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

Other Relevant Provisions

The Climate Action Plan also calls for the Department of the Interior (DOI) to permit wind and solar projects on public lands by 2020 to power 6 million homes. The DOI is also to designate the first-ever hydropower project for priority permitting, and establish a new goal of 100 MW of renewables on federally assisted housing by 2020. The DOI has already been moving forward on the renewables-on-public-lands front.

Observation: Unfortunately, The Climate Action Plan doesn’t clarify if or how other energy sources such as bio-coal, will be incorporated into its directive.

Obama’s Race Against Time

There is little time left for EPA to enact regulations that are being mandated under the President’s Climate Action Plan. Mr. Obama is already well into his second term and he will need to have in place, final EPA rules controlling GHG emissions, no later than 60 days before he leaves office. If the EPA is unable to finalize these rules in time, under the Congressional Review Act, those in the Senate that oppose these rules can pass a nullification resolution. If this happens, there may not be enough support in the Senate to block passage of such a resolution. In that case, the EPA would have to start its rule making process all over again. According to those familiar with the process of promulgating the kind of regulations that The Climate Action Plan requires, it is expected that it will take a minimum of two-years for EPA to draft the rules, go through the public hearing process, defend legal challenges, issue amendments and clarifications, and issue a set of final rules.

Observation: If time runs out, or if a nullification resolution passes in The Senate, it will certainly have an adverse impact on investment in clean energy projects, as the regulatory uncertainties created would add to project risk.

Other Hurdles

Even if the EPA’s rules go into effect before time runs out or if time runs out but a nullification resolution can be blocked, the political battle over these rules will in all likelihood continue and regulatory uncertainty will remain. For example, voters in Republican-leaning, energy-producing states contend that any set of EPA rules controlling greenhouse-gas emissions will include provisions that directly or indirectly, impose some form a national energy tax. These concerns will result in political challenges for changes and/or for legal challenges in the courts.

Observation: If lawsuits ensue, the time needed for settling these matters is not easily controlled and the further delay would contribute to regulatory uncertainty and impede clean energy project development.