By Climatico Contributor: Shira Honig

Negotiators work on an agreement late into the night, 10 December 2011. (Photo taken by the United Kingdom's Department of Energy and Climate Change)

The Durban conference on climate change ended on a much better note than many expected, but continued to delay the toughest questions for at least three years.

The final outcome of the conference, COP-17, is a two-page, breakthrough document called the “Durban Platform for Enhanced Action” that commits all countries to a legally binding agreement to cut carbon emissions. The document satisfies the United States, who was looking for China and India to participate in a global agreement. Delays also work for the Obama administration, who as Politico reports, are looking to hold off on contentious details until after the 2012 election.

The document also meets China’s requirement of not joining a global treaty until 2020. India is also satisfied, having fought for the inclusion of the concept of equity between developed and developing countries in the Durban document, with strong backing from China.

The document even satisfies the European Union, who was willing to extend its current Kyoto Protocol commitments in exchange for a global agreement in force by 2020. In fact, there will be a second commitment period for Kyoto to remain in place as an interim agreement before the new deal is negotiated. The end of the second commitment period – either 2017 or 2020 – will be negotiated next year, at COP-18, in Qatar. Besides the EU, several other developed countries will also continue their Kyoto commitments.

While the creation of a “Kyoto II” is a win for developing countries, it is only a victory of sorts, given that the world’s largest emitters will not be participating in a legally binding agreement until 2020. Small island developing states in the Pacific, and other developing countries who were looking for an agreement at Durban, point out that this may be too late for them to avoid the worst of rising sea levels that threaten their existence.

One potential bright spot for the least developing countries is the agreement in Durban to set up a management and distribution body for the Green Climate Fund. No further details, however, were reached in the agreement.

By Climatico Contributor: Shira Honig

Garden Staircase, Kyoto, Japan (Source: Tran Vu Tuan Phan)

The end of the Durban conference is approaching, and in all likelihood, the end of the Kyoto Protocol along with it.

Developments in the last few days indicate the outcome is more likely to confirm a global disagreement, rather than agreement, over the idea of a second Kyoto commitment period, or “Kyoto II,” for all countries, both developed and developing.

Reports on Wednesday characterized the disagreement, at its heart, as between China and the United States. China will not participate in a global treaty until western countries acknowledge that it should not be bound by legal requirements since it is still developing and not responsible for historical emissions. America considers China to be a major player and will not participate in any global agreement without their involvement.

The disagreement, however, is not just between China and the U.S.

On Tuesday, Australia and New Zealand joined other western countries in saying that they will not sign a Kyoto II if other countries don’t opt in. The UK also added its voice to the chorus, saying developing countries such as China need to take on more responsibility.

This does not include Japan, Russia and Canada, who have all announced they will not rejoin Kyoto without emerging economies’ involvement.

It also does not include India, who, like China, will not commit to binding cuts.

The lone player in this divide is the European Union, whose proposal to consider an extension of current Kyoto commitments, in exchange for a broader treaty that includes emerging economies to begin in 2015, was roundly dismissed by China and India. Perhaps for this reason, the EU openly expressed frustration on Wednesday, likening the negotiating process to a game of ping pong between the world’s largest economies.

It is not clear, however, if China and the U.S. were to leave the process altogether, the fundamental disagreement would disappear.

Certainly, their presence – given their status as the world’s top two emitters – is critical.

At a press conference Monday, China’s lead negotiator, Xie Zhenhua, vice chair of the national development and reform commission, announced that China is open to a legally binding agreement in 2020.

Xie, however, stopped short of saying whether China would participate. Instead, he outlined five conditions that would need to be met before it joined, including that all previous commitments by the industrial countries be met before they move on to the next phase. Other conditions included the extension of Kyoto commitments for industrial countries and delivery on immediate and long-term financial aid to poor countries and new low-carbon technologies.

The EU, the United States and other countries expressed skepticism over the announcement and that they were unlikely to change their own in response until new details emerged. China has always been in favor of a legally binding agreement, but that does not mean it intends to be bound by it, EU Climate Commissioner Connie Hedegaard reportedly said.

Xie himself said that the position was not new, and that the pre-conditions come from the Bali Action Plan, the Copenhagen Accord and the Cancun Agreement.

Indeed, China has held this position for years. Its leadership is fully aware that America’s diametrically opposed view – that all major players, including China, must be full partners of a global treaty before it participates – also has been held for years and will not change.

Todd Stern of the U.S. and Xie were scheduled to meet December 6.

Protests called a Global Day of Action, a march for action on climate change, in Durban, South Africa, on December 3, 2011. (Photo by: tcktcktck, Global Campaign for Climate Action)

By Climatico Contributor: Shira Honig

With the Durban climate change negotiations barely a week old, key countries are drawing their “red line” positions in the sand.

