Greenhouse regulatory developments in the European Union and the United States

05 February 2008

Introduction

The Garnaut Climate Change Review is due to report in draft in June 2008 on matters relating to Australia’s greenhouse regulatory framework. The recommendations of the review will be informed by, and gauged against, greenhouse regulatory developments in the European Union (EU) and the United States (US). These developments have rapidly increased recently in pace and scope and in significance for Australia and, to judge from reported remarks of Professor Garnaut in late January 2008, are already influencing the conduct of the review.

Recent developments in the EU have been dramatic. On 23 January 2008, the European Commission (EC) tabled a significant package of proposals entitled the 'Climate Action and Renewable Energy Package' (package). The package includes draft legislation to overhaul the EU's greenhouse gas (GHG) emissions trading scheme (ETS) for a third phase running from 2013 to 2020 with specified emissions caps, and a legislative framework to increase the share of renewable energy sources in EU energy consumption with specified targets. The package also proposes to promote the development of carbon capture and storage (CCS) projects by recognising CCS technology in the EU’s GHG ETS.

By comparison, recent developments in the US have been more gradual, decentralised and uncoordinated, but equally as significant. The Bush Administration remains opposed to mandatory direct measures to reduce emissions of GHGs¹. Its policy has been, until recently, to focus on the use of voluntary commitments from industry to reduce emissions and the use of tax incentives to spur the use of cleaner renewable energy and more energy efficient technologies². However, in December 2007 President Bush signed into law the Energy Independence and Security Act 2007 which (among other things) makes mandatory stringent standards in several areas including automobile fuel economy, energy efficiency in commercial and Administrative buildings and use of biofuels in the transport sector. In addition, in connection with his State of the Union Address on 28 January 2008, President Bush committed US$2 billion over the next three years to the creation of a new international clean energy technology fund. Details of the fund and its administration remain to be announced.

In the meantime, state administrations in the US have been active and have developed divergent policies³—there are now 17 states in the US which have adopted GHG emission reduction targets⁴, and six states have legislated for those targets. Also, states in the US are participating in regional agreements designed to reduce GHG emissions—in the western US, six states and two Canadian provinces have created the Western Climate Initiative (WCI) which seeks to accomplish economy-wide GHG emission reductions; in the north-eastern US, 10 states have created the Regional Greenhouse Gas Initiative (RGGI) which seeks to accomplish reductions in GHG emissions in the electric power sector.

Congressional approaches are also emerging which diverge from or add to those of the Bush administration. Buried in the US federal budget legislation in December 2007⁵  is a provision that requires the US Environmental Protection Agency (EPA) to establish a mandatory program that will require US companies by mid-2009 to report their GHG emissions. The provision does not specify which industries must report or how often reporting must occur, but leaves those details to US EPA. Curiously, the December budget legislation obliges the US EPA to develop a reporting program in advance of the regulatory program which the reporting is to support and despite the imminent introduction into Congress of the Lieberman-Warner Climate Security Bill of 2007 (Lieberman-Warner Bill)⁶ which contemplates that the US EPA will create an ETS and a reporting program towards such a scheme. The December Budget legislation also makes unclear the status of the US federal government’s existing voluntary GHG registry within the Department of Energy under the Energy Policy Act 1992 known as the 1605(b) Program. Also, many US states are adopting their own GHG emission reporting laws, and the December budget legislation does not expressly pre-empt such state laws.

Such a fragmented approach poses challenges and inefficiencies for businesses in the US, and the increasing volume of state GHG policies is driving calls for nationwide regulation from the US Congress⁷ and is being reflected in the stances of the principal candidates for the 2008 presidential election.

Brief details of the EU package, and of the principal developments in the US, are set out below.

Several aspects of the EU and US developments seem to be influencing the Garnaut Review already. Like Professor Garnaut, the Liberman-Warner Bill proposes (among other things) the borrowing (as well as the banking) of emissions allowances, proposing that facilities covered by the Bill may borrow up to 15 per cent of their compliance obligations from future years. Also, the Liberman-Warner Bill proposes, like Professor Garnaut, a Climate Credit Corporation and a Carbon Market Efficiency Board which would have central administrative roles, particularly as regards auctioning of allowances and the monitoring of the carbon trading market and the implementation of specific cost-relief measures. It is likely that, when concluded, the Garnaut Review will recommend the inclusion of these aspects in an Australian ETS.

