November 2007
Environmental & Land Use Law
Symposium: Climate Change Strategies
Regional Developments in Climate Change and Renewable Energy
By Eric E. Freedman, Denise M. Lietz, and Carmen M. Butler, K&L Gates
I. Introduction
More recently, however, public concern has taken a
large leap forward. What once seemed a controversial
idea—that human activity is responsible for extraordinary
change in climate patterns—is now considered nearly
uncontroverted fact. And new mantras, such as Sterling
Planet’s1 “Reduce, Renew, Offset,”2 are setting the tone for
regulation on every level. Amidst this heightened concern
for climate change, it is no wonder that most of the American public is celebrating the award of the Nobel Peace Prize
to Al Gore for his efforts to promote understanding of and
appropriate regulatory responses to climate change.
Against a backdrop of heightened public concern,
progress in the regulation of greenhouse gas emissions and
climate change in the United States has been erratic, based
not on any uniform federal policy, but instead on a patchwork of local, state and regional solutions. In the face of
virtual inaction at the federal level, climate change legislation has been limited to the state and local level. Not
surprisingly, Washington and Oregon have been particularly active in implementing climate change laws and
regulations.
Public concern regarding climate change over the past
few decades has been a complicated dance, going two steps
forward, one step back. In the 1980s, the American public
moved two steps forward in a decade that featured the first
widespread environmental movement and the mantra
“Reduce, Reuse, Recycle.” That decade saw Seattle lead the
world with a recycling pilot program that was the first of
its kind. The initial environmental movement was described by some as a fad, and eventually the public took
one step back.
II. International “First Responders” to Climate
Change
Although the general public has only relatively recently recognized the role of humans in climate change,
scientists and policymakers have collaborated officially to
understand climate change since as early as 1988. During
that year, the Intergovernmental Panel on Climate Change
(the “IPCC”), the organization that shares the 2007 Nobel
continued on next page
Section Report from page 1
Editor’s Message from page 1
I hope you will all join us for our December 6, 2007,
quarterly program (you should be able to find the details
on our website), for a chance to listen to an ethics program,
meet the new Executive Committee members, and catch
up with colleagues. We also have planned a full-day CLE
program on February 27, 2008, quarterly programs on
March 27, September 25, and December 11, 2008, and of
course, a great Midyear program scheduled for May 15-17,
2008 at Semiahmoo. Chair-Elect Maia Bellon has been
working with this year’s co-chairs, Courtney Flora, of
McCullough Hill, PS, and Brent Lloyd, of the Seattle City
Attorney’s Office, to plan a broad and interesting program
that highlights differing perspectives on environmental
and land use issues in Washington state.
Thanks to all of the Section members for allowing me
the opportunity to serve as Chair for the upcoming year,
and I hope that if you have ideas, suggestions, even complaints, you won’t hesitate to contact me.
decisions from the Washington environmental and growth
management hearings boards (Andrea McNamara Doyle
and Brent Lloyd, respectively). Finally, there are reports
from Washington law school environmental groups. As
always, responses from readers on any Newsletter subject
are welcomed and encouraged.
Thanks to all authors and to the Editorial Board that
was responsible for the content of this Newsletter issue.
The Newsletter relies on members of the Editorial Board to
produce articles and other contributions for publication—
either by authoring articles or updates or by soliciting
others to author contributions. Editorial Board members
also as a group determine what topics may be timely for
articles and whether article proposals should be published.
The Editorial Board will soon be developing the content for the next issue of the Newsletter. Anyone who
would like to contribute an article for the next or any future
issue, or who has questions, comments, or suggestions
regarding the Newsletter, its content, or the Editorial Board,
is encouraged to contact either me or another member of
the current Editorial Board, as listed on the back page of
this issue. Thank you for your interest in the Newsletter!
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Environmental & Land Use Law
November 2007
Peace Prize with Al Gore, was established by the World
Meteorological Organization and United Nations Environment Programme to evaluate the risk of climate change
brought on by human activity.3 One of the main activities
of IPCC is to publish special reports on topics relevant to
climate change.4
In 1992, at the Earth Summit held in Rio de Janeiro,
most countries in attendance signed the United Nations
Framework Convention on Climate Change (the “UN
Framework”), a nonbinding agreement to consider measures to reduce greenhouse gas emissions.5 Since the UN
Framework entered into force on March 21, 1994, it has
been signed and ratified by a total of 191 countries. Signatories to the UN Framework agreed to gather and share
information on greenhouse gases, launch national strategies to address greenhouse gases and provide financial
and technological support to developing countries.6
The Kyoto Protocol, negotiated in 1997 in Kyoto, Japan, represents the most important addition to the UN
Framework, and a step toward the more powerful and
binding measures envisioned by the framework’s drafters.
By October 23, 2007, a total of 175 countries had signed and
ratified the agreement.7 The Kyoto Protocol strengthened
the UN Framework by committing “Annex I” countries
(generally developed countries) to individual, legally binding targets to limit or reduce greenhouse gas emissions.8 In
order to achieve their targets, Annex I countries have
committed to implement domestic policies and measures
to mitigate climate change and promote sustainable development.