On one side of the line, where the Group of 77 (G77) + China and other developing countries firmly sit, is a second commitment period under the Kyoto Protocol that continues binding targets for current country signatories after the first period expires at the end of 2012 (excluding Canada, which has announced that it is pulling out of the treaty altogether). On the other is a European Union plan for a new global agreement with binding targets for all countries beginning in 2015 and in force by 2020.

Emerging today is the news that India has rejected the EU plan for a new treaty.

Leading up to Durban, the EU said it was willing to consider an extension of the current Kyoto Protocol commitments, in exchange for a broader international agreement to begin in 2015, with emerging economies under the same binding targets as western industrialized countries. Since the first day of the negotiations, Poland, who currently holds the revolving EU presidency, has clearly stated that a “Kyoto II” could be a part of a transition to a wider, post-Kyoto agreement.

Before India announced its opposition, China had already rejected the plan, saying that a new mandate before the Bali Roadmap was complete was “too much.” China, which so far has spoken on behalf of both the G77 and the BASIC countries (Brazil, South Africa, India and China) – which has concerned some negotiators – remains firm in its opposition to binding cuts at the international level. It maintains that it is pressing ahead with ambitious national plans to cut emissions, increase energy efficiency and renewable production, and decrease deforestation.

India’s rejection of the EU plan brings the opposition level to three countries, including the United States. Like China, India maintains its current position of not committing to legally binding emissions cuts. The U.S. maintains its own position that China and India must accept legally binding cuts like other western countries. Only then would it consider a new treaty. In an interview, U.S. negotiator Jonathan Pershing deflected the issue, saying that until resistance from India and China to the EU plan abates, it is not prepared to take on legally binding obligations.

Meanwhile, in its own interviews, the EU has expressed frustration that its significant efforts to reduce emissions and provide climate finance – the most ambitious of western blocs and countries – have gone unrecognized. As in Copenhagen, where it was shut out of a final deal negotiated by the U.S. and the BASIC countries, it finds itself rejected again.

Without a move on these red-line positions from one country or another, a compromise deal is unlikely. Senior ministers and heads of state will join the negotiations on Dec. 6.

The International Conference Centre in Durban, South Africa, venue of the COP17 climate change negotiations. (Photo by: Karen Lotter/Ethekwini)

By Climatico Contributor: Shira Honig

Heading into Durban and the United Nations Climate Change Conference, otherwise known as the Seventeenth Conference of Parties (COP-17), the G77 remains committed to its long-standing position of achieving a legally binding agreement. Given the ongoing stalemate between developed and developing countries, however, many media accounts say they are unlikely to achieve it anytime soon.

Chief among its goals, the G77 is seeking a “Kyoto II,” a second commitment period that kicks in when the current commitment phase in Kyoto expires at the end of next year.

Developed countries such as the United States and Japan, meanwhile, remain committed to their own long-standing position of refusing to accept their own legally binding targets without also including binding commitments from major emerging economies such as China and India. For its part, India in recent months has consistently refused to commit to legally binding emissions cuts without more commitments from the U.S. Alongside this, several developed countries have attempted to downplay expectations for a treaty before 2015 or even 2020, angering many in the G77 who are urgently seeking international support to deal with climate change impacts.

The G77 is a loose coalition of developing countries founded in 1964 that has now grown to 132 members. Such large numbers inevitably lead to different positions within the group, with some members splintering off into other smaller regional blocs of which they may also be members, such as the Least Developed Countries (LDCs), Alliance of Small Island States (AOSIS), the Pacific Small Island Developing States (PSIDS) or the BASIC countries (Brazil, South Africa, India and China). At the same time, larger numbers mean greater negotiating strength, and the G77 maintains several collective positions, including the desire for a Kyoto II. The BASIC countries issued a joint statement early November calling for a second commitment period.  

Another of G77’s main goals, and a sticking point heading into Durban, relates to climate financing flows from developed to developing countries. The G77 is looking for progress on implementation of the Green Climate Fund, as agreed to in Cancún at COP-16 last year.

Many of its members are largely distrustful of western promises for financing, and with good reason. The rules governing development aid have long been opaque and bureaucratic, with countless requirements that developing countries generally do not have the capacity to meet. In the current round of climate negotations, at least some of what developed countries promised as “new and additional” funding through the Copenhagen Accord has not been proven to be new or additional. For example, following an announcement early November that European Union finance ministers would provide $5.5-billion in short-term funding, criticisms came from NGOs such as Oxfam, to developing country ministers, such as India’s new environment minister, Jayanthi Natarajan, who said the money was merely repackaged aid. While such criticisms are fair, today’s economic crisis in Europe – and threatening to spread far beyond – poses a critical threat to both short and long-term climate funding.

