over what EPA could do to fully resolve the issue, as analysts have been unable to find an alternative approach that would mitigate leakage 100 percent.
“I think their hands are tied. Statutorily they are going after existing sources under [Clean Air Act section] 111(d), so the tools available for just regulating existing sources are the ones we're already looking at,” Rhodium Group analyst John Larsen told reporters last month, though noting EPA could take further steps to incentivize the new source complement approach.
http://insideepa.com/daily-news/epa-hedges-whether-finalize-climate-esps-model-trading-rules
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US Methanol Projects Find economics Changed on Oil, Gas Prices
Jul 12, 2016 | Platts
By Thad Walker
Over the past five years, interest in US methanol production has exploded. There has been the reopening of mothballed plants, relocation of southern-hemisphere plants and billion dollar investments in brown and greenfield projects. These investments were all predicated on a unique pricing relationship: a historically wide natural gas-to-crude ratio.
However, this pricing relationship has been altered, changing the economics of methanol production in the US and raising questions about the future economic viability of US ethanol expansions. This piece outlines and analyzes the changing economic nature of the US methanol landscape and shows that methanol economics are not as rosy as they were a few years ago.
The increased price multiple between US natural gas, crude and methanol made methanol production economics favorable in the US. After methanol spent the past decade at a price multiple of less than 100x natural gas prices, it has averaged 112x since 2011, highlighting the value of turning natural gas into methan
But our analysis shows that the economics of US methanol production have taken a hit in the lower oil price environment.
The IRR, or internal rate of return, is a metric used in capital budgeting to measure the profitability of potential investments. Hurdle rates for IRR vary but 10-20% is typically considered economically feasible. For example, the current IRR of a Permian oil well is 23%, the highest IRR of oil and gas basins in North America, based on Platts Bentek’s June 2016 IRR analysis.
For our analysis we considered the initial investment costs split between a construction timeline of two years, and natural gas for feedstock and methanol output for its first 10 years of operation.
The methanol projects in the US that have been proposed, are under construction or are online all had unique traits that alter the economics of each project. For example, Methanex transported two 1 million mt/year units from Chile to Louisiana. Even after going over budget by roughly $200 million, the two units were relocated for a total price of $1.4 billion, or an average of $700/ton per annum of capacity. This was roughly $50/ton per annum less expensive than the average of all facilities analyzed. The first Geismar unit would have generated an IRR of 41% when proposed in July 2012, and the estimated IRR fell to 31% by the time the unit actually came online in January 2015.
The highest IRR can be traced to LyondellBasell’s Channelview facility, which was an existing facility mothballed in 2004 due to high natural gas prices and thus low margins. LyondellBasell announced in December 2011 it would bring the 780,000 mt/yr facility back online at an estimated cost of $150 million. While the decision at the time of announcement, assuming the initial construction costs were sunk, would have provided an IRR of 102%, the estimated IRR increased to 133% by the time the unit returned to operation in December 2013 as the value gap between natural gas and methanol widened even more.
The methanol expansions in the US have been eyeing the growing Chinese MTO market as a source of demand for the incremental demand. In fact, several projects have been proposed aiming to directly supply these olefin-producing plants.
Northwest Innovation Works announced plans to build three methanol projects in the Pacific Northwest in January 2014, and the $1.8 billion facilities would have each generated a 10-year IRR of 63%. In addition to having cheaper feedstock gas, averaging roughly 10 cents/MMBtu below the Gulf Cost benchmark over the past five years, the facility would also benefit from much closer proximity to China and therefore lower shipping costs. While natural gas prices in the Pacific Northwest have developed an increased discount to Henry Hub over the last few years as more heavily discounted Canadian volumes move into the region, the projects would now only return an IRR of 25%.
While a number of methanol units are under construction and expected to come online over the next few years, the economics are not near the level they stood during the higher-priced crude environment a few years ago. In fact, citing concerns over the current US pricing dynamics, BASF recently announced that it is reassessing its gas-to-propylene plant in the US.
http://blogs.platts.com/2016/07/12/us-methanol-economics-oil-gas-prices/
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EPA Should Do More to Prevent Chemical Disasters That Threaten Local Economies
Jul 12, 2016 | The Hill - Congress Blog
By David Levine
Chemical disasters can be devastating to local economies. Just ask West Virginia businesses whose economy lost $19 million per day after the Elk River spill in 2015.
