Tuesday, December 15, 2009

Is US Federal GHG Regulation Still 5 Years Away?

Is US Federal GHG Regulation Still 5 Years Away?

Passage and implementation of a US cap-n-trade bill is perhaps 5 years out. At the EPA Climate Leaders meeting last week, Ralph Izzo, CEO of PSEG, Yale Professor Dan Esty, and others confirmed a similar time frame. Congressional timing and political resolve are significantly impacted by other pending bills (health care, jobs, finance reform), the deficit, Climategate, and the 2010 and 2012 elections.

Experts are split on whether direct regulation by the EPA through its endangerment finding will pass legal challenges. Experts tell us that lawsuits against the EPA are highly likely and the key question is whether a federal judge would issue an injunction to halt any direct EPA regulation.

It's our view that regulation gyrations will continue to be newsworthy through 2010, but actual regulation won't be passed and implemented for years. Large companies will push aggressively to stop the EPA from regulating directly without Congresionally-passed GHG laws. Meanwhile revenue-hungry states like CA and other countries will push forward with their own regulations.

What is your view on this? Email me and let me know.

Concerns Grow About WRI Scope 3 Working Draft

WRI recently released for comments drafts from the working groups on Scope 3. Two drafts were released: one for Product Life Cycle accounting and one for Corporate Scope 3. Scope 3 emissions often make up the largest part of an organization's footprint, and many organizations want to report and reduce these emissions. The Corporate Scope 3 reporting draft break emissions into 18 categories, including generated waste, business travel, distribution of products, and disposal of sold products.

A number of large companies and consultants at the EPA Climate Leaders meeting expressed concern about the complexity of these 100+ page protocols and the ability to financially justify the data gathering. Two large retailers and a global computer company told me the protocols are becoming needlessly complex, unaffordable to implement and less relevant because of lack of comparability across periods and companies. I did not find anyone supportive of the current drafts, but some were hopeful about future drafts.

Scope 3 is clearly an important area. Hopefully, WRI will continue to hone this standard and define one that is implementable and as widely accepted and respected as the Scope 1 and 2 standards.

Don't expect any increase in public scope 3 reporting by companies until WRI finalizes the standard, which could take 1-2 years.

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