Climate Change Policy in an Obama Administration

1. Climate Change Policy in an Obama Administration Tom Lindley Perkins Coie LLP November 22, 2008

2. U.S. Federal Approach to Climate Change The debate has shifted: • From causes and effects to mitigation methods and timelines • From voluntary, incentive-based programs to mandatory, market-based regulation

3. Federal Climate Change Policy in the Bush Administration: 2000-2008 • President Bush's approach focused on voluntary, market-based incentive programs and partnerships managed by the Environmental Protection Agency and Department Of Energy • Only limited regulatory action has taken place recently: • Carbon Sequestration Rules (July 2008) • Advance Notice of Proposed Rulemaking (July2008) • GHG Reporting Rules (draft to OMB)

4. State & Regional Climate Change Policy There have been many more developments with regional and state-based regulation • Regional Action: • RGGI, Midwest Accord, WCI • California's AB 32 leads the way • 18 states now have mandatory greenhouse gas reporting rules

5. U.S. Regional Programs Pew Center on Global Climate Change, Oct. 17, 2008

6. President-Elect Obama: Climate Change & Energy • Campaign policies vague, but emphasize: • Cap-and-trade-style emissions reductions • Improved energy efficiency • Energy independence • Green job creation

7. Obama Campaign During the campaign, Obama proposed broad reforms in climate and energy policy : • Economy-wide cap-and-trade system • Invest $150 billion over 10 years in advanced energy technologies • Improve energy efficiency • Make the U.S. an international leader in combating climate change

8. Obama Campaign Obama's cap-and-trade plan: • Mandatory, economy-wide • Reduce emissions to 1990 levels by 2020 • 80% reduction below 1990 levels by 2050 • Allocation: 100% auction of allowances • Limited use of offsets

9. Obama Campaign Obama's cap-and-trade plan does not specify: • Sectors covered • Reporting start date • Emissions cap start date • Early action credit • Preemption of state/regional programs

10. Obama Campaign Obama's cap-and-trade plan would reinvest allocation revenues: • $150 billion over 10 years in: • Plug-in hybrids • Commercial scale renewable energy • Energy efficiency and weatherization projects • Low emissions coal plants • Next generation biofuels and fuel infrastructure • Transition to new digital electricity grid • Assist workers and low income families with "transition" costs

11. Obama Campaign International Commitments: • Re-engage with the UNFCCC • December 2008: UN Climate Change Conference, Poznań, Poland • November/December 2009: UN Climate Change Conference, Copenhagen • Create "Global Energy Forum" of largest emitters • Technology transfer to developing countries • Confront deforestation; promote carbon sequestration

12. Agency roles in the Obama Administration EPA DOE • Large role: climate change is an energy issue • Clean energy initiatives • Possible appointment of National Energy Security Director • Possible elevation to cabinet status • EPA to regulate emissions under existing Clean Air Act • CA waiver would be approved

13. Congress & Climate Change Policy • New cap-and-trade legislation is expected to be introduced in the latter half of 2009 or early 2010. • Until then, three recent bills are being discussed as starting points for the 111th Congress: • Senate: Lieberman-Warner • House: Dingell-Boucher • House: Markey

14. Congress & Climate Change Policy Recent Climate Change Bills: S. 2191 Lieberman-Warner • First cap-and-trade bill to be voted out of committee • Defeated by Senate procedural vote in June 2008 • Some language/initiatives may carry over, but bill will die in 110th Congress • New sponsorship needed: McCain, Boxer expected to lead

15. Congress & Climate Change Policy Recent Climate Change Bills: Dingell-Boucher "discussion draft" • Released for comment October 7, 2008 • Four scenarios proposed • Less aggressive initial reductions • Blanket preemption of state/regional cap-and-trade initiatives • May become leading bill in 111th Congress unless Waxman replaces Dingell as chair of Energy and Commerce Committee

16. Congress & Climate Change Policy Recent Climate Change Bills: H.R. 6186: Markey's iCAP Act • Chair of select committee on Energy Independence and Global Warming • Named by House Speaker Pelosi to specifically address global warming issues • Introduced June 4, but no further action taken • Committee may dissolve in favor of Rep. Dingell's Energy and Commerce Committee

17. Cap-and-Trade Policy Comparison

18. Federal Climate Change Policy Will emissions reductions remain a top priority in an Obama Administration? • Many competitors… • Recession, economy • Subprime mortgage crisis • Tax and healthcare reform • Wars in Iraq & Afghanistan

19. Federal Climate Change Policy Many key issues under a cap-and-trade program remain unresolved… • Level and timing of cuts • Offsets: domestic, international, or none? • Grandfathered vs. auctioned allowances • Federal preemption of state and • regional programs

20. Federal Climate Change Policy Key cap-and-trade debates continued: • Leakage: whether to first obtain international commitments from developing countries • Support for bridge technology (CCS, nuclear) • Expansion of renewables (wind, solar, biofuels) • Early action credit

21. Questions & Comments