The United States, currently the world’s largest greenhouse gas emitter, has so far resisted legally binding targets to limit or reduce greenhouse gas emissions. The
United States signed and ratified the UN Framework.
President Clinton also signed the Kyoto Protocol, but the
Senate refused to ratify it, thereby avoiding the obligation
to implement any of its measures. Instead, the United
States has undertaken only voluntary programs addressing greenhouse gas emissions, such as the Asia-Pacific
Partnership on Clean Development and Climate, also
known as the “AP6.”9 The AP6 is a non-binding agreement
between member countries Australia, India, Japan, China,
South Korea and the United States. Members of the AP6
have agreed to discuss measures that would help reduce
greenhouse gas emissions, but have not agreed to mandatory limits. Although the AP6 has been applauded for
initiating collaboration between developed and developing countries, it has been sharply criticized for its lack of
teeth.
conflicting state and local requirements that might result
from the absence of federal action. Earlier this year, several
key environmental groups and ten major energy and chemical corporations formed the United States Climate Action
Partnership (“USCAP”) to lobby for federal greenhouse
gas emission caps consistent with the most restrictive
standards contained in proposed federal legislation.10
Pressure on the federal government has come also
from the judiciary. In Massachusetts v. United States Environmental Protection Agency, several states with strong climate change policies argued that the United States Environmental Protection Agency (the “EPA”) had abdicated
its responsibility under the Clean Air Act to regulate
carbon dioxide emissions from vehicles.11 In a landmark
decision issued in April 2007, the United States Supreme
Court held that greenhouse gas emissions from vehicles
are pollutants under the Act, and held that the EPA has the
authority to regulate greenhouse gases from vehicles if the
EPA determines that those emissions contribute to climate
change.12 In response to the Supreme Court’s ruling, the
EPA is currently drafting automobile tailpipe rules, and
many expect that the ruling may lead to additional EPA
regulation of greenhouse gases.13
So far this year, Congress has only begun to address
methods to control and reduce the carbon dioxide and
other greenhouse gas emissions that cause global warming. Although a wide variety of renewable energy bills
have been introduced, two—one favored by the House and
the other by the Senate—have emerged as apparent front
runners. The two bills are vastly different, and informal
efforts are being made to reconcile their differences.
The bill favored by the House—the New Direction for
Energy Independence, National Security, and Consumer
Protection Act (H.R. 3221)—mandates that utilities provide 2.75 percent of their retail electricity from renewable
resources (or through renewable energy credits) by 2010,
rising to 15 percent by 2020, and extends renewable energy
production tax credits and investment tax credits through
the end of 2012.14 The bill favored by the Senate—the
Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007 (H.R. 6)—would increase Corporate
Average Fuel Economy (“CAFE”) standards to 35 miles
per gallon by 2020 and mandate increased use of ethanol
and other biofuels.15
There are also two versions of federal climate change
legislation under consideration. The first is a bipartisan
Senate bill sponsored by Senator Joseph Lieberman (D-CT)
and Senator John Warner (R-VA).16 The second is a House
bill that has been proposed by Representative John Dingell
(D-MI), Chairman of the House Committee on Energy and
Commerce.17 Each of the two climate-change bills contemplates a cap-and-trade market system to control greenhouse gas emissions.
Although the ultimate shape of the pending renewable
energy and climate-change initiatives is difficult to predict
at this point, there is a growing consensus that Congress
III. United States Federal Legislation
Notwithstanding the United States’ rogue stance on
climate change policy in the international arena, the federal government has over the past year experienced increased domestic pressure to act on climate change, partly
because of concerns on the part of industry regarding
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will enact federal legislation to limit greenhouse gas emissions within the next couple of years.
Both have recently adopted climate change laws that establish greenhouse gas emission reduction goals and have
implemented renewable portfolio standards requiring that
utilities acquire increased shares of their electric power
from renewable resources.26
IV. Regional Developments in the United States
Inspired by international efforts, regional and state
initiatives have rushed to fill the void left by the absence of
federal legislation. The first regional cap-and-trade program for carbon dioxide emissions from electric generating facilities was the Northeast Regional Greenhouse Gas
Initiative (“RGGI”). RGGI was formed in 2005 by seven
Northeastern and Mid-Atlantic states, and currently has
nine member states. The states participating in RGGI have
agreed to reduce greenhouse gas emissions to 1990 levels
by 2009, and to 10 percent below 1990 levels by 2018. In
order for the participants’ agreement to become legally
enforceable, each individual RGGI member state must
adopt its own implementing legislation and regulations.18
The Western Regional Climate Action Initiative (the
“Western Climate Initiative”) is the West’s analogue to
RGGI. In February 2007, the governors of Washington,
Oregon, California, Arizona and New Mexico signed an
agreement to form the initiative, providing that members
will “collaborate in identifying, evaluating and implementing ways” to reduce greenhouse gas emissions.”19
Since then, the state of Utah and the provinces of British
Columbia and Manitoba have joined the Western Climate
Initiative, and the states of Colorado, Kansas, Nevada,
Wyoming and Alaska, along with the provinces of Ontario,
Quebec and Saskatchewan and the Mexican state of Sonora,
have become observers.20
The members of the Western Climate Initiative agreed
(1) to establish an overall greenhouse gas reduction goal by
August 2007, (2) to develop a “design for a regional market-based multi-sector mechanism, such as a load-based
cap and trade program,” by August 2008, and (3) to participate in a multi-state greenhouse gas registry.21 In accordance with these undertakings, members of the Western
Climate Initiative have agreed to reduce greenhouse gas
emissions by 15 percent below 2005 levels by 2020.22 The
members have also joined a multi-state greenhouse gas
registry, The Climate Registry.23 As with RGGI, each state
and province participating in the Western Climate Initiative must adopt its own legislation and regulations to make
the initiative’s commitment legally enforceable.
