Update: October 14
Senator Barbara Boxer (D-CA) announced the Senate climate change bill is written and ready to be debated before the Environment and Public Works committee. The bill now moves to the EPA for analysis, which should be finished by the end of October. On October 27, Boxer kicks off three days of hearings on the bill.
Senator John McCain says he won’t support a climate bill that doesn’t have strong provisions for nuclear energy, since he doesn’t believe the US can achieve the necessary emissions reductions with it. Boxer included nuclear provisions in the bill, as well as the potential for offshore drilling to appease other Republicans.
Update: October 6
Obama’s top climate and energy official Carol Browner says there’s virtually no chance Congress will have a climate bill ready for him to sign before Copenhagen negotiations begin in early December. She said the Senate may be able to complete its hearings on the bill, which along with the EPA’s recent moves to regulate greenhouses gases, would at least show the world the US is moving forward.
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The crowd cheered at an event before the G20 meeting when Teresa Heinz read a message from husband, Senator John Kerry (D-MA) announcing that he and Sen. Barbara Boxer (D-CA) would introduce a climate bill in the Senate.
Kerry said, "The Bill will have strong, broad coalition backing. It will be a "thoughtful, innovative, far-reaching solution" and "will take a more comprehensive approach to dwindling oil reserves than any prior legislation."
Sounded great, but where’s the goods? Thus far, the "Clean Energy Jobs and American Power Act of 2009" looks much like that approved by the House, except for slightly more aggressive emission cut targets by 2020 – 20%, up from 17% from 2005 levels. Neither target comes close to that demanded by science – 40% below by 1990 levels by 2020. Read the details and environmental NGO reactions.
Like the House bill, the Senate bill would create a national cap-and-trade program, but omits details on how emissions permits would be distributed – an issue of great contention among stakeholders.
The bill includes the creation of emissions standards for commercial airlines. EPA would be required to work with the Federal Aviation Administration to write regulations for new aircraft and engines by the end of 2012.
And it could clear the way for New York City and other metropolitan areas to require conversion of taxi fleets to hybrid and electric vehicles. The Green Taxis Act of 2009 – included in the bill – would allow city governments to set fuel-economy and emissions standards for privately owned taxicabs. Federal courts have twice ruled that New York City’s green taxi initiatives were illegal, because only the federal government can set vehicle standards.
According to a New York Times report, New York City mayor Michael Bloomberg worked with Senator, Kirsten Gillibrand (D-NY) to craft the law and push it into the Senate climate package. Parallel legislation reportedly will be introduced in the House by Representative Jerry Nadler (D-NY). Boston, San Francisco, Seattle and other cities have also run into legal roadblocks in building green taxi fleets.
Boxer is expected to use Energy Information Administration (EIA) data showing the U.S. is on track to lower emissions 8.5% below 2005 levels by year end. Much of the decrease is a result of the recession and by some utilities switching to natural gas – still, it shows that reaching a 20% reduction isn’t all that difficult. Obama badly needs a climate change bill in his hands when he heads to Copenhagen.
The plan is for a vote in the Senate Environment and Public Works Committee by the end of October. Legislative hearings are expected the week of October 19th followed by mark-up the week of October 26th. Five other committees having jurisdiction over aspects of the bill are: Finance, Foreign Relations, Agriculture, Commerce Science and Transportation, and Energy and Natural Resources.
Once each committee has completed their work, Senate leadership will assemble legislation designed to get the 60 votes necessary to pass a bill on the Senate floor. There could be a floor vote by December, but climate legislation won’t be taken up prior to completion of the health care bill.
In the meantime, the EPA is moving ahead to regulate greenhouse emissions through the Clean Air Act.
Harsh Reality
The news comes on the heels of much more dire, depressing forecasts from the United Nations Environment Program. An analysis of the latest, peer-reviewed science concludes our planet could warm by the dreaded 6.3 degrees Fahrenheit by the end of the century unless the world takes immediate, decisive, extremely aggressive action.