It is not presently clear what the Garnaut Review will recommend concerning emissions targets. The EU has recently foreshadowed the introduction of ’indicative trajectories’ towards renewable energy targets, rather than targets themselves, and from Professor Garnaut’s recent remarks it appears that the Garnaut Review wishes to make recommendations along these lines. But on 1 February 2008 Minister Wong clarified that Australia will set interim targets. What therefore may emerge in Australia is a concept in which emissions targets are 'budgets', in accordance with which allowances will be allocated, rather than mandated limits. It will be possible to bank and borrow budgeted allowances (under limitations of the sort contemplated in the Lieberman-Warner Bill), and the budgeted allowances will be 'date-stamped', namely, the allowances will be issued in relation to specified present and future periods.

Among the central matters that are not clear are the following. In respect of what periods will 'date stamping' occur? Yearly periods? Periods of more than a year, if so, how many years? In what combination of periods? In respect of what future periods (or combination of periods) will 'date-stamped' allowances issue? What will be the overall budgeted allowance of emissions? Full details of Australia’s responses on these and other matters, particularly as regards emissions targets, await the outcomes of the Garnaut Climate Change Review.

In the meantime, it remains the case in Australia that there is a need for a broad framework to guide government intervention in areas related to climate change. The EU package and developments in the US will be increasingly relevant as that framework unfolds.

European Union

ETS

As mentioned, the EU package includes draft legislation to overhaul the EU's GHG ETS for a third phase running from 2013 to 2020⁸. The brief details of the draft legislation are as follows:

1. It proposes to cap emissions from EU ETS installations at 21 per cent below 2005 levels by 2020 and to provide for allowances to be centrally allocated by the EC rather than through national allocation plans (as has happened to date). 
2. Between 2013 and 2020, carbon permit allocations will fall in a line by 1.74 per cent each year, and the same linear reduction factor will apply in the fourth ETS phase between 2021 and 2028. The reduction factor will be reviewed by 2025. 
3. Each year, five per cent of allowances will be set aside for new market entrants. Allowances in 2013 will be allocated to member states in proportion to their emission shares in 2005. At least 20 per cent of revenues from member state auctions of allowances will be applied to reduce emissions, to support climate adaptation, and to fund renewable energy and CCS development. 
4. Power plants will be required to buy all their carbon allowances from 2013. Other sectors will get 80 per cent of their allowances free of charge in 2013, but free allocation will reduce annually by equal amounts to zero in 2020. Power plants fitted with CCS facilities will be regarded as not having been emitted (and therefore free from the requirement to buy carbon allocations). 
5. By July 2010, the EC will decide which EU industry sectors are ’at significant risk‘ from 'carbon leakage', namely adverse affects on comparative profitability vis-à-vis non-Annex I countries as a consequence of ETS-induced increases in carbon or fuel costs. By July 2011, the EC will review this decision against any international or sectoral climate agreements in place for the ’post-Kyoto‘ (post-2012) period and will either increase the free allocation of permits—potentially up to 100 per cent—or require importers to buy permits, but the overall emissions cap will not alter. 
6. There are no proposals to include shipping and road transport in the ETS from 2013, and forestry and agriculture emissions are explicitly excluded. The ETS will be extended to the aluminium, non-ferrous metals and chemicals sectors. National authorities will have the power to exempt smaller installations (below 25 megawatts) if their emissions were consistently below 10,000 tonnes of CO2 annually. Biomass-burning plants would also be exempt. 
7. Credits from Kyoto's CDM and JI flexible mechanisms that have not been used in the second ETS phase can be banked for the third and subsequent ETS phases.

Renewables

The EU’s package also includes a legislative framework to increase the share of renewable energy sources in EU energy consumption⁹. The brief details of the draft legislation are as follows:

1. It proposes to increase the share of renewable energy sources in EU energy consumption to 20 per cent by 2020 through differentiated national targets from a 2005 baseline. The targets range from 10 per cent for Malta to 49 per cent for Sweden. 
2. Target-setting will end after 2020 on the basis that, after that date, the price of carbon under the EU ETS will suffice to further the development of renewables. 
3. Member states are required to submit national renewables action plans to the EC by March 2010, setting targets for the share of renewables in the electricity, transport and heating and cooling sectors, and describing the measures to be adopted to achieve them.
4. There will be an ’indicative trajectory‘ towards the targets. Member states that deviate from the trajectory in any year will be required to effect corrective measures within a further year. Member states that adhere to the trajectory can allow domestic producers of renewable energy to sell certificates to non-adherent member states.