A. Washington’s Climate Change Initiatives
For Washington, 2007 has been the year of legislative
and regulatory action on climate change. Figure 1 summarizes Washington’s simultaneous ongoing climate change
initiatives on various fronts.
Figure 1. Washington’s Current Climate Change Efforts27
1.
Executive Order 07-02
Early in 2007, Governor Christine Gregoire issued an
executive order setting ambitious goals for reducing greenhouse gas emissions and increasing clean energy sector
jobs in Washington.28 To assist in meeting these goals, the
order directed the Department of Ecology (“Ecology”) and
the Department of Community, Trade, and Economic Development (“CTED”) to lead a task force on climate change
to assist in developing additional measures to address
global warming and strategize on goals. The effort, called
the Washington Climate Challenge, created a group composed of representatives from business, community groups,
and environmental groups—the Climate Advisory Team.
Two groups serve in advisory roles to the Climate Advisory Team: (1) the Technical Working Groups, which represent the energy supply, residential, commercial and
industrial, forestry, agriculture, and transportation sectors, and (2) the Preparation/Adaptation Working Groups,
which are responsible for assessing impacts on water, the
coast and infrastructure, human health, agriculture and
forestry. The Climate Advisory Team’s process is expected
to be complete by the end of 2007 and will result in a report
to Governor Gregoire by February 2008. This report will
include specific steps necessary for meeting the goals set
V. State Action: Washington and Oregon
Climate change is expected to affect Washington and
Oregon in similar ways. Each state anticipates that its
coastal communities will be challenged by rises in the sea
level associated with climate change.24 In addition, each
state is concerned about prospects for reduced rainfall in
the region as a result of climate change, since each depends
on snow pack for the summer stream flows necessary to
support energy generation, municipal water supplies, and
irrigation.25 Not surprisingly, then, Washington and Oregon have responded to climate change in similar ways.
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Environmental & Land Use Law
November 2007
forth in the order and to prepare for the impacts expected
from climate change.29
ance with the performance standard if the Energy Facility
Site Evaluation Council (“EFSEC”) or Ecology approves
the sequestration.37 All baseload electric generation facilities in operation as of June 30, 2008, are deemed to be in
compliance with the greenhouse gases emissions performance standard established under the statute until such
time as a Washington utility acquires a new ownership
interest in the facility, makes an upgrade to the facility, or
enters into an agreement having a term of five or more
years to purchase power from the facility.38
By June 2008, rules for implementing and enforcing
the standard are required to be adopted by EFSEC and
Ecology.39 The agencies have begun this rulemaking process, in which they are working very closely to coordinate
the rule development.40
2.
Climate Change Mitigation Legislation
In May 2007, Governor Gregoire signed Engrossed
Substitute Senate Bill 6001 (“ESSB 6001”), which had been
adopted by the Washington Legislature during the 2007
legislative session.30 The bill was inspired in large part by
the goals set forth in Governor Gregoire’s Executive Order.
Codified at Chapter 80.80 RCW, the operative portions
of ESSB 6001 address several aspects of climate change.
Specifically, the legislation sets the following emissions
reduction goals, modeled after the goals set in the
Governor’s executive order:
• Reduction of the state’s greenhouse gas emissions to
1990 levels by 2020;
3.
Clean Energy Incentive Legislation
The Washington Legislature also addressed the
Governor’s Executive Order in Engrossed Second Substitute House Bill 1303 (“E2SHB 1303”).41 This bill directs
CTED and Ecology to develop a framework for the state to
participate in “global markets to mitigate climate change,
on a multisector basis.”42 In addition, the bill implements a
school bus replacement incentive program to remove older,
less efficient buses from school fleets and implements
other programs to encourage biofuels production and fuel
efficiency improvements.