As host of COP-17, G77 member South Africa is looking for ways to minimize the ongoing rift. Its negotiators have called in Valli Moosa, former Minister of Environmental Affairs and Tourism and now the chairperson of the board of the World Wide Fund for Nature in South Africa, to advise the South African delegation and ease tensions between countries.

With its international clout, China is also seeking ways to bring parties together.  Xie Zhenhua, China’s chief negotiator whose influence was evident in the pivotal – and negotiators would say, negative – role he played in Copenhagen, is encouraging emerging economies to increase their own commitments. Xie is asking them to present national plans that may not be legally binding under Kyoto, but that at least show they are serious about reducing emissions at the national level. It is not clear at this point whether G77 members will buy into the plan, or whether it will satisfy the U.S. and other developed countries as being enough.  

Perhaps unintentionally, Xie’s idea is similar to those of U.S. chief climate change envoy Todd Stern, who was reported as saying this past spring in New York that internationally binding emissions caps are not necessary if you have national laws and regulations instead. In fact, he added, making obligations legally binding creates a perverse incentive that “diminish the ambition of what countries are proposing to do.” No doubt he was thinking of China as he made his statement.

The G77 would certainly take issue with Stern’s statement that a treaty is not necessary for targets, or for that matter, for financing implementation. Nevertheless, if a binding outcome does not emerge from Durban, they will need to seek ways to work around this deficit.

Water Pollution in China (Photo by Bert van Dijk)

It has taken a long time in China, but official policies finally aim to achieve a sustainable balance between environmental protection and economic growth in significant ways. Developments over the last several weeks and months include a draft proposal for new rules on fines for pollution, discussions of an environmental tax and increased environmental spending, new environmental standards on copper scrap imports, and the release last March of China’s 12^th Five-Year-Plan, which puts environmental concerns front and center, and seeks to slow down the astronomic growth so damaging to the country in the last two decades.

The question, however, is whether these policies will achieve that balance. Together, they present a mixed view: on one hand, the 12^th Five-Year-Plan clearly shows environmental protection and renewable technology development have become high strategic goals, which will attract more funding and attention. At the same time, they remain couched within China’s myriad institutional challenges – most of which these policies are unlikely to solve.

New Environmental Standards and the Challenge of Legal Enforcement

Many rules on environmental standards currently exist in China, but not nearly as many are adequately enforced. The copper rules require certificates to indicate they are not hazardous. Since they were established in August, they have been piling up in ports as Chinese customs cracks down. Imports at specific locations, however, are much easier to address than widespread environmental non-compliance.

Enforcement of pollution in China is challenging for a variety of reasons, most of them institutional: data and monitoring challenges, budget constraints, weaknesses in the legal system, and endemic corruption at the local level. Wide geographical disparities, including differences in funding between urban and rural areas, present additional challenges.

The draft rules, if implemented, would end a longstanding weakness in Chinese environmental legislation regarding pollution time limits by introducing daily fines. Currently, time limits on pollution are undefined (or arbitrarily chosen by the central government), and the fine remains at a fixed rate rather than marginally increasing, as it does under the U.S. Clean Air Act, where fines can be issued of up to $25,000 per day for a maximum of 30 days. This can result in massive overall fines, a significant pollution deterrent.

The draft rules also seeks to address two other weaknesses in Chinese environmental law: a lack of transparency, and a lack of public participation and public interest litigation. Without the ability for the public to litigate against pollution, there is no incentive for state-owned enterprises to comply with the law, and without procedural rights, the text of a law – no matter how strong – has little meaning. Currently in China, with lawsuits rarely accepted and with environmental law a relatively new field, only a handful of all cases in the country are environmentally related. Without a strong legal system, however, even an official endorsement can only go so far.

These rules, combined with increased environmental spending, including increases in annual budgets, might be significant, depending on precisely what China plans to spend the money on. While what those plans are is not yet clear, the 12^th Five-Year Plan offers some guidance in this respect.

The 12^th Five-Year-Plan Emphasizes the Environment, but Implementation is Uncertain

China’s 12^th Five-Year-Plan contains much more emphasis on environmental policies than previous plans. It promises to invest massively in plug-in hybrid electric and pure electric vehicles; develop increased wind, hydro, nuclear, solar, biomass and geothermal energy, to the point where alternative energies reach 11.4% of total energy consumption by 2015, up from 8.3% in 2010; decrease water consumption by 30%; and increase forest cover by 1.3%. Many of these indicators, including its plan to reduce energy consumption and emissions per unit of GDP, it views as binding (as opposed to merely expected). Also notable is its plan to implement  cap and trade pilot programs, as well as its attention to the implementation of the 2008 Circular Economy Promotion Law, which defines the “circular economy” as “a generic term for the reducing, reusing and recycling activities conducted in the process of production, circulation and consumption.” Its goals are ambitious: to promote recycling at all levels, including the recycling of industrial waste, as well as to encourage low carbon and even zero emissions models.

