South Korea Emissions Trading Scheme

(International) Permanent link

Background 

On January 12, 2015, South Korea opened trading on its new emissions trading scheme (“ETS”), making it the second country in Asia, after Kazakhstan, to launch a nationwide carbon market.

As part of the Copenhagen Accord, South Korea pledged to reduce its GHG emissions by 30 percent below business-as-usual emissions by 2020. Shortly thereafter, South Korea passed the Framework Act on Low Carbon, Green Growth to provide a roadmap for achieving its mid- and long-term emission reduction targets. Among other policy mechanisms, the Act provided for the eventual establishment of an ETS, and in May 2012, the National Assembly passed legislation establishing the new ETS. In January 2014, the Ministry of Strategy and Finance published the ETS Master Plan, a 10-year plan, divided into three phases, for the market’s operations.  

Scope – Participating Entities 

The Master Plan provides that companies with annual emissions over 125,000 tCO2e and individual installations with annual emissions over 25,000 tCO2e are required to participate in the ETS. Some 525 companies in 23 industry sectors meet these criteria, and emissions from the covered entities account for approximately 66 percent of South Korea’s total non-vehicle emissions. Trading under the new ETS will take place on the Korean Exchange.  At least initially, participation will be limited to companies directly covered by the scheme, excluding commercial banks and trading houses.

Allowance Allocation 

Trading under the new ETS divided into three initial phases, with the first phase running from 2015 to the end of 2017. In September 2014, the Korean Ministry of Environment published the National Emissions Permit Allocation Plan for the first phase of trading. The Allocation Plan set capped emissions for the period from 2015 to 2017 at 1.687 billion tCO2e.  It further explained that allocation of Korean Allowance Units (“KAU”) will be based on an entity’s historic emissions. For the first phase of trading, covered entities will receive free allocation for 100 percent of historic emissions from 2011 to 2013. 

In November 2014, the Ministry of Environment assigned individual allocations to all covered entities for the first phase of trading. A total of 1.598 billion KAUs were allocated, with the remainder placed on reserve for new installations joining the ETS or covered installations whose capacity will increase significantly. The electricity, steel, and petrochemical sectors received the largest share of allocated KAUs.

Posted by Lauren Sidner at 01/22/2015 5:06 PM

 

North American Advanced Biofuels Market

(Renewable Fuel Standards and Biofuels) Permanent link
 
Last week, Environmental Entrepreneurs (“E2”), a biofuels trade group, released its fourth annual Advanced Biofuels Market Report (“2014 Report”), describing the state of the North American advanced biofuels industry in 2014 and developing estimates of production capacity through 2017.

E2 defines advanced biofuels to include those liquid fuels made from non-petroleum sources that achieve a 50 percent reduction in carbon intensity as compared to a petroleum fuel baseline according to the California Air Resources Board. Fuels within the scope of the E2 report include biodiesel, cellulosic ethanol, and cellulosic butanol, among others.  

E2 tracks capacity rather than production, because of the potential for frequent fluctuation in production. E2 develops both high-end and low-end estimates of current and future production capacity. E2 states that its low-end estimates count only those projects with demonstrated progress towards completion. E2 states that its high-end estimates consider the capacity estimates of all active companies identified.

2014 Report Findings

E2 identified 181 companies that actively worked on advanced biofuels in North America in 2014. These companies collectively have at least 167 commercial facilities and nine demonstration facilities that are either operational, under construction, or in the advanced planning stages.

In 2014, E2 reports that advanced biofuel capacity was between 819 and 933 million gallons per year of gasoline gallon equivalents (gge). This is an increase from 2013, when the capacity was 787 million gallons per year of gge. By 2017, E2 estimates capacity will reach 1.7 billion gallons gge, with a growing proportion of capacity coming from alternative fuel products, such as butanol and dimethyl ether.

Factors Impacting Capacity

Regulations, such as federal Renewable Fuel Standard and California’s Low Carbon Fuel Standard, remain key drivers behind investment in advanced biofuels. In 2013, EPA announced that it was considering reducing the Renewable Fuel Standard volume mandates for the 2014 compliance year. E2 reported that investment from the fourth quarter of 2013 to present was lower than anticipated, likely resulting from the possibility of decreased volume mandates in 2014.

