GLOBAL CLIMATE DEBATE

McGINNIS: Hello, and welcome to "Clean Skies Sunday," a weekly half-hour look at energy issues facing Washington and America.  I'm Susan McGinnis.  This week, EPA Administrator Lisa Jackson responds to coal state Democrats about the prospect of the agency regulating CO2 emissions.  President Obama talks clean energy to business leaders.  Does he hint at a plan to encourage switching fuels at older coal plants?  And we'll show you a program that could make your family car one of the greenest items you own.  First, to the EPA and a letter that went last week from EPA Administrator Lisa Jackson to senators, unveiling her plan on how greenhouse gas regulations would proceed if Congress can't agree to climate legislation limiting carbon emissions.  "Clean Skies'" Dan Goldstein looks at how the EPA plans to use the Clean Air Act to control carbon emissions and what may lie ahead.  

GOLDSTEIN: While a Senate bill on carbon may be on the way...  

JOHN KERRY: It's better to legislate than regulate.  

GOLDSTEIN: It may not be soon enough.  

KERRY: And we're on a short track here, in terms of piecing together legislation that we intend to roll out.  I'm not going to give you days, I'm not going to give you a date, because I always know what happens when you do that. 

GOLDSTEIN: That's because the EPA may not wait.  Last week the agency gave its clearest signal yet as to what it plans to do if Congress doesn't act.  In a letter to eight coal state Democrats, EPA Administrator Lisa Jackson detailed her approach to limiting carbon emissions.  

JACKSON: As I've said from the beginning, EPA can use the Clean Air Act to make smart, sensible regulation that's entirely consistent with the idea of long-term legislation.  

GOLDSTEIN: Jackson's plan would require no action on greenhouse gas emissions in 2010, to give states and industries time to prepare.  The biggest emitters, like power plants already regulated under the Clean Air Act, would have to address those emissions in EPA permit applications starting in 2011.  Next up would be medium-sized emitters, like small factories, beginning in the second half of 2011 through 2012.  The smallest emitters, like mom and pop stores, wouldn't see regulations before 2016, if at all.  
JACKSON: The key to making sure that we don't have any bad impacts on our economy is predictability and time.  

GOLDSTEIN: And the EPA has tried to minimize the impact on small businesses, saying facilities that emit under 25,000 tons of carbon a year could be exempted.  Jackson, in her letter, said that limits could go even higher.  But already more than a dozen farm and industry groups have filed suit against the EPA, saying the agency hadn't proved its case when it comes to global warming and the danger of those emissions.  And the EPA could find itself in trouble on another front, too, namely, its attempt to exempt some of the smaller emitters.  

SCOTT SEAGAL: This is just an exercise of enforcement discretion, by saying bigger sources are most important, medium sources less so, and then smaller sources, relatively unimportant, so that we won't get to them till 2015 or 2016.  However, there is still great legal peril associated with setting up that three-part typology when there's no reference to it within the Clean Air Act, so they've got a legal issue that's pending there that they're going to have to resolve, and I predict will be challenged.  

GOLDSTEIN: Even defenders of the EPA are concerned that the agency could be carving out too big of an exemption in an effort to head off Congress.  

DAVID DONIGER: We will look at the final number and ask the question, are the big sources covered?  And are the things that are excluded the small things that have never been covered by permitting before?  If she gets the number right, then we'll support it.  

GOLDSTEIN: Still, Congress is likely to have the final say on the EPA's plans.  Republican Senator Lisa Murkowski has gotten nearly 40 votes for a resolution that would bar the EPA from regulating greenhouse gas emissions.  Farm state Democrats like Collin Peterson in the House have offered similar measures.  That could force the White House to spend political capital on heading off a climate defeat rather than passing a bill.  Dan Goldstein, Clean Skies News.  

McGINNIS: And joining us now is Dick Stoll.  He's a partner with the Washington, D.C. law firm Foley & Lardner, a member of the firm's environmental practice.  Dick, thanks for coming in.  