The EPA is now updating rules on chemical facility safety to minimize the impact of such accidents, but sadly, the planned changes will do very little to prevent chemical disasters. Instead, new chemical security rules should include prevention and information sharing in order to mitigate the risks.
Unfortunately, Elk River was no outlier. Of the 12,500 hazardous chemical facilities covered by the Environmental Protection Agency’s (EPA) Risk Management Program (RMP), as many as 466 pose a catastrophic hazard to 100,000 or more people. That’s more than 100 million people in the U.S. who could be in harm’s way following another chemical disaster - some of which could make the Elk River spill pale in comparison.
Local businesses and economies feel the effects of these disasters. When drinking water is contaminated or communities are evacuated, even if for a short time, it forces many main street businesses to close, and in extreme cases, go out of business.
The EPA is now starting to address this, proposing some changes to the RMP rule. What the EPA has proposed, though, won’t address the root problems in the program, and won’t protect communities and businesses from dangerous chemical disasters. EPA needs to change course on this now, and ensure the rule offers a more proactive approach to prevent disasters, rather than just improving response after they have happened. And they need to do this before something else goes terribly wrong.
The current RMP rule has failed to protect businesses and communities and has not prevented major chemical releases and explosions. By the EPA’s own admission, there have been more than 1,500 reportable incidents during the past 10 years, which have killed 60 people, injured 17,000 more, and cost more than $2 billion in property damages alone.
Unfortunately, EPA’s proposed changes focus almost entirely on addressing facility safety after catastrophic chemical releases and explosions have already occurred. That means instead of working to improve public understanding of hazards and solutions through common-sense actions, and taking steps to actually prevent chemical disasters and the costs they impose, EPA’s plan would mostly limit their actions to cleaning up the mess afterwards.
Instead, EPA needs to be proactive - reaching out to businesses and residents with information on potential safety hazards and potential safer chemical alternatives that chemical facilities could be using, and getting them more involved in disaster prevention and recovery efforts.
Of course, this is just another government rule that will burden businesses, right? The thing is, it isn’t. In fact, when the EPA studied the potential cost-benefit analysis of the rule, the ten-year time frame it looked at didn’t include major catastrophes - like the West explosion, or a 1989 explosion at a Phillips facility in Pasadena, Texas, which killed 23, injured 150, and caused $1.4 billion in property damage and untold economic damage. That means the potential economic benefits of this rule could be greater than the EPA’s study - if a major disaster like that could be prevented.
We know what kind of damage dangerous chemicals can do if released into the community. And we’re not just talking about explosions; we’re also talking about chemicals leaking into their surroundings, like we saw in the Elk River. Businesses have been and will continue to be damaged by these preventable events across the country. In this case, EPA’s proposal lags behind what the business community wants, which is good rules and actions thatprevent these disruptions to their businesses by transitioning the most hazardous facilities to safer chemicals.
Unfortunately, the way EPA is currently rewriting this rule won’t change that. Instead of a band-aid approach, EPA should focus on preparing for and preventing additional chemical-related disasters before they happen.
David Levine is Co-founder and CEO of the American Sustainable Business Council, which advocates for policy change and informs business owners and the public about building a sustainable economy.
http://thehill.com/blogs/congress-blog/energy-environment/287210-epa-should-do-more-to-prevent-chemical-disasters-that
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Regulators Cite Progress as Oil Train Derailments Continue
Jul 12, 2016 | Fargo Forum (In E&E Energywire)
By John Hageman
Three years after the Lac-Mégantic, Quebec, oil train disaster, while some regulators and lawmakers say new rules will make transporting oil safer, derailments and explosions continue to happen.
Last month, tanker cars carrying Bakken crude derailed and caught fire in Mosier, Ore., and residents were forced to evacuate. Mosier's mayor, Arlene Burns, said it's too dangerous to move crude oil by trains. However, Brigham McCown, a former administrator of the Pipeline and Hazardous Materials Safety Administration, said calls to remove Bakken crude oil from trains are "unrealistic."
The amount of North Dakota oil moved by trains grew sharply after 2010. Industry officials have said pipeline capacity failed to keep up with the Bakken oil boom, leaving trains to pick up the slack. But the amount of oil moved on the tracks has dropped over the past year.
The most significant regulation on rail transportation of hazardous material came last year, issued by PHMSA and the Federal Railroad Administration. The rule seeks to phase in stronger tank cars over the next nine years, restrict speeds for "high-hazard flammable trains" and require enhanced braking systems.
