Climate Change Challenges and Opportunities

Transcription

1 Climate Change Challenges and Opportunities Flexible Packaging Association 2008 Fall Executive Conference Patrick D. Traylor, Partner October 2008

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3 Overview The Kyoto Protocol Lieberman-Warner (S.2191) Dingell Discussion Draft Challenges and Opportunities for the Flexible Packaging Industry

4 The Kyoto Protocol

5 In general Commits parties to an average 10% reduction below 1990 levels of CO 2 e in the compliance period Country targets are met by controlling emissions, or securing additional allowances through the joint implementation (JI) and clean development mechanism (CDM) programs, as well as land-use, landuse change, and forestry projects (LULUCF) Several flavors of emission units (one tonne CO 2 e per unit): AAUs: assigned amount units (allowances allocated to Annex I parties) RMUs: removal units (LULUCF project credits in Annex I parties) ERUs: emission reduction units (joint implementation project credits) CERs: certified emission reduction units (clean development mechanism credits) Each type of emission unit is tradable between parties and may be used to cover emissions of GHGs United Nation s Kyoto Protocol webpage is at

6 The Clean Development Mechanism Up to $12 billion will flow from Annex I to developing countries under the Clean Development Mechanism (CDM), with 1.3 billion CERs in the pipeline through CDM Project Participants Host country Investor country Project participants CDM Project Requirements Assists host country in achieving sustainable development Provides real, measurable, long-term benefits related to the mitigation of climate change Delivers emission reductions that are additional to those that would occur without the project Is eligible (by reference to approved methodologies) for CDM registration

7 Lieberman-Warner (S.2191)

8 Terms and Cost Terms of the Bill Scope: 5,000 tons of coal annually, NG, petroleum/coal, CO 2 e distributor, HFC Caps: 5,775 MMtCO 2 e 2012; 1,732 MMtCO 2 e 2050 (19% below 2005 in 2020, and 70% by 2050) EPA will track trading system through allowances (>5 billion in year one) Allocation: free, then transitioning to 69.5% auction by 2031 Offsets: Domestic/international/borrowed (15%) Cost control: Carbon Market Efficiency Board (borrowing, offsets, cap expansion) International: developing country catch-up Floor debate anticipated in early June (45/20/15) EPA Assessment of S.2191 If: Lieberman-Warner plus Kyoto Annex I parties 50%<1990 by 2050 plus all other Kyoto parties at 1990 by 2035, then stabilization at 491 ppm At 491 ppm, the IPCC suggests the following impacts: degree C temperature rise and a m sea level increase $ G GDP impact by 2030; $ T GDP impact by % increase in electricity by 2030; 26% increase by 2050

9 Will it be enough? Stabilization at ppm

10 October 2008 Dingell Discussion Bill

11 Overview of Dingell Discussion Draft Released in October 2008 by House Committee on Energy and Commerce Chairman Dingell to spur discussion of climate change legislation in the 111 th Congress Reducing U.S. GHG emissions Covers 88% of GHG emissions in the United States Six percent below 2005 levels by 2020 Forty-four percent below 2005 levels by 2030 Eighty percent below 2005 levels by 2050 Covers sources with GHG emissions of 25,000 tons per year or more EPA authorized to impose categorical GHG performance standards on smaller sources Coal-fired electric generation emissions subject to performance standards and GHG sequestration as available

12 Overview of Dingell Discussion Draft Managing the cost of GHG regulation Establishes a cap-and-trade program for GHG emissions Caps gradually become more stringent over time to ease transition to carbon constraints Strategic reserve of allowances could be used to mitigate unusually high allowance costs; reserve allowances could also be auctioned Offset (international and domestic) project allowances would be allowed, with 5% of compliance obligation in the early years covered by offsets, growing to 35% of obligations by 2024 Carbon market oversight will reside with the Federal Energy Regulatory Commission Increase energy efficiency State energy efficiency development funds Building code energy efficiency improvements of 30% by 2010 and 50% by 2020

13 Overview of Dingell Discussion Draft Spurring the development of clean technologies Bonus allowance allocations to carbon sequestration and renewable energy (e.g., wind and solar) Incentives for deployment of clean technologies in the transportation sector Allocating emission allowances Option 1: free allocation like current Clean Air Act Title IV Acid Rain Program Option 2: limited free allocation, with more allowance value targeting complementary GHG reduction technologies Option 3: same as Option 2, but with allowance value also flowing to adaptation and international programs Option 4: majority of allowance value as a rebate to consumers All options include: energy efficiency and clean tech; low-income protection programs; auctioned allowances from 2026 unless Congress reauthorizes the bill

14 Overview of Dingell Discussion Draft Implementing the climate change program Streamlined; uses current agencies; uses current legal authorities International linkages Allowance allocation adjustments to industries hard-hit by climate regulation Border adjustments for carbon-intensive products

15 Challenges and Opportunities for the Flexible Packaging Industry

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