Friends,

It is with great regret that I inform you that this will be the last Energy update sent to our illustrious list of policy and media sources.  With all the burdens we face every day here at Bracewell’s PRG, constantly keeping you all informed about DC events and environmental and energy policy for free has finally become too much bear.  So it is with great sadness and incredible pain in my heart, I say April Fools…

Seriously, we could never give up on this update.  It is too much fun to write every week… Plus, today is the real beginning of Baseball season.  In fact, need to get this out ASAP so I can head over to National’s Park for the festivities to kick off this new season.

That was pretty exciting weekend of sports with the hoops and ice final fours.  Kudos to Michigan, Louisville, Wichita State (shocker) and Syracuse.  And on the ice, congrats to #1 seeds Quinnipiac and UMass-Lowell, surprise #4 seeds St. Cloud State (MN) and Yale.  Should make for some great hoops in Atlanta and hockey in Pittsburgh.

Well, even though the week ended with Good Friday, apparently, EPA thought Good Friday meant a good Friday to put out controversial rules.   Three items popped Friday, the long-awaited, often politically-delayed EPA Tier III gasoline rule  (which got a lot of coverage so I don’t devote much to it), a mercury rule revision and a court decision in an NSR case focused on DTE energy in Michigan.  (And just when you thought it was safe to forget NSR).  See below for details.

Congress returns next week with the Senate Energy Committee holding a hearing next Tuesday April 9th for DOE nominee Ernie Moniz hearing.  EPA Administrator Gina McCarthy’s hearing will be Thursday, April 11th in Senate Environment Committee.

Finally, two excellent events this week: tomorrow evening at 5:30 p.m., our friend and former AIG CEO Hank Greenberg returns to DC to continue his discussion of the government’s treatment of the AIG Bailout at the US Chamber’s CEO series.  Hank is always good for a few blasts and great quotes. Secondly, on Thursday at the Press Club, I will host a Newsmaker on the battle over bottled water.  I will have Nestle Water CEO Kim Jeffrey available to take your questions about the on-going effort to ban bottled water over environmental concerns in places like the University of Vermont and Concord, Massachusetts.   More than 90 colleges and universities have banned or restricted the sale of bottled water on campus.  It should be an interesting discussion.    

Call with Questions

Frank Maisano
(202) 828-5864
c. (202) 997-5932

IN THE NEWS

EPA Issues Tier 3 Gasoline Rules – EPA rolled out its long-awaited, politically controversial new environmental rules to reduce smog-producing sulfur in gasoline.  The sulfur standard, called Tier 3, would lower allowable sulfur content from 30 to 10 ppm starting in 2017, when the next phase of higher auto mileage targets are to begin. It follows the Tier 2 sulfur standards that lowered limits by 90%.  While EPA said it would only have a 1-cent per gallon impact, refiners say it will likely be 9-cents, could impact refinery operations and will certainly hike gas prices.  In fact, the gas price impact is pone of the major reasons it wasn’t released last year in the middle of the 2012 Presidential campaign.

Added to Ethanol, New Rule Creates Worries for Refiners – API, APFM and other individual refiners protested the new sulfur rules but focused on a larger swell of issues that will have gasoline supply and price impacts that have emerged in recent days. API’s Bob Greco said the plan is part of a “tsunami of regulations” by EPA that could drive up pump prices. He pointed to a study that estimated the potential pump price increase of 9-cents, separate from possible upward pressure from potential fuel vapor pressure rules and increased use of ethanol.  Of course, last week refiners already raised major cost questions over the most recent ethanol requirements. Each year, EPA is required to increase the amount of ethanol that must be blended into gasoline, but at the same time, the recession and efficiency gains have significantly decreased demand for gasoline.  No one expects that gasoline demand will rebound strongly, and there are physical constraints on safely using higher blends of ethanol.  As a result, there aren’t enough gallons of gasoline to put all of the required gallons of ethanol into – and that has driven up the price of renewable credits.  Valero alone says the costs could be $500-750 million more this year, which will likely be passed through to consumers