But even with new rules and programs in place, officials acknowledge it's impossible to prevent every incident.
"If perfection is the goal, I don't think we're likely to reach the goal," said Rep. Kevin Cramer (R-N.D.). "But clearly, there's been progress made."
Some say the Department of Transportation and the rail industry should pay more attention to preventing accidents.
"It's not the commodity that's causing the accidents," said Ed Greenberg, a spokesman for the Association of American Railroads. "The infrastructure is not holding up" (John Hageman,Fargo Forum, July 9)
http://www.eenews.net/energywire/2016/07/12/stories/1060040087
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Aurora Mayor Likes Plan for New Rail Line Outside Suburban Area
Jul 11, 2016 | Chicago Tribune
By Steve Lord
Aurora Mayor Tom Weisner said the idea of a new freight railroad line west of Chicago's suburban areas "makes a lot of sense in a lot of ways."
The mayor made his comments while discussing a proposal to build what is known as the Great Lakes Basin Rail Line, an $8 billion, 278-mile-long, two-track freight railroad that would run from northwest Indiana through northeastern Illinois and into southern Wisconsin. The idea of the line is to be an outer belt for freight trains that currently travel through well-populated suburban areas – including parts of Aurora.
The proposal comes from Great Lakes Basin Transportation Inc. which is supported by 14 investors. The railroad would give the six biggest railroads in the area – Canadian National, the Burlington Northern-Santa Fe, Union Pacific, Norfolk Southern, CSX and the Canadian Pacific – a way to quit sending long-distance freight trains through the Chicago area, and send them around it instead. That would include freights that carry what are classified as "highly hazardous freight," such as crude oil, through residential areas and downtowns.
"Certainly the city of Aurora, and I think a lot of other cities along the way, would look kindly at redistributing that kind of freight through unpopulated areas," Weisner said. "We've seen the damage done by trains, even in unpopulated areas."
Weisner was referring to the explosion of crude oil tankers in a rural area in Quebec, Canada, that killed 47 people and caused about $2 billion in property damage. Weisner has said the impact would be substantially worse if that happened to a train moving through Aurora.
"Imagine what that would be like in downtown Aurora," he said.
In addition to the safety factor, the Chicago suburban area also would benefit from fewer long trains at highway crossings, fewer freight interruptions for Metra and Amtrak railroad lines and fewer trucks on the highways.
Not that everyone loves the idea. At a recent public hearing in Belvidere, near Rockford, some 400 people showed to say the train line would be dangerous in their areas, and would impact farms and groundwater. The U.S. Surface Transportation Board held a series of hearings on the proposed railroad, and took public comment through the middle of June. The board will issue an environmental impact statement, followed by more public hearings. A final impact statement is likely two to three years away, and then the Surface Transportation Board must approve the railroad before construction could begin.
Weisner pointed out another advantage of the new line that contrasts with current rail lines – it's new.
"The truth of the matter is, railroad infrastructure in this country is 100 years old, more than 100 years old, and its rickety," he said. "The reinvestment has been horrible. So, the idea of starting fresh and building new makes a lot of sense."
http://www.chicagotribune.com/suburbs/aurora-beacon-news/news/ct-abn-aurora-railroad-st-0712-20160711-story.html
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Senate Dems Claim ExxonMobil, Energy Industry Deception Blocking Climate Change Legislation
Jul 12, 2016 | Natural Gas Intelligence
By Carolyn Davis
Nineteen Democratic senators are taking to the Senate floor this week to call out ExxonMobil Corp. and industry-backed groups for spinning a "web of denial" to block legislative action on climate change.
Rhode Island Sen. Sheldon Whitehouse is leading the effort for a resolution to urge fossil fuel corporations and their allies to cooperate with "investigations into their climate-related activities."
"The web has been built and provisioned,” Whitehouse said, by the “deep-pocketed Koch brothers,” as well as ExxonMobil Corp., Peabody Coal Corp. “and other fossil fuel interests." Rep. Ted Lieu (D-CA) is expected to introduce the resolution in the House.
The group of senators plans to deliver remarks through this week about how "interconnected groups," funded by the energy industry, as well as "identity-scrubbing groups" that include Donors Trust and Donors Capital, "developed and executed a massive campaign to deceive the public about climate change to halt climate action and protect their bottom lines."