E2 asserted that the possibility of a reduction in required biofuel volumes also had a chilling effect on fuel demand. In its 2013 Report, E2 estimated that production capacity in 2014 would reach approximately 1.2 billion gallons gge; instead, capacity in 2014 was between 819 and 933 million gallons gge. To explain the lower capacity relative to last year’s projections, the 2014 Report notes that “some projects have ceased operations, others have fallen outside of our scope, and a number were delayed until 2015 or later.”

The public sector also provides crucial financial support for the advanced biofuels industry. The Departments of Energy and Agriculture, for example, provide grants and loan guarantees to spur industry development. E2 reports that since 2007, producers and value-chain companies have received over $1.7 billion in public support from federal agencies and states. However, it is unclear that this level of funding will continue.

E2 also reported that a variety of economic conditions, including feedstock availability and demand for transportation fuel, can also impact the future trajectory of the industry. For example, declining oil prices are already placing downward pressure on ethanol prices and could reasonably be expected to have a similar impact on advanced biofuel prices.

In sum, although E2’s market report projects market growth in the North American advanced biofuels industry, policy remains a key driver of industry growth, and E2’s production capacity projections are contingent, in large part, on supportive policies and economic conditions going forward.

Posted by Lauren Sidner at 01/21/2015 2:10 PM

The Supreme Court Denies Cert. In a Climate Change Public Trust Suit Claiming Against Federal Agencies

(Federal GHG regulations, Litigation) Permanent link
 
On December 8, 2014, the Supreme Court denied certiorari in Alec L v. McCarthy, in which the petitioners argued that the federal government is required to reduce greenhouse gas (“GHG”) emissions because the atmosphere should be federally protected as a public trust for future generations. Because the Supreme Court has declined to hear the case, the decision by the United States Court of Appeals for the D.C. Circuit that such claims do not give rise to federal subject matter jurisdiction still stands. While future plaintiffs may still bring similar cases in other federal circuits, or state courts, the Supreme Court’s denial will prevent these types of claims going forward in the federal district that these agencies call home.

As discussed in our previous post, five teenagers partnered with two environmental organizations—Our Children’s Trust, Kids vs. Global Warming (a project of Earth Island Institute) and WildEarth Guardians—and filed suit against six federal agencies in the U.S. District Court for the District of Columbia.  Plaintiffs asserted that that the federal agencies violated their obligations under the public trust doctrine. 

What is the public trust doctrine?

The public trust doctrine requires the government to preserve and reasonably maintain trust resources for public use. While the government may have control over the trust resource, it cannot exercise all of the aspects of ownership over the resource. Unlike state-owned property, which can be freely bought, sold, or used by the state, the state acts as a trustee of the public trust resource by maintaining the resource for the public’s use. In the past, the public trust doctrine has been almost exclusively treated as a state obligation rather than a federal obligation to protect public resources, such as the land underneath rivers or lakes.

The Supreme Court recognized the public trust doctrine as part of state common law more than a century ago in Illinois Central Railroad v. Illinois. The Supreme Court held that the public trust doctrine prevented the Illinois government from alienating the public right to the lands under navigable waters by granting a large part of the Chicago harbor to the Illinois Central Railroad. Over the past few years, environmental groups and others have sought to extend the doctrine to cover “atmospheric trust” claims related to climate change. These groups argue that the public trust doctrine requires government entities, as trustees, to protect natural resources necessary for public health and welfare. According to these groups, the government entities have a duty to addressing increased levels of carbon dioxide in the atmosphere is necessary to protect against the effects of climate change.



Alec L v. McCarthy

In McCarthy, the plaintiffs sought to extend the public trust doctrine to the federal government and to the atmosphere. Plaintiffs’ alleged that six federal agencies had abandoned their duty to protect the atmosphere from irreparable harm. The district court dismissed the case in 2012, finding that there was no federal question jurisdiction. This past June, a three judge panel for the United States Court of Appeals for the D.C. Circuit unanimously agreed, holding that “the public trust doctrine remains a matter of state law” and therefore the doctrine does not “arise under the Constitution or laws of the United States, as would be necessary to establish federal question jurisdiction.”