STOLL: Glad to be here, Susan.  
McGINNIS: So, no EPA moves to regulate greenhouse gases through the endangerment finding for this year.  What did this letter by Lisa Jackson to the coal state Democrats really accomplish?  Did it deflect much criticism?  
STOLL: Well, it certainly was a relief valve for the time being.  Everybody was expecting that perhaps EPA would issue this final so-called "tailoring rule" in the next couple of months, and it would start reviewing big stationary sources and smaller stationary sources of air pollution pretty quick, like during calendar 2010.  That was clearly one option that was out there.  By making clear that EPA has already decided to put that off until 2011, that was a relief valve on perhaps resolutions that were being introduced in the Senate and maybe the House or other legislation to put EPA on hold, and it's also a relief valve for certain things that may be going on in the Court of Appeals in D.C. right now with respect to review of the endangerment finding.  
McGINNIS: So the possibility of upping, that tailoring rule and also issuing a timetable -- is that really the only thing that was new in this letter?  Is the rest of it just sort of, she's reiterating what has already been stated?  
STOLL: The two biggest pieces of news in that letter would be, no regulation during the year 2010.  Plus, a little footnote there, phasing in after that.  And then the second piece was saying that she could go substantially higher than the 25,000 ton limit.  

McGINNIS: Now, what could that part do?  We have lawsuits already from industry, from political groups, state of Texas.  Could this bring more lawsuits?  
STOLL: I don't think it will bring more lawsuits, because there's going to be plenty anyway.  There are already plenty on the endangerment finding, and when the tailoring rule goes final, there will be plenty on that.  I don't think there will be more parties coming in, but there will be more interesting issues to raise, now, if she's saying that she's even going from 25,000 to whatever "substantially higher" means.  
McGINNIS: Now, so many of these lawsuits are about the science behind climate change.  But what about the argument in some of these lawsuits that EPA did not adequately do an impact study on the impact of the endangerment finding?  
STOLL: When there's judicial review of this endangerment finding -- which has now started with the 16 lawsuits -- one major issue will be, is there justification for her scientific determination?  Frankly, that's going to be hard to defeat.  Courts will defer to EPA on scientific determinations.  And as long as EPA has connected the dots, as long as they've written a record and say, "We find this, this and this," that's going to be hard for a court to overturn.  But, as you allude to, one thing EPA did not do -- even though industry parties suggested or demanded that EPA should do -- was go through a process, which they normally do -- 

McGINNIS: And it's required by law.  

STOLL: Well, the D.C. Circuit will decide whether it was required by law here.  
McGINNIS: To do an adequate impact analysis.  

STOLL: EPA will maintain that, because the endangerment finding is not itself a regulation that requires anybody to do anything, that they don't have to do those studies and impact analysis.  The industry argument is that, with this endangerment finding, it is inexorably going to set off a colossal regulatory scheme.  
McGINNIS: But EPA did say, we will do this analysis later.  Do you imagine they'll get to work on that soon?  

STOLL: I don't know.  
McGINNIS: Did she shed any new light on how EPA might regulate?  

STOLL: Well, only -- yes, a little bit.  Only by saying, one, not during 2010, then phasing things in.  She said, for major sources that are already subject to permitting under the Clean Air Act, they'll come first for this new greenhouse gas scheme.  Then she said, after 2016, then we'll address smaller sources.  So, yeah, she set a little timetable there that nobody had seen before, and again, probably the big piece of news, then, would be saying that she's probably going to up the 25,000 ton threshold by some significant or substantial amount.  That was surprising to a lot of people.  

McGINNIS: So, in light of this past week's events, what are your expectations regarding this more than a dozen lawsuits right now?  Is there any real danger for EPA?  Could the D.C. Circuit Court ask EPA to reconsider it?  Or negate it?  