EPA Also Rolls Out Mercury Revision – Even though it was Good Friday, EPA was not done.  They also issued updates to pollution limits for new power plants under the mercury and air toxics standards, based on new information and analysis that became available to the agency after the rule was finalized. From the moment the MATS rule was proposed, complaints were raised that the rule was not achievable in practice, a clear and unambiguous requirement of the Clean Air Act.  In the case of the MATS rule as it applied to “new” sources – meaning future power plants – even the manufacturers of pollution control equipment (typically beneficiaries of inflexible rules) had to admit that mercury control levels were set so high that monitoring equipment couldn’t even detect compliance levels.   It was always suspected that EPA would have to address new-source MATS or face fairly certain defeat in court.  So, most experts are not surprised that EPA acted upon the petitions for reconsideration.  This is the second time in the last few weeks that EPA seems to be admitting that it may have taken positions regarding new coal- and oil-fired facilities that go beyond what the Clean Air Act will allow.  Two weeks ago, the Agency quietly admitted that the proposed new source performance standard for carbon emissions from new plants was also probably illegal and would need far more work before it could be finalized.  EPA continues to miss the real opportunity to address the underlying MATS rule as it applies to the existing fleet of coal-fired power plants.  While Assistant Administrator McCarthy did make some improvements in the rule before it was finalized, the rule still exacerbates certain market trends and reduces the diversity of affordable and reliable fuels upon which the US depends.  The MATS rule remains one of the most expensive rules in EPA history with potentially significant adverse impacts on unemployment and manufacturing.  Despite press claims to the contrary, the MATS rule can lay little claim to any significant benefits once double-counting is taken into account.

Court Rule in DTE NSR Case – And If you thought we were done with the old “New Source Review” argument, think again.  On Thursday evening, an important but heavily spun result occurred in the 6th Circuit case.  You may remember, DTE won a lower court case on NSR changes at its Monroe coal plant.  While the 6th Circuit remanded the case back to the District Court, the actual thrust of the opinion was positive for industry in many ways.  The decision can be found here:  http://www.ca6.uscourts.gov/opinions.pdf/13a0080p-06.pdf. Scott Segal, director of the Electric Reliability Coordinating Council, a group of energy companies working on sensible approaches to Clean Air Act implementation and enforcement, said the

court largely affirmed the position taken by DTE finding that ‘the district court’s premises are largely correct.’  The court even heard evidence that in the period since DTE’s activities took place, emissions at its Monroe facility have actually declined, not increased as would be necessary to trigger enforcement actions. Segal: “The Sixth Circuit explicitly rejected any second guessing of properly submitted projections in advance of construction.  The Court further found that the timing of DTE’s submissions was ‘fully consistent’ with the regulatory scheme.  And the Court waived off any suggestion of bad faith.  The Court even found that DTE’s actions at the Monroe facility ‘to keep its emissions from increasing’ actually ‘further the goal’ of the Clean Air Act.  Rather, the Court explicitly states that its reversal ‘does not constitute endorsement of EPA’s suggestions,’ instead only focusing on the very narrow question of whether adequacy of pre-construction projections can ever be reviewed by EPA.  In limited conditions (for example, according to the majority, using the wrong significance level or baseline), they can.”  Segal says the case continues a firm trend: The NSR program should be triggered in limited circumstances and is not intended to be a roving basis for a prior approval scheme. 

Enviros Seek Relook at CSAPR – Following a significant defeat in the US Court of Appeals, a collection of environmentalist groups have filed a cert petition before the US Supreme Court asking for review of the DC Circuit decision that set aside EPA’s cross-state air pollution rule, or CSAPR.   My colleague Scott Segal says the filing is by no means a novel approach, with the Supreme Court receiving over 8,000 cert petitions a year out of which the Court hears oral argument on about 100 or so cases.  Segal adds it is hard to imagine that this petition has a great likelihood of being one of those cases.  Segal: “First, the petition does not raise any novel legal issues or address particular circuit splits that make Supreme Court review likely.  The questions the petitioners would certify for appeal are critical of the DC Circuit decision, to be sure, but they are garden variety.  They are matters of statutory interpretation and court procedure of the type frequently advanced at least since the Chevron case almost thirty years ago.  The chances of the Supreme Court taking a case like this is very, very low.  Second, on the merits, the EPA was given an opportunity after the Clean Air Interstate Rule, or CAIR, decision to formulate a rule that met with the guidance of the court.  Instead, the Agency developed a CSAPR rule that overreached and they have ended up coming away with nothing.  Even when faced the real possibility of codifying the CAIR standards, some of the self-same petitioners on this brief counseled the Agency to push for more than the Act allowed.  Last, the petitioners’ discussion of the “national importance” of the relief is misplaced.  The CAIR rule remains in place even as EPA considers its options for a potential replacement for the interstate rule.  Further, the Agency’s actions in the MATS rule and in the carbon rules add other layers of expensive redundancy to the effort.  And if the Agency shares this sense of urgency they would do well to propose reasonable rules rather than to petition the courts to reinstate unreasonable ones.”