Some of these policies, particularly in the investments into renewable energies, would be global game-changers if implemented successfully. Some researchers, however, note that even if China succeeds only halfway, the changes to global clean energy technology would be significant, with the country becoming  a price setter.

Implementation, however, remains uncertain. Research since March indicates significant challenges to both its lofty environmental and general policy goals, with one researcher pointing out that pollution targets are not enough without more emphasis on data collection. As is generally the case with China’s five year plans, implementation details are not addressed. Rather, those are found in more detailed policy documents drafted in between these plans, and are left to a large degree for local authorities. Yet local environmental protection bureaus face many challenges, not least being surrounded by (and often involved in) corruption within local enterprises and governments. For this and other reasons that are too lengthy to describe here, vague intentions to “strengthen the supervisions of law enforcement,” and other similar statements, remain an open question.

In addition, China’s central government has historically treated environmental policy with as much of a heavy hand as it treats its economy: for example, by its use of short-term campaigns that may close thousands of local polluting companies, but ultimately fail to address systemic institutional challenges; or by its clampdowns on protesters and arrests of high profile environmental activists. Most recently, it imposed electricity brown-outs in late 2010 in its push to meet energy intensity targets.

Without a doubt, China is clearly focused on a sustainable direction. It may well be that that focus will lead the world, as in the case of renewable energy. Without addressing structural challenges, however, sustainability is not guaranteed.

Republican presidential candidates at the Iowa GOP/Fox News Debate in Ames, Iowa, Aug. 11, 2011. Tim Pawlenty appearing here is no longer in the race. Rick Perry entered soon after. (AP Photo/Charlie Neibergall, Pool)

Among the Republican Party candidates vying to contest Obama in the 2012 presidential election, there is a recurring theme: the idea that environmental regulation prevents job creation. While only one candidate attacked the Environmental Protection Agency (EPA) in Monday’s Tea Party Express debate, Herman Cain’s comment that the agency has “run wild” drew enthusiastic applause. The notion that there is a tradeoff between jobs and the environment is not new, but it is a powerful argument when job growth has been painfully slow, and when immediate economic concerns understandably outweigh long-term and complex environmental ones. It draws political points easily as it taps into voters’ struggles and fears.

As a political tactic, then, the idea is compelling. As an actual policy prescription, however, is it accurate?

Several recent articles and many past research studies have examined the question. While uncertainties and nuances exist, two main points of consensus are clear. The first is, environmental regulations do increase costs and can prompt job loss in certain industries, though projected losses are often significantly overstated, and lost jobs are generally offset by job creation in other industries and wider societal benefits.

The second is, job creation is in fact tangential to environmental regulation. The purpose of these regulations is not to increase job growth, nor is their termination meant to solve persistent unemployment (President Obama’s ozone decision was political, not economic). Rather, their purpose is to reduce the market inefficiencies of pollution. In other words, Republican candidate Newt Gingrich was correct when he said Monday night, “Governments don’t create jobs. The American people create jobs.” This time, the enthusiastic applause made sense.

The evidence explains why the jobs versus environmental regulation argument is misleading, and does not form the basis for carefully thought-out policies.

Regulation Does Increase Costs – But They Are Overestimated

On the first point of consensus, regulation increases costs, yet the data show that industry regularly overestimates projected job losses. The New York Times cites an example from the late 1980s, when the EPA proposed amendments to the Clean Air Act to reduce acid rain from power plant emissions. A 1997 study by Resources for the Future shows the electric utilities industry argued that amendments would cost more than $7 billion and thousands of jobs, but actual industry costs were closer to $1 billion, and ultimately there was a small increase in jobs rather than a decrease. A study by the World Resources Institute agrees that on balance, job creation is larger than job loss because jobs move from pollution-based industries toward pollution-control industries.

While the fact that only some industries may be harmed by environmental regulation is no consolation to a person who loses their job, the wider societal context must be considered. Economists agree that such regulations do not take place in a vacuum. Environmental rules interact with pre-existing policies, such as taxes, and therefore will increase efficiency in areas outside the targeted market. For example, real estate and tourism benefit from less pollution, and society as a whole benefits from increased efficiencies, technological or otherwise. That is the essence of environmental regulation: the rules may constrain individual firms as they adapt, but the objective is to promote the greater good.