STOLL: Well, I think she lanced a boil somewhat by delaying things, okay, because she said no regulation during 2010.  That's going to make it harder for parties to argue to the D.C. Circuit that the D.C. Circuit needs to stay the rule pending review.  So that's probably not going to happen now, or at least it will be harder for them to argue that.  So, in the meantime, EPA can go forward with the tailoring rule.  The court will go ahead and hear these arguments on the endangerment finding.  
McGINNIS: But it goes into effect.  

STOLL: Yes, because the general rule is, when EPA issues a final rule, even though people sue and seek judicial review, the rule stays in effect unless you can convince the court that a stay is warranted, and that's hard to do.  
McGINNIS: Okay, fascinating stuff.  Dick Stoll, thank you so much for coming in from Foley & Lardner here in D.C. We appreciate your insight.  And still to come on "Clean Skies Sunday," despite rumors of its demise, a climate bill is alive and well.  So says one of its authors.  Senator John Kerry outlines some of the elements in his bill, and we'll break them down.  Plus, President Obama talks transition, energy transition, but how much will that cost energy producers?  We talk to an energy expert on cost and potential jobs.  
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Snow diamonds glitter across a sleeping winter earth.  December skies have always represented an end, a quiet, restful death of the year, of a romance, of a well-worn life.  But I look at a frozen white landscape and see perfect harmony, an interconnected planet where everything eventually comes together.  The line between sky and a snow-covered horizon disappears -- a beautiful reminder that there may be nothing better than a fresh start.  A lot of what we think of as brilliant or luminous comes from the clear blue sky in our childhood memory.  So bright you'd squint your eyes, and so blue, it took your breath away.  It's the sky we'd re-create with crayons, with puffy clouds and a beaming yellow sun.  It just never occurred to us that one day, kids would pick up the brown or gray to illustrate the haze.  I think we all want the sky in our imagination to be the blue it was born to be, the blue every living thing deserves to see in their sky.  There's an American Indian proverb that says, "We do not inherit the land from our ancestors, we borrow it from our children."  Generations of civilization have understood that.  The air our children will breathe, the environment they will inhabit is theirs.  We just cannot accept the status quo, as if we have no comprehension, no conscience. 

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McGINNIS: Welcome back to "Clean Skies Sunday.”   The timetable for Senate climate legislation to limit carbon emissions is now taking shape.  Reports say that Senate Majority Leader Harry Reid has asked Senator John Kerry, one of the authors of coming climate legislation, to deliver his bill in early March.  "Clean Skies'" Tyler Suiters caught up with Senator Kerry last week to discuss his progress, and, Tyler, Kerry had been refusing to publicly share any deadlines.  
SUITERS: Susan, lately, that has been the case.  I don't think you can blame John Kerry given the lack of progress on health care.  Now, the last prediction I heard from Kerry was mid-March, but last week during a policy speech, the senator revealed that the deadline to deliver his climate bill is now rapidly approaching.  

KERRY: Harry Reid called me just the other day and affirmed that he wants a bill and he wants a bill soon.  And we're going to try and meet that standard.  We are working very, very diligently with a lot of different parties on the hill.  We're talking to all of the groups that you might imagine.  People who represent one interest, whether it's heavy industry, or people who represent another interest, coal, or natural gas, oil -- you name it.  They're at the table and we're thinking this through as carefully as we can as to how one can thread the legislative needle.  

SUITERS: During a policy event at the National Press Club, Senator Kerry outlined some of the elements of his long-awaited legislation.  He reaffirmed that he wants to use legislation, not regulation, as a means of curbing U.S. carbon emissions.  Also, Kerry said he and his senators, Graham and Lieberman, his coauthors on this bill, as well as their staff members, met with Interior Secretary Ken Salazar and his team last week to talk about the climate bill.  And John Kerry dismissed the idea of a potential carbon tax to lower carbon emissions.  He said, "You show me one Republican who's going to vote for that" -- "that" being a tax.  But Kerry's strongest message may have been his take on the idea of separating his climate bill from the clean energy bill, if and when both of these arrive on the Senate floor.  

