Wednesday, March 25, 2009
Don't Provoke a Cap-and-Trade War
Last week, Energy Secretary Steven Chu said the U.S. should be open to slapping tariffs on imports from countries that fail to implement their own carbon reduction policies. Meanwhile, China has threatened trade war if faced with carbon duties, which it says are illegal under World Trade Organization agreements.
Trade restrictions tend to leave all involved poor, making trade war a frightening prospect during an already immiserating recession. So how did we come to have the Energy Secretary provoking threats of mutually destructive trade sanctions?
Here's how. Either all the big, carbon-intensive economies reduce their emissions, or there's little chance of reducing warming. If the climate modelers are right, we'll all be better off if everyone pitches in. But each has an incentive to hold out, since countries that don't pitch in will enjoy lower energy costs and a competitive advantage in international markets. (read the rest of the story at Don't Provoke a Cap-and-Trade War on www.cato.org)
Trade restrictions tend to leave all involved poor, making trade war a frightening prospect during an already immiserating recession. So how did we come to have the Energy Secretary provoking threats of mutually destructive trade sanctions?
Here's how. Either all the big, carbon-intensive economies reduce their emissions, or there's little chance of reducing warming. If the climate modelers are right, we'll all be better off if everyone pitches in. But each has an incentive to hold out, since countries that don't pitch in will enjoy lower energy costs and a competitive advantage in international markets. (read the rest of the story at Don't Provoke a Cap-and-Trade War on www.cato.org)
Tuesday, March 17, 2009
Protectionism: Alluring but Deadly
by Daniel J. Ikenson
Daniel J. Ikenson is associate director of the Center for Trade Policy Studies at the Cato Institute.
Added to cato.org on March 14, 2009
This article appeared in the Zimbabwe Independent on March 14, 2009.
The global economic meltdown has prompted fears of resurgent protectionism and some governments have already raised tariffs and other trade barriers.
But, despite the occasional dalliance with protectionism, treaties and good sense prevent a more serious romance.
Amid pledges of restraint from the big economies, India recently raised tariffs and placed other restrictions on some imported steel products.
Ecuador raised tariffs by 5 to 20% on 940 products. Argentina's restrictions include auto parts, textiles, televisions and shoes. And the Indonesian government is requiring civil servants to purchase only domestic products.
Similar actions have taken place in other countries and surely there will be more in the months ahead. But the risk of protectionism escalating to the point that it noticeably reduces global trade further is remote.
With the proliferation of international production, investment and joint ventures, the "Us versus Them" characterisation of global competition no longer applies.
It is now a competition between global supply chains to produce and deliver products made with parts and labour from many countries (see the full article, Protectionism: Alluring but Deadly, at cato.org)
Daniel J. Ikenson is associate director of the Center for Trade Policy Studies at the Cato Institute.
Added to cato.org on March 14, 2009
This article appeared in the Zimbabwe Independent on March 14, 2009.
The global economic meltdown has prompted fears of resurgent protectionism and some governments have already raised tariffs and other trade barriers.
But, despite the occasional dalliance with protectionism, treaties and good sense prevent a more serious romance.
Amid pledges of restraint from the big economies, India recently raised tariffs and placed other restrictions on some imported steel products.
Ecuador raised tariffs by 5 to 20% on 940 products. Argentina's restrictions include auto parts, textiles, televisions and shoes. And the Indonesian government is requiring civil servants to purchase only domestic products.
Similar actions have taken place in other countries and surely there will be more in the months ahead. But the risk of protectionism escalating to the point that it noticeably reduces global trade further is remote.
With the proliferation of international production, investment and joint ventures, the "Us versus Them" characterisation of global competition no longer applies.