The legislation also proposes an undifferentiated target to increase the share of biofuels in transport fuels by 10 per cent. Not all biofuels qualify. To qualify, the fuel must result in net GHG savings of at least 35 per cent compared with conventional fuels. Also, production of the fuel must occur in accordance with a set of sustainability criteria. This would disallow fuels produced on land ’with recognised high biodiversity value‘, such as forests and nature protection areas.

CCS

The EU’s package also includes a proposal for an EU Directive on CCS¹⁰ which aims to drive the uptake of CCS, manage its environmental risks and remove legal barriers to its development:

1. New combustion plants with a capacity of at least 300 megawatts will have to include enough space for the installation of CCS equipment. 
2. Operators will also have to assess the availability of suitable storage sites and transport facilities, and the technical feasibility of retrofitting for carbon capture.
3. Under the revision of the EU ETS legislation mentioned above, the EU will treat carbon dioxide that is captured, transported and safely stored as not having been emitted. 
4. EU legislation on integrated pollution control, environmental impact assessment, waste treatment, water and large combustion plants will also be amended to accommodate the new CCS framework. 
5. There will be a strict permitting system for carbon storage. The permits will fix the amount of carbon to be stored, monitoring conditions, corrective measures in case of leakage and conditions for field closure. The EC will be able to inspect permits before these are granted by governments. 
6. The CCS operator will have to provide financial guarantees covering potential liabilities. In the event of leakage, operators will have to buy ETS allowances to cover escaped CO₂. The EU's Environmental Liability Directive will also apply. After closure of the storage site full financial and legal responsibility will be transferred from the CCS operator to the member state. Once responsibility has been transferred, any future liabilities will have to be borne by the member state. 
7. Member states will set up a system of exploration permits, valid for a maximum of two years, to help select new storage sites. The interaction of the proposed system of exploration permits with existing licensing systems within member states is not clarified. The proposed directive states that member states should ensure that the procedures for the granting of exploration permits are open to all entities possessing the necessary capacities and that the permits are granted on the basis of objective, published criteria. The proposed directive also states that member states retain the right to determine the areas from which storage sites may be selected. Possible interactions with other activities (for example exploration, production and storage of hydrocarbons, geothermal use of aquifers) are nominated as factors to be considered in determining those areas.

Energy efficiency

Finally, as part of the EU package the EC published an assessment report on national action plans on increasing energy efficiency¹¹. The EC sets out the measures it intends to take this year and next in order to boost energy efficiency. They include revisions of existing EU laws on the energy performance of buildings, energy labelling and energy taxation, and new reports on sustainable consumption and production and on increasing energy efficiency through information and communication technologies.

United States

Federal developments – general

Four significant US federal developments have already been briefly mentioned:

1. The Energy Independence and Security Act 2007 was signed into law in December 2007, making mandatory various energy-efficiency measures.
2. The US federal budget legislation in December 2007 contains a provision that requires the US EPA to establish a mandatory program that will require US companies by mid-2009 to report their GHG emissions. 
3. The Lieberman-Warner Climate Security Bill of 2007 (Lieberman-Warner Bill) will be introduced into Congress in 2008. It contemplates that the US EPA will create an ETS and a reporting program towards such a scheme. 
4. President Bush, in his State of the Union Address delivered on 28 January 2008, announced (among other things) a commitment to provide US$2 billion over the next three years to create a new international clean energy technology fund.

Federal developments – Lieberman-Warner Bill

Introduction

The Lieberman-Warner Bill is a particularly significant development—since the start of 2007, nine climate change bills have been proposed, but the Lieberman-Warner Bill is the first ever to have been approved by a congressional committee, for introduction into Congress. This occurred on 5 December 2007 when the Senate Environment and Public Works Committee voted to report the Bill to the full Senate. It will be tabled there in 2008 requiring the full Senate then to debate the issues raised by the Bill. Passage of the Bill in its current form is unlikely as environmental and industry interests groups and others have been critical of aspects of it. Moreover, it is unclear that President Bush would sign any measure that makes emissions reductions mandatory.

