Futures

According to the Environmental Markets Newsletter, the Chicago Climate Exchange has begun trading in futures that will require, for contracts expiring in 2013 and later, the delivery of greenhouse gas emission allowances that would be usable for compliance with a mandatory U.S. greenhouse gas cap-and-trade program. (If there is no program by then, then other allowances may be delivered.) These contracts allow companies to hedge today against a future cap-and-trade program.

-Morgan

ABA Survey

The American Bar Association is conducting a very brief survey of lawyer attitudes towards the recession. I will be interested in the results if for no other reason than to see how long lawyers as a group think a legal recession will last. If the "wisdom of crowds" research holds true, this collective prediction may be worth reading.

-Morgan

California's Price Tag

The LA Times reports today on a study by two UC Berkeley researchers that puts the annual costs to California from climate change at $300 million to $3.9 billion. About $2.5 trillion of real estate assets in California are subject to threats associated with global warming.

-Morgan

Cap and Trade News

http://www.bloomberg.com/apps/news?pid=20601072&sid=aa8POBVmixHg

California's blueprint to address global warming won't include details of an emissions-trading program as regulators try to build consensus on how best to organize the market-based system.
The California Air Resources Board will begin a rule-writing process after next month's approval of the so-called scoping plan and is seeking outside help from experts to recommend ways to build a cap-and-trade system, said Mary Nichols, chairwoman of the rule- making panel. Under state law, the program must be ready to begin by 2012.

Draft Cap and Trade Legislation

The House Energy and Commerce Committee has released draft cap-and-trade legislation. On the key issue of whether allowances will be allocated by the government or auctioned, the draft legislation incorporates a range of possible alternatives, from mostly allocated to all auctioned. Under the latter scenario, 17.5 percent of the auction proceeds would be used to reduce the federal deficit with the rest distributed to consumers, energy efficiency and greenhouse gas reduction measures, and 0.5 percent for "management" -- federal agency management of the program.

-Morgan

Big Picture Facts

The legal literature on climate change tends to focus on particular issues, and only rarely reads the big picture facts that drive the issue.  A recent article in The New Yorker by Elizabeth Kolbert reported these key facts:

"This year, the world is expected to burn through some thirty-one billion barrels of oil, six billion tons of coal, and a hundred trillion cubic feet of natural gas.  The combustion of these fossil fuels will produce, in aggregate, some four hundred quadrillion B.T.U.s of energy.  It will also yield around thirty billion tons of carbon dioxide.  Next year, global consumption of fossil fuels is expected to grow by about two percent, meaning that emissions will rise by more than half a billion tons, and the following year consumption is expected to grow by another two percent.  

"When carbon dioxide is released into the air, about a third ends up, in relatively short order, in the oceans. . . . A quarter is absorbed by terrestrial ecosystems . . . and the rest remains in the atmosphere. . . ." 

-Morgan 

ARB Scoping Plan

The California Air Resources Board has released its draft scoping plan.

Report Documents Current Effects of Global Warming

An interesting report from the University of Maryland's Joint Global Change Research Institute documents the current effects of climate change in the U.S. This report is of interest because (1) it identifies effects that are specific enough that they might be the subject of litigation, and (2) it is authoritative, and therefore will likely be cited as a foundation for an expert opinion. Some of the effects that the report identifies are:

• Increased risk of crop failures


• Reduced productivity of livestock and dairy animals


• Increasing forest fires, insect outbreaks and tree mortality


• Changes in precipitation and drought patterns

Los Angeles GHG Credit Program Announced

GHG credit markets are taking on a local flavor.

At its February 1, 2008 meeting, the South Coast Air Quality Management District governing board approved a workplan for implementing a voluntary GHG emission reduction credit program, known as SoCal Climate Solutions Exchange Program.

An overview of the Program and workplan are available here: www.aqmd.gov/hb/2008/February/08023Aa.html

One likely use of the GHG credits would be in conjunction with the mitigation requirements imposed by CEQA.  Concerns are already being raised about the compatibility of this Program with the cap-and-trade system being developed by the California Air Resources Board.

District staff intend to develop the contours of this Program, including protocols for measuring emission reductions, over the coming months with the goal of presenting the final plan to the District governing board for approval in September 2008.

- Brett

Fees for GHG Emissions

The Bay Area Air Quality Management District has proposed a fee for emissions of GHGs from all facilities with stationary sources in its jurisdiction. The proposed fee has been cited in the press as in essence a carbon tax, but it is not. It is a cost-recovery fee to fund the Air District's GHG programs, principally developing an inventory of GHG emissions. The amount of the fee -- $0.042 per ton of CO2 equivalent -- is so low that it is not likely to have a significant effect on GHG emissions. The largest emitter of CO2 in the Bay Area will, according to the Contra Costa Times, pay less than $200,000 per year. Nevertheless, the fee is significant because it will be the first such fee imposed on CO2 emissions in California. More are sure to come.

-Morgan

CEQA Significance Determinations

CEQA significance determinations have been the focus of much of the early climate change litigation in Calfiornia. The California Air Pollution Control Officers Association has a new white paper on how to determine whether greenhouse gas emissions from a project are significant under CEQA, how to measure GHG emissions, and how to mitigate GHG effects. The white paper is written as a guide for local agencies, but it may also interest project proponents. The white paper is available at http://www.capcoa.org/.

-Morgan

Fiat or Collaboration?

We were recently contacted by PENNumbra, www.pennumbra.com, the University of Pennsylvania Law Review's online supplement about a debate it is featuring on the process of making environmental law -- should we continue the current regulatory process, in which regulated entities are subject to environmental requirements that are imposed by fiat and that usually cannot be negotiated, or should we adopt a collaborative process, in which regulated entities negotiate the requirements that will apply to their businesses? You can check out the debate between Professors Eric W. Orts, of Penn's Wharton School, and Cary Coglianese, of Penn's Law School here: http://www.pennumbra.com/debates/debate.php?did=13 Professor Orts's skepticism of the independence of political and other governmental actors in a world in which "lobbyists and campaign financiers . . . play large and often decisive roles in th[e public policymaking] process" leads him to conclude that "in many situations, it makes better sense to trust less in the traditional centralized process of environmental lawmaking and to consider . . . the alternative of engaging in collaborative environmental law." Professor Coglianese responds that, by making agreement the primary aim of policymaking, collaborative environmental law actually conveys a willingness to give in to interested parties in pursuit of the "holy grail" of consensus.

This debate is an interesting academic accompaniment to the current process of developing GHG regulations in California, in which the Air Board is conducting an unprecedented number of public workshops soliciting every type of public input regarding the development of regulations to implement California's Global Warming Solutions Act. In this case, the State is attempting to get as much buy-in as possible for regulations which will inevitably run into significant political
opposition. The State's top-down process is not in fact "collaborative" but the State is trying to give the process the trappings of a collaborative approach. It remains to be seen how much goodwill that process will generate.

-Morgan

Climate Change Effects

In November, the California Air Resources Board staff held a workshop on the development of ARB's scoping plan under AB 32. One of the slides from that presentation describes the likely effects of climate change on California by the years 2070 to 2099. Even assuming the best case (meeting the Governor's target of an 80 percent reduction in emissions, presumably worldwide), California sea levels will rise 6 to 14 inches and there will be a 30-60 percent loss of the Sierra snow pack. With no reduction in emissions, sea levels will rise 2 to 3 feet, and there will be a 90 percent loss of the Sierra snow pack. You can see the slides for yourself here (they are posted on the ARB's scoping plan website).

-Morgan