It is now a competition between global supply chains to produce and deliver products made with parts and labour from many countries (see the full article, Protectionism: Alluring but Deadly, at cato.org)
Friday, March 13, 2009
United States, Environmental & Energy, US EPA Proposes Mandatory GHG Reporting - Mayer Brown - 13/03/2009, Environmental Law, Oil, Gas & Electricity, Utilities
This article has been brought to you from www.mondaq.com
United States: US EPA Proposes Mandatory GHG Reporting
13 March 2009Article by David B. Finnegan, Roger W. Patrick and Thomas V. Skinner
Originally published March 11, 2009
Keywords: EPA, mandatory reporting, greenhouse gas emissions, GHG, United States, Consolidated Appropriations Act, Clean Air Act, Kyoto Protocol, fossil fuel, industrial GHGs, coal-fired boiler
On March 10, 2009, the US Environmental Protection Agency (EPA) released its 1410 page proposal to require mandatory reporting of greenhouse gas (GHG) emissions in the United States.1 The proposed rule was issued pursuant to the FY 2008 Consolidated Appropriations Act (signed in December 2007) and EPA's authority under the Clean Air Act.
As drafted, the proposal would cover anthropogenic emissions of the six GHGs subject to the Kyoto Protocol—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6)—plus other fluorinated gases such as nitrogen trifluoride and hydrofluorinated ethers. As is usual, the GHG quantities are described in terms of metric tons of carbon dioxide equivalent (mtCO2e), which compares their effects on global warming to CO2.
The proposed rule would apply to suppliers of fossil fuel and industrial GHGs, manufacturers of motor vehicles and engines, and facilities that emit GHGs. Consequently, it would require reporting of emissions both from upstream producers and from downstream emitters. Generally speaking, the proposed threshold for facilities would be 25,000 mtCO2e per year; however, facilities which have certain source categories within their boundaries (such as petroleum refineries, cement production, and primary aluminum production) automatically would be required to report because EPA has concluded that they will emit at the threshold level. Where direct measurement data currently are collected (e.g., electric utilities), they will be utilized in the reports. Otherwise, facility-specific calculation methodologies are defined for covered sources.
By way of example, based on source categories, a petrochemical plant that emits 22,000 mtCO2e would be required to report, but a steel mill (which may include an integrated plant or an EAF shop) emitting the same amount would not. An assembly plant emitting 30,000 mtCO2e from a coal-fired boiler also would be required to report, not because it falls within any specific industrial category, but because its emissions from stationary fuel combustion exceed the 25,000 mtCO2e threshold. A university that emits 24,000 mtCO2e from cogeneration and 2000 mtCO2e from coal storage, on the other hand, would not be covered; the proposal does not prescribe a method for calculating the coal storage emissions so they would not be included. For municipal solid waste landfills, moreover, the threshold would be based on gas generation. Thus, a landfill that generates an amount of methane equal to 40,000 mtCO2e, but which collects and combusts 75 percent, such that its total emissions are only 10,000 mtCO2e, still would be required to report.
In the interest of simplicity, EPA also is proposing capacity-based thresholds for several sectors, including electronics manufacturing facilities and electric power system facilities. Similarly, EPA would exclude from reporting any facility that (i) has an aggregate maximum rated heat input capacity of stationary fuel combustion units (such as boilers, combustion turbines, engines, incinerators, and process heaters) of less than 30 mmBtu/hr and (ii) contains no other emission sources within its boundaries.
EPA expects its thresholds to exclude most buildings and other small emitters. And although the proposed rule would cover large manure management systems, it would exclude most agricultural emissions (such as methane emissions from the digestive systems of cattle).
Data primarily would be reported at the facility level. A petroleum refinery therefore would report its direct emissions and the CO2 emissions from oxidation of the fuel it puts in commerce. Reporting would be at the corporate level for vehicle and engine manufacturers (including passenger vehicles, heavy trucks, locomotive engines, marine engines, aircraft engines, and non-road engines) who would supply GHG emissions rate information, fossil fuel importers and exporters, and local gas distribution companies.
The reports would be submitted to EPA; depending on the source, they would contain a variety of facility, unit, process, and production data. A designated representative would certify under penalty of law that the report was prepared in accordance with the rule. As is typically the case, emissions data would not be considered confidential business information. Supporting records would need to be retained for five years. EPA, as opposed to a third party, would conduct QA/QC.
For most covered entities reporting would be required annually, with the first reports being submitted in 2011 for 2010 emissions. Facilities and suppliers that currently report more frequently under existing rules (such as the Acid Rain and Fuels Programs) would continue their current practices and submit an annual report. Reporting for vehicle and engine manufacturers would start with the 2011 model year.
