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Green Regulations Update – What to Watch Out For
Robert K. Bastian
U.S. Environmental Protection Agency
Office of Wastewater Management
Washington, D.C.
NBP Webcast
January 27, 2010
Green Regulations Update –
What to Watch Out For
• Economic Stimulus Package
• Climate Change – Implications for Water Programs
• EPA findings regarding GHGs under 202(a) of the Clean Air Act
• Cap & Trade Legislation
• Mandatory Reporting of Greenhouse Gases –Final Rule – 30Oct2009
Economic Stimulus Package
Water and Wastewater Infrastructure
special interest in …
• Green projects – at least 20% of the funds are to be
used for projects that address green infrastructure, water
efficiency improvements, etc.
1. Green Infrastructure for Managing Wet Weather
2. Methane Capture and Reuse
3. Energy Conservation at Water Utilities
4. Water Conservation and Efficiency
• Moving dirt within one year – within 1 year of
enactment (buy 2/17/10), all funds must be committed to projects
under construction or having awarded contracts for construction
Climate Change
• Climate czar Carol Browner indicated at MIT on 12Apr09 she wants Congress to establish a broad U.S. greenhouse-gas policy before the UN climate-change negotiations scheduled for December in Copenhagen.
• The Waxman/Markey bill introduced in Mar’09 would place a cap-and-trade market to reduce CO2 emissions, while requiring an increasing share of U.S. electricity to come from renewables.[―http://www.eenews.net/public/25/10364/features/documents/2009/03/31/document_gw_03.pdf‖]
• President Obama’s FY2010 budget proposed cutting GHGs 14% by 2020 and 83% by 2005 from 2005 levels, and auctioning off 100% of emission credits, or the right to emit.
Carol Browner
Climate Change
Climate Change
• National Water Program Strategy:
Response to Climate Changehttp://www.epa.gov/water/climatechange/
– An initial effort to evaluate how best to
meet our clean water and safe drinking
water goals in the context of a changing
climate.
Climate Change
• Goal 1: Water Program Mitigation of Greenhouse Gases: Use core water programs to contribute to greenhouse gas mitigation.
• Goal 2: Water Program Adaptation to Climate Change: Adapt implementation of core water programs to maintain and improve program effectiveness in the context of a changing climate and assist States and communities in this effort.
• Goal 3: Climate Change Research Related to Water: Strengthen the link between EPA water programs and climate change research.
Climate Change
• Goal 4: Water Program Education on Climate
Change: Educate water program professionals
and stakeholders on climate change impacts on
water resources and water programs.
• Goal 5: Water Program Management of Climate
Change: Establish the management capability
within the National Water Program to engage
climate change challenges on a sustained basis.
Climate ChangeCrosscutting Themes
1. Develop Data to Adapt to Climate Change:Water managers need information and baseline data to understand how climate change is altering the environment and inform long-term
planning.
2. Plan for Extreme Water Events: Water managers need to expand efforts to plan for and respond to extreme weather events resulting from climate change, including storms, an excess of water, and a lack of water.
Climate ChangeCrosscutting Themes
3. Increase Watershed Sustainability and Resilience: Many elements of a ―watershed approach‖ will increase the resiliency of watersheds to climate change and increase the sustainability of aquatic systems.
4. Develop Analytic Tools: Water managers need a wide range of new analytic tools to understand and address water resources impacts of climate change.
5. Strengthen Partnerships: Water program managers need the help of many partners, including Federal agencies and State, Tribal, and local governments.
Climate Change
• Greenhouse Gas Emissions
– Reductions and Offsets
• Energy Conservation and
Alternative Energy Sources
– Improved Energy Efficiency/Conservation
– Biofuels, Solar, Wind, Geothermal
– On-site Power Production/CHP
Climate Change
Climate Change
―http://www.epa.gov/climatechange/effects/coastal/sap4-1.html‖
Role of Cap & Trade
Legislation
• What is Cap & Trade?
• How does it work?
• Lessons learned from Cap & Trade Programs
• Keys to successful programs
• Key design elements
• Recent legislation
What is Cap and Trade?• A cap-and-trade program sets a mandatory cap, or maximum
limit, on the aggregate emissions of all affected sources to achieve broad, regional reductions
• The government distributes emission allowances—either freely (allocation) or by sale (auction)—that total no more than the cap
• Allowances may be traded (purchased and sold) creating a market for allowances and establishing a price. This creates an incentive to reduce emissions
• Control requirements are not specified under a cap-and-trade program, but each affected source must surrender allowances for compliance equal to its actual emissions
• The cap ensures achievement of the emission reduction goal while also providing flexibility to sources and predictability for the allowance trading market
How Does Cap and Trade Work?
