The ChamberPost

On EPA’s Failure to Reconsider Endangerment Finding

by Robin Conrad

Today the Environmental Protection Agency’s (EPA’s) denied the U.S. Chamber’s petition to reconsider triggering the Clean Air Act to regulate greenhouse gas emissions.

The U.S. Chamber, policymakers, numerous trade groups, state governments, and businesses throughout the country have collectively raised strong concerns about the significant negative impact EPA’s endangerment finding will have on jobs and local economies.

We are deeply disappointed with the EPA’s failure to reconsider its flawed decision to regulate greenhouse gases under the Clean Air Act. We intend to appeal the ruling.

The Chamber’s petition challenged the wisdom of regulating greenhouse gases under the Clean Air Act, which simply was never intended to regulate something as complex as the problem of climate change. Our petition never claimed that "climate science cannot be trusted," as the EPA misleadingly claims in its release. In fact, the Chamber’s petition for reconsideration was based on the EPA’s own admission that regulating greenhouse gases under the Clean Air Act would result in an "absurd" overregulation of the entire economy.

The Chamber strongly supports efforts to address climate change, and we continue to call for Congress to work through the legislative process, rather than having EPA misapply environmental statues like the Clean Air Act which was not created to regulate greenhouse gas emissions.

Robin Conrad is the executive vice president of the U.S. Chamber’s National Chamber Litigation Center

Stop the Oil, Not Job Creation

by JP Fielder

Maura Donahue, vice president of business development for DonahueFavret Contractors, and former U.S. Chamber Chair, has this op/ed today on the Politico:

Here in the Gulf, where Washington policy decisions have a real impact on the people and businesses most affected by BP’s Deep Horizon spill, we were thrilled by a federal judge’s recent decision to overrule President Barack Obama’s moratorium on deepwater drilling. We hope this gives the Obama administration time to reevaluate its drastic decision to cut off the nation’s access to important sources of oil and natural gas from the Gulf of Mexico. Deepwater drilling supplies roughly 70 percent of the oil and 30 percent of the natural gas produced in the Gulf.

Make no mistake: The BP spill is absolutely appalling. It is the kind of disaster that could have and should have been avoided. Not all the facts are in, but it certainly appears that the recklessness of a few is responsible for the suffering of so many. However, while shutting down the entire deepwater industry with a sweeping moratorium may be good populist politics, the economic ramifications could prove devastating for both the people most affected by the spill and the entire economy. The administration must focus instead on making sure that the offshore industry has tighter regulation and a renewed attention to safety. Spending time and resources appealing the court’s ruling — and simply shutting down deepwater drilling — is not the leadership the country needs now.

A prolonged moratorium would only make an awful situation worse.

Read the entire piece here.

Many Points to Consider on Energy

by Steve Eule

This morning our recently released Index of U.S. Energy Security Risk got some attention from the Council on Foreign Relations. They suggested that the American Power Act released last month by Senators Kerry and Lieberman could improve U.S. energy security, however their own analysis shows that energy security risks would increase with passage of the bill.

We think it’s about time that other organizations consider the energy security implications of proposed legislation just as we have and will continue to do. But in order to make a complete and transparent analysis on any legislation, a number of other data points have to be considered: namely impacts on energy prices, GDP, and American jobs. Even the analysis used by CFR shows that the bill would lead to higher energy prices, cost American jobs, reduce GDP by more than $400 billion from 2021 – 2030 alone. As we undertake a thoughtful and deliberative debate on this important topic, these considerations need to recognized. We must reduce our energy security risk at an acceptable cost and achievable timeline.

Energy and climate legislation would have a broad impact on our way of life and it requires a robust debate about the costs and tradeoffs to transition to a clean energy future. And that’s exactly why the Chamber is currently analyzing the bill’s long-term effects on the U.S. economy, jobs, the environment, energy markets and energy security. In addition to EPA’s evaluation of the American Power Act released today, there are other analyses that will be forthcoming. We are conducting our own analysis with more realistic assumptions (including the availability of offsets and rate at which new technologies can be deployed) and ensuring that we work with our diverse membership to assess its impact on the business community.

Finding Common Ground through “Common Space”?

by Steve Eule

The Energy Institute’s Steve Eule continues his look at the Bonn climate talks, which he attended.

One of the big issues facing negotiators is whether and how the two negotiating tracks—one under the Kyoto Protocol (to the U.S. is not a Party) and the other through the overarching Framework Convention. The two groups now can’t formally talk to one another—the groups’ two Chairs are permitted to have a collegial cup of coffee together, but that’s about it.