Neither sinks nor reductions nor offsets would be included in the reports, only emissions. Further, the proposal does not seek to impose any GHG emission controls.
EPA is planning two public hearings on its proposal: April 6-7, 2009, in suburban Washington, DC, and April 16, 2009, in Sacramento, California. The public will be able to submit written comments for 60 days following publication of the proposed rule in the Federal Register.
Apart from electric utilities, this will be the first mandatory national system for reporting GHG emissions in the United States. EPA estimates that implementation will cost $160 million in the first year, but considers the rule a "critical step" that will generate "comprehensive and accurate" information to guide the efforts to "confront climate change."
Learn more about our Climate Change practice.
Visit us at http://www.mondaq.com/redirection.asp?article_id=73268&company_id=1089&redirectaddress=http%3A//www.mayerbrown.com/.
Footnote
1. Due to the length of the proposal, the preamble appears at http://www.epa.gov/climatechange/emissions/downloads/MRRPreamble.pdf and the proposed text of the rule at http://www.epa.gov/climatechange/emissions/downloads/MRR-Rule.pdf.
Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and JSM, a Hong Kong partnership, and its associated entities in Asia. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.
Copyright 2009. Mayer Brown LLP, Mayer Brown International LLP, and/or JSM. All rights reserved.
United States, Environmental & Energy, US EPA Proposes Mandatory GHG Reporting - Mayer Brown - 13/03/2009, Environmental Law, Oil, Gas & Electricity, Utilities
United States: US EPA Proposes Mandatory GHG Reporting
13 March 2009Article by David B. Finnegan, Roger W. Patrick and Thomas V. Skinner
Originally published March 11, 2009
Keywords: EPA, mandatory reporting, greenhouse gas emissions, GHG, United States, Consolidated Appropriations Act, Clean Air Act, Kyoto Protocol, fossil fuel, industrial GHGs, coal-fired boiler
On March 10, 2009, the US Environmental Protection Agency (EPA) released its 1410 page proposal to require mandatory reporting of greenhouse gas (GHG) emissions in the United States.1 The proposed rule was issued pursuant to the FY 2008 Consolidated Appropriations Act (signed in December 2007) and EPA's authority under the Clean Air Act.
As drafted, the proposal would cover anthropogenic emissions of the six GHGs subject to the Kyoto Protocol—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6)—plus other fluorinated gases such as nitrogen trifluoride and hydrofluorinated ethers. As is usual, the GHG quantities are described in terms of metric tons of carbon dioxide equivalent (mtCO2e), which compares their effects on global warming to CO2.
The proposed rule would apply to suppliers of fossil fuel and industrial GHGs, manufacturers of motor vehicles and engines, and facilities that emit GHGs. Consequently, it would require reporting of emissions both from upstream producers and from downstream emitters. Generally speaking, the proposed threshold for facilities would be 25,000 mtCO2e per year; however, facilities which have certain source categories within their boundaries (such as petroleum refineries, cement production, and primary aluminum production) automatically would be required to report because EPA has concluded that they will emit at the threshold level. Where direct measurement data currently are collected (e.g., electric utilities), they will be utilized in the reports. Otherwise, facility-specific calculation methodologies are defined for covered sources.
By way of example, based on source categories, a petrochemical plant that emits 22,000 mtCO2e would be required to report, but a steel mill (which may include an integrated plant or an EAF shop) emitting the same amount would not. An assembly plant emitting 30,000 mtCO2e from a coal-fired boiler also would be required to report, not because it falls within any specific industrial category, but because its emissions from stationary fuel combustion exceed the 25,000 mtCO2e threshold. A university that emits 24,000 mtCO2e from cogeneration and 2000 mtCO2e from coal storage, on the other hand, would not be covered; the proposal does not prescribe a method for calculating the coal storage emissions so they would not be included. For municipal solid waste landfills, moreover, the threshold would be based on gas generation. Thus, a landfill that generates an amount of methane equal to 40,000 mtCO2e, but which collects and combusts 75 percent, such that its total emissions are only 10,000 mtCO2e, still would be required to report.
