Climate Change and Alternative Energy Program Part I

Wednesday 27th October

Greetings from Washington DC!

I’ve been here since Sunday 25th, but thanks to a rather busy business and social programme I am only just able to commit some text to this blog I promised to deliver. My brain is a bit fried so I apologise if this doesn’t make perfect sense (not that I often make perfect sense…). If you remember, I am here on the Climate Change and Energy Program, which is sponsored by the US State Department. Our intrepid band of travellers comprises seven people representing DECC, UKERC (that’s me by the way), Edinburgh University, Sustainable Development Commission, the Welsh Assembly, the Nuclear Industry Association and House of Commons ECC Select Committee. We’re here, as reasonably early career people, to learn about how things get done here in America. The Washington DC programme is focussing on Capitol Hill and on the passage of the various Climate Change Bills through the two Houses and also to some extent on how the recovery funds are being deployed.

So far we have met with policy think tanks, the Department of Energy, staff for a Republican Senator and the Environment Protection Agency. I haven’t got time to delve into the details, and I don’t want to get in trouble for attributing comments, so I’m going to keep this extremely high level and make just a few observations. The fact that it’s 30 minutes until dinner has nothing to do with it at all…

1) Don’t get your hopes up about Copenhagen. The strong message is that there won’t be a global deal at Copenhagen – I’m sure that this isn’t a massive surprise to most. There are a number of reasons, but key is that no domestic US Climate Change Bills will be ready in time. Currently, there appear to be three documents circulating:

• The Waxman-Markley Bill, which has been passed by the House of Representatives (you need to get through both Houses before something can become law, like in the UK).
• The Boxer-Kerry Bill, which is the new Bill, which is currently being discussed at the Senate.
• The Bingaman Bill, which is also being discussed in the Senate

I daren’t get into details on these as they are all extremely complicated (the first runs to 1400 pages or so), but in essence most rely on a cap and trade system with permits (to emit GHGs) either allocated (e.g. current EU ETS) or 100% auctioned (e.g. future EU ETS). At the moment, allocation is favoured in the Bills, but many people we have talked with would prefer 100% auctioning. In the meantime, EPA is starting to collect data on GHGs from the relevant industries (those emitting more than 25,000 tonnes per year), which is compliant with Kyoto reporting. The main point is that there isn’t any hope of any of these Bills getting through the system before December, and without a domestic policy there isn’t a hope of signing up to a global agreement.

It’s not wholly negative as there is optimism that some of the really tricky elements that could lead to a global agreement could be cracked in Copenhagen, paving the way for agreement.

2) There is a lot of recovery money sloshing around. For example we have learned that the DoE budget for low carbon technologies in 2009 was $5.5bn – that is some serious cash. I did a back of an envelope calculation and I reckon that this (on a per capita basis) is the equivalent of an injection of £611M into the UK. Remember that the budget of the ETI is around £600M over 10 years; so this, for example, would represent a 10-fold increase for a given year, and likely the same again the following year.

There are some interesting issues over how the money can be spent, since it all needs to be spent (or committed) over 2-years. From what I’ve seen, there will be numerous big projects, kind of similar to ETI projects, with a focus on delivering products to market within 3-5 years. I think we’ll find out more about these when we visit the National Renewable Energy Laboratory (NREL) in Denver on Thursday.

3) There is a Plan B. If none of the Climate Change Bills pass the Houses, then the EPA does have the power to regulate GHGs under the Clean Air Act, because they represent a hazard to human health. Because this approach would be clunky, bureaucratic and prone to legal challenges, it is far from ideal, but there is work ongoing to set it up as a fall back.

I do hope in a later post to touch upon a “Green Bank” proposal and also the way in which things seem to get done in the Senate, but haven’t the time right now.

We fly out to Denver today where we will see some of the national research laboratories and also learn about State level policy and politics.