Emissions Caps

The Bill divides the six GHGs into two categories: Group I (carbon dioxide, methane, nitrous oxide, sulphur hexafluoride, and perfluorocarbons) and Group II (hydrofluorcarbons)¹².

The Bill creates two separate caps, one covering facilities that produce hydrofluorcarbons (HFCs) and the other covering facilities that:

1. use more that 5,000 tons of coal annually
2. process, produce, or import natural gas
3. produce or import petroleum or coal-based fuel that when combusted will emit a Group I GHG, or
4. produce for sale or distribution or import more than 10,000 CO₂e of Group I GHGs (assuming no capture or permanent sequestration).

The cap on facilities producing HFCs starts in 2010 at 300 MMTCO₂e and declines to 90 MMTCO₂e by 2037, remaining at that level to 2050. Emissions from all other covered facilities are capped at 5775 MMTCO₂e in 2012, and this cap decreases annually to 1732 MMTCO₂e in 2050. The two caps combined will result in roughly a 19 per cent reduction from 2005 levels in 2020 and a 70 per cent reduction from 2005 levels by 2050.

Allocation of permits

In early years, the majority of permits will be distributed free—in 2012 approximately 72 per cent of permits will be distributed free and 28 per cent auctioned. However, by 2031 approximately 69.5 per cent of permits will be auctioned.

1. In 2012, free allowances will be made as follows—fossil fuel-fired power plants will receive 19 per cent of the permits, manufacturing facilities will receive approximately 10 per cent, and importers and producers of petroleum-based fuels will receive two per cent. These figures will decline to zero by 2031¹³.
   
2. Approximately 11 per cent of the allowances would be distributed to load serving entities that deliver electricity to retail customers and natural gas companies that deliver to retail consumers. These allowances would be required to be used to mitigate the economic impact on low and middle income customers, or to promote energy efficiency measures.

Banking and borrowing of emission allowances would also be permitted under the Bill. Holders of emission allowances would be able to bank them so that they can be used in future years. There would be no limit on the length of time an allowance can be banked. Facilities would also be able to borrow up to 15 per cent of their compliance obligation from future years. However, an interest penalty would be assessed on all borrowing.¹⁴ A newly-created entity called the Climate Credit Corporation would be charged with managing the auction process.¹⁵ Revenue generated from the auction would be used to fund low- or zero-emission technology development and deployment, carbon sequestration and storage efforts, climate change adaptation measures, worker training and fire-fighting¹⁶. The Bill would also create a Carbon Market Efficiency Board to monitor the carbon trading market and implement specific cost-relief measures, including increased borrowing and the use of offsets.

The Bill would allow covered facilities to satisfy up to 15 per cent of their yearly compliance obligation with offsets that are generated within the US. The Bill would require the EPA to certify, monitor and enforce offsets and contains specific language addressing the protocols and standards that the EPA is to use for this task¹⁷.

The Bill would also allow covered facilities to satisfy up to another 15 per cent of their compliance obligation with international allowances generated in other countries. An ’international allowance‘ is defined as an emission allowance purchased from a foreign greenhouse gas emissions trading market that meets certain integrity and stringency requirements set by EPA. This provision would, to a limited degree, link the US emission market with other carbon markets around the world, such as the European Union emission trading system¹⁸. The mechanism may also allow US firms to participate in projects under the Clean Development Mechanism of the Kyoto Protocol, although presumably only if the US ratifies the Protocol or its successor.

State developments – legislation

The six states in the US which have legislated for GHG emission reduction targets are California, Washington, Hawaii, New Jersey, Florida and Oregon.

California’s actions are particularly noteworthy. On 27 September 2006, California Governor Schwarzenegger signed the Global Warming Solutions Act¹⁹ (AB 32).

AB 32’s major features are as follows:

1. it requires state-wide GHG emissions to be capped at 1990 levels by 2020, a significant reduction from current levels²⁰
2. it requires the monitoring and annual reporting of GHG emissions by all sources 'of significance'²² 
3. it requires the development and implementation of GHG emission reduction measures²³, and
4. it delegates broad authority to the California Air Resources Board (CARB) to implement these mandates in accordance with an aggressive series of deadlines²⁴.