Poll: More Emphasis on Domestic Renewable Energy – A new Gallup poll says a majority of Americans want the U.S. to place more emphasis on the domestic production of renewable energy than on that of oil, coal and nuclear power.  The poll, which surveyed 1,022 Americans, found that 76% of respondents want the U.S. to emphasize domestic production of solar power, followed by 71% of respondents urging for wind power. According to Gallup, this means that no fewer than two in three Americans support the further domestic production of renewables.

DOE Launches Clean Energy Manufacturing Initiative – The U.S. Department of Energy (DOE) has launched the Clean Energy Manufacturing Initiative (CEMI), which will focus on growing U.S. manufacturing of clean energy products and boosting U.S. competitiveness through major improvements in manufacturing energy productivity.  As part of the CEMI, the DOE has awarded over $23 million in funding for clean energy manufacturing research and development and plans to award more funds in the coming months. In addition, the CEMI involves hosting a series of summits to gather input on manufacturing priorities and opportunities, as well as launching new public-private partnerships focused on improving U.S. clean energy manufacturing competitiveness.  The announcement was made at the ribbon cutting of the DOE’s Carbon Fiber Technology Facility in Oak Ridge, Tenn., a new manufacturing facility that will be used to help reduce the cost of carbon fiber – a critical material for next-generation wind turbines.  Now open to U.S. manufacturers, this state-of-the-art facility provides clean energy companies and researchers with a test bed for the development of less-expensive, better- performing carbon fiber materials and manufacturing processes, the DOE says. The 42,000-square-foot facility is supported by a $35 million DOE grant and will produce up to 25 tons of carbon fiber each year.

GOING ON THIS WEEK 

EPA to Look at Climate Goals – EPA’s Green Power Partnership will host a webinar tomorrow at 1:00p.m., looking at innovative approaches to climate goals.  They will focus on recent efforts by Microsoft to develop an internal carbon fee.  As companies and organizations strive to meet carbon reduction goals and climate commitments, many are undertaking innovative strategies to help meet these goals. A leading example of such innovation is Microsoft’s adoption of an internal carbon fee. An EPA Green Power Partner, Microsoft recently instituted a company-wide commitment to achieve carbon neutrality for its data centers, software development labs, offices, and employee air travel, and the carbon fee is a key component of this aggressive goal. By internalizing the cost of GHG pollution through financial measures, the carbon fee incentivizes employees to reduce emissions while raising funds for energy efficiency and renewable energy projects and purchases.

Former AIG CEO Greenberg Returns to DC for Chamber Talk – The US Chamber Foundation will hold a book discussion with former AIG CEO Maurice R. “Hank” Greenberg tomorrow at 5:30 p.m. focused on Greenberg’s book, The AIG Story,with GWU professor Lawrence Cunningham.  The book is Greenberg’s firsthand account of American International Group’s rise and near-destruction.  In this story, AIG’s CEO of forty years, Maurice R. “Hank” Greenberg, and corporate governance expert, Lawrence Cunningham, relate the complete, inside story of the rise and near-destruction of AIG. Readers are regaled with tales from Hank Greenberg’s firsthand experience at AIG, combined with Cunningham’s additional research and interviews.  The book tells the story of Greenberg, who transformed a scattered collection of insurance businesses into American International Group, a global financial colossus with nearly $1 trillion in assets on its balance sheets-and how, in the process, he revolutionized the insurance industry.   At the same time, The AIG Story is an account of the world’s rough ride toward globalization and the triumph of free and open markets over communism, nationalism, protectionism, and isolationism, and the significant role Greenberg and AIG played.  Integral to the story is the authors’ take on the 2008 global financial crisis. Through Greenberg’s direct involvement and Cunningham’s craftsmanship, The AIG Story reveals much about those events that until now, has been kept hidden from the public.

Energy to Discuss CHPs, State Energy Plans – The Energy Department will present a live webinar Wednesday at 2:00 p.m. looking at combined heat and power and energy infrastructure. This webinar will discuss how combined heat and power (CHP) systems can fulfill the need for resilient critical infrastructure while making energy more cost- and fuel-efficient for the user and more reliable and environmentally friendly for society at large. Presenters will discuss the benefit of CHP systems in critical infrastructure applications, detailed case studies of how CHP systems powered facilities through Hurricane Sandy, and federal and state policies promoting the use of CHP technology in critical infrastructure. Also on Wednesday at 2:00 p.m., DOE will also hold a live webinar titled “State Energy Strategic Planning.” During this webinar, the National Association of State Energy Officials will discuss their recent analysis of 39 State Energy Strategic Plans and accompanying “Guide to State Energy Planning.” This webinar will focus on describing the necessary steps to create an effective State Energy Plan, hearing from state agencies that have recently completed the process, and highlighting best practices from NASEO’s research.

