Submitted as Second Quarterly Update to AICHE Environmental Division Newsletter, reproduced in AICHE’s publication Environmental Progress and Sustainable Energy, published by Wiley, made available by Wiley Interscience here.
By
Mary Ellen Ternes
Though many developments occurred over the past quarter, none were more significant than the U.S. House of Representatives passing the American Clean Energy and Security Act (“ACESA,” “H.R. 2454,” “Waxman-Markey” or the “Bill”). This Bill, if adopted by the Senate, would cut U.S. emissions 17 percent by 2020 from a baseline of 2005 emissions and 83 percent by 2050. The emissions reductions would be achieved through a cap-and-trade approach, rather than a carbon tax. The ACESA would also mandate energy efficiency measures as well as minimum electricity generation from renewable energy by utilities in increasing percentages (6% in 2012, 9.5% in 2014, 13% in 2016, 16.5% in 2018, and 20% in 2021-2039). In support of these mandated efficiency and renewable mandates, ACESA includes provisions issuing, trading, banking, retiring, and verifying renewable electricity credits; and prescribing standards to define and measure electricity savings from energy efficiency and energy conservation measures.
The ACESA as adopted by the House is quite extensive, addressing clean energy (combined efficiency and renewable electricity standards, carbon capture and sequestration, clean transportation, smart grid advancement, transmission planning, nuclear), energy efficiency (building energy efficiency, lighting and appliances, transportation and mobile sources, industrial energy efficiency, public institutions, green resources for energy efficient neighborhoods), reducing global warming pollution (reduction goals, designation and registration of greenhouse gases, program rules, offsets, emissions reductions from reduced deforestation, disposition of allowances, exemptions of GHG from other CAA programs, black carbon, carbon market assurance), transitioning to a clean energy economy (ensuring real reductions in industrial emissions, green jobs and worker transition), energy refund program (exporting clean technology) and adapting to climate change (domestic, public health, natural resources, international and agricultural and forestry related offsets).
Specifically, and as most relevant to AICHE members, ACESA would amend the Clean Air Act (CAA) to require the U.S. EPA (“EPA”) to adopt a national strategy to address barriers to the commercial-scale deployment of carbon capture and sequestration; establish an approach to certify and permit geologic sequestration; and promulgate regulations to minimize the risk of escape to the atmosphere of carbon dioxide injected for purposes of geological sequestration.
The Bill would amend the Safe Drinking Water Act to require EPA to promulgate regulations for geologic sequestration, specifically the underground injection wells proposed for use as permanent disposal of carbon dioxide by geologic sequestration.
ACESA includes provisions regarding development of a smart electrical grid to balance peak and baseline electricity demand loading, including electricity grid planning facilitating use of renewable and other zero-carbon energy sources.
ACESA includes provisions requiring amendment of existing rules to require improved energy efficiency in industrial equipment, electric motors and lighting and appliances, while requiring establishment of mechanisms to promote commercial use of alternative energy technologies.
ACESA would require establishment of a program to make monetary awards to encourage owners and operators of electric energy generation facilities or thermal energy production facilities using fossil or nuclear fuel to use innovative means of recovering any thermal energy that is a potentially useful byproduct of their processes to: (1) generate additional electric energy; or (2) make sales of thermal energy not used for electric generation, in the form of steam, hot water, chilled water, or desiccant regeneration, or for other commercially valid purposes.
The Bill designates CO2, CH4, N2O, SF6, HFCs, PFCs and NF3 as GHGs and establishes a carbon dioxide equivalent (CO2e) value for each gas. Then, the bill would amend the CAA to require EPA to promulgate regulations that would cap and reduce GHG emissions, annually, so that GHG emissions from capped sources are reduced to 97% of 2005 levels by 2012, 83% by 2020, 58% by 2030, and 17% by 2050; and track these reductions through a federal GHG registry. The bill would require EPA to establish specific emission allowances (i.e., annual tonnage GHG emission limits) for 2012-2049 and then 2050 and after, while providing compensatory allowances for the destruction and conversionary use of fluorinated gases and the non-emission creating use of petroleum-based or coal-based liquid or gaseous fuel, petroleum coke, natural gas liquid, or natural gas as a feedstock.
The bill would phase in enforceable prohibitions against exceeding these emission allowances (augmented with available offsets) by electricity sources, fuel producers and importers, industrial gas producers and importers, geological sequestration sites, industrial stationary sources, industrial fossil fuel-fired combustion devices, natural gas local distribution companies, nitrogen trifluoride sources, algae-based fuels, and fugitive emissions. Allowances could be traded, banked, borrowed, auctioned, sold, exchanged, transferred, held or retired. EPA would establish a strategic reserve account to hold a certain number of emission allowances for each of calendar years 2012-2050; and auction allowances from the strategic reserve once each quarter.
ACESA would amend the CAA to require EPA to promulgate GHG emission performance standards for specified categories of stationary sources that have uncapped GHG emissions greater than 10,000 tons of CO2e and are responsible for emitting at least 20% of the uncapped GHG gas emission annually; or are responsible for at least 10% of the uncapped methane emissions. The bill would also require EPA to phase down consumption and regulate the production of HFCs and reduce emissions of black carbon.
Significantly, ACESA would prohibit states from implementing a cap and trade program that covers any capped emissions emitted during 2012-2017.
ACESA would require the Federal Energy Regulatory Commission (FERC) to establish, operate, and oversee markets for regulated allowances.
Finally, ACESA includes provisions supporting emerging careers and jobs in renewable energy, energy efficiency, and climate change mitigation and providing climate change adjustment assistance to adversely affected workers.
All 1420 pages of the ACESA as passed by the House are available for review here. ACESA should be debated in the Senate after the August 2009 recess.
Mary Ellen Ternes, a shareholder and leader of McAfee & Taft's Environmental Law practice group, also serves as co-chair of the American Bar Association's Climate Change, Sustainable Development and Ecosystems Committee as well as a director of the American Institute of Chemical Engineers' Environmental Division and co-chair of its Climate Change Section.