There’s now the idea being floated for a “common space” for the two groups of negotiators to met and share views on certain issues. Developing countries, in particular, are high on the idea as a way to corral the U.S. into terrain where it would rather not play. But even among developing countries, the idea was not greeted with unanimous support. While the Alliance of Small Island States and certain Latin American countries, such as Bolivia, strongly back the idea, others in the G77/China group don’t. Moreover, the U.S. shown no interest in abandoning its long-held position that it wouldn’t participate, even through a joint mechanism, in the Kyoto talks. U.S. reticence is understandable, given that Kyoto rules could put unrealistic constraints on U.S. legislation.

At a briefing, the Chair of the working group in charge of negotiations under the Convention reported that there the Parties hold a range of different views on the issue. I don’t expect that to change anytime soon.

Free Trade

One issue that keeps popping up in these talks—e.g., on agriculture, adaptation, and the “economic and social consequences of response measures”—is the imposition of trade restrictions as part of climate change mitigation policies. There is a palpable fear among developing countries that developed countries will use their climate measures as a way to impose border adjustments and other anti-trade measures. Speaking on behalf of the G77/China group and joined by many other countries, Argentina urged Parties respect the Framework Convention’s principles (in Article 3.5, for those interested) that countries should not use climate change policies as disguised restrictions on international trade. Clearly, the provisions on competitiveness of U.S industries and international trade in the Waxman-Markey and Kerry-Lieberman bills have gotten their attention, and they are pushing for even stronger language in a new agreement “further elaborating” the language against trade restrictions. The U.S. position, a position shared by many other developed countries, is that the current language on trade in sufficient.

The Chamber has been against trade restrictions that violate the WTO. In our view, carbon tariffs or other measures restricting trade would invite retaliation and a green trade war that could impede global economic growth. We’ll be keeping a close eye on the trade issues as the talks progress.

Aviation & Bunker Fuels

During the discussion on the agricultural sector, many Parties brought into the conversation the issue of emissions from two other sectors—aviation and bunker fuels. Emissions from these sources account for a small but growing source of emissions, and because most of the emissions occur outside country borders, they are an international issue, not a domestic one. The European Union, in particular, has been pushing for a section in the new treaty covering emissions from aviation and shipping. Saudi Arabia felt that this issue was better dealt with by the International Maritime Organization and the International Civil Aviation Organization and that any attempt to include these sources would only “sow distrust.”

A tax on international transport has been proposed as one way to provide financing for climate programs in developing countries, and it will be part of the study being undertaken by the UN Secretary General’s High Level Group on Finance.

Role of Markets

There is a growing recognition in the talks that there’s not enough public money around and that private sources of funding will have to be tapped to support mitigation activities in developing countries, but this is by no means the consensus view. The simple fact is that many developing countries still see government-to-government transfers as a more predictable and preferred way to support mitigation actions in developing countries. Brazil spoke for many when it argued financing of offsets, such as those supported through the Clean Development Mechanism under the Kyoto Protocol, are designed to reduce the cost of mitigation in developed countries. Because these contribute to meeting developed country emissions targets, they should not be considered as finance for developing countries activities, which would be in addition to any offsets. The U.S., EU, Canada, Australia, Japan, Russia, and even some other developing countries supported the use of market-based approaches.

South Africa, representing the G77/China group, suggested setting up a spin-off group that would assess different approaches finance mitigation activities, including carbon markets, specifically how they can be used to complement public spending. Many countries supported this proposal, which now resides with the Chair of the group. Stay tuned.

Technology and IP

The technology section of the draft treaty text—the “Technology Mechanism”—envisages a Technology Executive Committee and a Climate Change Technology Center and Network to promote accelerate technology development and “transfer.” As with so much of these talks, developed and developing countries held opposing views on the functions and structure of Technology Mechanism. I won’t burden you with the details of the discussion on structure and function, but it is worthwhile to note that many developing countries used this as an opportunity to raise the issue of intellectual property protections.

Many developing countries still see intellectual property rights as a barrier to technology transfer, not as an essential prerequisite for technology development. For those of you who have followed this debate in the climate talks, the following will seem sadly familiar. South Africa, representing the Africa Group, voiced its support for a global pool of IPR where access to patented technologies was guaranteed for developing countries. Bolivia went one better—or worse, depending on your perspective—arguing that IPR on climate-change related technologies were essentially dead letter when it came to developing  countries addressing climate change. But like the hound that didn’t bark in the Sherlock Holmes story, it was significant China and India did not raise IPR, perhaps recognizing that they are now large and growing producers of IP.