KERRY: It's a deal-breaker for Lindsey Graham, who called it a "half-assed approach.”   So, I'll just quote Lindsey Graham.  [Laughter] It doesn't get the job done, folks.  It just doesn't get the job done.  If you want to move your economy rapidly towards this transformation, you need to send a price signal.  An "energy only" bill sends no price signal.  It simply continues business as usual.  And the businesses will have no certainty as to what the future is going to bring.  

SUITERS: And in another reference to the future of his climate bill, Kerry said that he, Lindsey Graham, and Joe Lieberman all like the idea of what is known as a "price collar.”   That's a mechanism to prevent any price spikes from carbon emission allowances.  He said that that was an element of the Kerry-Boxer climate bill, and, Susan, he says he would be very surprised if it weren't in Kerry-Graham-Lieberman as well once it finally emerges.  

McGINNIS: So now we hear more about a price collar, so it seems like John Kerry and the co-authors have been backing away from an actual cap-and-trade system to cut carbon emissions.  Any more clues about that?  
SUITERS: There was a clue, Susan, to some extent, what wasn't said -- he didn't specifically mention cap-and-trade in terms of endorsing that idea.  Now, I asked John Kerry about the nuclear title of this bill.  It seems to me this is really one of the key elements to passing any potential climate legislation.  Before that, Senator Kerry pointed to the real linchpin here in his mind.  That is the system that this will use to cut U.S. carbon emissions.  

KERRY: What's the mechanism for pricing carbon is the real key here.  I mean, that's what we're trying to figure out, is how do we do that in the most effective way?  
SUITERS: Is it fair to say the nuclear title is complete now?  

KERRY: We're pretty close.  We've got a very good sense of what it is.  We're working with people.  We need to pass it by a number of people, so it's not complete yet, but we have a pretty good sense of what it is, and we're pretty comfortable with it.  

SUITERS: I've been tracking the elements of this nuclear title for about three weeks now, and the language in this title that refers to nuclear energy as "clean, baseload energy," this is something that could put -- in some cases, at least -- nuclear into a class with renewable electricity sources, and that may be the single most important element to getting enough Republican votes, Susan, to pass this climate legislation.  
McGINNIS: All right, we'll be waiting to see that legislation over the next couple of weeks -- Tyler Suiters, thank you.  Clean energy -- that's been a theme for President Obama throughout his campaign and his presidency, but nearly half of our electricity still comes from coal plants, and they're old coal plants -- on average, more than 40 years old.  Many are grandfathered under clean air laws, so they don't have modern emissions controls, but their age also means they're paid off.  They run cheaply, keeping electric rates low and utility profits high.  So how can the administration encourage utilities to move away from them?  Margaret Ryan is here to talk a little bit more about that -- Margaret?  

RYAN: Susan, that's exactly the question that top administration officials have been asking.  Clean Skies News has learned that officials, including EPA Administrator Lisa Jackson, are quietly talking with people who run those old coal plants, asking what federal policies would get the dirtiest of them off-line, most likely by repowering them or replacing them with natural gas.  Now, the administration is looking beyond the stick of carbon regulation to some carrots, as the president himself indicated this week to the Business Roundtable.  

