Global Warming Regulation Possible in 2006

January 16, 2006
Client Alert Newsletter Forecast 2006

Many scientists and lawmakers in 2005 expressed concern over global warming issues and the lack of a mandatory national program to control greenhouse gas emissions, and they will likely continue to do so, suggesting that a number of national and local cap-and-trade programs or other regulations could be proposed and possibly implemented in 2006. These climate change programs could significantly affect various U.S. economic sectors, including oil, gas and coal exploration, petroleum refineries and coal blending/cleaning facilities, electric utilities, large industrial plants, and the automobile industry.

Nationally, Senate Energy Committee leaders recently announced plans to explore mandatory greenhouse gas control legislation through cap-and-trade programs. The committee also released a study analyzing "mandatory market-based systems" and committed to hold a climate change conference this spring to receive input from industry leaders and others. However, these efforts may be blocked by the Senate Committee on Environment and Public Works, whose chairman has stated that his committee has primary jurisdiction over climate change issues and that Senate approval of mandatory greenhouse gas emission restrictions was unlikely.

Locally, the Regional Greenhouse Gas Initiative ("RGGI") recently announced that seven member states, including New Jersey and Delaware, had agreed to a regional carbon dioxide ("CO2") cap-and-trade program framework for Northeast and Mid-Atlantic power plants. A draft model rule, which would have to be adopted by each of the participating states, is expected in March. Currently, Pennsylvania is only an "observer" of the RGGI process, but could propose its own new climate change programs in addition to the renewable energy target and ongoing "clean energy" grant programs currently in place.