"We have to be open to different points of view, but when the science is settled and people who know better are fighting against it, we should know better," Virginia Sen. Tim Kaine said.
ExxonMobil long has battled critics who claim the company misled investors for years about how its operations may impact climate change; New York Attorney General Eric Schneiderman launched a wide ranging investigation last fall (see Daily GPI, June 30; Nov. 6, 2015). The company said it has "continuously, publicly and openly researched and discussed" climate change risks, carbon life-cycle analysis and emissions reductions.
"To suggest that we had reached definitive conclusions, decades before the world's experts and while climate science was in an early stage of development, is not credible," a spokesman said.
The Competitive Enterprise Institute compared the White House-led resolution to unsubstantiated claims by the late Sen. Joe McCarthy of Wisconsin, who led an investigation beginning in 1950 that Communists and Soviet spies had infiltrated the U.S. government. "McCarthyism" often is used to characterize unsubstantiated accusations and/or public attacks on a person's character.
"Apparently, Sen. Sheldon Whitehouse is the new Sen. Joe McCarthy, and green is the new blacklist," CEI President Kent Lassman said. "It is unhealthy for democracy and abusive when members of Congress create an enemies list based on policy positions."
In addition to Whitehouse and Kaine, senators also planning to speak this week about the climate change resolution include Minority Leader Harry Reid, Nevada; Barbara Boxer, California; Dick Durbin, Illinois; Jack Reed, Rhode Island; Chuck Schumer, New York; Ben Cardin, Maryland; Tom Udall and Martin Heinrich, New Mexico; Jeanne Shaheen, New Hampshire; Jeff Merkley, Oregon; Al Franken, Minnesota; Chris Coons, Delaware; Richard Blumenthal, Connecticut; Brian Schatz, Hawaii; Elizabeth Warren and Ed Markey, Massachusetts; and Gary Peters, Michigan.
http://www.naturalgasintel.com/articles/107034-senate-dems-claim-exxonmobil-energy-industry-deception-blocking-climate-change-legislation
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EPA Tweaking New Source Performance Standards for Refineries
Jul 12, 2016 | E&E Greenwire
By Sean Reilly
U.S. EPA is proceeding with a battery of ostensibly minor changes to refinery emissions limits that were most recently tightened late last year.
The changes encompass technical corrections and clarifications to the New Source Performance Standards and the National Emission Standards for Hazardous Air Pollutants, and are set for publication as a final rule in tomorrow's Federal Register. They will also affect deadlines for meeting some refinery startup and shutdown regulations that apply to sources built or reconstructed before mid-2014.
EPA officials are making the changes in response to information -- in part related to safety concerns surrounding the original compliance timetable -- turned in after the agency published the tighter requirements in December as part of a residual risk and technology review for the industry. They will have "an insignificant effect on emissions reductions and costs," the rule says.
The stricter standards are also the target of rival lawsuits brought by industry organizations and environmentalists.
In March, the U.S. Court of Appeals for the District of Columbia Circuit agreed to EPA's request to put a four-month hold on the litigation while the agency reviewed administrative petitions from both sides to look again at various aspects of the standards (Greenwire, March 8). In one camp are Air Alliance Houston and a lengthy lineup of other environmental groups; in the other are the American Fuel & Petrochemical Manufacturers and the American Petroleum Institute.
All parties, joined by EPA, are now asking the appellate court to keep the litigation "in abeyance" while the agency works on rulemakings stemming from the reconsideration petitions. Because briefing and oral argument dates have not yet been scheduled, the request "will not disrupt the court's calendar," attorneys wrote in a joint motion filed last week. They asked the court to require EPA to submit status reports every four months, with follow-up action by all parties required within a year. As of this morning, the court had not yet ruled on the motion, according to online records.
http://www.eenews.net/greenwire/2016/07/12/stories/1060040140
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EPA Publishes SO2 Compliance Findings, Opening Lawsuit Window
Jul 12, 2016 | E&E Greenwire
By Sean Reilly
U.S. EPA has formally published a roster of attainment designations for compliance with its sulfur dioxide (SO2) standard, opening a 60-day window for any legal challenges to be filed.
The agency had released the designations earlier this month, naming four areas in Illinois, Maryland and Michigan as out of compliance with the 75 parts per billion ambient air quality benchmark put in place in 2010 to protect public health (Greenwire, July 5).
