China Tells U.N. Climate Summit it Will Cap GHG Emissions ASAP, U.S. GHG Emissions Rise, Rockefeller Family to Divest Fossil Fuel Investments, India Supreme Court Revokes Coal Leases (by Bob Percival)

At the UN Climate Summit on September 23, Chinese Vice Prime Minister Zhang Gaoli announced that China would try to stop the rise of its carbon emissions “as early as possible.” Minister Zhang stated that “as a responsible major developing country, China will make an even greater effort to address climate change and take on international responsibilities that are commensurate with our national conditions.” Zhang spoke after President Obama, who had declared that the U.S. and China bear a “special responsibility to lead,” Mr. Obama said, “That’s what big nations have to do.”  According to the Global Carbon Atlas, China is now the world’s leading emitter of greenhouse gases (GHGs) accounting for 27.6% of global emissions.  The U.S. is the second largest emitter.  However, the U.S.still  emits considerably more GHGs per person, 16 tons per persons compared to China’s 7.2.

President Obama declared that “the United States has reduced our total carbon pollution by more than any other nation on earth, but we have more to do.”  The latter portion of his statement was emphasized on September 26 when the U.S. Energy Information Administration (EIA) reported that U.S. carbon emissions from energy use rose in each of the last two years, largely due to the rebounding economy. The EIA report did note that emissions from the transportation sector were flat because Americans were buying more fuel efficient vehicles, that wind and solar energy sources increased seven percent last year, now accounting for 12 percent of U.S. energy generation.

Last week the heirs of oil baron John D. Rockefeller announced that they would divest their $860 million Rockefeller Brother Fund (RBF) of investments in fossil fuels in light of their contribution to global warming and climate change.  The RBF has long been a major supporter of environmental causes, contributing to many of the projects I worked on at the Environmental Defense Fund during the early 1980s.  But last week’s announcement drew great attention because the fund is the product of a fortune initially made in the oil industry.  The RBF indicated that it would take some time to sell its investments in companies in the fossil fuel industry and subsequent reports suggested that the fund may keep its natural gas investments for a longer period of time.  

Last May Stanford University, where I went to law school, announced that it will no longer include companies who mine coal for electricity generation in the investment portfolio of its endowment.  The university Board of Trustees acted on the recommendation of its Advisory Panel on Investment Responsibility and Licensing.  Harvard University has expressly refused requests that it divest its endowment of companies in the fossil fuel industry, citing concerns that such a move might hurt the fund’s returns and the fact that the university uses fossil fuels to heat and light its buildings.

On September 24 the Supreme Court of India upheld a previous decision to revoke 214 coal leases that the Indian government had awarded between 1993 and 2009.  The Court found that the leases had been granted to steel, cement and power companies at prices billions of dollars below market rates.  The Court not only fined the companies $4.85 per metric ton of coal they had mined under the leases, but it also barred them from receiving future leases. The companies were given six months to wind down their coal operations before turning them back over to a government entity.  While some observers expressed fear that the decision could exacerbate energy shortages in India, the Court noted that the leases account for only 7 percent of the country’s coal production and that they may be reallocated in the future.  Neha Thirani Bagri, India’s Top Court Revokes Coal Leases, N.Y. Times, Sept. 25, 2014.

Demonstrations Precede UN Climate Summit, Great Barrier Reef Plan, China Bans Dirty Coal, Wind and Solar Now Compete with Gas, Exxon Gets More Time to Stop Russian Arctic Drilling (by Bob Percival)

People around the world today staged massive demonstrations to demand action from world leaders who will gather at the United Nations on Tuesday September 23 to discuss climate change. The largest demonstration occurred in New York City where it covered a two-mile route south from Columbus Circle.  The New York Times reported that so many demonstrators turned out that protesters still were waiting to be able to move two hours after the front of the group commenced the march. New York Mayor Bill de Blasio announced “a sweeping plan to overhaul energy efficiency standards in all state-owned buildings.” Lisa W. Foderaro, At Climate March in New York, A Clarion Call to Action, N.Y. Times, Sept. 21, 2014.

Last week the Australian and Queensland governments announced a 35-year plan for management of the Great Barrier Reef.  The Reef 2050 Long-Term Sustainability Plan was widely reported to be an effort to forestall the UNESCO from classifying this World Heritage site as “in danger” due to climate change and coastal development.  The reef has lost approximately half of its coral. The plan, which is open to public comment until October 27, 2014, is available online at: http://www.environment.gov.au/marine/great-barrier-reef/long-term-sustainability-plan.  Environmentalists had hoped that it would ban the disposal of dredge spoil on the reef, but it does not.  However, the Queensland government has announced a new plan to dispose of 3 million cubic feet of dredged spoil from the Abbot Point port expansion on land, instead of in reef waters, as previously had been planned.

Last week China’s powerful National Development and Reform Commission (NDRC) banned the burning of low quality coal near populated areas that are fighting severe air pollution.  The NDRC prohibited the use of coal with an ash content greater than 16 percent or a sulphur content of greater than one percent.  The ban will take effect in 2015.  The NDRC also has banned all mining or importation of particularly dirty coal with an ash content greater than 40 percent or a sulphur content greater than 3 percent.  Lucy Hornby & Jamie Smyth, China Ban on Low-Grade Coal Set to Hit Global Miners, Financial Times, Sept. 15, 2014.