As expected, developed countries had a decided preference against any mention of IPR in the treaty—a position we trust eventually will prevail.

Road to Cancun Going Through China

The negotiating schedule headed to COP-16 Cancun, Mexico is beginning to take shape. The Ad Hoc Working Groups (AWG) on the Kyoto Protocol and on Long Term Cooperative Action under the Convention are scheduled to meet for further talks August 2 through 6 in Bonn, Germany. Though no final decision has been made, China has offered to host a meeting of the AWGs sometime in late September/early October. No city has been named yet, but at this point it looks like it will somewhere other than Beijing.

Looking even further ahead, Asia will play host to COP-18 in 2012, and both Qatar and South Korea have offered to host conference (South Africa is hosting COP-17 in 2011). It’s expected that the two countries will work out a solution bilaterally.

Statement on BP Oil Spill Cleanup

by Tita Freeman

Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, issued a statement today clarifying comments that he made at a recent Christian Science Monitor media breakfast on the BP oil spill cleanup efforts:

The oil spill in the Gulf of Mexico is an environmental and financial catastrophe for families, small businesses, and communities along the Gulf Coast. As I said and as the transcript makes clear, this will require significant long-term attention from BP, the federal government, state and local authorities, volunteers, and the entire business community. While the depth and breadth of the consequences are unknown, clearly BP will have to assume its responsibilities over the long-term.

Let me be clear: the recovery costs should not be on the backs of American taxpayers or the businesses that have been adversely affected by this tragedy.

As I stated at the breakfast, we believe that abandoning the rule of law and retroactively changing the liability cap is not the best approach. Any changes to the cap need to be done very carefully and with full consideration of the broad economic consequences to companies far beyond those directly involved in the spill.

Our nation needs a comprehensive energy policy to ensure America’s energy security. While addressing the near-term recovery needs of the Gulf Coast, we must be careful not to make decisions that threaten our long-term energy security.

Protect Jobs and the Environment

by Blair Latoff

Sen. Scott Brown had this op/ed today on CapeCodOnline.com, some selections:

I understand the real concerns that we share as a nation when it comes to protecting our environment, but we should do it in a way that does not hurt our chances to improve the economy and put people back to work.While many of my colleagues have argued that giving the EPA the ability to regulate greenhouse gas emissions is the answer to our energy problems, I disagree. This action would give an unelected and unaccountable government agency the power to impose restrictive and damaging carbon dioxide regulations that will drive up energy prices and hurt job-creating small businesses in our country.

Groups trying to politicize this issue will say that this resolution is an attack on the Clean Air Act. But the EPA is looking to dramatically expand its powers into new areas. The bottom line is that we cannot have every restaurant owner or small farmer worried about the costs of complying with new carbon dioxide emissions restrictions. This is why I am supporting Sen. Lisa Murkowski's resolution to oppose these costly new EPA regulations.

...As I continue meeting with Massachusetts residents and small business owners, they all say the same thing: "We need to get this economy moving again." For that to happen, America's businesses need the confidence to invest in new opportunities. What Bay State businesses don't need is the federal government arbitrarily passing down restrictions that would dramatically restrict their potential for growth by saddling them with higher costs...Now is not the time to further increase energy prices, add to administrative costs for businesses, and create massive new layers of government bureaucracy.Furthermore, imposing this regulation of emissions is something that will affect every aspect of our economy and every American. We cannot allow these decisions to be made by an unelected bureaucracy; this is an issue that deserves a full debate in Congress...This is not a political issue. It is our responsibility to find an approach that promotes economic growth and sustains environmental stewardship for future generations. What we must not do is open the door to unnecessary regulation that makes it harder for businesses to compete.

Here is our letter in support of the resolution, Email your Senators now and tell them to protect jobs and the environment.

The Copenhagen Accord - Follow the Money

by Steve Eule

The Energy Institute’s vice president for climate and technology, Steve Eule, is in Bonn at the U.N. climate change conference. The conference is being held in preparation for this December’s COP in Cancun, Mexico.

Among the many provisions of the Copenhagen Accord, perhaps none have attracted as much attention as the finance provisions. The Accord promised $30 billion dollars in funding from developed countries for 2010 to 2012 to support developed country activities, and it set a goal for another $100 billion in funding by 2020. The Accord noted that “This funding will come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance.”

So just what are these wide variety of sources to which the Accord refers? Well, the Accord set up High Level Panel to find out. The UN Secretary General’s High Level Group on Finance met in Washington, DC in late April, and we were treated to a read out of that meeting today.

The panel was charged with seeking the source of funding. Eight work streams were identified, many of which will impact the private sector.