JHU to Host Forum on Global Food Security – The Johns Hopkins School of Advanced International Studies will host a discussion featuring Robert Thompson, SAIS visiting scholar and former director of rural development at the World Bank Wednesday at Noon.  Thompson will discuss global food security and building resilience to climate impacts.

WRI to Release NatGas Emissions Working Paper – On Thursday at 9:00 a.m., the World Resources Institute will roll out a new working paper, “Clearing the Air on Natural Gas: Reducing Upstream Greenhouse Gas Emissions from U.S. Natural Gas Systems”.  The rapid expansion of unconventional natural gas development has reshaped the U.S. energy picture through increased production and reduced prices of natural gas. The shale gas production boom has also ignited divisive debates over its near- and long-term environmental impacts. The new study looks to clarify what is known about leakage rates of methane, a potent greenhouse gas, from the U.S. natural gas sector, what progress has been made to reduce those emissions, and what more can be done to further reduce leakage.  The paper outlines tools that federal and state governments can employ to reduce these harmful emissions, helping to clear the air and slow the rate of climate change.

Nestle CEO to Discuss Bottled Water Ban at NPC Newsmaker – The National Press Club Newsmakers Committee will host Kim Jeffery, Chairman of Nestlé Waters North America, at a Newsmaker forum in the Club’s Zenger Room at 10:00 a.m. Thursday.  Jeffery will focus on policy issues, health benefits and environmental controversies surrounding the growth of bottled water. Concord, Massachusetts made history this year by becoming the first town to ever ban the sale of water, citing environmental concerns over the plastic bottles. Critics question the logic of banning bottled water at a time when the nation faces a serious obesity crisis. Nestlé Waters North America is the number one bottled water company in the United States and the third largest non-alcoholic beverage company in the country.

FUTURE EVENTS

Forum to Look at Africa, Climate Issues – The Woodrow Wilson International Center for Scholars will hold a forum next Monday, April 8th at 3:00 p.m. to look at Africa ‘s population dynamics, climate change and sustainable development.  A large share of the population of Africa is living in marginalized areas that are susceptible to climate variation and extreme weather events. Population growth is occurring most rapidly in sub-Saharan Africa, increasing vulnerability to the projected impacts of climate change. Incorporating population dynamics into climate change mitigation and adaptation in these areas can help organizations better understand and address these challenges, yet issues like access to family planning, reproductive health, and women’s education and empowerment are rarely considered in climate change planning.  The African Institute for Development Policy recently conducted a study in collaboration with Population Action International to analyze the challenges and opportunities for incorporating population considerations into climate change and development interventions in sub-Saharan Africa. The results highlight policy and program implications in Kenya and Malawi and will help guide responses to climate change that include population dynamics and work towards sustainable development.  Speakers will include Eliya Msiyaphazi Zulu, of the African Institute for Development Policy, Clive Mutunga of Population Action International and Abigail Jones of Climate Advisers.

Moniz Nomination Hearing Set – On Tuesday, April 9th at 10:00 a.m. , the Senate Energy Committee will hold a hearing to consider the nomination of Dr. Ernest Moniz to be the next Secretary of Energy.

CSIS Forum to Look at Water Issues – CSIS will hold the 17th annual NCAC Washington Energy Policy Conference on Tuesday April 9th to examine the energy-water nexus with a specific focus on water management issues relative to electric power generation. The availability of clean and reliable water resources is a critical issue across the North America and throughout the world. Electricity production is the second largest consumer of water in the United States, after agriculture. This one-day conference will feature experts to discuss some of the most central issues related to water and electricity use:  the technological opportunities and financial challenges of; the regulatory and environmental outlooks; and insights into the regional U.S. and international dynamics. Recently, the U.S. Department of State released its draft Supplement Environmental Impact Statement on the Keystone XL pipeline, which, if approved by the Obama administration, would connect Canada’s oil sands with U.S. refineries in the Gulf Coast. The debate surrounding the pipeline has brought increased attention to the Canadian province of Alberta,—which, with an estimated 170 billion barrels—is home to the world’s third-largest proven reserves of oil.

Alberta Premier to Speak at Brookings – The Energy Security Initiative at Brookings will host Alison Redford, the premier of Alberta, on Tuesday April 9th at 2:00 p.m. for a discussion on the Alberta-U. S. energy relationship, environmental efforts undertaken by her administration, and the Keystone XL pipeline.  Senior Fellow Charles Ebinger, director of the Energy Security Initiative, will provide introductory remarks. Brookings Trustee Daniel Yergin, chairman of Cambridge Energy Research Associates, will moderate the discussion with Premier Redford to include questions from the audience.