The plaintiffs then petitioned the Supreme Court to hear their case. In their petition for certiorari, the plaintiff-petitioners argued that the agencies’ “actions and inactions with respect to global climate change are causing harm to public trust resources.” According to the plaintiffs, United States Court of Appeals for the Eighth, Ninth, and Tenth Circuits have previously held that the public trust doctrine also imposes similar obligations on the federal government to protect certain resources. The plaintiff-petitioners reasoned that there was therefore federal subject matter jurisdiction to hear their case. The petition called on the Supreme Court to address the conflict between the D.C. Circuit’s judgment holding that the public trust doctrine does not apply to the federal government, and the previous decisions by the three other circuits. The petition also highlighted the traditional role that the judiciary has played in enforcing the public trust doctrine to ensure the protection of certain resources, and argued that the Supreme Court has previously recognized that the doctrine can apply to the federal government.

While the plaintiff petitioners cited cases from the Eighth, Ninth, and Tenth Circuits to assert that there is a federal public trust doctrine, none of these Circuits has yet recognized an atmospheric trust. In a 1928 case, the Eighth Circuit held that the United States had the right to recover the value of the timber cut and carried away from its public lands because the statute of limitations cannot limit a sovereign’s ability to enforce a public right. United States v. Miller, 28 F.2d 846, 846 (8th Cir. 1928). The petition also cited a more recent Ninth Circuit case involving the United States’ ability to bring a civil action to recover damages from a defendant who negligently caused a wildfire that burnt roughly 18,000 acres of the Angeles National Forest  See United States v. CB & I Constructors, Inc., 685 F.3d 827, 829 (9th Cir. 2012). Finally, the petition points to a Tenth Circuit case involving the development of Indian lands.  Davis v. Morton, 469 F.2d 593, 597 (10th Cir. 1972).

The Supreme Court’s decision not to hear this case means that the D.C. Circuit’s decision still stands. Because the D.C. Circuit held that the public trust doctrine does not create federal subject matter jurisdiction, future plaintiffs will have to think of an alternative basis of jurisdiction in order to obtain a decision on the merits of their claims from the federal court for the District of Columbia. This is significant because the federal venue provisions allow suits against officers, agencies, or employees of the United States to be brought in the district where the “defendant resides” and many of the potential defendants for these cases (including federal agencies) “reside” in the District of Columbia. Plaintiffs may, however, still be able to bring these claims in other federal circuits based on a separate venue provisions that allow an action to be brought where a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or where the plaintiff resides if no real property is involved in the action. Even in these other circuits, the D.C. Circuit’s decision in Alec L. is likely to have a persuasive impact as circuits begin to consider for the first time whether a federal atmospheric trust exists. The decision will not, however, impact the ability of future plaintiffs to use the doctrine in state courts to require states to take actions to reduce GHGs.

Posted by Corinne Snow at 01/15/2015 4:30 PM

EPA Announces That it Will Miss Deadline to Finalize GHG NSPS Rule for New Power Plants

(Federal GHG regulations) Permanent link
 
On January 7, EPA announced that it will delay issuing the final New Source Performance Standards (NSPS) for new power plants until sometime this summer, missing the one-year statutory deadline to complete the rules.

Section 111 of the Clean Air Act allows EPA to develop emissions standards — known as NSPS — for specific categories of stationary sources. The NSPS apply to new and modified facilities in specific source categories.  On January 8, 2014 EPA published a proposed rule setting greenhouse gas (GHG) performance standards for existing Electric Utility Generating Units (EGUs).  After publication, EPA had one year to finalize the rule.  By the time the 120-day comment period closed on May 9, 2014, EPA had received approximately 2 million public comments on the proposal. 

One day before the statutory deadline to finalize the rule, EPA issued a fact sheet indicating that it will instead postpone issuing the rule until this summer.  More information about EPA’s proposed rule is available here.