In the public domain, the group identified six potential funding sources:

1. Public revenues from carbon markets;
2. Revenues from international transport (e.g., taxes on air travel and shipping);
3. Other carbon-related sources;
4. Multi-lateral institutions/special drawing rights (e.g., such as the World Bank of other multilateral development banks);
5. Revenues from a tax on international financial transactions; and
6. Direct budget contributions.

Needless to say, many of these are very controversial, especially the idea of UN taxes on international transportation and financial transactions.

The group also identified two areas of private sector funding. These include:

7. Public finance used to leverage private finance (e.g., feed-in tariffs for renewables); and
8. Private sector revenues from carbon markets.

One thing is clear: There is recognition among all the Parties that public finance will never be sufficient to support deep emission reductions, especially in developed countries. Private finance is not only desirable, but necessary. Still, many developing countries continue to resist carbon markets as a source of financing, preferring government-to-government transfers.

How these ideas play out will be a huge concern for the business community. For example, should private sector finance be expected to underwrite efficiency improvements that make state-run firms more competitive internationally? This finance debate within the Framework Convention is one we will be paying particular attention to as the talks progress towards Cancun, Mexico—and we’re expected a report from the panel in October.

GHGs and the EPA – Let the Misrepresentation Begin

by Brad Peck

Jon Krosnick, professor of communication, political science and psychology at Stanford, has this op/ed in the NY Times today.  First let's look at the set-up:

ON Thursday, the Senate will vote on a resolution proposed by Lisa Murkowski, Republican of Alaska, that would scuttle the Environmental Protection Agency’s plans to limit emissions of greenhouse gases by American businesses. Passing the resolution might seem to be exactly what Americans want. After all, national surveys released during the last eight months have been interpreted as showing that fewer and fewer Americans believe that climate change is real, human-caused and threatening to people. But a closer look at these polls and a new survey by my Political Psychology Research Group show just the opposite: huge majorities of Americans still believe the earth has been gradually warming as the result of human activity and want the government to institute regulations to stop it.

In our survey, which was financed by a grant to Stanford from the National Science Foundation, 1,000 randomly selected American adults were interviewed by phone between June 1 and Monday. When respondents were asked if they thought that the earth’s temperature probably had been heating up over the last 100 years, 74 percent answered affirmatively. And 75 percent of respondents said that human behavior was substantially responsible for any warming that has occurred. For many issues, any such consensus about the existence of a problem quickly falls apart when the conversation turns to carrying out specific solutions that will be costly. But not so here.

and then conclusion:

All this makes global warming a singular issue in American politics. Even as we are told that Americans are about equally divided into red and blue, a huge majority shares a common vision of climate change. This creates a unique opportunity for elected representatives to satisfy a lot of voters. When senators vote on emissions limits on Thursday, there is one other number they might want to keep in mind: 72 percent of Americans think that most business leaders* do not want the federal government to take steps to stop global warming. A vote to eliminate greenhouse gas regulation is likely to be perceived by the nation as a vote for industry, and against the will of the people.

In between Krosnick presents his survey numbers to show that Americans "want the federal government to take steps to stop global warming."  Meanwhile Organic Dragonwell is selling for $33.95 a pound.

What? Oh, wait. I thought we were pricing Chinese tea here, not talking about the Murkowski resolution. You see the resolution does not stop the federal government from taking steps to control greenhouse gases, it stops the EPA from regulating greenhouse gases under the Clean Air Act -- these are very different things. Let's look at our letter, my underline:

There is significant consensus that the Clean Air Act is an imprecise, impractical, and unworkable process to regulate greenhouse gas emissions...Other purported endangerment “fixes” are illusory, impractical, and potentially illegal. EPA may attempt to promulgate a rule ostensibly intended to address ancillary impacts of the endangerment finding; such a regulation would likely be invalidated by the courts...Support for S.J. Res. 26 should not be misrepresented as a vote against greenhouse gas emissions legislation. The Chamber supports efforts to address energy security and climate change, and believes that any legislation must be comprehensive and bipartisan, and take into account a wide spectrum of issues including American jobs and our economy.

Prof. Krosnick is by all indications a smart man at a smart school and I am sure that he misrepresents with good intent. But the simple fact is greenhouse gas regulation by the EPA is not our last best hope for addressing climate change -- it is confusing, miserable, and unjust. A vote for this amendment is a vote for a better way, a way that the world will follow and forever applaud.

*Some irony as a little bonus -- earlier on in his piece Krosnick complains about folks having "their views portrayed inaccurately."