The same idea applies to the public health benefits of environmental regulation. While these numbers contain uncertainties and are not precisely comparable to costs (for example, investments in non-polluting technologies versus a decline in asthma cases), many economists find that society-wide benefits nevertheless significantly outweigh costs and are ultimately beneficial to those regulated. With regard to acid rain, the EPA estimated the public health benefits at more than $120 billion by 2010, and found a 64 percent reduction in sulfur dioxide emissions compared with 1990 levels by 2009. A study on the 1972 Clean Air Act amendments by Michael Greenstone found that between 1972 and 1987, polluting industries lost 590,000 jobs, $37 billion in capital stock and $75 billion in output – a substantial number for these industries, yet small compared to the entire manufacturing sector, and small compared to monetary benefits to homeowners and reduced infant mortality rates.

There is no Large-Scale Trade-off Between Environmental Regulations and Jobs

On the second point of consensus, jobs are not a critical issue when it comes to environmental regulation. Economic analysis is not jobs analysis. Whereas regulations are designed to prevent the market inefficiency of pollution, unemployment is a macroeconomic issue limited by monetary policy. As Eban Goodstein points out, even jobs that are created by environmental regulation do not have a significant impact on the unemployment rate.  Where it does occur, job loss is too small to create a tradeoff between unemployment and the wider economy.

Instead, the tradeoff is between regulation and output of goods and services. According to Peter Dorman, the three possible sources of unemployment in an economy are the level of aggregate demand, the trade balance and structural matters. Today’s economy is struggling because a lack of demand, not because of the existence of or increase in environmental regulations. The cement industry may currently be warning that proposed stricter standards for sulfur dioxide and nitrogen oxide emissions will cause a loss of approximately 13,000 jobs, but the real source of its problems is a troubled housing market and a lack of demand for cement.

The Trick is to Balance the Long and Short Term, Not Dismantle EPA Regulations

Regulations are blamed for many things, and in a bad economy, environmental regulations are an easy target. Removing them, however, does not help the overall economy recover anymore than putting them into place hurts it. The group Republicans for Environmental Protection points out that if the EPA were dismantled, as so many Republican candidates would like to do, the budget savings would be two-tenths of one percent of the federal budget. This number does not reflect industry’s costs of implementing EPA regulations, but it shows the minimal cost of government protection. While the timing of imposing new regulations is important to weigh in the short term, removing protections runs counter to the long-term reality that environmental health is the foundation of human health, productivity, innovation and well-being.

Debates are underway in the United States as contenders seek the Republican party nomination to challenge Barack Obama in the 2012 U.S. presidential election. Last week’s debate was the first for Texas Governor Rick Perry, whose front-runner status appeared to take a slip to former Massachusetts Governor Mitt Romney following controversial remarks on social security. All eyes will be on the two rivals again as the candidates face off tonight at the “Tea Party Republican Debate” in Tampa. While the media have focused on the candidates’ positions on social security, job creation and the economy, environmental policy has featured prominently as well, with most of the candidates attacking the Environmental Protection Agency’s (EPA) role as the country’s environmental regulator.

Most prominent is the view that environmental protection and regulation prevents job creation, as articulated by House Majority Leader Eric Cantor in a letter to Republican Party members calling to fight 10 “job-destroying regulations.” Seven out of those 10 are EPA rules. U.S. Representative Michele Bachmann and Perry have both referred to the EPA as a “job killer,” while Romney has said that regulation is holding the economy back. Former U.S. Ambassador to China Jon Huntsman and businessman Herman Cain, as well as Perry, say no new regulations should be passed in this economy because they will hurt job creation.

In time for tonight’s debate, we briefly summarize each candidate’s current positions and past records on the environment.

Rick Perry
Rick Perry has a record of controversial statements. He has compared himself to Galileo because he feels “out-voted” for his belief that climate science is not yet “settled,” and has defended his comment that the 2010 BP oil spill was an “act of God.” His record, however, is consistent with his views: he has fought the EPA for years from Texas, and is currently leading a lawsuit against its greenhouse gas emissions regulations.

Michele Bachmann
Michele Bachmann may have not featured as prominently in the last Republican debate as did Perry or Romney, but has made many headlines with her controversial views. She has said she would repeal some environmental regulations and close down the EPA except for conservation, a statement which fits with her view that climate change is a “hoax” but does not make sense given that other departments are designed to deal with conservation, such as the Department of the Interior. A believer in small government, her record indicates she is against public investment in renewable energy.

Mitt Romney
Mitt Romney’s statements on the environment tend to be more moderate than the other candidates. For example, he supports some regulation for safety reasons while allowing for more domestic production of all energy sources, from oil to nuclear (he also supports drilling in the Arctic National Wildlife Refuge). Romney is the only candidate other than Huntsman who has consistently accepted climate change. He does not, however, believe that greenhouse gas should be regulated by the EPA, as was decided in the landmark 2007 Supreme Court case, Massachusetts vs. EPA.  In 2004, he supported an emissions reduction plan for Massachusetts, but in 2006, decided not to support a similar plan because of high costs.

