Market News

 September 25, 2009
Does America Have a Plan B?

 The European Union’s EurActiv newswire reports that U.S. President Barack Obama is drawing up a ’Plan B’ to regulate greenhouse gases if the US Senate fails to pass legislation needed to negotiate an international climate treaty in Copenhagen in December.

According to EurActiv, a U.S. official Dennis Leaf, a senior adviser at the US Environmental Protection Agency (EPA), sought to ease European fears that the US will not be ready to sign up to a successor to the Kyoto Protocol if the Senate does not pass domestic climate legislation, including a cap-and-trade scheme, ahead of Copenhagen.

"The president wants comprehensive legislation, but at the same time there’s a back-up plan," Leaf is reported to have said during a stopover in Brussels on a European speaking tour.

Leaf noted that overarching legislation is the best way to reduce emissions considering the wide range of interests involved, from agriculture to energy and the environment. But he added that as a plan B, the president is setting up a regulatory system that will allow the US to regulate greenhouse gases under the existing Clean Air Act.

The US Supreme Court ruled in 2007 that greenhouse gases are air pollutants and should therefore be covered by the Clean Air Act and invited the EPA to investigate whether these endanger public health or welfare. The EPA proposed in April to classify six key greenhouse gases, including CO2 and methane, as a threat to public health and welfare.

If the final EPA decision, which will possibly be taken before the end of the year, confirms the proposal, this would open the door for the agency to set binding limits on these gases.

If legislation is not passed in the Senate, then the public has the right to petition the EPA to regulate things like electric power plants and industrial sources, Leaf pointed out.

Leaf suggested this option could be used as leverage over the Senate to push the members into passing the climate bill. Effectively, it would open a new channel for different interest groups to turn to the EPA to demand measures on climate protection.

"If for some reason we said ’no’, they could then take us to court," he said. "But I suspect under this administration we would not say ’no’."

The climate bill got through the House of Representatives in June, but only by a very narrow margin. Indeed, a repeat of the majority achieved in the lower chamber would not see the law through the Senate, where 60 out of 100 votes are required for approval.

"We will push for many things that the Japanese and the Europeans probably won’t like," EPA senior advisor Dennis Leaf

The EU has made a binding commitment to reducing its CO2 emissions by 20% from 1990 levels by 2020, and is willing to increase this to 30% should other industrialised countries follow suit. But the draft US climate bill only promises a return to 1990 levels.

Also, differences have been reported regarding the institutional arrangements of the new treaty. Europe wants to retain the architecture set up under the Kyoto Protocol. The Obama administration has told European colleagues that it intends to replace the protocol’s structures with its own.

Leaf says the US found the Kyoto Protocol’s enforcement mechanisms blatantly lacking. "I think when we come in, there’ll be much more emphasis on enforcement and repercussions if you don’t meet your target," he said. 

"We will push for many things that the Japanese and the Europeans probably won’t like," the official said. Some of these things would come in Copenhagen and the rest could be filled in afterwards, he concluded.

Next steps:

  • 28 Sept.-9 Oct.: UN climate negotiations in Bangkok.
  • 29-30 Oct.: European summit.
  • 2-6 Nov.: UN climate negotiations in Barcelona.
  • 7-18 Dec.: UN Climate Change Conference in Copenhagen.

While some companies are making climate change a central strategic priority, others are taking a more reactive approach to the results of the upcoming COP15 climate meetings in Copenhagen.  How the outcomes of COP15 will affect future business strategies will be a major topic at GLOBE 2010, the upcoming world conference and exposition on the business of the environment taking place in Vancouver, Canada March 24-26, 2010. Check here for more details: http://www.globe2010.com

For More Information: EurActiv