Posted by Corinne Snow at 01/14/2015 3:15 PM

EPA Office of International and Tribal Affairs Releases Climate Change Adaptation Plan

(Adaptation, International) Permanent link
 
On Friday, October 31, 2014, the EPA Office of International and Tribal Affairs (“OITA”) released its final Climate Change Adaptation Plan, describing how it will implement its programs, policies, rules, and operations in a changing climate. As part of part of EPA’s agency-wide effort to adapt its operations to climate change, each region and office has released its own plan. OITA works with other nations to identify and address international environmental issues. It also includes the American Indian Environmental Office, which strengthens public health and environmental protection in Indian nations. Information about the adaptation plan of the Office of Air and Radiation is available here, and information about the Office of Water’s plan is available here

OITA conducted a “vulnerability assessment” to identify key areas of concern at the international and tribal levels. International vulnerabilities included lack of basic data, networking, and information sharing mechanisms that would allow partner countries to assess and mitigate their exposure to the risks of climate change. Meanwhile, tribes face erosion, temperature change, drought, and changes in access to water. Through a formal consultative process with EPA, the tribes requested financial and technical support, community-level education and awareness materials, better coordination among federal agencies, and the incorporation of tribes’ Traditional Ecological Knowledge into EPA’s policymaking.   

The OITA plan articulates actions the Office will take to respond to tribal requests and international concerns, as well as its criteria for prioritizing them. Those criteria include the extremity of the vulnerability, whether the vulnerability affects regions bordering the United States, whether the action’s benefits can be measured or documented, and whether OITA has “the necessary resources to meaningfully and effectively help address its partner vulnerabilities. . . .” 

OITA’s International Priority Actions focus on building and disseminating information, especially to partner countries along our borders and members of the Organization for Economic Cooperation and Development. OITA also plans to work with the annual Resilient Cities Congress and the Durban Adaptation Charter cities to share city and municipal government knowledge. This is important because “cities are first responders to climate/weather disasters. . . .” Additionally, OITA will work with the Arctic Council and the International Maritime Organization to address the region’s acute climate change.

The Tribal Priority Actions, meanwhile, will include the education of EPA scientists regarding tribes’ Traditional Ecological Knowledge, the use of Indian General Assistance Program funds for climate change adaptation purposes, and the promotion of Tribal ecoAmbassador programs in partnership with tribal colleges and universities.

Finally, OITA will evaluate the success of its efforts on a five-year basis using a Performance Measurement Framework, which will include 26 different metrics. International metrics will include the number of partner engagements OITA conducted, progress toward achieving identified policy goals, EPA-based tools implemented by partner organizations, and the number of partnerships, alliances, or networks established or enhanced. The measures of OITA’s success with tribes will include monitoring how tribes apply for and use Indian General Assistance program funds for climate change adaptation, and using these examples to improve OITA’s technical and financial support of tribes adapting to climate change.

Posted by Ross Woessner at 01/09/2015 1:00 PM

EPA’s Office of Solid Waste and Emergency Response Climate Change Adaptation Implementation Plan

(Adaptation) Permanent link
 
As explained in our previous post, EPA recently released its final Climate Change Adaptation Plan. Building on the Agency-wide Adaptation Plan, its National Environmental Program Offices and Regional Offices produced Climate Change Adaptation Implementation Plans to provide greater detail on how the Agency will carry out the efforts framed in the Adaptation Plan. This post discusses the Implementation Plan created by the Office of Solid Waste and Emergency Response (“OSWER”).

The mission of OSWER is to protect human health and the environment, and preserve and restore land resources. OSWER achieves this by protecting land from contamination through sustainable materials management and the proper management of waste and petroleum products. OSWER and its partners work to clean up communities to create a safer environment. Additionally, OSWER prepares for and responds to environmental emergencies while promoting redevelopment of contaminated areas and emergency preparedness and recovery planning. OSWER’s June 2014 Implementation Plan includes a Vulnerability Assessment that discusses the impacts climate change will have on its mission, programs, and activities. Examples of these impacts include:

1. Increasing frequency and intensity of heavy precipitation: Studies indicate the amount of rainfall in the heaviest downpours has increased approximately 20 percent in the last century. Flooding and inundation from these more intense storms can lead to contaminant releases through surface soils, ground water, surface waters, sediments, and/or coastal waters at contaminated sites.

2. Sea level rise: Studies suggest sea levels have risen up to eight inches or more in certain coastal areas and have fallen in others during the last half century. Contaminated sites may become inundated in coastal areas by rising sea levels and flooding may increase from storm surge, which could damage cleanups and increase human and ecological exposures to contaminants.

