Author: WM

California to Appeal Superior Court Decision to Halt Carbon Market

On May 20, 2011, San Francisco Superior Court judge Ernest Goldsmith issued a decision requiring the California Air Resources Board (CARB) to halt action on implementing its planned emissions cap-and-trade program until it has explored alternatives to meet California’s emission reduction targets. The decision follows a ruling delivered in March 2011 in which the judge said CARB had violated the California Environmental Quality Act by failing to adequately assess alternative emission reduction mechanisms, such as a carbon tax. The ruling is the result of legal action brought by the Association for Irritated Residents and other environmental justice groups, which argued that the proposed cap-and-trade program could damage air quality in some parts of the state.

The cap-and-trade program is part of AB 32 (Global Warming Solutions Act), California’s landmark climate change law, which is designed to lower California’s greenhouse gas emissions to 1990 levels by 2020. AB 32 also includes increased fuel efficiency standards and a renewable electricity target of 33% by 2020. Under the ruling, CARB must set aside its December 2010 decision approving the trading system for emitters over 25,000 metric tons per year, and must cease all rule-making and implementation activities related to cap-and-trade until it complies with the law. In particular, the judge said that CARB must go back and show why it made the decision to implement cap-and- trade. The trading program is designed to cover 85 percent of the state’s industrial emissions by 2020 and would include emissions from power plants, oil and gas refineries, transportation fuels and other heavy industries.

On May 23rd, California’s top attorney initiated an appeal of Judge Goldsmith’s decision. Depending on the length of the appeal process, the cap-and-trade program could be delayed, perhaps until 2013. In the meantime, California can continue with its renewable energy targets, low-carbon fuel standard and energy efficiency measures, all of which are unaffected by the judge’s ruling.

EMAS

“The EU Eco-Management and Audit Scheme (EMAS) is a management tool for companies and other organisations to evaluate, report and improve their environmental performance. The scheme has been available for participation by companies since 1995 and was originally restricted to companies in industrial sectors. Since 2001 EMAS has been open to all economic sectors including public and private services. In 2009 the EMAS Regulation has been revised and modified for the second time. Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organisations in a Community eco-management and audit scheme (EMAS) was published on 22 December 2009 and entered into force on 11 January 2010.” Source: EU Website

Website

Sustainable Business Practices

Sustainability is a very complex and far-reaching concept. Inspired by the ISO 14000 set of standards , but also incorporating our practical experience of balancing the characteristics of user-friendliness and comprehensiveness we have developed our own set of user friendly GHG Accounting Services criteria for Sustainable Business Practices for SMEs, they are:

1. Public Statement of Commitment

2. Chosen Program Authority and Transparency

3. Systematic Information and Data Recording and Analysis

4. Acts and Activities to Reduce or Remove Adverse Effects

5. Continuous Activity

6. Review Practices and Continuous Improvement

©2009-2011GHG Accounting Services

 

Another Study links High GHG Emissions with Negative Impact on Company’s Value

A study by researchers at the University of Wisconsin-Madison, Georgetown University and the University of Notre Dame has found that high levels of greenhouse gas (GHG) emissions can have a negative impact on a company’s value.  According to the study – Voluntary Disclosures and the Firm-Value Effects of Carbon Emissions (April 2011) – a company’s value decreases on average by $202,000 for every additional thousand metric tons of emissions it produces.

Researchers used hand-collected carbon emissions data for 2006-2008 that Standard and Poor’s (S&P) 500 companies disclosed voluntarily to the Carbon Disclosure Project to examine two issues: (1) firm-level characteristics associated with the choice to disclose carbon emissions, and (2) relationship between carbon emission levels and firm value. With respect to the first issue, researchers found a higher likelihood of carbon emission disclosures by firms with superior environmental performance, conditional on firms taking environmentally proactive actions. However, researchers found no association between inferior environmental performance and the likelihood of disclosing carbon emissions, conditional on firms taking environmentally damaging actions. Furthermore, researchers found that companies are more likely to voluntarily disclose their carbon emissions as the proportion of industry peer firm disclosers increases. In connection with the second issue, the researchers found a negative association between carbon emission levels and firm value. From its sample of S&P 500 companies, the study found that a company’s value decreases on average by $202,000 for every additional thousand metric tons of GHG emissions it produces.