In the interest of simplicity, EPA also is proposing capacity-based thresholds for several sectors, including electronics manufacturing facilities and electric power system facilities. Similarly, EPA would exclude from reporting any facility that (i) has an aggregate maximum rated heat input capacity of stationary fuel combustion units (such as boilers, combustion turbines, engines, incinerators, and process heaters) of less than 30 mmBtu/hr and (ii) contains no other emission sources within its boundaries.
EPA expects its thresholds to exclude most buildings and other small emitters. And although the proposed rule would cover large manure management systems, it would exclude most agricultural emissions (such as methane emissions from the digestive systems of cattle).
Data primarily would be reported at the facility level. A petroleum refinery therefore would report its direct emissions and the CO2 emissions from oxidation of the fuel it puts in commerce. Reporting would be at the corporate level for vehicle and engine manufacturers (including passenger vehicles, heavy trucks, locomotive engines, marine engines, aircraft engines, and non-road engines) who would supply GHG emissions rate information, fossil fuel importers and exporters, and local gas distribution companies.
The reports would be submitted to EPA; depending on the source, they would contain a variety of facility, unit, process, and production data. A designated representative would certify under penalty of law that the report was prepared in accordance with the rule. As is typically the case, emissions data would not be considered confidential business information. Supporting records would need to be retained for five years. EPA, as opposed to a third party, would conduct QA/QC.
For most covered entities reporting would be required annually, with the first reports being submitted in 2011 for 2010 emissions. Facilities and suppliers that currently report more frequently under existing rules (such as the Acid Rain and Fuels Programs) would continue their current practices and submit an annual report. Reporting for vehicle and engine manufacturers would start with the 2011 model year.
Neither sinks nor reductions nor offsets would be included in the reports, only emissions. Further, the proposal does not seek to impose any GHG emission controls.
EPA is planning two public hearings on its proposal: April 6-7, 2009, in suburban Washington, DC, and April 16, 2009, in Sacramento, California. The public will be able to submit written comments for 60 days following publication of the proposed rule in the Federal Register.
Apart from electric utilities, this will be the first mandatory national system for reporting GHG emissions in the United States. EPA estimates that implementation will cost $160 million in the first year, but considers the rule a "critical step" that will generate "comprehensive and accurate" information to guide the efforts to "confront climate change."
Learn more about our Climate Change practice.
Visit us at http://www.mondaq.com/redirection.asp?article_id=73268&company_id=1089&redirectaddress=http%3A//www.mayerbrown.com/.
Footnote
1. Due to the length of the proposal, the preamble appears at http://www.epa.gov/climatechange/emissions/downloads/MRRPreamble.pdf and the proposed text of the rule at http://www.epa.gov/climatechange/emissions/downloads/MRR-Rule.pdf.
Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and JSM, a Hong Kong partnership, and its associated entities in Asia. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.
Copyright 2009. Mayer Brown LLP, Mayer Brown International LLP, and/or JSM. All rights reserved.
United States, Environmental & Energy, US EPA Proposes Mandatory GHG Reporting - Mayer Brown - 13/03/2009, Environmental Law, Oil, Gas & Electricity, Utilities
U.S. urged to adopt mandatory livestock traceback - MSNBC Wire Services- msnbc.com
U.S. urged to adopt mandatory livestock traceback
Reuters
updated 3:18 p.m. ET, Wed., March. 11, 2009
WASHINGTON - By Charles Abbott
The U.S. government should require livestock producers to enroll in a traceback system, a primary U.S. defense against mad cow disease, because voluntary signups are not working, two key congressmen said on Wednesday.
The chief veterinarian at the Agriculture Department said at a House Agriculture subcommittee hearing "it is time to reassess our strategy." He declined to say if USDA would endorse a mandatory program.
The goal of the traceback system is to identify within 48 hours of the outbreak of livestock disease the home farm of the infected animals and other livestock exposed to them. USDA adopted traceback as an animal health tool within days of the discovery of the first U.S. case of mad cow disease in late 2003.
Some $128 million has been spent over five years to create a voluntary system. About 35 percent of livestock producers have registered their premises. Relatively few livestock markets or slaughterhouses are enrolled.
Subcommittee chairman David Scott, Georgia Democrat, said a mandatory system appeared to be the only way to assemble a reliable system. Minnesota Democrat Collin Peterson, chairman of the full committee, said he supported a mandatory system as a way to avoid devastating losses from virulent diseases.