Marine Renewable Conference Set – The Global Marine Renewable Energy Conference will be held at the Almas Temple Club on Wednesday and Thursday, April 10th & 11th to provide a venue where technical experts from across disciplines can publish and present cutting-edge wave and water current energy research that helps accelerate the pace of technology development.

EPA McCarthy Nomination Hearing Set – On Thursday, April 11th at 10:00 a.m. , the Senate Environment Committee will hold a hearing to consider the nomination of Gina McCarthy to be the next EPA Administrator.

RFF Academic Brief to Discuss Energy Efficiency – RFF will hold its usual Academic Seminar on Thursday April 11th to discuss a handful of Property-Assessed Clean Energy (PACE) programs offered property-secured loans to homeowners for residential clean energy investments. This analysis uses difference-in-differences models and synthetic counterfactual models to estimate the effect of three California PACE programs on residential photovoltaic installations.  The Duke Nicholas School expert Lori Bennear will discuss.

International Geothermal Forum Set – The Geothermal Energy Association will hold its International Geothermal Energy Finance Forum on Thursday April 11th at New York’s Marriott Marquis. The full day Forum will provide a daylong discussion featuring the leaders of geothermal development, private and public financing, and project risk and reward.  Confirmed speakers include The World Bank Group’s Energy Sector Management Assistance Program Manager Rohit Khanna, Jennifer Graham of the Prudential Capital Group, JP Morgan’s John Eber, Bloomberg New Energy Finance’s Head of Geothermal & CCS Research Mark Taylor, and MidAmerican Energy’s Jonathan Weisgall.

McCarthy, Nichols, UNFCCC Figueres to Address Carbon Conference – The 11th annual Navigating the American Carbon World (NACW) will be held in San Francisco’s Palace Hotel April 16th through 18th.  The event is the largest and most comprehensive gathering for information and discussion around climate change policy and carbon markets.  NACW will take an in-depth look at California’s historic cap-and-trade program, including discussions on market structure, revenue allocation, legal issues and forecasts. The conference will also delve into other established and emerging carbon markets around the world and potential linkages. And, NACW will provide a platform for discussing offsets and offset supply, U.S. federal policies, and business leadership.  Speakers will include EPA’s Gina McCarthy, CARB head Mary Nichols, UNFCCC Executive Secretary Christiana Figueres and NWF President Larry Schweiger.

WAPA Forum to Focus on Feasibility of ZEV Mandate – The Washington Automotive Press Association (WAPA) will hold its April luncheon on Wednesday April 17th at Noon in the National Press Club.  Mike Stanton, president and CEO of the Association of Global Automakers, will explore issues related to the feasibility of Zero-Emissions Vehicle mandates and other transportation policy issues.  As automakers work to meet the new national fuel economy regulations, they are also faced with the challenge of complying with California’s Zero Emission Vehicle (ZEV) program. Between MY 2018 and MY 2025, the ZEV sales “mandate” will require manufacturers to sell approximately 5 million ZEVs cumulatively in California and the nine states that have adopted the program, regardless of market conditions and infrastructure availability.  Stanton, a trusted voice for the auto industry, will outline the ZEV program and how the government can play an active role to help bring alternative fuels, advanced technology vehicles, and the necessary infrastructure to the marketplace.

Farrell to Headline Chamber Energy CEO Leadership Event – The Institute for 21st Century Energy and the U.S. Chamber of Commerce Foundation will hold a CEO Leadership Series luncheon on Thursday, April 23rd at Noon featuring Dominion Energy CEO Thomas Farrell. 

Hydrogen, Fuel Cell Expo Set for Hill – The House Hydrogen and Fuel Cell Caucus will host a Fuel Cell and Hydrogen EXPO and POLICY FORUM Wednesday, April 24th from 10:00 a.m. to 3:30 p.m. in 345 Cannon.  The forum will include Congressional and Administration speakers as well as a panel of state experts.

The American Foundry Society (AFS) is hosting their annual Government Affairs Conference on Wednesday, May 1st at the J.W. Marriott Hotel in Washington, D.C.  My colleague Jeff Holmstead will address over 80 owners and plant managers on what they can expect from EPA in the next 12 to 24 months, including new regulations to limit greenhouse gas emissions at existing power plants.  Of particular interest to these manufacturers is the upcoming ozone rule.

WINDPOWER 2013 – May 5th through 8th in Chicago, IL.