Jon Huntsman
Jon Huntsman is the strongest environmental advocate in the group. He famously tweeted that he believes in the scientists on climate change, he signed Utah into the Western Climate Initiative as the state’s former governor, and he is the only candidate who supported cap-and-trade policies to limit carbon emissions. These actions, however, as well as his moderate positions on other issues, have not helped his candidacy, which may be dying. He now says cap-and-trade has not worked and that he would wait until the economy improves before supporting it again.

Herman Cain
Herman Cain supports a mix of energy sources, from fossil-fuel based to renewables such as wind. He also, however, supports expanded offshore drilling areas, including in the ANWR. Like Bachmann and Ron Paul, he doesn’t believe in climate change and did not support the Lieberman-Warner bill on cap-and-trade legislation.  He wants to give regulatory powers to independent groups that include oil company leaders.

Ron Paul
Ron Paul supports all kinds of energy production, including offshore drilling and renewables, but prefers tax incentives over subsidies. He believes in measures to reduce pollution, such as energy efficient vehicles, but he is against federal government regulation of the oil industry. Paul voted against cap and trade, both because he is against regulation and also because he believes it would cause jobs to move away from America.  Like Bachmann and Gingrich, he would dismantle the EPA, preferring that environmental protection and solutions occur through private property rights, the courts, and private enterprise.

Rick Santorum
Former U.S. Senator Rick Santorum dismisses climate change as “junk science.” He has consistently voted against an increase in renewable energy and regulations for cleaner air, and has supported a limit increase on mercury emissions from power plants.

Newt Gingrich
The environmental views of former speaker Newt Gingrich are mixed. While he spoke out against the Waxman-Markey climate bill and currently opposes EPA regulation of carbon, he has also supported programs that reduce carbon emissions, including providing incentives for carbon sequestration technology development. His latest statements include his desire to shut down the EPA and rename it the Environmental Solutions Agency.

Is the opposition to the EPA by most of these candidates genuine or part of the Tea Party script designed to appeal to voters and distinguish them from their peers, as some speculate?

Whether a political or economic calculation, or a combination thereof, some experts believe that such controversial statements will not win the nomination, especially following the Tea Party’s heavily criticized, stringent views during the debt ceiling debate. If that is so, a candidate such as Romney may have a stronger chance of winning the leadership than Perry, despite criticisms from Tea Party loyalists or others – unless, that is, Perry’s job-killing statements grow in popularity. As a follow up to this question, I will look more in depth at the link between environmental regulation and job creation in my next article.

While Ontario’s ambitious feed-in-tariff (FIT) policy is being put to the test by domestic and international opposition, including a challenge from Japan, Japan has just achieved a major breakthrough for its own FIT policy as it continues to recover from the tsunami and nuclear disaster this past March. Both examples will have implications for renewable energy policies and trade worldwide.

Currently in place in more than 40 countries – most notably in Germany, whose early leadership made it the world’s leading solar power – FIT policies boost initial development in renewable technologies by providing developers with above-market rates guaranteed over a long-term contract, usually 15-20 years. When designed well, they deliver long-term emissions reductions while providing a stable rate of return for clean-tech developers and reasonable costs for the consumer. When costs are not controlled over time, however, an FIT can be doomed to follow the example of Spain, whose program created a rush of solar development that ultimately led to a bust.

Ontario’s FIT Program Faces Many Challenges

The Green Energy Act (GEA) was passed in 2009 in Ontario, Canada, by the Liberal Party as a way to position the province as a long-term renewable energy leader while phasing out coal, spurring clean-tech investment and boosting the economy by creating jobs through domestic content requirements. The Act’s FIT program covers biomass, biogas, landfill gas, on-shore wind, solar photovoltaics (PV) and waterpower. So far, it has created 13,000 jobs and attracted $20 billion in private-sector investment.

Two years later, however, it is facing three international challenges. First, in a dispute initiated under the World Trade Organization (WTO) last year, Japan is calling the Act’s domestic content requirements a prohibited subsidy that discriminates against imported products and violates key elements of international trade law. Europe likewise objects to the domestic requirements in its own complaint it initiated in the WTO last month. The third challenge comes from Mesa Power Group, owned by T. Boone Pickens, who filed a compaint in July under the North American Free Trade Agreement (NAFTA), alleging that Ontario made last-minute, discriminatory changes to its FIT rules, preventing the company from winning contracts for two wind projects it was hoping to build in the province.

The Act also faces significant domestic opposition in Ontario. Some of the opposition comes from communities fighting the construction of wind turbines in their neighborhoods. Some of it comes from a $7 billion deal made in 2010 between the Ontario government and South Korean-owned Samsung, which has sparked anger and which oddly dismisses Ontario’s own goal of promoting local over foreign companies.