3. The increase in average temperature: In the United States, the average temperature has increased by more than 2 degrees Fahrenheit during the last 50 years. This increase in average temperature and increased extreme temperatures may produce more frequent and longer lasting heat waves, which, in turn, increases the risk of wildfires that can spread to contaminated sites, impacting the success of any remedies. Moreover, wildfires at contaminated sites may promote the spread of contamination and impact clean-up efforts and reduce vegetative cover at upland contaminated sites, thereby increasing surface runoff and giving rise to flooding that spreads contamination.

OSWER Focus Areas

OSWER evaluated these vulnerabilities and organized them into four critical OSWER programmatic focus areas and a cross-cutting category. These areas include: (1) Preserving Land – Proper Management of Hazardous and Non-Hazardous Wastes; (2) Preserving Land – Reducing Chemical Risks and Releases; (3) Restoring Land; (4) Emergency Response; and (5) Tools, Data, Training and Outreach. Although each vulnerability is linked to a specific climate change impact, many are linked to multiple inter-related impacts (e.g., increased spreading of contaminants may occur as a result of greater frequency of flooding at sites from heavy precipitation, hurricanes, sea level rise, melting permafrost, or wildfires). Based on its evaluation, the Office identified 26 priority actions in one or more of the programmatic focus areas and cross-cutting category.  The Office will begin to take these actions over the next three years. Each OSWER program office determined which vulnerabilities were applicable to its work and developed priority actions to address the most critical vulnerabilities.1

1. Preserving Land – Proper Management of Hazardous & Non-Hazardous Waste: The vulnerability that ranked highest in this category was the management of storm surge waste. To ensure proper management of hazardous and non-hazardous waste, OSWER identified several actions, including prevention, by activities such as permitting and inspections. For example, as part of the Resource Conservation and Recovery Act (“RCRA”) program, the OSWER Office of Resource Conservation and Recovery developed recommendations for states and tribes to incorporate climate change into RCRA Permitting Programs.

2. Preserving Land – Reducing Chemical Risks and Releases: The action plans for this focus area address preventing contamination through effective operation and maintenance activities, containment strategies, and inspection and monitoring of facilities that handle hazardous materials. Actions developed by OSWER’s Office of Emergency Management include, for example, incorporating climate change vulnerabilities into Oil Spill, Prevention, Control, and Countermeasure Plans and Facility Response Plan inspector training.

3. Restoring Land: Two primary types of vulnerabilities were identified by several OSWER offices as the most critical in this focus area. First, increased contaminant migration has a high potential impact and high probability of occurrence. Second, the effectiveness of various stages of the clean-up efforts may be greatly impacted by climate change. One example of the actions developed by the program offices includes the Office of Superfund Remediation and Technology Innovation and Federal Facilities Restoration and Reuse Office’s plan to identify existing Superfund program processes (Remedial Investigation/Feasibility Study, Record of Decision, Remedial Design/Remedial Action, etc.) for implementation of climate change adaptation protocols.

4. Emergency Response: In addition to OSWER’s Office of Emergency Management, other OSWER and EPA program offices take part in responding to emergency events. As mentioned above in the Proper Management of Hazardous and Non-Hazardous Wastes section, waste/debris management is a high vulnerability in this category. Numerous key actions were identified, including, analyzing lessons learned from Hurricanes Katrina and Sandy and sharing information among states, tribes, and EPA regions regarding emergency response and preparedness.

5. Tools, Data, Training and Outreach: As the Implementation Plan notes, for OSWER to incorporate climate change into its activities, it must utilize the best available data. Several vulnerabilities relate to data collection and training. In particular, the Implementation Plan notes the challenge of obtaining reliable projections of sea level rise, flooding zones, and other impacts of climate change due to the rapidly shifting assumptions regarding ecosystem conditions. To adequately address such vulnerabilities, the Office plans to work with regions and other EPA offices to ensure consistency across the Agency.