These deadlines are as follows:

1. 1 January 2007 – AB 32 goes into effect
2. 30 June 2007 – CARB must publish 'a list of discrete early action GHG emission reduction measures' for implementation by regulations by 1 January 2010²⁵
3. 1 January 2008 – CARB must adopt regulations requiring the monitoring and annual reporting of GHG emissions from all significant sources²⁶
4. 1 January 2008 – CARB must establish the 1990 baseline of statewide GHG emissions that will be the cap to be implemented by 2020²⁷
5. 1 January 2009 – CARB must prepare and approve a 'scoping plan' for 'achieving the maximum technologically feasible and cost-effective reductions in GHG emissions from sources or categories of sources of GHG gases by 2020', and the scoping plan is to be the template for regulations that will be adopted by 2011²⁸
6. 1 January 2010 – CARB must ’adopt regulations to implement‘ the list of reduction measures that it publishes by 30 June 2007²⁹
7. 1 January 2011 – CARB must adopt regulations establishing ’GHG emission limits and emission reduction measures’³¹ 
8. 1 January 2012 – the 2011 regulations must become operative³².

CARB’s ability to pursue this regulatory program fully is subject to current litigation between California and the US EPA. The US Clean Air Act prohibits US states from adopting or enforcing motor vehicle emissions standards³³ but permits the US EPA to waive application of this prohibition if the state determines that the state standards will be, in the aggregate, at least as protective of public health and welfare as applicable federal standards³⁴. On this basis, California had lodged a request for waiver with the US EPA in December 2005. In proceedings decided on 11 December 2007, the US District Court upheld California’s power to enact motor vehicle emissions standards subject to waiver from the US EPA³⁵. On 19 December 2007, the US EPA declined to grant the waiver which California had sought³⁶. On 2 January 2008, California commenced litigation against the US EPA to overturn the denial of the waiver³⁷. 14 other US states³⁸ have adopted California’s vehicle emissions standards, and four more have stated their intention to do so³⁹. 15 states have stated that they plan to intervene in California’s litigation against the US EPA.

In the meantime, CARB has published 'a list of discrete early action GHG emission reduction measures'. It first did so on 20 April 2007⁴⁰, identifying the following three priority measures—the establishment of a Low Carbon Fuel Standard (LCFS), reduction of refrigerant losses from motor vehicle air-conditioning maintenance, and increased methane capture from landfills. These actions were estimated to reduce GHG emissions by between 13 and 26 MMTCO₂e annually by 2020 relative to projected levels. CARB updated this list on 7 September 2007⁴¹, and finalised it on 17 October 2007⁴². The list now includes the original list of three measures as well as an additional six measures in the transportation and commercial sectors. Another 35 measures are proposed to be taken forward informally. It is estimated that the 44 measures have the potential for reductions of 42 MMTCO₂e by 2020. The processes concerning LCFSs are now well under way⁴³. A LCFS will measure the 'carbon intensity' of a fuel on a 'lifecycle' or 'field to wheel' basis in order to include all emissions from fuel production and consumption that contribute to the global warming impact of transportation fuels⁴⁴. CARB is now in the process of developing a tracking, certification and auditing system for trading credits within an LCFS system⁴⁵.

CARB is also moving ahead with the mandatory GHG monitoring and reporting system contemplated by AB 32. On 19 October 2007, CARB issued a draft regulation on the subject⁴⁶. On 6 December 2007, CARB required technical revisions to the draft regulation⁴⁷. It is anticipated that the revised draft regulation will be made publicly available in February 2008 for public comment within a 15 day period⁴⁸. The original draft regulation requires more than 800 industrial and commercial sources in California to measure and report annually their GHG emissions to CARB. The regulation also requires independent verification of emission reports. The regulation would apply to the following types of facilities—cement plants, oil refineries, electricity generating facilities that emit more than 2,500 metric tonnes of CO2, electricity retail providers and power marketers, hydrogen plants that emit more that 25,000 metric tonnes of CO2, cogeneration facilities that emit more than 2,500 metric tonnes of CO2, and other industrial sources that emit over 25,000 metric tonnes per year of CO2 from stationary combustion sources, including facilities such as food processing, glass container manufacturer, oil and gas production, and mineral processing⁴⁹. Under the proposed regulation, the reporting entity is the ’operator‘ of the facility, which is defined as ’the company or organization having operational control of a facility or entity...’, and operational control means the authority to introduce and implement operating, environmental, and health and safety policies⁵⁰. These provisions closely resemble parallel provisions in Australia’s National Greenhouse and Energy Reporting Act 2007 (Cth).