In the study, researchers also pointed out that according to the 2009 Goldman Sachs’ GS Sustain Report it is expected that the relationship between carbon emissions and global climate change will drive a redistribution of value from firms that do not control their carbon emissions successfully to firms that do.
The study may be accessed online

Study finds that SO2 Allowance Trading has not led to Environmental Injustice

In a new study entitled “Trading Equity for Efficiency in Environmental Protection? Environmental Justice Effects from the SO2 Allowance Trading Program”, Professor Evan Ringquist at the University of Indiana has found that efficiency gains from sulphur dioxide (S02) allowance trading have not come at the expense of the equitable treatment of minority and low-income groups.

In a study entitled “Trading Equity for Efficiency in Environmental Protection? Environmental Justice Effects from the SO2 Allowance Trading Program”, Professor Evan Ringquist at the University of Indiana has found that efficiency gains from sulphur dioxide (S02) allowance trading have not come at the expense of the equitable treatment of minority and low-income groups.

The study considered the environmental justice impacts of the SO2 allowance trading program, which was established pursuant to amendments to the Clean Air Act in 1990.  The program is aimed at reducing SO2 emissions, which cause acid rain and human health problems. In particular, Professor Ringquist considered the potential conflict between the efficiency of market-based tools for pollution control and social equity, and whether the SO2 program inadvertently transferred pollution into minority and poor communities. As part of his research, Professor Ringquist obtained trading records for all facilities participating in the SO2 allowance trading program between January 1995 and March 2009. He then used statistical models to determine whether allowance trading led to concentrated pollution in poor communities. Professor Ringquist concluded that it did not: “There is no inherent tradeoff between efficiency and equity when using market-based instruments for pollution control. Policy makers, however, might make an effort to design and implement future emissions trading programs in a manner that reduces the monitoring costs of tracking emissions trading. By reducing monitoring costs, policy makers may prevent the concentration of emissions in poorly educated communities while preserving the efficiency benefits of these instruments.”

This research could shed some light on the concerns expressed by the Association of Irritated Residents (AIR), which has brought a court challenge against the California Air Resources Board’s decision to use cap-and-trade as the mechanism to reduce California’s greenhouse gas emissions (Association of Irritated Residents, et al. v. California Air Resources Board). AIR believes that companies which buy the right to exceed emission limits will release greater amounts of pollutants in surrounding communities, mostly poor and non-white. As Professor Ringquist suggests, perhaps the most prudent approach would be to design an emissions trading program that makes it easier for the effects of the program to be monitored by local residents.

The study is available online at Link

California & EU Plan to Link Emissions Trading Markets

Europe’s commissioner for climate action, Connie Hedegaard, has confirmed plans to link the EU emissions trading scheme (ETS) with California’s carbon market which is scheduled to start trading on January 1, 2012. On April 5, 2011, Hedegaard met with California’s governor, Jerry Brown, and Mary Nicholls, chair of the California Air Resources Board, in Sacramento to discuss how the parties could cooperate to join together the world’s largest carbon market with what will be the world’s second largest carbon market.

Europe’s commissioner for climate action, Connie Hedegaard, has confirmed plans to link the EU emissions trading scheme (ETS) with California’s carbon market which is scheduled to start trading on January 1, 2012. On April 5, 2011, Hedegaard met with California’s governor, Jerry Brown, and Mary Nicholls, chair of the California Air Resources Board, in Sacramento to discuss how the parties could cooperate to join together the world’s largest carbon market with what will be the world’s second largest carbon market.

Hedegaard said: “We told Governor Brown that we would very much like to co-operate with them so that no matter how California constructs their scheme, it is linkable to the way we do things in Europe. It doesn’t have to be identical, just compatible.”

According to Point Carbon, the estimated value of transactions on the EU ETS was US $103 billion in 2010 and California’s cap-and-trade program could be worth US $10 billion by 2016.