BARACK OBAMA: But to truly transition to a clean energy economy, I've also said that we need to put a price on carbon pollution.  Many businesses have embraced this approach, including some who are represented here today.  Still, I am sympathetic to those companies that face significant potential transition costs.  And I want to work with this organization, and others like this, to help with those costs and to get our policies right.  
RYAN: Now, here are the outlines of concepts that are under consideration.  There's some parallel to the "cash for clunkers" auto program.  Perhaps some combination of tax benefits and streamlined EPA permitting to entice utilities to replace that old capacity.  Congress would have to agree on any funding.  Now, experts -- even some environmentalists -- say the quickest option for these old baseload plants may be switching fuels.  That means either revving up unused natural gas capacity, converting coal units to run on natural gas, or replacing them with new high-efficiency gas turbines.  For instance, Robert F. Kennedy, Jr., last year wrote, "These decrepit [coal] generators can be eliminated very quickly -- in many instances literally overnight by substituting power from America's existing and underutilized natural gas generation, which is abundant, cleaner and more affordable and accessible today than dirty coal.”   So, how easy would this kind of transition really be?  I asked Revis James, director of the Energy Technology Assessment Center with the Electric Power Research Institute.  
JAMES: Well, from a plant-specific standpoint -- if you would like to burn the gas in a coal plant, what you would need to do is replace the burners.  It's a part of the combustion system.  And, because natural gas burns faster, the burning characteristics are different, you need different types of burners.  And you can do that, it has been done.  And the engineering exists.  The consideration there, though, is that what you're essentially doing is you're now boiling water with natural gas instead of boiling water with burning coal.  And so there are certain, let's say, limits on efficiency with that process of boiling water than using steam to turn a turbine, whereas you can burn gas directly and use the gases themselves to turn a turbine in a combustion turbine.  
RYAN: Is that more the high-efficiency gas turbines we hear about?  

JAMES: Correct.  Significantly higher than what you'd see in a thermal power plant that uses steam as the basis of its cycle.  

RYAN: Well, on the supply side, how much more natural gas would be needed?  Looking at the U.S. overall, about 23% of our U.S. electricity last year came from natural gas.  What kind of increase in supply?  
JAMES: Well, it depends on how much of the existing fleet you would like to convert to gas.  A study has been done, a very interesting study, done by the Congressional Research Service.  Stan Kaplan there has done a very good study, which looks at what would happen if you were to shut down some coal plants and start up, or increase the capacity factor of some existing coal plants.  And you could, for example, increase gas consumption by something on the order of say 10%, to 15%, if you were to do a very large-scale tradeoff between old coal plants and these gas plants.  There are other considerations -- Where are the plants located?  Are they located near loads and transmission lines -- that enter into the equation.  But, basically, it would be a significant increase.  
RYAN: And David Crane, head of generator NRG, says, natural gas prices -- both their absolute level and their volatility -- are driving decisions on all other types of generation.  He recently told nuclear advocates, if we believe gas is going to stay at $3.00 for the next 30 years, we should all go home.  

McGINNIS: So, why natural gas as opposed to other types of fuel?  

RYAN: Because it's the quickest to turn on.  When you need one more megawatt to meet your peak load or to compensate for some unit going down, or wind flagging, you use a natural gas generator.  And the cost of that final megawatt hour determines the price that generators get for their electricity, so it's almost always a gas megawatt-hour that determines the price.  
McGINNIS: Margaret Ryan, thank you.  Well, your car may be greener than you think.  Still to come on "Clean Skies Sunday," recycling those old clunkers.  We'll show you one program that's found a way to fight carbon using your old vehicle.  

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 Do you ever gaze into the sky and wonder if it looks the same as when people thousands of years ago looked to the heavens?  Not just wondering if ancient people recognized the sun and stars and clouds for what they are -- we know they didn't -- but wondering if in that same spot where you are standing today, did some primitive nomadic hunter look up at a sky that was bluer and clearer and more brilliant than what you see?  We know mankind's footprint has changed the land in ways that would make it unrecognizable to primitive man.  But what have we done to the untouchable, limitless sky?  Maybe the more important question is, what will the sky look like in only a hundred more years?  I wish I could capture cherished moments to put in my pocket and keep forever.  Like the first cold snap of the season, when there's a crisp edge in the air that says, winter is almost here.  And then a few months later when the sun cuts through the morning mist and you can almost hear the dogwood blossoms bursting out of their branches.  But the best moment, by far, is when I'm playing with one of my kids and they get one of those deep belly laughs from way down inside, with a look on their face that can only be described as absolute joy.  Some things are definitely worth hanging on to.  Snow diamonds glitter across a sleeping winter earth.  December skies have always represented an end, a quiet, restful death of the year, of a romance, of a well-worn life.  But I look at a frozen white landscape and see perfect harmony, an interconnected planet where everything eventually comes together.  The line between sky and a snow-covered horizon disappears -- a beautiful reminder that there may be nothing better than a fresh start.  

