Obama’s Race Against Time: The Climate Action Plan, and its impact on biofuels

July 7, 2013 |

obama-signingA Need for A U.S. “Energiewende” that Works

By Tim Sklar, special to Biofuels Digest

The Obama Climate Action Plan

On June 25th, three years after Congress killed a cap-and-trade bill, President Obama introduced a 21-page Climate Action Plan designed to crack down on greenhouse-gas (“GHG”) emissions. This plan calls for issuance of regulations through the executive branch, under existing EPA laws. Clearly, Mr. Obama is determined to address climate change issues in a significant way before he leaves office. EPA is now being ordered to promulgate new regulation that target the nation’s new and existing coal fired power plants, and require them to reduce GHG emissions that are believed to be responsible for 40% of the heat trapping CO2 emissions in the United States.

Because they have yet to be promulgated, it is unclear what these new rules for cutting carbon pollution will contain. It is expected that they may be similar to EPA’s rules for cutting other toxic emissions such as mercury and arsenic. And at this point in time, one can only speculate upon and the regulatory options that will be available to existing power plant owners. These options are expected to include plant closure, scaling back of operations, installing scrubbers and other costly clean coal technology, and co-firing of a clean bio-fuel such as wood pellets or Torrefied Wood (“TW”), a.k.a., bio-coal.

Rules of this level of complexity would normally take years to be fully implemented, as there are bound to be a continuous stream of appeals and requests for exceptions. It is expected that even if passed before Mr. Obama leaves office, clouds of uncertainty will remain for those who are committed to developing renewable energy projects. This continued regulatory uncertainty could be enough to cripple the market prospects for TW in this country for many years. 

Further, implementing regulations of this complexity, often lead to results that have unforeseen adverse consequences that then have to be undone. This article focuses upon the unforeseen consequences of policies and regulations that have occurred in Europe, where regulations designed to reduce greenhouse gas emissions in existing coal fired power plants have already been enacted.

Presented in summary form is an overview of Germany’s GHG reduction policies and regulations that are part of Germany’s “Energiewende”. Energiewende is described as an energy plan designed to convert Germany’s power generation capacity so that it runs primarily on renewable energy.

Because Energiewende is an ongoing program, changes in policies and regulations still needed, will continue to create a climate of economic uncertainty and perceived high investment risk for renewable energy projects.

Using the lessons learned from Germany’s experience under Energiewende, recommendations are presented as to what ought to be considered when implementing rules under the President’s Climate Action Plan. It is hoped that if adopted, these very general recommendations will avoid “Energiewende” mistakes, as well as provide certainty needed to actually stimulate development of clean bio-fuels projects such as TW plants. But one should expect that any U.S. version of Energiewende would not be perfect.

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