"I will do everything I can to make sure government doesn't bail you out," Peterson told opponents, if there is an epidemic and no traceback system is in place.
Private consultant Jay Truitt said the hearing was an opportunity for USDA and lawmakers to signal their support for a mandatory system.
Texas Republican Randy Neugebauer said USDA has the power on its own to demand enrollment.
"I'm not saying who (Congress or USDA) should take the lead or not," replied USDA chief veterinarian John Clifford when another lawmaker asked about moving to a mandatory system.
If participation becomes mandatory, it would take an three or four years to get a working "book end" system in place and at a cost of $160 million to $190 million, Clifford said. A book-end system would compile data on where and when a food animal was born and its location when it died.
"The current system is not working," he said before listing two routes to high enrollment -- mandatory participation or incentives for enrollment, such as "up-front resources" from the private sector such as sales premiums for livestock with low-fat meat. Those payments have been slow to arise.
Cattle groups have been cool to USDA's traceback plan. They fear high costs for equipment to carry out the system and they question if USDA can keep the information confidential. Information on crop subsidy payments is easily found on the Internet.
A spending bill passed by the Senate on Tuesday includes $14.5 million for the traceback system this fiscal year. In an accompanying statement, Congress says USDA "is expected to make demonstrable progress" in building the traceback system.
Copyright 2009 Reuters. Click for restrictions.
URL: http://www.msnbc.msn.com/id/29640041/
U.S. urged to adopt mandatory livestock traceback - MSNBC Wire Services- msnbc.com
Reuters
updated 3:18 p.m. ET, Wed., March. 11, 2009
WASHINGTON - By Charles Abbott
The U.S. government should require livestock producers to enroll in a traceback system, a primary U.S. defense against mad cow disease, because voluntary signups are not working, two key congressmen said on Wednesday.
The chief veterinarian at the Agriculture Department said at a House Agriculture subcommittee hearing "it is time to reassess our strategy." He declined to say if USDA would endorse a mandatory program.
The goal of the traceback system is to identify within 48 hours of the outbreak of livestock disease the home farm of the infected animals and other livestock exposed to them. USDA adopted traceback as an animal health tool within days of the discovery of the first U.S. case of mad cow disease in late 2003.
Some $128 million has been spent over five years to create a voluntary system. About 35 percent of livestock producers have registered their premises. Relatively few livestock markets or slaughterhouses are enrolled.
Subcommittee chairman David Scott, Georgia Democrat, said a mandatory system appeared to be the only way to assemble a reliable system. Minnesota Democrat Collin Peterson, chairman of the full committee, said he supported a mandatory system as a way to avoid devastating losses from virulent diseases.
"I will do everything I can to make sure government doesn't bail you out," Peterson told opponents, if there is an epidemic and no traceback system is in place.
Private consultant Jay Truitt said the hearing was an opportunity for USDA and lawmakers to signal their support for a mandatory system.
Texas Republican Randy Neugebauer said USDA has the power on its own to demand enrollment.
"I'm not saying who (Congress or USDA) should take the lead or not," replied USDA chief veterinarian John Clifford when another lawmaker asked about moving to a mandatory system.
If participation becomes mandatory, it would take an three or four years to get a working "book end" system in place and at a cost of $160 million to $190 million, Clifford said. A book-end system would compile data on where and when a food animal was born and its location when it died.
"The current system is not working," he said before listing two routes to high enrollment -- mandatory participation or incentives for enrollment, such as "up-front resources" from the private sector such as sales premiums for livestock with low-fat meat. Those payments have been slow to arise.
Cattle groups have been cool to USDA's traceback plan. They fear high costs for equipment to carry out the system and they question if USDA can keep the information confidential. Information on crop subsidy payments is easily found on the Internet.
A spending bill passed by the Senate on Tuesday includes $14.5 million for the traceback system this fiscal year. In an accompanying statement, Congress says USDA "is expected to make demonstrable progress" in building the traceback system.
Copyright 2009 Reuters. Click for restrictions.
URL: http://www.msnbc.msn.com/id/29640041/
U.S. urged to adopt mandatory livestock traceback - MSNBC Wire Services- msnbc.com
Tuesday, March 10, 2009
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