• Reduction of the state’s greenhouse gas emissions to
25 percent below 1990 levels by 2035; and
• Reduction of the state’s greenhouse gas emissions to
50 percent below 1990 levels (or 70 percent below the
emissions projected for the state that year) by 2050.31
The legislation also sets a goal to increase the state’s
clean energy sector jobs—informally termed “green collar
jobs”—to 25,000 by 2020.32 In order to measure the state’s
progress in meeting these goals, Ecology and CTED must
estimate the state’s greenhouse gas emissions in 1990 to
establish a baseline against which to measure the emission
reduction goals.33 In 2010, Ecology and CTED will begin
making biennial reports of total and sector greenhouse gas
emissions.34 In the 2008 legislative session, the Governor
must make policy recommendations to the Legislature
addressing the manner in which market-based mechanisms (like a cap-and-trade system), sequestration options,
replacement of high-polluting older thermal power plants,
use of indigenous resources, and state regulatory or tax
policies could support the reduction of greenhouse gas
emissions.35
Under ESSB 6001, effective on July 1, 2008, Washington
will have an emissions performance standard of 1,100
pounds per megawatt hour (an amount determined to be
equivalent to the greenhouse gas output of a new combined cycle natural gas-fired power plant) for baseload
electric generation.36 This standard applies to all baseload
electric generating plants (i.e., plants having an annualized
capacity factor of at least 60 percent) located in Washington
and becoming operational after July 1, 2008, or in which
Washington utilities acquire an ownership interest or make
upgrades after July 1, 2008, and all long-term power purchase agreements (i.e., power purchase agreements having
terms of five years or more) entered into or renewed by
Washington utilities after that date. Emissions that are
permanently sequestered—in geologic formations or otherwise—do not count for purposes of determining compli-
B. Oregon’s Climate Change Legislation
Like Washington, Oregon has taken aggressive action
in response to climate change in 2007.
1.
Climate Change Mitigation Legislation
In July 2007, the Oregon Legislature passed House Bill
3543 (“HB 3543”).43 Governor Ted Kulongoski signed the
bill in August. HB 3543 establishes greenhouse gas emission reduction goals for Oregon that are similar to those
established for Washington by ESSB 6001. Emission growth
is to be arrested by 2010; emission levels are to be reduced
to percent below 1990 levels by 2020, and to 75 percent
below 1990 levels by 2050.44 HB 3543 also establishes a
global warming commission that will include 11 voting
members appointed by the Governor and 14 ex officio
nonvoting members. The ex officio members, who are
specified in the legislation, are composed of ten members
representing state agencies and four legislators.45 The
commission’s mission includes recommending “ways to
coordinate state and local efforts to reduce greenhouse gas
emissions in Oregon consistent with the greenhouse gas
emissions reduction goals established by section 2 of th[e]
2007 Act and … efforts to help Oregon prepare for the
effects of global warming.”46
HB 3543 also creates the Oregon Climate Change Research Institute, which will be administered by the Oregon
State University.47 Unlike Washington’s ESSB 6001, HB
3543 does not set an emissions performance standard for
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power-generating facilities. In a letter to the chair of
Oregon’s Environmental Quality Commission, Governor
Kulongoski asked that the Commission, with the assistance of the Oregon Department of Energy, the Oregon
Public Utility Commission and the Oregon Department of
Environmental Quality, develop a greenhouse gas reporting rule in order to assist Oregon with its activities in the
Western Climate Initiative and its efforts to implement the
goals of HB 3543.48
electric, geothermal, and biofuels. By requiring load-serving electric utilities to use these renewable energy sources
(or the RECs associated with them), states are creating
demand for new clean technologies (“cleantech”). Cleantech
investment is given a significant boost by federal and state
production tax credits and investment tax credits that
typically account for 30 to 35 percent of the capital costs of
renewable energy projects.
1.
Washington’s Renewable Portfolio Standard (I-937)
Washington Initiative 937—the “Energy Independence
Act”—was passed by slight majority of voters in November 2006 and is codified in Chapter 19.285 RCW. It applies
to Washington’s 17 largest utilities, which collectively
serve 84 percent of the retail load in the state.51 Utilities
serving 25,000 or fewer retail customers are exempt.52 The
Act establishes a legal requirement that by 2020, all but the
smallest utilities in the state serve at least 15 percent of their
load with renewable resources.53 The requirement is to be
implemented in phases: three percent of load by 2012, nine
percent of load by 2015, and 15 percent of load by 2020.54
The Act defines “load” as “the amount of kilowatt-hours of
electricity delivered in the most recently completed year
by a qualifying utility to its Washington retail customers.”55 The penalties for failure to meet the requirements of
the act are expressed in terms of dollars per megawatt
hour.56 Thus, the requirements of the act seem to apply to
the amount of energy provided by eligible renewable
resources rather than the generating capacity of those
resources.
The Act defines eligible renewable resources as water,
wind, solar, geothermal, various kinds of biomass, landfill
and sewage treatment gas, wave/ocean/tidal power,
biodiesel, and efficiency upgrades to utility-owned hydroelectric projects located in the Pacific Northwest. 57
Washington’s RPS excludes large, existing hydro projects,
including the federally owned hydro facilities on the Columbia and Snake Rivers from which the Bonneville Power
Administration markets the output.58 Qualifying projects
must have been built after March 31, 1999, and can be
located anywhere in the Pacific Northwest or elsewhere if
their energy can be delivered to Washington on a real-time
basis without shaping, storage or integration services.59
Distributed renewable resources (i.e., renewable resources
having a generating capacity of five megawatts or less) are
counted at double the actual output of the facility.60
Utilities may satisfy the RPS requirement during any
year with RECs produced during that year or during the
immediately preceding or succeeding years.61 Any such
RECs must, however, have been produced by eligible
renewable resources located in the Pacific Northwest.62 In
addition, a utility may not count any renewable resource
energy toward satisfaction of the RPS requirement if RECs
associated with the energy are owned by a person other
than the utility.63
2.