Much opposition comes from the Act’s purported role in rising household energy bills. Conservative Leader Tim Hudak, in advance of a provincial election in October, has promised to cancel the FIT program and the Samsung contract, hoping he can oust the Liberals on the perception that the Act’s rising costs hurt the economy. Yet as Pembina Institute shows, the rising prices are due to such factors as the introduction of smart metering and the much-needed replacement of aging infrastructure – and prices would rise even without renewable investment. Others note that prices are expected to fall in the long-term.

As Japan Challenges Ontario’s FIT, it Passes its Own

Meanwhile, as the composition of the Ontario-Japan WTO dispute panel got underway, Japan passed a renewable energy FIT law that will go into effect next July. Some details of the policy remain undecided, but the tariff will cover solar PV, wind, biomass, geothermal and small hydroelectric generation. An overall review will occur every three years, and tariffs and contract terms will be reviewed annually.

Given the long-standing political strength of the nuclear industry in Japan, the measure would not have passed if it weren’t for the Fukushima disaster, as well as the controversies surrounding the government’s handling of it. The powerful but heavily criticized Ministry of Economy, Trade and Industry (METI) will not be responsible for implementing the FIT system; rather, that responsibility will go to a special parliamentary committee.

The law reflects the large shift in public opinion on nuclear energy since the tsunami and disaster at Fukushima, as well as the pressure government officials have been under to phase out atomic power. While it may be considered a victory for long-silenced renewable energy supporters, Prime Minister Yoshihiko Noda is attempting to convince a fearful public that Japan’s precarious position cannot be overcome without any nuclear in the mix.

Implications – and Questions – From Both Cases

The implications of these related examples are likely to be significant. For example, Japan’s new policy could help it recover its leadership in solar PV technology, along with Germany, and place it in competition with China, which last month established its own solar FIT program. (In another parallel example, China’s wind FIT program is currently being challenged by the United States for its support of domestic wind turbine manufacturers, considered also to be an illegal protective subsidy).

It is not certain, however, that Japan’s policy, if successful, will affect other countries’ nuclear policies, given that each country’s nuclear energy needs and capacities are different.  It is also not certain whether Japan will implement its own domestic requirements as part of its FIT policy, but this is unlikely while its own case against Ontario remains open.

With regard to Ontario, it is unclear whether its FIT program is more at risk from the three international challenges or from domestic opposition. Certainly, however, a repeal of the Act would render the WTO and NAFTA challenges moot, leaving the protective subsidy question unanswered.

Traffic on Golden Gate Bridge (Image by: caribb)

U.S. President Barack Obama late last week announced an aggressive agreement to  increase the corporate average fuel economy (CAFE) to 54.5 miles per gallon for cars and light-duty trucks by model year 2025.

The agreement, made with 13 major automakers, including Ford, GM, Chrysler, Honda, Jaguar/Land Rover, Hyundai, BMW, Kia, Mitsubishi, Mazda, Nissan, Toyota and Volvo, is the next phase of the Obama administration’s national vehicle program, building on a 2009 historical agreement that raised fuel efficiency to 35.5 mpg for 2012-2016 vehicles.

The fuel economy programs set forth under the Obama administration mark the first meaningful update of fuel efficiency standards in three decades, and the most significant climate change action made by Obama since he took office. At a time when Washington has been mired deep in divisive debt ceiling talks, this latest agreement contains good news for the environmental policy community, automakers and associated new technologies, and the average American.

The Environmental Protection Agency and the White House estimate that over the life of the program, Americans will save $1.7 trillion in fuel costs and 12 billion barrels of oil. By 2025, they estimate that a new car will save $8,200 in fuel costs, compared to what they would pay at the pump with a similar 2010 model, and that oil consumption will be reduced by 2.2 million barrels a day. Also by 2025, the plan will eliminate six billion metric tons of carbon dioxide pollution. While the 54 mpg stipulated in this agreement is less than the 62 mpg environmentalists initially pushed for, it is still significant, doubling the roughly 27 mpg that the average car gets today. Even when one factors in the 20-percent discount that federal officials use to rate a vehicle in real-world driving conditions, which would place the average 2025 vehicle at roughly 43 mpg rather than 54, the agreement is still ambitious, say automobile executives.

For years, American automobile companies fought the implementation of tougher efficiency standards, most notably in California, which fought the companies in multiple lawsuits. Yet when the lawsuits failed, the EPA allowed California to set its own stringent standards, thus paving the way for this agreement. Also paving the way were the federal automotive industry bailouts in 2008 and 2009 that followed the Wall Street financial crisis. The bailouts not only required greater efficiency in American vehicles, but also gave the Obama administration greater negotiating power in setting national standards, which the companies prefer over a number of changing standards across different states.

