Conservative and Liberal Think Tanks Endorse Putting a Price on Carbon Emissions

The Peter G. Peterson Foundation asked six think tanks representing "the wide scope of American political thought" to develop comprehensive plans for putting the country on a fiscally sustainable long-term path. Four out of the six groups concluded that the US should eliminate subsidies for fossil fuels and impose either a carbon tax or a cap-and-trade program to increase federal revenues.

The American Enterprise Institute argued that the US should end energy subsidies and greenhouse gas regulations in favor of a carbon tax. AEI would begin with a tax of $26 per metric ton of carbon emissions to be phased in between 2013-2017, and then increased by 5.6% per year through 2050.

This is not coming from a bunch of tree-hugging socialists. You may recall AEI as the home of many of the intellectuals and business leaders who formed the brain trust of the Reagan Administration. Not much has changed. The AEI Board of Trustees continues to include a who's who of conservative and libertarian academics and business leaders, including former Vice President Dick Cheney.

Nor is this a new position for AEI. In 2007, AEI argued that "the best way to reduce greenhouse gas emissions is to tax the carbon content of fuel to build in the cost of the environmental impact." AEI now argues that taxing carbon emissions is also a good way to reduce the federal deficit.

The Economic Policy Institute proposed using a carbon tax or a cap-and-trade program to address the societal cost of greenhouse gas emissions and reduce the federal deficit. It also called for a gradual increase in the motor fuel excise tax by 15 cents in 2019 and 25 cents in 2024.

The Roosevelt Institute Campus Network proposed a carbon tax as more efficient than a cap-and-trade system, because a carbon tax would provide more certainty about future prices. It called for an upstream tax on carbon of $24.33 per metric ton beginning in 2013 with an increase of 5.6 percent each year. According to the Congressional Budget Office, this would reduce carbon emissions by 36 percent by 2026.

The Center for American Progress called for reducing greenhouse gas emissions and reliance on foreign oil with a price on carbon and an oil import fee. It proposed a $5 per barrel tax on oil imports and an unspecified price on carbon emissions.

Two other think tanks also participated in the Peterson Foundation's efforts to find sustainable fiscal solutions.

The Bipartisan Policy Center could not reach agreement within its organization on the issue of a carbon tax, but its report did note that “a tax of $23/mt of CO2 emissions in 2018, increasing at 5.8pc annually” would raise $1.1 trillion to reduce the deficit while cutting carbon emissions by 10%

The Heritage Foundation was the only think tank that did not include a carbon tax or cap-and-trade program in its recommendations.

What to make of all this?  Not much, I'm afraid.  Remember the Simpson-Bowles Deficit Reduction Plan?  They also proposed some honest, tough measures to get us out of our fiscal and environmental mess.  But it's not clear that we want to take the medicine.

John Howley
Woodbridge, New Jersey

Carbon Regulation is Already Here

Most people talk about carbon taxes, cap and trade, and other carbon-related costs and regulations as if they were something new and unusual. In fact, most companies already face a very complex environmental and Greenhouse Gas (GHG) regulatory system that includes both private standards and government laws and regulations.

The private and public restraints on GHG emissions range from the Walmart Sustainability Index that requires 100,000 Walmart suppliers to disclose their carbon footprints and sustainability initiatives, to regional GHG cap and trade programs that require power plants to reduce their emissions or purchase allowances in an open auction. And, of course, the 1990 Clean Air Act Amendments instituted a cap and trade program for acid rain that achieved 100% compliance in reducing sulfur dioxide emissions during the 1990's.

The most prominent GHG cap and trade program today is the Regional Greenhouse Gas Initiative (RGGI). The ten Northeastern and Mid-Atlantic states that comprise RGGI have agreed to a mandatory, market-based effort to reduce greenhouse gas emissions. The member states have capped CO2 emissions from the power sector with the goal of reducing those emissions by 10% by 2018. States sell nearly all emission allowances through auctions and invest proceeds in consumer benefits: energy efficiency, renewable energy, and other clean energy technologies.

Similarly, the Western Climate Initiative (WCI) is a collaboration of seven western US states and three Canadian provinces working together to identify, evaluate, and implement policies to reduce greenhouse gas emissions, spur investment in clean-energy technologies that create green jobs, and reduce dependence on imported oil. WCI has announced plans to implement a cap-and-trade system in January 2012 that will provide financial incentives to reduce carbon emissions. The program will start with power plants, then extend to large industrial producers and transportation.