Preparation of the scoping plan is also progressing⁵¹.

Importantly related to the passage of AB 32 are the activities of the California Market Advisory Committee (CMAC). CMAC was formed on 20 December 2006 by the California Secretary for Environmental Protection pursuant to Governor Schwarzenegger’s Executive Order S-20-06 of 18 October 2006⁵² which required the Secretary to 'create a Market Advisory Committee of national and international experts to make recommendations to the [CARB] on or before [30 June 2007] on the design of a market-based compliance program'. CMAC has 14 members⁵³. In June 2007, CMAC released a report recommending that California create a ’cap-and-trade‘ system to help the State meet the GHG emission reductions required by AB 32⁵⁴. CMAC’s Report (report) includes detailed recommendations and ’best design options‘ for California to create a GHG cap-and-trade system. The report recommends, among other things, that the trading system include all major GHG emitting sectors of the economy, including the transportation sector.

State developments – regional compacts

US states are also forming regional compacts of importance.

As mentioned, in the western US, six states and two Canadian provinces have created the Western Climate Initiative (WCI) which seeks to accomplish economy-wide GHG emission reductions.

One of the goals of the WCI is to develop a market-based strategy such as a load based cap-and-trade program to accomplish emission reductions throughout the region. To facilitate the creation and operation of the trading program, WCI participants have also committed participate in a multi-state GHG emissions registry. The emissions registry is intended to assist in the tracking, managing, and crediting of emission reductions. In August 2007, the WCI took its first major step towards implementation by adopting a regional emission reduction target to reduce GHG emissions, in the aggregate across all member states and provinces, by 15 per cent below 2005 levels by 2020. In some states, such as Oregon, the reduction in state-wide emissions from the 2005 base year is as high as 32 per cent by 2020.

While WCI is building out an economy-wide trading system, ten North-eastern and mid-Atlantic states are moving rapidly toward implementation of a cap-and-trade system covering only the electric power sector. Like the WCI, the Regional Greenhouse Gas Initiative (RGGI) is a regional initiative. Unlike the WCI, it focuses on GHG emissions from fossil fuel fired power plants only. The goal of the RGGI system is to cut CO₂ emissions from power plants by 10 per cent by 2018. When RGGI becomes operational in 2009 it will become the first mandatory GHG trading program in the United States.

Last year, the RGGI system took a significant step toward implementation when the states of Massachusetts and Maine issued detailed draft regulations to implement the program in those states⁵⁵. The regulations were designed to meet the states’ commitments under the Memorandum of Understanding that each state signed when they joined the RGGI.

State developments – emissions reporting

California’s moves towards a mandatory GHG monitoring and reporting system under AB 32 have already been mentioned.

Several other US states are already considering mandatory GHG reporting measures.

On 1 January 2008, GHG reporting regulations came into effect in the state of New Mexico⁵⁶. Other western states, including Washington and Oregon, have committed to adopting similar reporting rules as part of their involvement in the WCI.

With the aim of avoiding regulatory inconsistency, an independent organization called the Climate Registry⁵⁷ was formed in 2007, It is supported by 39 US states, as well as by several Canadian provinces and Mexican states. The Climate Registry aims to standardize GHG accounting and reporting rules across multiple jurisdictions and to provide businesses with a means of publicly recording their emissions in a single consistent and comparable report. The Climate Registry is currently in the process of developing general reporting protocols which are expected to be released for public comment in February 2008. The reporting protocol will be based on the internationally recognized Greenhouse Gas Protocol Corporate Accounting and Reporting Standard authored by the World Resources Institute and World Business Council for Sustainable Development.

State developments – GHG action plans

On 26 August 2001, the following states signed onto the Climate Change Action Plan⁵⁸ developed by the New England Governors Conference⁵⁹—Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.

By signing the plan, these Governors agreed to reduce their state-wide GHG emissions to 1990 levels by 2010, 10 per cent below 1990 levels by 2020, and 75 per cent to 85 per cent below 2001 levels in the long term.

In June 2002, the New York State Energy Planning Board released the 2002 State Energy Plan and Final Environmental Impact Statement, which established goals to reduce State-wide GHG emissions to five per cent below 1990 levels by 2010, and 10 per cent below 1990 levels by 2020.

