Congress Allows Bans on OCS and Oil Shale Development to Expire
On September 27, 2008 the Senate voted 82-12 to pass the Continuing Resolution (CR) to fund the federal government at FY2008 levels through March 2009 and lift long-standing congressional bans on development of the Outer Continental Shelf (OCS). By a vote of 370-58, the House passed similar legislation lifting the OCS ban on September 24, 2008. In addition to lifting restrictions on OCS development, the legislation also allowed funding restrictions for the development of an oil shale leasing program to expire. The NAM is pleased with the lifting of the OCS ban since we have been calling for more environmentally-sound offshore drilling for years as essential to a comprehensive, long-term U.S. energy policy.
Although the federal government is technically able to move forward with OCS leasing and oil shale development plans, Congress will very likely revisit the issue when it convenes in January 2009. A fundamental difference next year, however, is that the burden for imposing new moratoria will largely shift towards those who oppose development and exploration rather than rest completely on the shoulders of industry. Rep. Nick Rahall (D-WV), Chairman of the House Natural Resources Committee, has stated that he will consider the issue early on in the next Congress. On the oil shale front, the NAM is also pleased that Congress dropped its moratorium on allocation of funds to the Bureau of Land Management (BLM) to move forward with an oil shale and tar sands development program. The NAM submitted comments to the BLM this fall advocating that the Administration move forward with such a program to capitalize on yet another domestic energy resource.
Located in the United States, the OCS contains more than 420 trillion cubic feet of natural gas — enough to heat approximately 100 million American homes for 60 years. The OCS also contains an estimated 86 billion barrels of oil. According to federal government estimates, portions of Colorado, Utah and Wyoming contain at least 800 billion barrels of recoverable oil from oil shale — almost three times the volume of Saudi Arabia’s oil resources. These resources are able to be refined into a variety of transportation fuels, including costly diesel and jet fuels. Energy imports account for approximately 25 percent of the nation’s trade deficit — development of the country’s vast reserves of domestic oil shale and tar sands could significantly narrow the current gap in trade balances with respect to these balances.
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The EPA Accepts Comments on Regulation of Greenhouse Gases
The EPA is accepting comments on an Advanced Notice of Proposed Rulemaking (ANPR) on the question of whether or not carbon emissions constitute an “endangerment” to the environment and public health through Nov. 28, 2008. This could trigger regulation of carbon emissions under a variety of programs under the Clean Air Act (CAA). Although not yet a proposed rule, the ANPR will solicit information and comments that could lay the groundwork for future regulatory actions on carbon emissions.
By way of background, this latest action is a response to last year’s Supreme Court decision in Massachusetts v. the EPA that characterized carbon as a “pollutant” under the CAA, and remanded to EPA the issue of whether or not carbon emissions constitute an “endangerment.” The next Administration will move forward on the “endangerment” issue based in large part on the type of information it receives pursuant to the ANPR.
The regulation of carbon emissions by EPA could trigger a variety of new requirements for manufacturers in all sectors. Factories, refineries and power plants could be subject to more red tape for preconstruction permits as regulators attempt to assess the entity’s potential to emit carbon, which will cause delays. Regulators could also assess potential carbon emissions for smaller entities that apply for operating permits, adding costs to manufacturers’ bottom line.
The NAM has reconfigured its climate change tool kit to allow members and their employees to submit an electronic comment to the docket and copy their Members of Congress. To file a comment with the EPA, go to www.nam.org/climatechangetoolkit, and click on the “Contact the EPA” link. In addition to pushing grassroots advocacy against use of the CAA as a tool with which to regulate carbon emissions, the NAM is developing more detailed comments focusing on a variety of policy and legal rationales for not expanding the scope of the CAA. For more information, please contact Bryan Brendle at bbrendle@nam.org or (202) 637-3176.
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Renewable Energy Tax Credits
Energy tax incentives critical to many manufacturers had a long and complicated journey through Congress this year, but in the end, the NAM won multiyear extensions of these provisions as part of the Emergency Economic Stabilization Act. The $17 billion energy package provided a one-year extension of the expiring production tax credit for wind projects and a two-year extension of production incentives for geothermal, biomass and several other energy resources. The package also provided an eight-year extension of credits for investments in residential and commercial solar projects and various other incentives for energy-efficient homes and buildings, plug-in vehicles, biofuels, and other technologies, including accelerated depreciation for “smart” meters and grid equipment. Other provisions include $1.5 billion in credits for control of carbon emissions from advanced coal projects and per-ton credits for underground storage of carbon dioxide from industrial sources. The NAM key voted various iterations of these incentives to show its support for the expansion of renewable energy resources as one important part of securing our energy future.
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House Energy and Commerce Chairs Release Draft Climate Legislation
In early October, Chairman John Dingell (D-MI) and Ranking Member Rick Boucher released a discussion draft of climate change legislation. This draft is the result of extensive work, including numerous hearings and white papers, by the House Energy and Commerce Committee.
The draft proposes to amend the Clean Air Act to establish an economy-wide cap-and-trade program to reduce covered emissions to six percent below 2005 levels by 2020, 44 percent below 2005 levels by 2030, and 80 percent below 2005 levels by 2050. Sources covered by the legislation include: power plants, producer and importers of petroleum and other fossil-based fuels, large industrial facilities, producers and importers of other bulk gases, natural gas local distribution companies, and geologic sequestration sites. The EPA would be given authority to regulate any smaller sources with less than 25,000 tons of emissions per year through industry specific standards.
Under the proposed cap-and-trade system, incentives would be created for sources to use low-cost compliance strategies and encourage technological innovation, including in efficiency programs. Entities covered could bank and borrow allowances and a “strategic reserve” would be created to address high allowance prices. Additionally, covered entities would be able to purchase the EPA-approved domestic and international offset credits to meet a portion of their obligation. All responsibility for carbon market oversight would reside with the Federal Energy Regulatory Commission.
For additional information or complete text of the House Energy and Commerce discussion draft please go to: http://energycommerce.house.gov/Climate_Change/index.shtml.
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The EPA to Propose Greenhouse Gas Registry Rule
The White House is currently reviewing a draft proposal from the EPA that would mandate a registry of Greenhouse Gas (GHG) emissions from various entities that import, emit, or produce GHGs. Although the EPA missed the September 26 deadline for issuing its proposal, federal regulators are expected to release the proposed regulations prior to the end of the current Administration. The FY2008 omnibus spending bill required the EPA to release a proposed rule by September 26, 2008. According to Administration sources, the process has been delayed because of the length and complexity of the draft submitted for an inter-agency review, which is required prior to the release of a formal proposal. A final rule for a GHG registry is expected in June 2009. Such a registry could serve as a roadmap for a future federal climate policy.
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The EPA Issues Stringent Standard for Lead Emissions
On October 16 the EPA announced that it will tighten the National Ambient Air Quality Standard (NAAQS) for lead emissions from the current limit of 1.5 micrograms per cubic meter (ug/m3) of air to 0.15 ug/m3. On August 4, the NAM submitted comments to the EPA opposing imposition of a stricter standard, which has reduced lead emissions by more than 90 percent since 1980. The phase-out of lead from gasoline drove most of these emission reductions. The EPA is expected to make non-attainment designations for the new NAAQS by October 2011.
The EPA’s decision marks the first time the lead standards have changed in 30 years. The agency’s action sets two standards: a primary standard at 0.15 ug/m3 to protect health and a secondary standard at the same level to protect the public welfare, including the environment. The new regulations will impact sources such as smelters, iron and steel foundries, and general aviation gasoline. For more information about lead in air visit: http://www.epa.gov/air/lead.
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