Last week Lazard Ltd. relesed its annual comparative analysis of the cost of various fuel sources. The report “Lazard’s Levelized Cost of Energy Analysis - Version 8.0,” which is available online at: http://www.lazard.com/PDF/Levelized%20Cost%20of%20Energy%20-%20Version%208.0.pdf, found that the cost of solar and wind energy projects has continued to decline rapidly. In the last five years the cost of wind energy has declined 58 percent while solar photovoltaics have declined 78 percent in cost.  This has occurred because of significant declines in the prices of materials used in these projects along with dramatic improvements in the efficiency with which these projects generate energy. In many parts of the U.S. large wind farms and solar projects now may be cheaper than gas-fired power even without subsidies.

The U.S. Treasury granted ExxonMobil a short-term extension of its previous September 26 deadline to halt its drilling operations in the Kara Sea in the Russian Arctic.  The extension was granted to enable Exxon to safely wind down its drilling operations.  Exxon’s joint venture with Russia’s Rosnoft must be halted because of U.S. sanctions that were tightened due to Russia’s invasion of Ukraine. Previous sanctions imposed in July only prohibited the export of U.S. of U.S. technology.  These sanctions were broadened earlier this month to prohibit U.S. companies from providing services or technology. Ed Crooks, Russia Arctic Drilling on Hold at Exxon, Financial Times, Sept. 20, 2014, at 12.

September 17 was the 227th anniversary of the signing of the Constitution.  The University of Maryland Carey School of Law celebrated Constitution Day with a wonderful program on “The Supreme Court Justice as Constitutional Scholar.”  Three former Supreme Court law clerks whose Justices have written books about theories of constitutional interpretation spoke at the law school event. Decades before they clerked, I clerked for Justice Byron White who eschewed such theories and declared that the job of the Supreme Court Justice is “to decide cases”.  I took the clerks to lunch and enjoyed exchanging stories about the life of a law clerk.  

Yesterday I spoke about the Environmental Law Program’s activities and future plans at a meeting of the Maryland Carey Law Board of Visitors who celebrated my Senior Education Award from the IUCN Academy of Environmental Law.

Chile Carbon Tax Enacted (Updated), Peruvian Environmentalist Murdered, U.S. Sanctions Target Exxon Drilling in Russian Arctic, Chinese Incinerator Protests (by Bob Percival)

Last week Chile apparently became the first country in South America to adopt a carbon tax when the Chilean Congress gave final approval to President Michelle Bachelet’s comprehensive tax reform program.  The tax, which is to take effect in 2017, will apply to thermal power generation stations that generate more than 50MW of electricity.  The tax package also applies hefty fees to imports of polluting diesel vehicles.  Some media reported that last May, Michael A. Hammer, the U.S. Ambassador to Chile, had criticized the proposed carbon tax as a measure that would discourage foreign investment in Chile.  See http://www.globalpost.com/dispatch/news/regions/americas/chile/140513/chile-carbon-tax. and “Carbon Tax Bill Gains in Chile to Business’s Dismay,” EcoAmerica, August 2014, at 9.   His remarks came only two months after U.S. Secretary of State John Kerry personally had directed all U.S. heads of mission to elevate climate change issues to a major priority.  See http://blogs.state.gov/stories/2014/03/07/we-need-elevate-environment-everything-we-do. 

While it would be difficult to understand why the chief representative of the U.S. in Chile would try to undermine the adoption of one of the most progressive environmental measures in the world, the embassy maintains that the ambassador did not in fact criticize the carbon tax.  Gabrielle Guimond, press attache at the U.S. Embassy in Santiago sent me the following email on September 16: “Ambassador Hammer has not made any public comments on the carbon tax, nor has he criticized the Chilean government on the carbon tax. The carbon tax question, as well as the larger tax reform is an internal issue for the Government of Chile and the Chilean people to decide.”  

It is most gratifying to see the U.S. take this position. In a followup email on September 17, the press attache states: “It seems the authors of the globalpost.com article are referring to a speech the Ambassador gave to the U.S.-Chilean Chamber of Commerce in Santiago on May 6, 2014. To add clarity, the full quote from the Ambassador’s speech is as follows, ‘As you know well, the new Administration is considering several changes. In order to continue contributing to the economy and providing value to society, U.S. businesses have the same requirements as any other business – political and economic stability, and clear rules.  When there are changes it is important to inquire with all stakeholders and, at the same time, make timely decisions in order for businesses to plan and adapt properly. At the Embassy we seek to promote the development of U.S. businesses in Chile, ensuring equal treatment as all other businesses, foreign and Chilean.’ The Ambassador did not, as has been incorrectly asserted, make any comments relating to the carbon tax."

