EPA endangerment finding and petition for review - the court battle over GHG regulation begins
On December 23, 2009, a Petition for Review was filed in the U.S. Court of Appeals for the D.C. Circuit challenging the US Environmental Protection Agency’s (USEPA) final action and its December 7, 2009 findings that: 1) new motor vehicles and engines cause or contribute to greenhouse gases; and 2) greenhouse gases in the atmosphere threaten public health and welfare of current and future generations. (Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act).
Many of the same companies that filed the Petition are part of a coalition of companies and trade associations that submitted over 133 pages of comments in late June 2009 challenging the Proposed Rule for USEPA’s findings. The coalition questioned the process USEPA used to support its Findings. In addition the coalition asserted that USEPA relied primarily on synthesis reports published by the Intergovernmental Panel on Climate Change (IPCC) and U.S. Climate Change Program – not on underlying science and data. The coalition believes the synthesis reports are insufficient, uncertain, and inadequate to support the findings regarding manmade greenhouse gases and global warming. The coalition also asserted that USEPA did not consider evidence from scientists that disagree that all or most of the climate change that has occurred in the last few centuries is due to human causes.
The timing of the Coalition’s June comments and Petition For Review is worth noting in light of the fact that the USEPA findings came out just before the United Nations Climate Change Conference in Copenhagen (held on December 7th through the 18th), just after the November 23 disclosure that data had been taken from the Climatic Research Unit (CRU) of University of East Anglia and the October 2009 petition filing by the Competitive Enterprise Institute (CEI) to reopen the proceedings for the EPA’s Proposed Findings because the CEI was concerned about evidence concerning the destruction of data at the CRU. Lastly while the USEPA denied the CEI’s request, the CRU is now in the process of doing an internal review and expects results of its review in Spring 2010. CRU stated that the purpose of the review is to determine whether there is any evidence of the manipulation or suppression of data, which is at odds with acceptable scientific practice and may therefore call into question any of the research outcomes.
Given all of the above, it is likely that the comments by coalition of companies mentioned above, the CEI, and others (including OMB) will likely be a road map of the issues that will be addressed in the Petition motions to be filed in February 2010. Clearly, the battle in the courts over how to regulate greenhouse gases is just beginning.
U.S. PTO launches Green Technology Pilot Program to fast track processing of green patents
Co-authored with Cyrus Frelinghuysen.
On December 7th, just hours before the United Nations Climate Change Conference was set to begin in Copenhagen, the U.S. Patent and Trademark Office (PTO) announced the launch of its Green Technology Pilot Program to speed the processing of green patents. The Program is initially set to run for only twelve months. At the end of that period, the PTO will determine whether to extend the program based both on the efficacy of the program and on feedback from participants. In addition, under the program, the PTO will accept a maximum of 3000 applications, but will reevaluate the resources needed to extend the program should the PTO receive more than 3000 applications.
The announcement was made at a joint event held by the Department of Commerce and the Department of Energy. At the event, Department of Energy Secretary Steven Chu also announced that $100 million in funding from the American Recovery and Reinvestment Act, which President Obama signed into law in February, will be made available to accelerate innovation in green technology, increase America’s competitiveness, and create jobs.
Regarding the new Green Technology Pilot Program, U.S. Commerce Secretary Gary Locke explained that, “American competitiveness depends on innovation, and innovation depends on creative Americans developing new technology. By ensuring that many new products will receive patent protection more quickly, we can encourage our brightest innovators to invest needed resources in developing new technologies and help bring those technologies to market more quickly.” Echoing that view, PTO Director David Kappos declared, “Every day an important green tech innovation is hindered from coming to market is another day we harm our planet and another day lost in creating green businesses and green jobs. Applications in this pilot program will see a significant savings in pendency, which will help bring green innovations to market more quickly.”
Ordinarily, the PTO processes patent applications in the order the applications are received. Under the new Green Technology Pilot Program, however, applications related to “green technologies,” i.e., applications pertaining to environmental quality, energy conservation, development of renewable energy resources, or greenhouse gas emission reduction, will be granted accelerated examination, provided those applications meet the program’s requirements. Secretary Locke told reporters that the goal of the program is to reduce the time it takes to review an application from 40 months to 12 months, allowing inventors to secure funding and launch businesses more quickly.