Renewable Energy Legislation
Oregon has also implemented several measures encouraging renewable energy use. HB 2210 encourages the
development and use of biofuels. Oregon also implemented
both residential and business tax credits for renewable
energy projects.49 And, as described below, Oregon, like
Washington, has recently implemented a renewable portfolio standard.
C. Renewable Portfolio Standards and Renewable
Portfolio Goals
About half of the states plus the District of Columbia
have enacted either a renewable portfolio standard (“RPS”)
or a renewable portfolio goal (“RPG”) with the aim of
reducing greenhouse gas emissions from load-serving retail utilities. An RPS is a requirement that a minimum
amount of energy from eligible renewable resources be
included in the power supply portfolio of load-serving
utilities subject to the requirement. An RPG is a nonbinding renewable energy goal. Simply put, the purpose of
both systems is to displace an increasing amount of fossilfuel burning energy, or “dirty energy,” with an increasing
amount of renewable energy generation, or “clean energy.” Generally, RPS and RPG systems aim for a certain
percentage of retail load to be served by renewable resources by a certain year. In addition to promoting the
displacement of dirty energy with clean energy, some state
RPSs or RPGs also promote energy efficiency or conservation.
RPS and RPG systems vary widely in the manner in
which they define eligible renewable resources, in the
limitations that they impose on the geographic area from
which the renewable energy source can be purchased, in
the parameters that they establish for how “new” the
eligible renewable energy project must be, and in the extent
to which they will allow a utility to use a renewable energy
credit (“REC”) associated with the generation of renewable energy to satisfy the RPS or RPG independently of the
associated energy from the renewable resource.50 These
variations have caused multi-state utilities considerable
concern that they will be caught in the midst of conflicting
state requirements in their operations from one state to
another.
Common examples of eligible renewable energy
sources include wind, solar (including photovoltaic and
concentrated thermal solar energy), biomass, some hydro6
Environmental & Land Use Law
November 2007
Utilities are exempt from the RPS requirement if they
experience no load growth and invest at least one percent
of their annual retail revenue requirement on renewable
resources or RECs.64 Utilities are deemed to be in compliance with the requirement if they invest not less than four
percent of their total annual retail revenue requirement on
RECs or the “incremental costs” of renewable resources
(i.e., the levelized delivered cost of eligible renewable
resources in excess of the levelized cost of non-eligible
resources).65
In addition to promoting renewable energy,
Washington’s RPS also promotes energy conservation.
Chapter 19.285 RCW obligates utilities to identify and
pursue cost-effective energy efficiency opportunities in
their service territories, and to set two-year conservation
acquisition targets beginning in 2010.66
Utilities are subject to penalties of $50 per megawatt
hour (adjusted for inflation) for failing to meet the Act’s
RPS or conservation requirements.67 Penalty revenues are
deposited into an “energy independence account” and
used to fund RECs or energy conservation for use in public
sector facilities.68
The agencies tasked with adopting rules for the implementation of Washington RPS are the Washington Utilities
and Transportation Commission (the “WUTC”) (for investor-owned utilities that are subject to the jurisdiction of the
WUTC) and the State Department of Community, Trade
and Economic Development (“CTED”) (for the state’s consumer-owned utilities that are not subject to the jurisdiction of the WUTC). Both agencies have released draft rules,
and are required to formulate and adopt final regulations
by the end of 2007.69
Chapter 19.285 RCW will create considerable competition among Washington utilities for energy from eligible
renewable resources. It will also impose significant additional power supply and energy conservation costs on
Washington utilities. The statute provides, however, that
“[a]n investor-owned utility is entitled to recover all prudently incurred costs associated with compliance with this
chapter.”70
There is no statutory entitlement on the part of a utility
to recover in rates any penalties that the utility incurs as a
result of failing to meet the RPS or conservation requirements of the Act. Nor is there any prohibition against
seeking such recovery. The Act provides that “[t]he commission shall determine if an investor-owned utility may
recover the cost of this administrative penalty in electric
rates, and may consider providing positive incentives for
an investor-owned utility to exceed the targets established
in section 4 of this act.”71
Under the statute, the larger the utility, the greater its
requirement to displace fossil-fuel burning sources with
renewable sources. For the state’s largest electric utilities
(i.e., those serving at least three percent of all electric power
sold in the state), the RPS requirements are phased in at 5
percent by 2011, 15 percent by 2015, 20 percent by 2020, and
25 percent by 2025.73 Mid-sized electric utilities (i.e., those
serving between 1.5 percent and 3 percent of all electric
power sold in the state) must serve at least 10 percent of
their retail load with renewable energy by 2025.74 All other
electric utilities (i.e., any utility serving less than 1.5 percent of all electric power sold in the state) must serve at
least five percent of their retail load with renewable energy