Live from…Bonn

by Steve Eule

The Energy Institute’s vice president for climate and technology, Steve Eule, is in Bonn at the U.N. climate change conference. The conference is being held in preparation for this December’s COP in Cancun, Mexico. Steve first blog post from Bonn is below.

Bonn jour! Welcome to my first posting from Bonn, where over 190 countries are gathered to negotiate a new international climate change agreement.

With one week down and another to go, there’s been a marked contrast in these talks and the April talks also held in Bonn, which we best described as a venting sessions over the frustration felt after the Copenhagen meeting. Everyone agrees that the tone of these talks is much better, but that hasn’t really translated into a whole lot of progress, with many Parties finding it difficult to move beyond previously held positions.

Overall, the story of the first week was something of a tug of war between developed and developing countries—sound familiar? A lot of time was spent during the first week on whether greenhouse gas emissions reduction targets should be determined through a “top-down” or” bottom-up” process.

Even though many developing countries endorsed it, the Copenhagen Accord was seen by many of them as undermining the Kyoto negotiating process where binding and comparable targets for developed countries would be imposed from the top down. And even thought the U.S. isn’t a Party to Kyoto, that hasn’t stopped developing countries from trying to maneuver the U.S. into Kyoto’s orbit through various means.

The U.S., Australia, Canada, Japan, and Russia pushed back in support of a bottom-up approach where developed countries would commit to national actions based on their national circumstances and what is politically possible—the only approach that has a real chance of succeeding. The U.S. also is advocating a more symmetrical approach, whereby the actions of developed and developing countries are subject to similar measurement, reporting, and verification procedures—known more commonly as MRV. (It’s not a proper UN meeting without lots of acronyms!)

So while the temperature of the rhetoric has gone down as the talks have entered into a more specific phase, the Parties aren't any closer to a deal. Let's just say the Parties are being agreeably disagreeable, which after the rancor of the previous year is a step in the right direction.

In future postings, I’ll be exploring these and some other new issues that have cropped up in greater detail. Stay tuned!

Greenhouse Gas Emissions and the Clean Air Act

by Blair Latoff

Bruce Josten sent this letter to all Members of the Senate today:

The U.S. Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector, and region, strongly supports S.J. Res. 26, crucial, bipartisan legislation sponsored by Sens. Murkowski and Lincoln, which would prevent the U.S. Environmental Protection Agency (EPA) from moving forward with its scheme to regulate greenhouse gas emissions under the Clean Air Act, because of the enormous permitting and compliance costs EPA regulation would force upon businesses large and small.

There is significant consensus that the Clean Air Act is an imprecise, impractical, and unworkable process to regulate greenhouse gas emissions. Yet, EPA’s “endangerment finding” triggered a burgeoning regulatory onslaught of costly, burdensome regulatory programs, such as:

• Mandatory New Source Performance Standards, set by sector;
• New Source Review and Prevention of Significant Deterioration permits for new or modified major sources;
• Title V operating permits for an escalating number of emitters; and,
• National Ambient Air Quality Standards, a program so incompatible with greenhouse gases that EPA has concluded it would be virtually impossible to implement.

The endangerment finding expands the regulatory universe under the Clean Air Act from a few thousand businesses to almost six million. Many of these newly-regulated entities would have their costs of doing business escalate due to rigid new rules and requirements, and projects stalled or stopped while they apply and wait for complicated new permits that require strict and expensive control technologies. Entities affected are not just power plants and refineries, but also potentially office buildings, small businesses, private schools, nursing homes, churches, and other small emitters.

The Congressional Review Act provides Congress with needed checks and balances to undo unwise and unwarranted Administration regulatory actions. Simply put, S.J Res. 26 is the only effective way to stop the consequences of the endangerment finding.

Other purported endangerment “fixes” are illusory, impractical, and potentially illegal. EPA may attempt to promulgate a rule ostensibly intended to address ancillary impacts of the endangerment finding; such a regulation would likely be invalidated by the courts. Bills that have been or may be introduced in the House or Senate to amend the Clean Air Act may be well intentioned; they will not and cannot mitigate, block, deflect or undo EPA’s oncoming regulatory onslaught as effectively as S.J. Res. 26.

Support for S.J. Res. 26 should not be misrepresented as a vote against greenhouse gas emissions legislation. The Chamber supports efforts to address energy security and climate change, and believes that any legislation must be comprehensive and bipartisan, and take into account a wide spectrum of issues including American jobs and our economy.

The Chamber urges you to approve S.J. Res. 26, the bipartisan Congressional Review Act Resolution of Disapproval. The Chamber will consider votes on, or in relation to, this issue in our annual How They Voted scorecard.