SO2 Emissions
(million tons)
0
5
10
15
20
25
30
19
80
19
85
19
90
19
95
20
00
20
05
20
10
Allowable Emissions
ActualEmissions
Without Acid Rain Program
National SO2 Trading Program
• Problem: Acid Rain
• Scope: National
• Target: Reduce SO2
emissions from
electric generators by
8.5 million tons (50%
below 1980 levels)
• Coverage: ~3000
Electric Power Units
Wet Sulfate Deposition
Average 1989 - 1991
Wet Sulfate Deposition
Average 2001 – 2003
Major Reductions in Acid Rain
Sulfur deposition and concentrations down 40% across the Eastern U.S.
Signs of recovery are evident in some acid sensitive ecosystems
Key Lessons from Cap and Trade Programs
• If properly designed and applied, the system can be:– Environmentally effective and administratively efficient
– Reduce emissions quickly and cost-effectively
– Promote innovation
• Cap and Trade has worked in situations where:– emissions have longer residence times
– broader geographic impacts
– aggregate impact (as opposed to source-specific) is principal concern
– Costs differ across a range of options
– Strong regulatory institutions and financial markets exist
• SO2 and NOx programs:– Importance of clarity, simplicity, certainty, and transparency
– Need for legislation to resolve key implementation issues (e.g., caps, allowance distribution) to minimize legal challenges
Keys to Past Successful Cap & Trade
Systems
• Cap– Protects the environment
– Provides predictability to market participants
• Accountability– Accurate, complete emissions measurement
– Transparent emissions and allowance data
– Predictable consequences for noncompliance
• Simplicity of design and operation– Minimal, but effective government role
– Facilitates market and maximizes cost savings
―http://www.epa.gov/airmarkt/cap-trade/index.html‖
Key Design Elements of Cap and Trade
Systems
• The Goal
• Point of regulation
• Setting the cap
• Allowance distribution
• Compliance period
• Banking
• Monitoring and reporting emissions
• Compliance and enforcement Other design elements are optional, and may work against the guiding
principles (e.g., complexity, lack of predictability, lack of transparency
etc.)
Considerations for GHGs
• Scale of program (# and diversity of sectors, size of market)
• Long-term nature of challenge and importance of cumulative reductions over time
• Linkages to other policies (energy efficiency, renewables, land-use, transportation policy, etc.)
• International linkages
– Negotiation of post-2012 UNFCCC framework
– Competitiveness
– Linkage of cap and trade systems
• Interest in reductions outside covered sectors (offsets)
Offsets
Offset Project Type Examples – OAR’s Climate Leader’s Program
Methane capture
Landfill, manure, coal mines
Forestry
Afforestation, forest management, Increasing Agriculture Soil C
Other Industrial and commercial
boiler upgrades, bus fleet upgrades
What are offsets?
Emission reductions occurring at
sources that are not capped (e.g., a
landfill).
With GHGs, emission reductions have
the same effect regardless of where
they take place.
Advantages of offsets:
Provide incentives for reductions in
sectors that are not amenable to
trading.
Potential cost-savings for capped
facilities.
Challenges
Assessing ―additionality‖ of reductions.