Last week it was revealed that Peruvian environmental activist Edwin Chota, who had campaigned against illegal logging, has been murdered, along with three other men, including Chota’s deputy Jorge Rios.  Illegal loggers are suspected of the murders, which occurred in a remote region of Peru near the Brazilian border.  For years Chota had campaigned for members of indigenous communities to receive title to the lands where they lived and worked.  Chota long had received death threats from illegal loggers who he regularly confronted with nothing more than a machete even though they had firearms.  Some environmentalists are arguing that this horrendous tragedy could have been prevented if the Peruvian government had responded to Chota’s pleas to crack down on the nefarious activities of the loggers.

On September 12 the United States and the European Union significantly strengthened sanctions against Russia in response to Russia’s continuing incursion into Ukraine.  Peter Baker & Andrew Higgins, New Round of Sanctions Targets Energy in Russia, New York Times, Sept. 13, 2014, at A4. The new sanctions are expected to put the brakes on ExxonMobil’s joint venture with Russian oil company Rossneft to develop offshore oil resources in the Kara Sea.  American officials anticipate that the American oil company’s lawyers may try to find creative ways to evade the sanctions, but they confirmed that the U.S. “government’s intention was to shut down the company’s operations in the Kara Sea.” Stanley Reed & Clifford Krauss, New Sanctions to Stall Exxon’s Arctic Oil Plans, New York Times, Sept. 13, 2014, at B1.  The Russian government has been seeking foreign help to develop to tap offshore oil resources in the Arctic as its onshore production declines.

Residents in Boluo County in China’s southern Guangdong Province took to the streets to protest government plans to build a garbage incinerator.  Dozens of demonstrators were arrested after they defied government efforts to dissuade them from protesting.  The government estimated that a thousand residents had joined the protests, while the protesters asserted that the number was an order of magnitude greater.  Chris Buckley, In Southern China, Residents Wary of the Government Protest a Plan to Burn Waste, N.Y. Times, Sept. 15, 2014, at A9. This is the latest in a series of incidents where the Chinese public has distrusted government assurances that locally undesirable land uses would not expose them to greater environmental risks.

BP Held "Grossly Negligent" for Deepwater Horizon Spill, Great Barrier Reef Dumping Plan Dropped, India "Coal Scam," 50th Anniversary of Wilderness Act (by Bob Percival)

In a 153-page ruling issued last week, federal district judge Carl Barbier ruled that “gross negligence” by BP PLC was a major contributing factor to the April 2010 Deepwater Horizon oil spill in the Gulf of Mexico. BP repeatedly cut corners to reduce costs, evincing “an extreme deviation from the standard of care and a conscious disregard of known risks.” The judge placed particular emphasis on BP’s decision to leave debris in the bottom of the well that clogged a critical valve and the failure of BP workers to believe that a negative pressure test showed gas seeping into the well. BP argues that the evidence does not support the judge's ruling, which it will appeal.

The decision was the product of the first part of a three-part civil trial that is being held in federal district court in New Orleans. Lawsuits brought by the U.S. government, five Gulf coast states, and private parties have been consolidated and are being tried together.  The finding of gross negligence means that civil penalties of $4,300/barrel of oil spilled, or up to approximately $18 billion, could be imposed on BP. Judge Barbier found that BP was responsible for 67% of the liability, Transocean Ltd (the owner of the oil rig) for 30% and Halliburton (which performed the cement work on the well) for 3%.  

Although the finding of gross negligence should not surprise anyone who has followed the case closely, BP’s stock price plunged nearly 6%, apparently because the company has set aside only $3.51 billion for Clean Water Act penalties, an amount that will have to be increased dramatically. Judge Barbier is expected to rule next on the amount of oil that was spilled.  BP claims that it is responsible for only 2.45 million barrels of oil spilled, while the government maintains that it is liable for 4.2 million barrels.  This was the focus of the second phase of the trial, which was concluded last fall.  The third phase of the trial, to set the actual penalty, will commence in January. Just days before Judge Barbier’s ruling, Halliburton agreed to pay the plaintiffs $1.1 billion to settle claims against it.

Last week a plan to dispose of 3 million cubic meters of dredged soil near Australia’s Great Barrier Reef was dropped in the face of intense public opposition.  Australian environment minister Greg Hunt instead invited the consortium planning to expand the Abbott Point port to increase coal exports to revise their plan to provide for onshore disposal of the dredged spoil.  Jamie Smyth, Dumping Plan for Barrier Reef Halter, Financial Times, Sept. 3, 2014, at 6.

The government of India has asked the country’s Supreme Court to modify its ruling declaring more than 200 coal mining licenses to be illegal.  The government argued that 40 license holders already producing coal and six that are close to beginning production should not have their licenses cancelled.  This is the latest in a long-running “coal scam” scandal involving coal rights dating back to 1993.

September 3rd marked the 50th anniversary of President Lyndon Johnson signing into law the Wilderness Act and the legislation creating the Land and Water Conservation Fund. In an editorial the New York Times criticized Congress for enacting only two pieces of wilderness legislation during President Obama’s terms (compared to 43 during President Reagan’s).  The editorial noted that only a third of the $900 million authorized annually for the Land and Water Conservation Fund is likely to appropriated, even though the fund is supposed to received dedicated royalties from offshore oil leasing.  “Still Time for a Conservation Legacy,” N.Y. TImes, Sept. 2, 2014.