On 21 May 2003, Maine Governor John Baldacci signed the Act to Provide Leadership in Addressing the Threat of Climate Change, which reiterated the state-wide GHG emission reduction targets agreed to on 26 August 2001.

On 9 June 2005, New Mexico Governor Bill Richardson issued Executive Order 2005-033 which set state-wide GHG emission reduction targets of 2000 emission levels by 2012, 10 per cent below 2000 levels by 2020, and 75 per cent below 2000 emission levels by 2050.

On 8 September 2006, Arizona Governor Janet Napolitano issued Executive Order 2006-13 which established a State-wide GHG emission reduction targets of 2000 levels by 2020, and 50 per cent below 2000 levels by 2040.

On 13 February 2007, Governor Rod Blagojevich of Illinois announced Statewide GHG emission reduction targets of 1990 levels by 2020 and 60 per cent below 1990 levels by 2050.

On 25 May 2007, Minnesota Governor Tim Pawlenty signed the Next Generation Energy Act which established state-wide GHG emission reduction goals of 15 per cent by 2015, 30 per cent by 2025, and 80 per cent by 2050, based on 2005 levels.

Other federal development – presidential election

As mentioned, a number of the major US presidential candidates have indicated their climate change positions, albeit primarily focused on US energy security and independence rather than in the name of express environmental concern.

The key Democrat contenders (Hillary Clinton, Barack Obama and John Edwards) have similar climate change policy positions. They have all committed to 80 per cent GHG reductions against 1990 levels by 2050. That is a substantially greater long-term target than the ALP’s (and now Australia’s) target of 60 per cent of 2000 levels by 2050. The lead trio have also indicated interim targets, which also appear to be substantial—Clinton and Obama match the Californian aim for 1990 levels by 2020, Edwards’s interim target is a more modest 20 per cent below 2010 levels by 2020. All three Democrat candidates have also stated that they favour a cap-and-trade ETS. Obama and Clinton favour the auctioning of 100 per cent of permits, whereas Edwards will sell or give away some permits initially before shortly moving to sell all. Edwards has committed to implement an ETS by 2010, the same timeframe currently foreshadowed for Australia—the other candidates have not been specific. The three Democrat candidates have all presented a raft of energy efficiency and innovation mechanisms.

There is less enthusiasm among the Republican presidential candidates for targeted GHG emission reduction measures—they address climate change within and as it relates to the matter of US energy independence. John McCain and Mitt Romney have emerged as the Republican front-runners over Mike Huckabee and Rudy Giuliani. Giuliani’s campaign appears close to over. Romney and Huckabee have not disclosed solid details of their respective positions, although they have matched each other in promising greater US energy independence by the end of their second terms. Romney is open to emissions restrictions based on global accord provided the key developing world emitters are involved. Huckabee has publicly indicated support for a US ETS, but has not disclosed any detail including long or short term targets. By comparison, Senator McCain is the odd man out with a proven track record on the issue. He co-backed unsuccessful legislation with Barack Obama and the 2000 Democratic vice presidential candidate Joe Lieberman. That bill aimed to implement a US cap-and-trade ETS with a long term emission reduction target of 65 per cent by 2050. McCain has emerged as the Republican candidate with the most defined and targeted policy. One notable difference between the two parties is the strong Republican support for nuclear power—the three Democrat candidates are more equivocal.

In contrast to Bush’s longer term stance, but closer to his more recent attempts outside of the Kyoto framework, all of the mentioned candidates have used language indicating a future lead international role for the US on the climate change issue. Huckabee is slightly behind, preferring for the US to focus itself domestically before looking to co-operate internationally. McCain and Romney in particular are clear that the involvement of key emitting developing countries are required, most notably China and India. The Republicans also appear to more favour the US moving to capitalise on emission reducing technology rather than openly sharing.

The number of competing candidates, particularly the close Republican contest, present somewhat muddied waters. However, the storm is clearing and it is likely that at the November 2008 presidential election, at least the Democratic candidate, and possibly also the Republican candidate, will take to the electors a commitment for strong domestic US climate-change measures (indeed measures that are in some respects stronger than those currently proposed in Australia) coupled with a reluctance to accede to mandatory international measures that do not involve all major emitters. That stronger domestic stance will be driven largely by the perceived need for the US to become independent of imported sources of fuel, but given the US’s significant GHG emissions and role in global diplomacy will potentially make a significant contribution to global GHG abatement as a side effect.