These GHG cap and trade programs, however, are only the highly visible tip of the iceberg. Almost every company in the US faces a complex web of private standards and public laws that regulate their GHG emissions, other environmental impacts, and overall sustainability. CERCLA, RCRA, NEPA, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the Ocean Dumping Act, and the Endangered Species Act are just a few of the US laws regulating the environmental impacts of companies and individuals in the US. Companies that export to Europe must also be aware of the specific regulatory, green labeling, and other environmental requirements in the European Union and locally.

My good friend Stan Alpert believes that smart companies can use their compliance with environmental regulations as a competitive advantage and ultimately to reduce costs. Stan should know. In addition to working for many years as the Chief Environmental Prosecutor in the U.S. Attorney's Office that covers parts of New York City and all of Long Island, Stan has extensive experience as a lawyer in private practice advising green and sustainable businesses.

Stan has put together a free online webinar entitled Sustainability is Smart Business: A Legal Perspective. The seminar covers the triple bottom line, carbon regulation in the US and internationally, and toxin reduction in the product and waste streams. Businesspeople can view the webinar by clicking here. US lawyers who wish to receive free Continuing Legal Education (CLE) credits for watching the webinar can view it by clicking here.

John Howley
Woodbridge, New Jersey

President Obama Orders 28% Reduction in Government Greenhouse Gas Emissions

President Obama announced yesterday that the Federal Government will reduce its greenhouse gas (GHG) emissions by 28 percent by 2020. Every federal agency has been ordered to send a sustainability plan to the White House by June explaining how they will meet this ambitious goal.

The announcement came after a review of GHG emissions by all federal agencies that began when the President signed Executive Order 13514 back in October 2009.

A 28% reduction in GHG emissions would have a tremendous impact on overall emissions in the US, because the federal government is the largest single energy user in the country. It would reduce Federal energy use by the equivalent of 646 trillion BTUs, equal to 205 million barrels of oil or taking 17 million cars of the road for one year. It is expected to save a cumulative total of $8 to $11 billion in avoided energy costs.

Key to the success of the GHG reduction program is measuring and verifying actual reductions in energy consumption and GHG emissions. The Executive Order requires agencies to measure greenhouse gas emissions and to maintain a greenhouse gas inventory -- in other words, their carbon footprint. White House Council on Environmental Quality Chairwoman Nancy Sutley emphasized this point, telling reporters, "You can't manage what you can't measure."

Compliance with the measurement and reporting requirements will have a significant impact on virtually every company that does business with the federal government. For example, Section 2(h) of the Executive Order directs each federal agency to ensure that 95% of new contracts for products and services (except weapon systems) are energy efficient (e.g., Energy Star), water efficient, bio-based, environmentally preferable, non-ozone depleting; contain recycled content; and are non-toxic or a low-toxic alternatives. It will be up to the supplier to prove that their products meet these criteria.

The General Services Administration (GSA) is required to give the White House additional procurement recommendations by April of this year. The GSA is considering:

• requiring vendors and contractors to register with a voluntary registry or organization for reporting greenhouse gas emissions;

• requiring contractors, as part of a new or revised registration under the Central Contractor Registration or other tracking system, to develop and make available its greenhouse gas inventory and description of efforts to mitigate greenhouse gas emissions;

• using Federal Government purchasing preferences or other incentives for products manufactured using processes that minimize greenhouse gas emissions; and

• other options for encouraging sustainable practices and reducing greenhouse gas emissions.

When President Obama first signed the Executive Order last year, the White House issued a press release announcing that it was intended to "leverage Federal purchasing power to promote environmentally-responsible products and technologies."

The message to private business is clear: If you want some of that purchasing power to come your way, then you better start measuring and documenting your carbon footprint, energy efficiency, and sustainable practices.

John Howley
Orlando, Florida

The Mouse That Roared: Micronesia Challenges a Czech Power Plant

World government conspiracy theorists must be foaming at the mouth.

The Federated States of Micronesia has demanded that the Czech Republic allow an international audit of a planned upgrade of the largest coal-fired power plant in the Czech Republic . . . and the Czech Republic acceded to the demand.

Micronesia made the demand pursuant to recently adopted European Union regulations allowing any nation in the world to challenge construction or upgrades of industrial sites emitting carbon dioxide. Under EU law, transboundary environmental impact assessments are part of normal procedure.

The essence of Micronesia's claim is that the upgraded Czech power plant should be required to use the best available technology for the project. The Czech plant is the 18th-largest CO2 emitter in Europe, emitting 40 times more CO2 annually than the whole of Micronesia.

Why is a nation on the other side of the world complaining about a coal-fired power plant in the Czech Republic? Micronesia is a chain of more than 600 islands in the west Pacific, and some of its land area has already been lost to rising ocean tides. It asserts that failure to control CO2 emissions in the Czech Republic will further contribute to the warming of the planet blamed for rising ocean water levels. It fears that climate change could also result in more intense and damaging storms.