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McGINNIS: The auto recycling business is a $22 billion a year industry, that money gained from reclaiming more than 75% of an automobile.  But if some researchers at Argonne National Lab have their way, that percentage will grow.  "Clean Skies'" Lee Patrick Sullivan was in Chicago for a behind-the-scenes look at how researchers are trying to keep cars out of landfills and reduce CO2 emissions by more than 12 million tons a year.  
SULLIVAN: It's called a junkyard, but the material here is not junk.  Three-quarters of a trashed car or truck is stripped of its metal.  The rest is what's called "shredder residue.”   

BASSAM JODY: The non-metals is the shredder residue which ends up now in landfills.  
SULLIVAN: With more than 12 million vehicles recycled each year in the U.S. alone, that makes for more than 5 million tons of that shredder residue ending up in landfills.  Here's a Reader's Digest version of how a car is recycled.  After all the usable parts are taken off and fluids drained, the car hulk is sent to a crusher and then put through a shredder.  Then powerful magnets separate the metals from the rest of the shredded hulk.  Other non-magnetic metals, like copper and aluminum, are then separated by weight.  That takes care of about 75% of the residue.  What to do with the remaining 25% has had auto recyclers stumped, and it's what the researchers at Argonne National Lab outside Chicago have been working on for the past five years.  

JODY: This material is very rich in polymers, like plastics, and elastomers, different rubber species.  So our objective is to try to recover materials from shredder residue, including the polymers, for recycling, so that they could be reused instead of going to a landfill.  

SULLIVAN: Sounds simple, but here's the catch.  There are several different kinds of polymers and elastomers that make up the various parts of a car, and most of them don't like each other and won't bond into a strong enough plastic.  That's where Argonne stepped in.  

JODY: So our second objective was to separate the polymer mixture into individual plastics or groups of compatible materials so that it could be used for making car parts or other parts for other industries.  

SULLIVAN: The folks at Argonne developed a way to separate the different polymers by using a special fluid.  Now, those plastics go into a process that takes several steps till they're eventually broken down into pellet size, like this right here.  Now, these pellets are then turned into more car parts, like this air-conditioning vent, for example.  Being able to totally recycle nearly 90% of an automobile promises to be another revenue stream for the industry.  

MICHAEL WILSON: As far as our industry, anything that helps out the environment is definitely something that is a positive effect for the recycling community.  A lot of things that happen regulatorily will be passed up to us as far as addressing environmental concerns, and so this is going to have a positive effect on our industry.  

SULLIVAN: And good news for consumers -- the recycled plastic is stronger and cheaper than virgin plastic, lowering the cost of making a vehicle while upping its strength.  Also, if recycled plastics are used in the auto industry, it would save more than 24 million barrels of oil a year in the U.S. alone.  
JODY: So it's good from an energy point of view, it's good for the environment.  Plus, it makes these products more sustainable, because we cannot just keep throwing things away in landfills and losing their energy value for too long.  Sustainability is an important factor these days.  
SULLIVAN: Outside Chicago at Argonne National Lab, Lee Patrick Sullivan, Clean Skies News.  

McGINNIS: One quick note -- Congress extended the recycling of "cash for clunker" automobiles by 90 days so salvage yards have until April 30th to process all the cars before they are sent to the shredder.  And that does it for us for this edition of "Clean Skies Sunday.”   I'm Susan McGinnis.  Enjoy the rest of your weekend.  We'll see you right here next Sunday morning, and until then, we'll see you at CleanSkies.com.  Of course, you can also follow us on Twitter and Facebook, too.  Have a great day.  

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