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Endnotes

¹ See White House Climate Change Fact Sheet, White House Council on Environmental Quality, Addressing Global Climate Change
² US Climate Change Policy Fact Sheet, Released by the White House, Office of the Press Secretary, Washington DC, November 19, 2004
³ See What’s Being Done in the States, Pew Center for Global Climate Change
⁴ See Pew Centre
⁵ HR 2764 (Public Law 110-161) Division F Title II. Visit here for more information.
⁶ S 2191. Visit here for more information.
⁷ See In Brief, Number 8
⁸ The draft legislation concerning the EU ETS is available here. An EC background paper is available here.
⁹ The draft legislation concerning renewables is available here. An EC background paper is available here.
¹⁰ Proposals concerning CCS are contained in a proposal for an EU Directive on the subject, a copy of which is available here. Other background information is available here and here.
¹¹ The assessment report is available here. The EC’s analysis is based on 17 national action plans submitted under the 2006 EU Directive on end-use efficiency and energy services. A copy of that directive is available here.
¹² Lieberman-Warner Climate Security Bill section 4
¹³ Lieberman-Warner Climate Security Bill at section 3901
¹⁴ Lieberman-Warner Climate Security Bill at sections 2101 and 2301
¹⁵ Lieberman-Warner Climate Security Bill at section 4201
¹⁶ Lieberman-Warner Climate Security Bill at section 4302
¹⁷ Lieberman-Warner Climate Security Bill at sections 2402 to 2405
¹⁸ Lieberman-Warner Climate Security Bill at sections 2501 and 2502
¹⁹ Assembly Bill 32. A copy of AB 32 can be found here.
²⁰ California Health & Safety Code section 38550
²¹ California Health & Safety Code sections 38530(a) and 38505(i)
²² California Health & Safety Code sections 38530(a) and 38505(i)
²³ California Health & Safety Code section 38560
²⁴ California Health & Safety Code section 38510
²⁵ California Health & Safety Code section 38560.5(a)
²⁶ California Health & Safety Code section 38530
²⁷ California Health & Safety Code section 38550
²⁸ California Health & Safety Code section 38561
²⁹ California Health & Safety Code section 38560.5(b)
³⁰ California Health & Safety Code section 38562(a)
³¹ California Health & Safety Code section 38562(a)
³² California Health & Safety Code section 38562(a)
³³ 42 USC 7543(a)
³⁴ 42 USC 7543(b)
³⁵ Central Valley Chrysler-Jeep Inc v Goldstone [Eastern District of California Case no. CV-F-04-6663 (AWI LJO) (Docket no 656).   The decision in the case relied heavily on the Supreme Court’s decision in Massachusetts v. EPA (127 S.Ct. 1438, 167 L.Ed.2d 248 (2007)) which gave the US EPA the authority to regulate GHGs as air pollutants under the US Clean Air Act, as well as a decision in September 2007 of the Vermont District Court in Green Mountain Chrysler v. Crombie (2007 WL 2669444 (D. Vt. Sept. 12, 2007)) which, in a similar fashion to the decision of the California District Court, upheld the State of Vermont’s right to regulate GHG emissions from new vehicles.
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³⁸ Massachusetts, New York, Arizona, Connecticut, Illinois, Maine, Maryland, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington and Pennsylvania.
³⁹ Arizona, Colorado, Florida and Utah.
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⁴⁹ See Proposed Rule, article 1, section 95101.
⁵⁰ See Proposed Rule, subarticle 1, section 95102.
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⁵⁹ For more information click here. The New England Governors' Conference was formally established in 1937 by the Governors of the six states. In 1981, the Conference incorporated, and the six State Governors serve as its Board of Directors. Annually, the Governors select a Chairman to oversee the activities of the organization. Governor Donald Carcieri of Rhode Island is the present Chairman. The NEGC's framework permits the Governors to work together, to coordinate and implement policies and programs which are designed to respond to regional issues, including environmental and energy issues. The NEGC also serves as the New England Secretariat for the Conference of New England Governors and Eastern Canadian Premiers. The NEGC’s environment program has attracted national and international attention for its innovative and pioneering work on greenhouse issues. The NEGC addresses these issues through its Environment Committee, which is comprised of the Commissioners of the State Departments of environmental protection.

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