Becker's Iowa Environmental Law Update : Iowa Environmental Lawyer & Attorney : Charles Becker : Belin McCormick P.C. Law Firm : IA Regulatory Compliance, Site Cleanups

“Fairness” is a relative, not an absolute, concept.  If this was not the case, lawyers would be out of a job.  Apparently, this truism can also apply to senators.

With Copenhagen fast approaching, climate change legislation will again be the topic of the day.  Cap-and-trade language, as currently proposed in both the House and the Senate, allocates free CO2 allowances to electrical distributors based on a 50/50 formula; that is, 50% on total emissions and 50% on total energy sales. Under this formula, utilities that are more coal dependent will need to purchase more allowances than they would if the allowances were allocated based only on emissions, and those higher costs will be passed on to their customers.

Fourteen Democratic senators, from coal-dependent, Midwestern states, have written a letter to Senate Democratic leaders requesting that the 50/50 formula be changed to base the allowances solely on emissions.

The effect of using the 50/50 formula is that those states that have historically relied more heavily on coal-fired electrical generation, such as Iowa, North Dakota, Wisconsin, Minnesota, Illinois and Colorado, will pay significantly more for future power, during the transition period to cleaner energy, than under a 100% emissions formula.  The fourteen senators argue that  legislation must equitably distribute transition assistance across individuals, states and regions.  Put another way, they are saying that in this transition period, we should not penalize one group or geographic area, so the 100% emission formula is the "fair" thing to do.

There are, of course, those who disagree.  They argue that the purpose of the legislation is to create financial incentives to switch to lower-carbon fuel sources, so causing higher costs to higher polluting states, is, in fact, “fair” and appropriate.  It is, in their view, not proper to let one group be bailed out for relying so heavily on coal-fired energy in the past.

So who's right?  Like most arguments that address fairness, it all depends on where you stand.

If you believe that cleaner energy is something that had to happen last week and that we must mandate an immediate change, then it would be “fair” to force the higher expense of cleaner energy on one group. If you believe that it will take some time to wean ourselves away from using coal as the primary form of electrical generation (which we have used for more than 125 years), then it would be “fair” to attempt to make the transition less painful as proposed by the senators.

Which view should prevail?  That's for you to decide, but let me add two pragmatic considerations to the mix.

First, despite the best efforts of all concerned, coal will be with us for a long time. It will likely get cleaner but, due to cost and increases in demand for electricity, it will be a significant part of the mix, along with increasing use of solar, wind, geothermal and hydro. In fact, the U.S. Energy Administration expects coal to account for 47% of U.S. electricity in 2030, which is a 2% decrease from the present.

Second, in this age when a Senate majority requires 60 votes, can 14 votes be ignored?
 

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There is a global-warming parade going on and everyone seems to want to join in.  Well, not everyone.  The U.S. Chamber of Commerce has staked out its position that the assertion that global warming is harmful to human health is something that should not simply be assumed, but should be proven, before trillions of dollars are spent “fixing” it. Not an irrational position, but one which has caused five large companies to pull their support for the Chamber, the most visible being Nike and Apple. The question that should be asked is why -- why have the companies chosen to walk away from the Chamber?

Someone Else Is Better?

It certainly couldn’t be that they will be better represented by some other lobbying group. The U.S. Chamber of Commerce spent $26 million in lobbying in 2009, which is double any other single entity. Historically, the Chamber has had, and spent, a lot of money and has been effective in Washington, D.C.

Difference of Opinion?

Could it be that these companies philosophically disagree with the Chamber and are willing to cut off their nose to spite their face? Well, Catherine Novell (V.P. of Worldwide Government Affairs at Apple) did say:

We strongly object to the Chamber’s recent comments opposing the EPA’s effort to limit greenhouse gases. . . .  Apple supports regulating greenhouse gas emissions, and it is frustrating to find the Chamber at odds with us in this effort.

Nike, who relinquished its Chamber board seat but has not yet quit the group, said:

We believe that on this issue of climate change, the Chamber has not represented the diversity of perspective held by the board of directors.

General Electric and Johnson and Johnson have also issued statements that they disagree with the Chamber’s climate policy.

Certainly these companies, with their collective millions of shareholders, might choose to walk away from a $26 million lobbying force based on principle and righteous indignation. That’s possible. But perhaps something else is at work.

That's Where The Money Is?

Another possible explanation might be that they are doing what all companies strive to do — they are trying to sell their products to the greatest possible number of consumers. Perhaps these huge, market savvy companies believe that their customers believe that climate change is a fact that does not need debating and that these customers just might be offended by any one (or any company) that thinks otherwise. These companies have seen what happens when a company appears to be anti-environment, and it simply isn’t worth the risk. Of course, the Chamber doesn’t sell shoes or computers or contact lenses so they don’t need to worry about what the consumer might believe. But the Apples of this world do.

Ironically, environmentalists couldn't have a better friend than the Chamber right now.  With each vocal defection, the inevitability of climate change legislation grows a little closer.