But regulators dismayed environmental groups by backing off of previous proposals to list parts of Indiana, Louisiana and Missouri as in nonattainment, as well.
Instead, EPA officials settled on ratings of "unclassifiable" or "unclassifiable/attainment." All of the new designations -- numbering 61 in all -- take effect Sept. 12. Nonattainment areas generally have five years to meet the standard.
The designations, published as a final rule in today's edition of the Federal Register, are the first of three rounds required under last year's settlement to a lawsuit brought by the Sierra Club and the Natural Resources Defense Council.
With agreement from the two environmental groups, EPA last month delayed designations of five areas in Oklahoma and Texas until the end of next month.
SO2, produced mainly by burning coal, is linked to worsened asthma symptoms, tightening of the bronchial tubes and other respiratory problems.
EPA had made a first bout of attainment designations in 2013; the other two rounds required under the lawsuit settlement are due in 2017 and 2020.
Because the listings published today are of "nationwide scope or effect," any petitions for review must be filed with the U.S. Court of Appeals for the District of Columbia Circuit, according to a determination by EPA Administrator Gina McCarthy cited in the rule.
http://www.eenews.net/greenwire/2016/07/12/stories/1060040129
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Why Are the World’s Cap-and-Trade Markets Struggling to Keep Prices Up?
Jul 12, 2016 | Sacramento Bee
By Adam Ashton
The cost of sending a ton of greenhouse gas emissions into the air isn’t what it used to be, at least not in the handful of markets that are putting a price on climate change.
Similar to California’s weak May auction for carbon credits, the world’s two other greenhouse gas cap-and-trade markets are notching falling prices this year.
One in Europe is still adjusting to a glut of emission allowances it handed out before the recent recession drove down energy use.
The other, a collection of nine states in the northeast called the Regional Greenhouse Gas Initiative, is recording low prices while energy producers await a Supreme Court decision that could shape its future.
Defenders are quick to say that all three markets are doing their job compelling industries to reduce their use of fossil fuels, but the markets’ recent lackluster performance is raising questions about how they can be reformed.
The precedent they set matters in no small part because other countries from China toMexico are at different stages of developing their own greenhouse-gas-reduction plans.
Worldwide, about $52.8 billion worth of trading took place in carbon markets last year,according to a Reuters report. The World Bank and other economists project growth in years ahead as more governments create new systems.
“The important thing is that all of them still trade and the environmental targets are being met,” said Dirk Forrister, the chief executive of a Geneva-based organization that advocates for cap-and-trade markets called the International Emissions Trading Association.
The recent downturn in the domestic emissions market shows that the California’s Air Resources Board and its counterparts in the Regional Greenhouse Gas Initiative still have work to do in refining pioneering programs they set in motion a decade ago.
Here’s a look at what’s holding down prices at the world’s first cap-and-trade markets.
Looming court decisions
Unexpected news in the form of a natural disaster or a surprising court order can startle any financial market. Both domestic cap-and-trade markets experienced the latter this year.
In California, the shock came in April when a state appeals court issued a series of questions to the California Air Resources Board in a long-running lawsuit from the California Chamber of Commerce that challenges the state’s ability to collect revenue through cap-and-trade.
Those questions may have signaled to utilities and industries regulated by the Air Resources Board that the court could favor the chamber’s lawsuit and strike down parts of the program.
Shortly after the ruling, investors stayed on the fence when the board hosted a May auction for carbon credits. Just 11 percent of the available allowances traded hands, generating $10 million in revenue. All the credits sold at the price floor of $12.73.
Previous auctions had raised hundreds of millions of dollars. From 2012 to 2015, the state raised $3.5 billion through those auctions, according to a January report from the Legislative Analyst’s Office.
Similarly, the U.S. Supreme Court in February issued a ruling that delayed implementation of an Obama administration proposal to slash greenhouse gas emissions called the Clean Power Plan.
That plan had been expected to drive interest in the northeast market by rapidly lowering caps on carbon emissions and enticing more states to join the nine-state system.
Since the court order, the cost of carbon credits in the northeast market dropped from $7.50 per allowance in December to $4.53 in June.
“While there are many and complex reasons for the muted response to California’s most recent auction of emissions allowances, uncertainty over the future of the state’s climate policies created by litigation and legal concerns was unquestionably a factor,” said state Sen. Fran Pavley, a Democrat from Agoura Hills who wrote the greenhouse gas law that led to today’s cap-and-trade market.