by 2025.75 ESSs must meet the requirements of the electric
utilities in whose service territories the ESSs serve retail
customers.76
Eligible resources must be new—becoming operational on or after January 1, 1995—and be either wind,
solar, wave, tidal, geothermal, biomass, new hydro (not
located inside environmentally protected areas) or efficiency upgrades to existing hydro facilities.77 Electric utilities can use bundled or unbundled RECs to satisfy the RPS
requirement, so long as the RECs are associated with
renewable energy generated within the Western Electricity Coordinating Council (“WECC”) region.78 However,
utilities may use unbundled certificates (i.e., RECs that are
acquired without acquisition also of the renewable energy
with which they are associated) only to satisfy up to 20
percent of the RPS requirements (although ESSs are exempt from this limitation).79 RECs must be acquired by
March 31 of the year following the year for which the RECs
are to be used, and RECs not used in any year may be
banked indefinitely and used (in order of date of issuance)
at any subsequent time.80
Oregon’s RPS also features safety valves for electric
utilities struggling to comply with its requirements. First,
if utilities are unable to satisfy the requirement in any given
year, they may make alternative compliance payments in
amounts established by the Oregon Public Utility Commission.81 Second, suppliers may be exempted from the
RPS requirement during any year in which compliance
would cost more than four percent of a supplier’s annual
revenue requirement.82 If a utility or ESS fails to comply
with the standards established by the RPS, it is subject to
monetary penalties.83
VI. Summary
Federal climate change regulation is inevitable, but the
federal government has been slow to take steps in that
direction. The resulting void has inspired state and regional climate change initiatives across the United States.
Washington and Oregon are among the leaders in implementing such initiatives. Although there are now signs of
movement towards federal climate-change legislation, it is
clear that, whatever the ultimate results of that movement,
2.
Oregon’s Renewable Portfolio Standard (SB 838)
Oregon’s RPS, adopted in late May 2007, applies to
Oregon electric utilities and any “electricity service supplier” (“ESS”) that serves commercial or industrial customers located in the service area of an Oregon utility.72
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20 Membership information is available at the Initiative’s website: http://
www.westernclimateinitiative.org/Index.cfm.
all of those who live and work in Washington and Oregon
have already entered the carbon-constrained future.
21 Western Climate Initiative Agreement.
22 Press Release, Western Climate Initiative, “Western Climate Initiative Members Set Regional Target to Reduce Greenhouse Gas Emissions” (Aug. 22, 2007).
Eric Freedman is a partner in the Energy and Utilities Group at
K&L Gates, focusing on energy and utilities transactional matters, including mergers and acquisitions, joint ventures, power
project development, power supply contracts, renewable energy
credit trading contracts and emissions allowance trading contracts.
23 The Climate Registry is developing an emissions reporting system to be used by
its members. Additional information is available on the Registry’s website at
http://www.theclimateregistry.org.
24 See RCW 80.80.005(1)(a); Oregon House Bill 3543, § 1(4).
25 Id.
26 In recent years, Washington and Oregon also adopted clean fuels standards. In
2005, Washington passed House Bill 1387, later codified in Chapter 70.120A
RCW. In 2006, Oregon’s Environmental Quality Commission adopted Oregon
Administrative Rule (OAR) Chapter 340, Division 257, available online at http:/
/arcweb.sos.state.or.us/rules/OARs_300/OAR_340/340_257.html.
Denise Lietz focuses her practice on environmental, land use,
natural resources and energy and utilities issues. Her practice
emphasizes environmental permitting, municipal utility authority and operation, and conservation projects. She provides
regulatory and litigation services to clients, including corporate,
private and municipal entities.
27 Conceptual diagram provided courtesy of Janice Adair, Department of Ecology, on October 17, 2007.
28 Executive Order 07-02, Washington Climate Change Challenge (Feb. 7, 2007).
29 Additional information about the Climate Action Team and its process can be
found on its website at http://www.ecy.wa.gov/climatechange/cat_overview.htm.
30 Information about ESSB 6001 is available at http://apps.leg.wa.gov/billinfo/
summary.aspx?bill=6001&year=2007.
Carmen Butler is an associate in the Seattle office of K&L Gates,
where she is developing a practice in real estate and energy and
utilities with an emphasis on renewable energy. Prior to joining
the firm, Carmen worked with the United Nations in Bosnia,
where she monitored compliance with postwar property law to
ensure the safe return of displaced persons and refugees.
1
2
31 RCW 80.80.020(1)(a)-(c).
32 RCW 80.80.020(1)(d).
33 RCW 80.80.020(2)(a).
34 RCW 80.80.020(2)(b).
35 RCW 80.80.030.
36 RCW 80.80.040(1)(a).
37 RCW 80.80.040(7).
Sterling Planet, like The Climate Trust, helps utilities, businesses and individuals “green up” by selling Renewable Energy Certificates (also known as “RECs”
or “green tags”) and energy efficiency certificates (also known as “White
TagsTM”), and by guiding utilities and companies in the development of green
projects. More information on Sterling Planet is available online at
www.sterlingplanet.com. Additional information on The Climate Trust is available at http://www.climatetrust.org.