I’ve said it before: "An Inconvenient Truth" gave global-warming advocates a free pass. The parade of environmental reform has started and the huge elephant that is public opinion has already lumbered past the question of whether there is global warming and whether it is bad for us and has moved on to the question of what could be the cure. Right or wrong, it is too late to turn the elephant (or the donkey) around. Apple, Nike and P&G recognize this fact. One has to wonder if the Chamber will accept it and realize that the only way to affect the parade is to get in front of the elephant.

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                             The Most Important Environmental Law Case                  

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Dear Mr. President,

With all due respect, I feel that I must warn you that you are on the brink of losing one of your biggest support groups – wine drinkers. Allow me to explain.

Wine has always been one of my guilty pleasures -- and I'm not alone.  Wine consumption in the United States has been, and continues to be, on an extraordinary growth path.  That means an ever-increasing base of fairly myopic (and, at certain times of the day, malleable) voters.  For example, in 2008, a close friend of mine told me that he was a single issue voter: You promised to do something about global warming, so you got his vote.  This is because climate change is having a huge impact on grape growing and, therefore, wine making. 

My point is that all of this economic stimulus and health care talk is fine and good, but I don’t want you to take your eye off of the really important issue -- wine, . . . uh, I mean climate change. So here are a few facts to consider:

When it comes to identifying global warming, grape production is the canary in the coal mine. Very small temperature increases result in immediate, and large, changes in the ability to grow great grapes. For example:

•     In Australia:

--    Up to 1000 growers will be faced with the decision of ceasing operations due to increasingly hot harvests;

--    By 2050, 44% of current grape-grown areas are likely to be negatively affected by rising temperatures.

•     In France:

--    In 20 to 30 years, Burgundy, France, will be too warm to plant its classic-prized varietal, pinot noir (now I realize that it’s just pinot, but still);

--    Winemakers warn that failure to cut greenhouse gases will devastate their area;

--    A group of 50 winemakers predicted that vineyards will move 600 miles past their traditional boundaries by the end of the century if nothing is done now.

•      England is now able to produce prize-winning vintages thanks to the warming conditions (Mr. President, ENGLAND! Sure they’re our friends but they really can’t be trusted with cars or grapes).
•         In California, the Napa Valley will become as warm as Modesto. Modesto will become as warm as Stockton. Stockton will become as warm as Bakersfield (can cats and dogs raining down from the heavens be far behind?).

I know what you’re saying. Your saying that this just means that grape growing in Oregon and Washington will improve, but are there really enough votes to care what happens there?

Let me put it another way. Isn’t it at least possible that Sarah Palin has dropped out of the political scene because she sees what’s coming and is buying up prime Alaskan grape growing land? Do you really want to see Palin Insignia? Do you really want to be responsible for Sarah Palin becoming the replacement for the late, great Robert Mondavi as the American winemaking icon? I didn’t think so.

For my sake, your sake and Alaska’s sake, you must redouble your efforts to address climate change.

To be sure that my message is getting through, let me approach the issue from a more scientific angle. I’ve just completed some research on global warming. Between 1970 and 2008, the five-year mean temperature has drastically increased. In fact, the increase during this period is greater than the same increase for more than the previous 100 years.

Now, let’s take a look at what that has done to wine. Robert Parker (he is to wine what you are to Democratic politics) rates the quality of wine each year for all of the world’s wine producing areas. A year that scores 90 or higher is considered “Outstanding.” Looking at 90-point years for France (Pomerol), Italy (Piedmont - Barolo), California Cabernets, Oregon (Willamette Valley) and Washington Cabernets as reported by The Wine Advocate, we find:

Uh . . .wait a minute. Let me think about this.  During the period of extreme warming, the number of great wine vintages have actually increased, thanks to climate change. That means that, at least in the short term, warmer is better for grapes.  Sure, this can only go on for another 15 or 20 years, but at this rate that means another 12 to 15 spectacular wine vintages. I’ll have plenty of wine to last me through my waning years. True, I probably won’t be able to drink them outdoors, but that’s a sacrifice a truly dedicated oenophile is willing to make.   Hmmm . . .well . . . .in that case.

Mr. President, kindly disregard this letter.

                                                                                                      Whining No More,

                                                                                                                        Chuck Becker

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Well, it has begun.

The posturing that one would expect before an important environmental conference like the United Nations Framework Convention on Climate Change in Copenhagen is in full swing.  To date, China and India have made it clear that they are not going to accept mandated targets to reduce greenhouse gas emissions.  Their arguments are:

• They are new to the industrial scene and they should have the same opportunity as the other industrialized nations (i.e. the United States) to pollute their way to prosperity;
• Their per capita emissions are, and will remain, well below those of the U.S.;
• Their "dirty" products are consumed primarily by industrialized nations so those nations should pay for the added costs of the emissions.

Politically speaking, these are pretty strong arguments.  The only real response is "Well, yes, but we're in a desperate situation and we need everybody to join in."  That response isn't very effective if you don't believe that global warming is in a "desperate situation" or, more importantly, you don't care. 