While the EU ETS has been fraught with problems including over-allocation of allowances and allegedly fraudulent transactions worth US $7 billion, Hedegaard said schemes in other countries should learn from the EU’s example. Hedegaard also suggested that a successful carbon market in California could pave the way to a national US scheme in the future: “If the biggest American state, and 8th largest economy joins the growing crop of emissions trading schemes, it could break the ice in this field in the United States.” (F. Carus, The Guardian, April 7, 2011).

Implementation of California’s Cap & Trade Program Faces Potential Delay after Court Ruling

In a decision issued on March 18, 2011, a California Superior Court judge threw up a roadblock to the implementation of California’s cap-and-trade program by suspending the implementation of A.B. 32, the state’s landmark climate change law on the grounds that the California Air Resources Board (CARB) failed to properly consider alternatives to a cap-and-trade system.

In a decision issued on March 18, 2011, a California Superior Court judge threw up a roadblock to the implementation of California’s cap-and-trade program by suspending the implementation of A.B. 32, the state’s landmark climate change law on the grounds that the California Air Resources Board (CARB) failed to properly consider alternatives to a cap-and-trade system. While the Court upheld the validity of CARB’s Scoping Plan for implementing A.B. 32, thus saving CARB from having to revise the Scoping Plan, it found flaws with CARB’s environmental review of the Scoping Plan under the California Environmental Quality Act. As a result, not only has the proposed cap-and-trade program been put on hold, but at risk are other elements of the Scoping Plan, including the state’s low-carbon fuel standard and a 33% renewable portfolio standard for electricity by 2020. In his ruling, Judge Ernest Goldsmith of San Francisco Superior Court said that the CARB “seeks to create a fait accompli by premature establishment of a cap-and-trade program before alternatives can be exposed to public comment and properly evaluated.”

The ruling by Judge Goldsmith does not prohibit the CARB from adopting cap-and-trade or require the delay of the scheduled start of date of January 1, 2012, but Judge Goldsmith said that CARB must first analyze other options (such as a carbon tax) and explain why it did not choose such options. Given the tight timeline this year for finalizing the details of California’s climate change plan, the ruling represents a potentially significant hurdle in the timely implementation of the state’s greenhouse gas emission reduction initiatives.  The CARB’s spokesperson, Stanley Young, expressed dismay at the scope of the ruling, which requires the board to conduct an environmental review and invite public comment before taking further steps to implement the law. Mr. Young has indicated that the CARB will appeal the decision, which could result in pushing back the cap-and-trade program’s January 1, 2012 start date.  An alternative is for the CARB to seek a stay on the ruling that will allow it to implement the climate policies as planned until a final verdict is issued.  Also, the CARB could complete the necessary analyses as quickly as possible, but the results of this approach would be uncertain. For example, if the CARB is unable to satisfy the court’s concerns by October 2011 – which is the key deadline for adopting cap-and-trade regulations – this would most likely put the January 1, 2012 start date at risk.  If California’s cap-and-trade program is delayed, it is likely that other WCI jurisdictions such as B.C., Ontario and Québec, will also delay the implementation of their cap-and-trade programs until such time as California begins trading.

A.B. 32 was passed in 2006 and requires the state to reduce greenhouse gas emissions to 1990 levels by 2020. The legal challenge to California’s cap-and-trade program was brought by environmental justice groups (the Association of Irritated Residents and other groups) that consider the plan too weak. In particular, they argued that the cap-and-trade program would result in increased pollutants in poor and non-white communities.  More mainstream environmental groups, however, have supported cap-and-trade and stayed out of the legal action.

The next likely step is that a Writ of Mandate will be filed within 10 days of the March 18 decision. The Writ is the plaintiffs’ interpretation of the decision and will include their preferred remedies. The judge will then decide on the final remedy. Any appeal to that decision would have to be filed within 60 days from the date the decision was entered.