38 RCW 80.80.040(2).
39 RCW 80.80.040(10).
40 See St. Reg. 07-16-024 (July 20, 2007); St. Reg. 07-15-084 (July 18, 2007). Ecology
has set up a website reporting on the rule development process: http://
www.ecy.wa.gov/laws-rules/activity/wac173407_218.html.
41 Information regarding E2SHB 1303 is available at http://apps.leg.wa.gov/billinfo/
summary.aspx?year=2007&bill=1303.
An offset is an activity, such as the reduction, avoidance, or sequestration of
greenhouse gas emissions, that counteracts or offsets greenhouse gases that
would have been emitted into the atmosphere.
42 HB 1303, § 403(1).
43 HB 3543 is available online at http://www.leg.state.or.us/07reg/measpdf/hb3500.dir/
hb3543.en.pdf.
3
More information on the IPCC is available online at http://www.ipcc.ch.
4
The IPCC has published three reports this year: Climate Change 2007: The
Physical Science Basis (Feb. 2, 2007), Climate Change 2007: Impacts, Adaptation and
Vulnerability (Apr. 6, 2007), and Climate Change 2007: Mitigation (May 6, 2007).
These reports are available at http://www.ipcc.ch.
44 HB 3543, § 2(1).
5
The predominant greenhouse gas is carbon dioxide. Other greenhouse gases
include methane and nitrous oxide.
47 HB 3543, §§ 15(1), (16).
6
An overview of the UN Framework is available on its website at http://unfccc.int/
essential_background/convention/items/2627.php.
7
Information on the Kyoto Protocol and updates on the status of its ratification
are available online at http://unfccc.int/kyoto_protocol/background/
status_of_ratification/items/2613.php.
8
An overview of the Kyoto Protocol and a link to the Kyoto Protocol Reference
Manual on Accounting of Emissions and Assigned Amounts are available at
http://unfccc.int/kyoto_protocol/items/2830.php.
50 The process of permitting RECs to be utilized separately from the associated
renewable energy is called “unbundling.”
9
Information on the AP6 is available online at http://www.asiapacificpartnership.org.
52 Id.
45 HB 3543, § 4(1).
46 HB 3543, § 9.
48 Letter from Governor Theodore R. Kulongoski to Lynn Hampton, Chairwoman, Environmental Quality Commission (July 17, 2007).
49 The Oregon Department of Energy developed a summary of Oregon’s 2007
Energy Legislation, which is available, along with other information regarding
Oregon’s climate change and renewable energy efforts, at http://www.oregon.gov/
ENERGY/GBLWRM/index.shtml.
51 RCW 19.285.030(16).
10 Information on USCAP is available online at http://www.us-cap.org.
53 RCW 19.285.040(2)(a)(iii).
11 549 U.S. __, 127 S. Ct. 1438, 167 L.Ed.2d 248 (2007).
54 RCW 19.285.040(2)(a).
12 Id.
13 Information on EPA rule-making is available online at http://www.epa.gov/
epahome/rules.html#proposed.
55 RCW 19.285.030(12). RCW 19.285.040(2)(c) provides that “[i]n meeting the
annual targets … of this subsection, a qualifying utility shall calculate its annual
load based on the average of the utility’s load for the previous two years.”
14 H.R. 3221 is available online at http://www.rules.house.gov/110/text/110_hr3221.pdf.
56 RCW 19.285.060(1).
15 Information about H.R. 6 is available online at http://democrats.senate.gov/dpc/
dpc-new.cfm?doc_name=lb-110-1-91.
57 RCW 19.285.030(10). The act defines “Pacific Northwest” by incorporation from
the Pacific Northwest Electric Power Planning and Conservation Act, 16 U.S.C.
§ 839, et seq., which defines “Pacific Northwest” to include Washington,
Oregon, Idaho, Western Montana, and adjacent portions of California and Utah
and Nevada within the Columbia River Basin, or within 75 miles of the
Columbia River Basin. 16 U.S.C. § 839a(14). This is the service area of the
Bonneville Power Administration (“BPA”). The historical rationale for BPA’s
service area was that BPA marketed power from the Federal dams on the
Columbia River. The dams produced power from water runoff from the entire
Columbia River Basin, and BPA was accordingly obligated to make the power
available to the residents of the basin.
16 The Lieberman-Warner bill and links to more information are available online
at http://lieberman.senate.gov/issues/globalwarming.cfm.
17 Information regarding the Dingell bill is available online at http://
energycommerce.house.gov/CHIP_110/index_chip110.shtml.
18 Information on RGGI is available online at http://www.rggi.org/index.htm.
19 Western Regional Climate Action Initiative Agreement (Feb. 26, 2007) (the
“Western Climate Initiative Agreement”).