So what happens if China and India refuse to agree to any limits?  The practical impact is that if the industrialized nations agree to limits but China and India won't come along, then China and India will have the ability to sell their products cheaper than the U.S.  Jobs will shift  to those countries and imports of cheaper products will increase, while greenhouse gas emissions from China and India will presumably continue to increase. 

Since the U.S. has little power to push around the mountains that are China and India, we will need to look to what we can control -- tariffs on goods coming into the country (though the World Trade Organization could limit that control).  By adding tariffs to the products, we would discourage movement of jobs overseas and the importing of cheap products.  The tariffs could be adjusted as the country ramps up environmental compliance.  Once the country is in compliance with whatever environmental limits are agreed upon, we could eliminate the tariffs and all goods would be back on an even playing field.  Simple, right?  The only problem is that most countries get very upset when tariffs are imposed on their goods. 

China and India have been watching the Congressional climate change debates closely and saw the tariff issue coming.  They have been warning that tariffs are unacceptable.  Ten swing-vote Democrats are now posturing to require that the U.S. insist on full participation by all countries or the imposition of tariffs on the non-conforming countries.  If this is done, China and India may retaliate by imposing their own tariffs and we'll be off to the races.  Relatively smart people have come down on both sides of the issue.

So, like so many other things environmental, it comes down to money.  The new environmental question is likely to become, can we afford a trade war?  I don't have the answer but I remember the words of my father before our first camping trip (paraphrased slightly):  "If you are going to poke a bear with a stick, you'd better have a really good backup plan."  I told him, "I wouldn't poke the bear."  His reply, "That's a pretty good plan, got any others?"

RELATED POST: Environmental Legislation Won't Wait For China

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 Mediation of legal disputes (as opposed to time-consuming and expensive trials) has been a great benefit to the justice system. In mediation, the parties voluntarily meet with a neutral third party who listens to both sides and then splits the parties up. The mediator shuttles between the parties and tries to broker a deal to end the dispute. The success rate is remarkably high.

I’ve had the opportunity to participate in many mediations and I have found that sometime early in the process, after the parties have been split up, you’ll inevitably hear the following finger-pointing exchange between one party and the mediator:

Party 1 (with a slight pout): “They are really bad people. They’re doing bad things and they need to be the first one to make an offer.”

Mediator: “Ok, I’ll go talk to them.” 

The mediator goes to the other party and hears: 

Party 2 (with an air of indignation): “These people are the real villains. Their demands are outrageous. We can’t possibly make any offer. Tell them to make a reasonable proposal.”

Mediator: “Ok, let me talk to them.”

This goes back and forth until one party finally realizes that making the first move isn’t the end of the world, and an offer is made, and then countered, and on it goes until a resolution is reached. That first offer can take five minutes or five hours. It doesn’t matter too much to the mediator – he/she is being paid by the hour. And the mediator knows something the other two parties don’t; that is, sooner or later, someone will make the first offer.

When it comes to international climate change action, China (and India) and the United States are at the beginning of the mediation. Everyone is finger pointing:

U.S.: “China is beginning to be a huge contributor to CO2 emissions. They must commit to a huge reduction."

China: “The U.S. has historically generated much more CO2 than China and has done nothing over the last eight years. The U.S. needs to make the commitment to change, and then we’ll see what we’ll do.”

U.S.: “We’re not going to pass climate change legislation until China does."

China: “ We won’t move.”

Let me shorten this mediation by about four hours by making a suggestion – United States, pass your legislation. Be the first to make the offer. Keep the pressure on China (consider trade policy, for example), but take the lead.  You're just wasting a lot of effort if you insist that China take action at the same time. 

Further, though it certainly has significant environmental problems, it isn’t as though China is just sitting on its 2.6 billion hands. Pop quiz: As between the U.S. and China, which country:

• Committed to reduce the energy intensity of its economy – energy used per dollar of goods produced – by 20% in five years?
• Will increase its total installed capacity for solar power 75 times in just over ten years?
• Plans to install 100 million energy-efficient light bulbs in 2009?
• Has committed $462 billion to scaling up renewable energy by 2020?
• Has increased wind power by 100% in each of the last four years?
• Is the world’s top producer of solar photovoltaic panels?
• Has the more stringent automotive fuel economy standards?
• Invested $12 billion in renewable energy in 2009, placing it second in the world in absolute dollars spent, just behind Germany?
• In 2009 will be the largest installer of wind power.

The correct answer to each question is China. I’ve graded the quiz. The West Coast did well and the Midwest was great but you people on the East Coast, particularly the D.C. area, failed miserably.

My point is that if the U.S. goes first, it won’t be the end of the world. (I won’t pull an Al Gore and say that if we don’t go first, it will be the end of the world. I wouldn’t do that.) Whether its cap and trade, nuclear, or something more creative, legislation is going to happen.  I'm not saying that that is good or bad, just that the genie is out of that bottle.  Insisting that China must act benefits no one – unless you’re being paid by the hour.

RELATED POST:  Tariffs and the Environment: Are We Ready For a Trade War?

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