At this stage, it is unclear what the court-ordered remedy will consist of and whether it will affect all work on measures to reduce greenhouse gas pollution – observers indicate that it most likely it will not. Following the decision, the Environmental Defense Fund issued a conciliatory statement that perhaps best captures the intent of the parties: “It is clear from examining arguments of both parties before the Court that CARB and the environmental justice groups bringing the action against the State are committed to improving California’s environment and fighting climate change and do not intend to bring AB 32 work to a halt.” Stay tuned as this story evolves.

Revisions to BC Reporting Regulation now in force for 2011 Reporting Year

Recent amendments made to BC’s greenhouse gas Reporting Regulation have come into effect for 2011 calendar year emission reports (to be reported by March 31, 2012)

The amendments made in order 849 dated 17th of December 2010 to BC’s greenhouse gas Reporting Regulation have come into effect for 2011 calendar year emission reports (to be reported by March 31, 2012). These amendments include:

  • Establishment of a third class of reporting operation – electricity import operation – for the purpose of including imported electricity under the regulation.
  • Establishment of a reporting-only class of emissions for the purpose of including aboveground coal mine fugitive emissions, along with mobile equipment and carbon dioxide from Schedule C biomass sources.
  • Miscellaneous improvements including: (i) addition of further requirements to ensure that changes between methods on the part of reporting operations will result in improved emissions estimates; (ii) clarification on handling of terminals/storage tanks; (iii) addition of red liquor to Schedule C; and (iv) an update of quantification method references to incorporate new and revised quantification methods developed by the Western Climate Initiative.
  • Various changes to data to be reported, including: (i) addition of Income Tax Act business numbers, DUNS and Bradstreet numbers to reports; and (ii) addition of process flow diagrams to reports starting in 2012.
  • Clarifications have been made to site visit requirements for linear facility operations and changes have been made to the required contents of verification statements.

Additional updates to the Reporting Regulation may be introduced by the government based on the proposed Emissions Trading Regulation and Offsets Regulation, which are expected to be finalized in 2011. These changes could include further reporting-only sources, additions to the Schedule C list of biomass, and additional verification and compliance requirements.

BC and Washington State sign Cross-Border Climate Action Plans

The province of British Columbia (BC) and the state of Washington have signed two climate action plans to strengthen cross-border efforts to reduce carbon emissions while advancing the low-carbon economy.

The province of British Columbia (BC) and the state of Washington have signed two climate action plans to strengthen cross-border efforts to reduce carbon emissions while advancing the low-carbon economy.

On February 2, 2011, BC Minister of State for Climate Action John Yap and Washington Department of Ecology Director Ted Sturdevant signed plans on limiting carbon emissions from government operations and promoting awareness of the impacts of sea level rise on coastal areas.

Under the climate action plans, entitled “Joint Action Plan on Carbon Neutral Government” and “Joint Action Plan on Awareness and Outreach for Coastal Impacts of Climate Change”, BC and Washington will:

  • demonstrate how to make government operations as carbon-neutral as possible, sharing information and drawing on BC’s success in achieving a carbon-neutral public sector.
  • further strengthen engagement with British Columbians and Washingtonians about how sea level rise threatens critical shore areas and communities.
  • BC and Washington State have been working together on climate issues since signing a Memorandum of Understanding on Climate Action in 2007. These new action plans build on existing climate-related partnerships between BC and Washington, including:
  • Pacific Coast Collaborative – representing joint efforts by BC, Washington, Oregon, California, and Alaska on energy, transportation, climate change, and ocean issues.
  • Washington-British Columbia Memorandum of Understanding on Coastal Climate Change Adaptation – holding joint science workshops, exchanging information on sea-level rise projections and mapping, sharing information on Green Shores programs, and Washington and B.C. “king tide” photo initiatives.
  • Salish Sea Ecosystem/Puget Sound-Georgia Basin Ecosystem Research Conference – the largest, most comprehensive scientific research and policy conference that focuses on issues impacting the region known as the Salish Sea. BC and Washington take turns hosting the biennial conference.

In addition, BC and Washington state are active participants in the Western Climate Initiative, a cooperative effort to reduce greenhouse gas emissions in seven U.S. states and four Canadian provinces.

The action plans can be viewed online.