Recent research shows exponential change is happening much faster than forecasters anticipated just two years ago. On July 9, the world’s top emitting countries – responsible for 75% of global emissions – agreed to limit increases in global warming to 2ºC – the upper limit of warming possible to avoid catastrophe. The commitments made thus far will not be enough.
Some progress was made at the G20 summit which recently concluded in Pittsburgh, but most of the attention was on the economy and Iran’s nuclear facility. They agreed to phase out subsidies for oil and gas, which would cut worldwide emissions 10%.
Serious commitment about reaching a deal in Copenhagen was in the air, but there’s been little headway at the G20 meeting in Bangkok this week. Talks have stalled over the same old speed bumps: emissions targets for advanced nations and adaptation funding for developing nations.
"Progress toward high industrialized world emissions cuts remains disappointing during these talks. We’re not seeing real advances there," Yvo de Boer, the head of the U.N. Climate Change Secretariat, told reporters. "Movement on the ways and means and institutions to raise, manage and deploy financing support for the developing world climate action also remains slow."
Next week the talks move to Barcelona. The Copenhagen conference is December 7-18.
Good News: Renewable Energy Rising Rapidly in US
Over the past couple of years, the "Monthly Energy Review" by the U.S. Energy Information Administration (EIA) has shown renewable energy sources growing steadily (i.e., biofuels, biomass, geothermal, hydroelectric, solar, wind).
For June, renewables supplied 11.37% of domestic energy production, up from 9.89% in 2007. They provided 11.18% of net U.S. electrical generation for the first six months of 2009. Renewable energy is almost on par with nuclear, which provided 11.38% of the mix for the first half of 2009. Electricity from coal dropped 13.76%.
Wind energy and hydro is responsible for much of the increase, growing 24.54% and 7.14% respectively during the first half of 2009.
As a footnote, the European Environmental Agency says the EU’s GHG emissions declined for the fourth consecutive year, primarily due to the recession and tightening the cap of its cap-and-trade program, the Emissions Trading Scheme. The EU is on track to meet its Kyoto target and will publish figures later this year.
A123 Systems Goes Public
Back to present reality and our stock markets. In our green investing newsletter, Progressive Investor, we said the significance of A123 Systems’ IPO was a test of confidence in the markets, the economy and in cleantech. A successful IPO could open the door to other strong cleantech candidates waiting in the wings like Silver Spring Networks, Tesla Motors, Nanosolar and Solyndra.
A123’s IPO was indeed successful, demonstrating strong investor interest in batteries for hybrids and electric vehicles. It’s the biggest cleantech IPO since First Solar (FSLR) soared onto the public markets in 2006, quickly rising from about $20 to $375. That year was the year for solar stocks – now advanced batteries are in the spotlight.
A123 (AONE) raised $378 million, almost $100 million more than expected. The company increased the deal size by almost 10% even after raising the offering price 50% from its initial range. So far the share price is holding up at $25.77, almost twice the opening share price of $13.50.
The eight-year-old Boston-based lithium ion battery maker has raised over $300 million in venture capital and has a deal to supply batteries for Chrysler’s EVs. One of the biggest recipients of stimulus funds for battery manufacturing in the US, DOE awarded A123 $250 million in matching grants this summer. A123 plans to locate a manufacturing plant in Michigan, which offered $100 million in tax credits.
"A123 has the right mojo for a successful tech company: brainiacs with state-of-the-art technology spun out of MIT, adults in charge, a bulging R&D budget, real revenues from a fundamental (and long-sought) new product, and dead center in the global frenzy to green our energy economy," says Forbes. On the other hand, A123 burns through cash, showing losses of $146 million since it was founded.
Energy storage is bound to be a huge growth area, but competition is fierce – it’s anyone’s guess as to which companies will make it in the end. In its IPO filing, A123 pointed to data that project the number of hybrids and EVs will expand from 19 models in 2009 to over 150 models in 2014. A.T. Kearney says the market will grow to $22 billion by 2015 and $74 billion by 2020.
Again, the significance of the IPO isn’t so much about investing in battery makers – there are plenty of profitable companies that are safer to invest in.
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