The report concludes by discussing its partnership with states, tribes, and local communities to address environmental justice in its programs, mainly in overburdened and underserved communities. The focus area activities are centered on producing meaningful, measurable outcomes in low income and minority communities. In addition, EPA engaged tribes in a formal consultation process in the development of its Adaptation Plan.

OSWER will regularly evaluate its Implementation Plan throughout the process as it begins to understand the effectiveness of its adaptation efforts. Like the other sixteen Implementation Plans, OSWER’s Implementation Plan is a living document that will be revised periodically to account for new data, knowledge, scientific evidence, and lessons learned through the Agency’s ongoing climate adaptation efforts.

1 The OSWER offices that developed action plans are the Center for Program Analysis, Federal Facilities Restoration and Reuse Office, Office of Brownfields and Land Revitalization, Office of Emergency Management, Office of Resource Conservation and Recovery, Office of Superfund Remediation and Technology Innovation, and Office of Underground Storage Tanks.

Posted by Michael Malfettone at 01/08/2015 3:40 PM

EPA Region 5 Releases Climate Change Adaptation Plan

(Adaptation) Permanent link

On Friday, October 31, 2014, EPA Region 5 released its final Climate Change Adaptation Plan, describing how it will implement its programs, policies, rules, and operations in a changing climate. Region 5 includes Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin, and the land belonging to 35 tribes. The regional plan is part of EPA’s agency-wide effort to adapt its operations to climate change. Each region and office has released its own plan, which the Agency will update or revise periodically to reflect new data and best practices. For information about the Region 9 plan, for example, please see this previous post.

Region 5 conducted a “vulnerability assessment” to identify key areas of concern, including increasing heat waves, reduced air quality, floods, water deficits, invasive species, and increased risk of water pollution and insect-borne diseases. These dangers could impose a significant cost on the Midwest. The plan notes that in order to mitigate their risk, communities may need to update their water infrastructure to control sewer overflows during downpours and floods. Additionally, floods may increase lack of access to quality housing and drinking water.

The regional plan articulates five broad goals to mitigate climate change risks:

  1. Improve air quality. Higher temperatures and weaker air circulation will increase ozone formation, assuming the same level of ozone-forming emissions. This is significant because Region 5 contains six nonattainment metro areas, several of which are exceeding ozone standards.

  2. Protect water quality. Higher water temperatures could increase algal blooms, pathogens, and sediment in surface water and the Great Lakes; floods and downpours could overwhelm existing wastewater treatment and stormwater collection systems.

  3. Contain the risk of contaminant release. According to the adaptation plan, Region 5 has an industrial legacy that created “a significant universe of contaminated sites.” Floods and downpours could mobilize contaminants at these sites.

  4. Prevent exposure to toxic chemicals. Flooding and severe weather may damage homes and other buildings, resulting in increased exposure to lead, PCBs, asbestos, and other chemicals.

  5. Enforce environmental laws. The adaptation plan notes that “the uncertainties associated with climate change present challenges to EPA’s ability to effectively comment to other federal agencies on the potential environmental impacts of proposed projects” as required under the National Environmental Policy Act (“NEPA”). For more information about the challenges posed by NEPA review of climate change impacts, please see this previous post.

The plan further describes “priority actions” Region 5 will take to achieve these goals, some of which may affect regulated persons. For example, Region 5 may “revise inspection and field work priorities . . . to reflect climate change considerations.” Thus, Region 5 could more frequently inspect Superfund sites or pesticide and chemical producers that are vulnerable to climate change, such as those within flood plains. Additionally, the plan observes that wastewater, drinking water, and stormwater utilities may strain to maintain their compliance if precipitation overwhelms their infrastructure. To strengthen their resilience, Region 5 may “incorporate [Sustainable Water Infrastructure] (“SWI”) conditions into NPDES permits,” compliance assistance, and enforcement settlements. EPA’s SWI program encourages investment in sustainable, high-efficiency water infrastructure. Finally, Region 5 will seek to incorporate climate change into its NEPA analysis, stating that its goal is for “[a]ll NEPA projects . . . to identify and analyze the effects of climate change on the proposed project as well as the impact of the project on climate change.”

Posted by Ross Woessner at 01/07/2015 12:25 PM

 







Disclaimer & Legal Notice | ©1999- Vinson & Elkins LLP Attorney Advertising