Some critics of the agreement argue that the increased cost of efficient vehicles will make them difficult for some people to buy up front, even if they save later on in fuel costs – but the Boston Consulting Group says the costs would be in the area of $2,000, which would easily cover the fuel savings (the Center for Automotive Research puts the number at $6,700). Furthermore, people tend to buy cars using loans, which means the accurate comparison is between monthly car payments and monthly fuel savings, not between up-front and down-the-line costs.

The joint White House and EPA announcement says the EPA and the National Highway Traffic Safety Administration (NHTSA) are also considering incentives for “game-changing” new technologies for emissions improvements, which the Wall Street Journal says could include features that automatically shut off an engine when it’s idling or solar panels on car roofs. Car companies are pleased with the long-term nature of the agreement, because it will allow them to test out new technologies over time. It will also require both car and battery companies to become more innovative and internationally competitive.

The WSJ report adds that the agreement will allow Obama to formally propose the rules by the end of September. It will be a historic and welcome way for the White House to start the fall.

The United Nations Security Council (Photo courtesy of the United Nations).

Charged meaningless by some and pathetic by others, yesterday’s debate in the United Nations Security Council on the security implications of climate change disappointed the hopes of those in the policy community who, for years, sought action on climate change by the Security Council in absence of any effective multilateral agreement by the United Nations Framework Convention on Climate Change (UNFCCC).

Yesterday’s debate, under the German Security Council presidency, was the second on the topic. The first was held in 2007 under a British presidency, two years before the Pacific Small Island Developing States achieved a hard-won General Assembly Resolution on climate and security in June 2009.

Among the hopes for the debate were, at the least, a Presidential Statement on the matter, and, as Nauru’s President Marcus Stephen wrote in a New York Times op-ed July 19, the appointment of a special representative on climate and security to raise awareness about connections between the two issues and possibly to track ongoing threats. Members of the Pacific small island community such as Nauru have been keen to see the Security Council take a role as their security becomes increasingly compromised by rising sea levels.

Coming to agreement on a Presidential Statement, which in the end simply acknowledged the risks climate change poses to international peace and security, was not easy.  Opposition came from countries such as China and Russia, as well as members from the so-called Non-Aligned Movement, who were mainly concerned about the implications of the powerful Security Council involving itself in matters traditionally reserved for the larger General Assembly. Countries in favor, on the other hand, were said to include the United States, where military leaders and academics alike have examined the intersection of climate change and international and national security issues. Hours after the debate, before any agreement had been reached, the United States Ambassador to the UN, Susan Rice, said the lack of outcome was “pathetic and short-sighted.”

Short-sighted is a fair assessment. The rising sea levels inundating parts of small island states in the Pacific not only affect their own citizens – frightening already as that is – but will affect citizens around the world as islanders search for a safe haven, should the seas continue to rise. Meanwhile, if the increase in extreme weather events affecting food supply, homes and human safety across the world, has not become clear this year, as well as the ongoing mounting evidence that the climate is warming, then it is quite frightening to contemplate what will be enough for policymakers to see that the islands are likely only the beginning of this story.

It is easy to understand skeptics who question what the Security Council, a body more readily able to impose sanctions than to deal with scientific complexities with widespread and uncertain implications, could possibly do for climate change. At the same time, it is precisely the power and small size of the Council that could make it far nimbler, more creative and more effective than the UNFCCC, or even the GA. While an advisor at the Micronesia Mission to the UN, I proposed breaking down the climate change and security issue into more manageable topics, such as territorial sovereignty, for study by working groups or for consultations by expert panels. While neither of these options would result in climate mitigation, they would at least provide the Council with a greater understanding of how climate interacts with issues it is more familiar with (a key distinction, since climate generally does not cause conflict on its own), and give it the ability to step in with greater authority should the need arise.

None of this fully explains precisely what those needs may be in the future – and therein lies another argument for opposition: urgent issues such as a nuclear Iran, for example, must be dealt with before possible future threats in unforeseen locations are examined. Indeed, experts argue a nuclear Iran should be a top priority. Yet another top priority is brewing, as natural resources dwindle due to hotter temperatures and raging wildfires and as the Arctic continues to melt. While tsunamis are not climate-related, one only need look as far as Japan to see the significant policy implications of a massive natural disaster. If an event happens once, it can be seen as an isolated incident. If it becomes commonplace, it can weigh down on a country’s domestic and international obligations, which can have wider ramifications. In the case of atoll nations that will become inundated if sea levels continue to rise, once is all they have.

Policymakers who wished to see the Security Council take up these issues yesterday in their support expressed their  disappointment over the outcome. Nauru’s President Marcus Stephen said, “Let history report that again we have sounded the alarm and the world chose not to act.” Yet he also questioned in his op-ed whether the United Nations is even capable of addressing this issue at all.

Given that the Security did eventually agree on a historical, albeit weak, Presidential Statement, let us hope he is not right.