Importance of Additionality
Landfill Emissions (without methane
collection/combustion)
Power plant Emissions (no cap)
Landfill Reduction (with methane
collection/combustion)
Power plant Emissions (with
cap)
No Offset/No Cap
Offset/Cap
Cap
EPA Offset Methodology Steps
1. Clearly Define the Project Type• Location, technology, size
2. Define Project Boundary• Physical, GHG, temporal, leakage
3. Determine Regulatory Eligibility• Federal, state and local
4. Develop and Apply the Performance Threshold and Emissions Baseline
• Determination of Additionality – performance threshold (emissions rate, technology, practice)
• Baseline for calculation – emission baseline
5. Estimate Project Emission Reductions• Software tool, Model or Equations
6. Implement Project, Monitor Emissions• Limited set of acceptable monitoring approaches –
direct metering, modeling
7. Quantify Project GHG Emissions Reductions
Offsets Summary
• Offset reductions must be additional– If reductions aren’t real this effectively increases
the overall cap and negatively impacts the environmental integrity of the overall system
• Under the Climate Leaders program, EPA applies a performance standard approach
• The performance standard approach reduces complexity, cost and subjectivity
• EU program uses a case-by-case approah
Voluntary Carbon Markets:Examples of Treatment of Forest and
Wetlands Projects
Mandatory
• Regional Greenhouse Gas Initiative (RGGI) (Northeast)– Afforestation is the only land-based offset project type on the eligibility list
– Other protocols under development (e.g., forest management)
Voluntary
• California Climate Action Registry (CCAR)– 3 eligible forest project types:
1. Forest management
2. Reforestation
3. Avoided conversion of forest
• Chicago Climate Exchange (CCX)– Forestry carbon: afforestation, managed forests, long-lived forest products
– Agricultural and rangeland soil carbon
Examples of Regional Carbon Markets
12/07/2009 EPA findings regarding
GHGs under 202(a) of the
Clean Air Act
• Endangerment Finding:The Administrator finds that the current and
projected concentrations of the six key well-mixed
greenhouse gases--carbon dioxide (CO2), methane (CH4),
nitrous oxide (N2O), hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), and sulfur hexafluoride (SF6)--in
the atmosphere threaten the public health and welfare of
current and future generations.
• Science overwhelmingly shows greenhouse gas (GHG)
concentrations at unprecedented levels due to human
activity
―http://www.epa.gov/climatechange/endangerment.html‖
Recent Cap and Trade
Legislation • 17 bills introduced
• Boucher / Dingell Draft Bill (October 7, 2008)
• Markey (June 4, 2008)
• Lieberman-Warner (with Boxer amendment May 20, 2008)
• Doggett / Van Hollen / Blumenauer (June 17, 2008) CLIMATE
MATTERS - Reduce emissions 80% below 1990 levels by 2050
– 12 economy wide
– 5 focused on power sector
• March 2008: EPA economic analysis of Lieberman-Warner • Total U.S. GHG emissions are approximately 40% lower
(~ 3,749 MtCO2e) than reference case in 2030 and 56% lower (~ 6,030 MtCO2e) in 2050
• The greatest emission abatement occurs in the electricity sector
• Offsets lower costs
Eligibility of Land-Based Offsets in
Recent Legislation
• Lieberman-Warner– Afforestation/reforestation
– Forest management
– Reduction in frequency and duration of flooding of rice paddies
• Stabenow amendment to L-W– Most extensive list of land-based offsets
– expanded eligibility for ―changes in carbon stocks attributed to land use change and forestry activities to include:
• management of peatland or wetland
• conservation of grassland and forested land
• Dingell-Boucher discussion draft– Eligible terrestrial C projects: afforestation, reforestation
– EPA must consider forest management, reduced deforestation, controlled wastewater treatment for addition to the eligibility list
Mandatory Reporting of
Greenhouse Gases
Final Rule – October 30, 2009
• In response to the FY2008 Consolidated Appropriations Act (H.R. 2764; Public Law 110–161), EPA has proposed a rule that requires mandatory reporting of greenhouse gas (GHG) emissions from large sources in the United States.
• Greenhouse gases, like carbon dioxide, are produced by the burning of fossil fuels and through industrial and biological processes. Approximately 13,000 facilities, accounting for about 85 percent to 90 percent of greenhouse gases emitted in the United States, would
be covered under the proposal.
―http://www.epa.gov/climatechange/emissions/ghgrulemaking.html‖
Mandatory Reporting of
Greenhouse Gases
Final Rule – October 30, 2009
• The new reporting requirements would apply to suppliers of fossil fuel and industrial chemicals, manufacturers of motor vehicles and engines, as well as large direct emitters of greenhouse gases with emissions equal to or greater than a threshold of 25,000 metric tons per year. This threshold is roughly equivalent to the annual greenhouse gas emissions from just over 4,500 passenger vehicles.
• The first annual report would be submitted to EPA in 2011 for the calendar year 2010, except for vehicle and engine manufacturers, which would begin reporting for
model year 2011
Bob Bastian
U.S. Environmental Protection Agency
Office of Wastewater Management
Washington, D.C. 20460
tele: 202-564-0653
e-mail: ―[email protected]‖