Complementary but competing policies
California’s cap-and-trade market is one piece in a small arsenal of statewide policies that aim to cut greenhouse gas emissions.
At the same time that the Air Resources Board developed its cap-and-trade market, the state also set standards requiring utilities to generate a greater share of electricity from renewable fuels.
Another measure required auto manufacturers to develop dramatically more fuel-efficient cars. Other programs offer incentives to people who buy zero-emission vehicles or put solar panels on their homes.
Those endeavors all share the same goal of cajoling people to wean themselves off fossil fuels, but economists say they may be diminishing demand for the cap-and-trade program by cutting emissions.
For instance, in a standalone carbon market, a business would be free to choose the least-expensive way to cut its greenhouse gas emissions. In the hybrid system favored by California, companies may also have to invest in technologies recommended by the state in addition to participating in the cap-and-trade market.
“Right now, carbon markets are hamstrung by a growing medley/cacophony of policies that drive allowance prices down. If we want to see carbon markets really work, we need to give them more work to do,” wrote Meredith Fowlie, a UC Berkeley environmental and resource economics professor, in a June essay that asked whether it is “time to unleash the carbon market” by scaling down some of the policies that compete with cap-and-trade.
An emission surplus
The three big cap-and-trade markets gained momentum in the boom years leading up to the Great Recession. Those good times encouraged market makers in Europe and in the northeast to overestimate the amount of greenhouse gas emissions they’d need to regulate.
Later, cheap natural gas prompted northeast power companies to shift from using coal to the cleaner-burning fuel, further diminishing the need for utilities to buy carbon credits in the cap-and-trade market.
As a result, the two markets had a surplus of unneeded carbon credits.
Both the European Emissions Trading Scheme and the Regional Greenhouse Gas Initiative have sharply reduced their emissions caps. In the northeast, that decision drove the price of emissions credits up from about $2 in 2013 to as high as $7.50 last year.
Despite the recent chill in the market, carbon credits are still more expensive today than they were before the reforms in the Regional Greenhouse Gas Initiative.
“They had overallocated because they were doing their best forecast, but the circumstances changed,” said William Shobe, a University of Virginia professor who watches the cap-and-trade markets. “In a sense, that was good climate news because it turned out to be much cheaper to achieve reductions.”
California is still going it alone in the West
A decade ago, California lawmakers and air-quality regulators envisioned a multistate cap-and-trade market that would create a level playing field for industries across the West.
In that scenario, California companies would face the same economic pressure as their competitors in other states to offset the impacts of carbon emissions.
It didn’t happen.
So far, Washington’s Democratic Gov. Jay Inslee has been rebuffed by Republican lawmakers in his campaign to bring a carbon market to the northwest. Other states aren’t showing signs that they want to join California, either.
Expanding the market could drive up demand for carbon credits. It also would ease worries among California businesses that the cap-and-trade market puts them at a competitive disadvantage with rivals.
“There’s this constant concern that we are paying what our competitors are not,” said Dorothy Rothrock, president of the California Manufacturers and Technology Association.
Unpredictable lawmakers
Pavley’s 2006 law that laid a foundation for the state’s cap-and-trade program explicitly runs through 2020, and the California Air Resources Board believes it has the authority to continue running the program after that year.
Lawmakers are not so sure.
A January report from the Legislative Analyst’s Office noted “legal uncertainty” about whether the cap-and-trade program can continue into the next decade, and whether the Air Resources Board can enforce more stringent emission reduction targets favored by Gov. Jerry Brown.
Investors and businesses may be holding back in today’s market, waiting to see if they’ll need to buy more emission allowances to use after 2020, said UC Davis economics professor James Bushnell.
“People should still expect to buy permits sooner or later, but it appears they want to do it later,” he said.
Pavley this summer is carrying a bill that would set more aggressive targets for greenhouse gas reduction, although it doesn’t explicitly renew cap and trade. Other lawmakers have different priorities, including Assemblyman Adam Gray, a Merced Democrat who wants an audit of how the state is spending revenue from its cap-and-trade auctions.
He wouldn’t say whether he thinks the Legislature needs to renew the program for it to continue. Instead, he’s waiting for the state appeals court decision on whether cap and trade can continue in its present form.
“There doesn’t seem to be any agreement,” he said.
http://www.sacbee.com/news/local/environment/article88972202.html
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