“Climate change is real and it is happening on our shores. It’s a matter of survival for us,” Andrew Yatilman, the director of Micronesia’s Office of Environment and Emergency Management, told Reuters.

The Czech utility that owns the plant, CEZ AS, asserts that it is using the most advanced technologies and that the refurbished power plant will emit less CO2 than it does now. The plant's efficiency will increase from a current level of 32.8% to 39.06%, a spokeswoman for CEZ AS said.

Northeast and Mid-Atlantic Governors Commit to Low-Carbon Fuel Standard

Governors of 11 Northeast and Mid-Atlantic states signed a Memorandum of Understanding (MOU) on December 30 that commits their states to developing a regional Low-Carbon Fuel Standard (LCFS), a market-based, fuel-neutral program addressing the carbon content of fuels.

The proposed regional LCFS would involve a market-based, fuel-neutral program to address the carbon content of fuels. If adopted by states, it would apply to the transportation sector, and potentially to fuels used for heating buildings. According to a press release issued by the Governors, a regional LCFS has the potential to reduce transportation-related greenhouse gas emissions, which represent approximately 30 percent of emissions in the region, reduce regional vulnerability to petroleum price volatility, and facilitate the long-term transition from petroleum-based fuels in the transportation sector. In addition, the Governors expect that the regional LCFS will spur economic growth related to development of advanced technologies and green energy jobs.

The Low-Carbon Fuel Standard initiative began in June 2008, when Massachusetts Governor Deval Patrick sent a letter to the governors of all 10 member states of the Regional Greenhouse Gas Initiative (RGGI) inviting them to work together on developing a Low-Carbon Fuel Standard that would apply to the entire region, creating a larger market for cleaner fuels, reducing emissions associated with global climate change, and supporting the development of clean energy technologies. Based on Letters of Intent signed in December 2008 by state environmental commissioners, the participating states - the 10 RGGI states plus Pennsylvania - have been doing preliminary work toward designing a regional LCFS program.

The LCFS MOU signed on December 30 establishes a process to develop a regional framework by 2011 and to examine the economic impacts of an LCFS while getting input from business and environmental stakeholders. The 11 signatories include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.

Click here for more information on the LCFS work in the Northeast and Mid-Atlantic region.

John Howley
Orlando, Florida

Windmills on Office Buildings?

Solar panels on office buildings and homes have become almost commonplace. But windmills?

That is what SC Johnson is doing at its corporate headquarters in Racine, Wisconsin. The company has launched a wind energy pilot program with the installation of three new wind turbines. The objectives are to reduce greenhouse gas (GHG) emissions and raise awareness that renewable energy is not just for factories, but also office buildings in urban settings.

The three wind turbines are located on the roof of one of the seven buildings on SC Johnson's international headquarters campus, which has an approximate eight block radius and where more than 1,300 employees work. The wind turbines are expected to be fully functioning by the end of the month. Once fully operational, the turbines will be connected to the company's electrical distribution system. The output they generate will power a small portion of the company's campus.

Admittedly, this is a test project and it is difficult to project how many computers, machines and other basic office resources can be powered by renewable energy. "While we are not sure how much alternative energy these turbines will produce, we expect to have clear, consistent results within a year," said Johnson. "This pilot program will help provide useful information on ways we can develop more sustainable solutions for our campus."

The turbines are expected to be fully installed and connected in late January and will be monitored closely throughout the year. Depending on the impact of the turbine's energy output, it is possible the company will extend the project to additional local SC Johnson facilities.

This is not SC Johnson's first foray into sustainable energy. Its largest global factory, based in Racine, Wisconsin, is partially powered with cogeneration using methane gas from a local public landfill. The company's Bay City, Michigan plant is powered with wind energy, reducing the annual purchase of coal-fired electricity by nearly half. In Indonesia, waste palm shells are burned as a substitute for fuel, using 80 percent less diesel fuel, and in Mijdrecht, The Netherlands, the company's largest European manufacturing facility is operated by an 80 meter-tall wind turbine which is expected to eliminate 3,900 tons of carbon dioxide annually.

Through these efforts, approximately 36 percent of SC Johnson's total electricity usage worldwide came from renewable energy. The company cut GHG emissions at its worldwide factories by 27 percent during the last eight years, including all its United States operations by 17 percent since 2005. These reductions -- achieved three full years ahead of the company's 2011 target -- are the equivalent of taking approximately 11,100 U.S. cars off the road for one year.

John Howley
Orlando, Florida