8
Environmental & Land Use Law
November 2007
58 RCW 19.285.030(10)(b).
dicts that rising temperatures may result in significant
adverse consequences over the next 100 years, including
rising sea levels, increased flooding, increased stress on
forest resources, and disruption to agriculture.1 The IPCC
has concluded there are two broad strategies for addressing the consequences of climate change: (1) mitigating or
reducing GHG emissions; and (2) adapting to environmental changes attributable to global warming.2
While Congress is presently debating the merits of
various legislative proposals to reduce GHG emissions, it
has not yet adopted any comprehensive plan for addressing global climate change. In the absence of federal guidance, states have taken the lead in establishing frameworks
for addressing GHG emissions and other climate change
impacts. To date, at least sixteen states have adopted
legislation or agreed to participate in regional pacts that
establish aggressive, economy-wide GHG emission reduction targets.3 For example, under ESSB 6001, adopted by
the Washington Legislature in 2007, Washington has committed to reducing its GHG emissions to 1990 levels by
2020, and fifty percent below 1990 levels by 2050.4 In order
to achieve emission reduction targets, Washington and
other states must quantify historic and contemporary GHG
emission levels and adopt measures for eliminating or
reducing state-wide GHG emissions.
The Washington State Environmental Policy Act
(“SEPA”) and other state-level environmental review statutes will likely play an important role in states’ efforts to
address climate change, particularly in states with legislatively-mandated GHG reduction targets. First, all SEPAs
share a fundamental information-gathering purpose and
require project proponents to reveal and quantify the
environmental impacts associated with their proposals.5
SEPA review documents which assess GHG emissions will
help regulators identify the GHG emissions associated
with various activities, formulate baseline emission inventories, and identify potential sources for mitigating emissions. Indeed, one Washington jurisdiction (King County)
and the State of Massachusetts have adopted policies which
require project proponents to quantify the GHG emissions
and other climate change impacts attributable to their
proposals. The City of Seattle is considering its own SEPA
proposal, and similar requirements in other jurisdictions
seem inevitable—either through legislation or pending
litigation.
Second, some SEPAs grant permitting agencies substantive authority which may be used to modify or deny
projects based on GHG emissions and could play an important role in achieving GHG emission reduction targets.6
The GHG targets mandated by ESSB 6001 are economywide and will require emission reductions from the energy, transportation, and other sectors of the economy.7
While the energy and transportation sectors account for a
large portion of national GHG emissions, discretionary
land use decisions will continue to come under increasing
scrutiny because the built environment is also responsible
59 RCW 19.285.030(10)(a). The act does not define the phrase “real-time basis
without shaping, storage or integration services,” nor do the WUTC’s proposed
regulations as of this date. In comments on the WUTC’s proposed regulations,
certain Washington electric companies have proposed that the phrase be
defined as “any timeframe shorter than the day-ahead market.” That proposed
definition is consistent with regional electric transmission scheduling practices.
60 RCW 19.285.040(2)(b).
61 RCW 19.285.040(2)(e).
62 RCW 19.185.030(17).
63 RCW 19.285.040(2)(f)(i).
64 RCW 19.285.040(2)(d).
65 RCW 19.285.040(2)(e).
66 RCW 19.285.040(1).
67 RCW 19.285.060(1).
68 RCW 19.285.060(5).
69 Information on WUTC rule-making is available online at http://www.wutc.wa.gov/
hearingrulemaking. Specific information on CTED’s draft rulemaking for I-937 is
available at http://www.cted.wa.gov/site/1001/default.aspx.
70 RCW 19.285.050(2).
71 RCW 19.285.060(4).
72 An ESS is an alternative electric service provider that has received certification
from the Oregon Public Utility Commission to provide electric power to
commercial and industrial electric customers in Oregon that are eligible to
purchase their electric supply from a supplier other than their local electric
utility. Oregon Revised Statutes 757.600.
73 SB 838, Section 6(1).
74 SB 838, Section 7(3).
75 SB 838, Section 7(2).
76 SB 838, Section 9.
77 SB 838, Sections 3 and 4. Oregon’s RPS is more generous than is Washington’s
RPS in permitting certain output from existing BPA and utility-owned hydroelectric facilities to be applied in satisfaction of a utility’s RPS requirements. See,
e.g., SB 838, Sections 3(3) and 8(2)(a).
78 SB 838, Section 15(1) and (2). By contrast, as noted above, Washington’s RPS
requires that qualifying RECs must have been produced by eligible renewable
resources located in the Pacific Northwest, a region that is only a portion of the
WECC.
79 SB 838, Section 17.
80 SB 838, Sections 11 and 16.
81 SB 838, Sections 10(1)(c) and 20.
82 SB 838, Section 12(1).
83 SB 838, Section 22.
Climate Change and Environmental
Review: Trends under State and
National Environmental Policy Acts
By Dustin T. Till, Marten Law Group
I. Introduction
There is a widespread and growing consensus among
scientists and policy makers that fossil fuel combustion
and land use changes such as deforestation and urban
development are increasing atmospheric concentrations of
carbon dioxide and other heat-trapping greenhouse gases
(“GHGs”). Increasing GHG concentrations are believed to
contribute to rising global average surface temperatures.
The International Panel on Climate Change (“IPCC”) pre-
9