Reaction to the launch of the Green Technology Pilot Program has been generally positive. Carl Horton, Chief Intellectual Property Counsel of General Electric, said, “We hail this initiative as an excellent incentive to fuel further innovation of clean technology and a terrific mechanism to speed the dissemination of these patented technologies throughout the world.” In Q3 of 2009, General Electric was granted four fuel cell and four wind technology patents, according the to the latest CEPGI report.
According to the most recent Clean Energy Patent Growth Index (CEPGI) report, the PTO granted 271 green patents in Q3 of 2009, bringing the total number of green patents issued in 2009 to 788.
Green Patents: The patent system's "fuel of interest" and the promotion of technological innovation
*Co-authored with Cyrus Frelinghuysen.
IPLaw360 recently reported that Clean Energy Patents Reached a New High in Q2. According to the most recent Clean Energy Patent Growth Index report, the U.S. Patent and Trademark Office (PTO) issued 274 “green” patents in the second quarter of 2009.[1] One might expect that those who regard technological innovation as a necessary tool to combat climate change would welcome the continued increase in the issuance of green patents. Nonetheless, there remains disagreement regarding whether the patent system and the enforcement of intellectual property rights will promote or hinder technological innovation with regard to climate change.
The debate over whether the patent system adequately promotes the development of technology to manage climate change is related to the ongoing debate over the role of technology transfers in any future climate change treaty. Under the U.N. Framework Convention on Climate Change and the Kyoto Protocol, developed countries have undertaken obligations to promote the development and transfer of environmentally sound technologies to developing countries. Indeed, the draft negotiating text for the UN Climate Change Conference in Copenhagen contains provisions for “compulsory licensing for specific patented technologies,” as well as “pooling and sharing publicly funded technologies and making the technologies available in the public domain at an affordable price.”
Though meant to encourage the development and spread of green technology, such obligations may paradoxically reduce incentive for technological innovation because private parties or the governments of developed countries will balk at devoting resources to the research and development of technology that may be expropriated or subject to a compulsory license under a future climate change treaty. In an apparent effort to ease such concerns, the House of Representatives recently passed legislation that opposes any global climate change treaty that weakens intellectual property rights. Within the context of these debates over how to promote technological innovation and how to structure technology transfers, the growth of green patents suggests that the patent system continues to provide at least part of the necessary incentive for the development of technology to combat climate change.
Leading environmental groups such as Natural Resources Defense Council (NRDC) have recognized for the need for “Developing the Technology of the Future” to address the problem of climate change. In a brief issued earlier this year, NRDC argued that the federal government must take action to spur research and development with regard to clean energy technology because “[t]he private sector tends to under-invest in new low-carbon technologies because of the risk of ‘innovation spillovers’ -- that other companies will benefit from their initial research investment.” Others have offered so-called “inducement prizes” offered to anyone who can develop the technology to counter the effects of greenhouse gas emissions. In September of 2007, Sir Richard Branson and Al Gore launched the Virgin Earth Challenge, pledging to award $25 million to the developer of “a viable technology which will result in the net removal of anthropogenic, atmospheric greenhouse gases each year for at least ten years without countervailing harmful effects.” Similarly, during the 2008 presidential race, Senator John McCain proposed a $300 million prize for “the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.”
Plato famously wrote that “necessity is the mother of invention.” Arguably, however, neither “necessity” nor the prospect of “inducement prizes” has been as effective as the patent system in providing the crucial incentive for technological innovation. As Abraham Lincoln (who was granted a patent of his own) once remarked, the creation of patent laws encouraged innovation by adding “the fuel of interest to the fire of genius.”
[1] The patents cover the following technologies: fuel cells (156), wind energy (43), solar energy (36), hybrid/electric vehicles (20), biofuels (13), tidal/wave energy (8), and geothermal energy (2). Corporations that were awarded the most “green” patents include Honda (17), General Motors (15), Toyota (12), General Electric (11), Nissan (9), Panasonic (5), Ford (5), Daimler (4), Enercon GmbH (4), Applied Materials (3), and Bloom Energy (3).
Countdown to Copenhagen: The debate over technology transfers and the protection of intellectual property
The debate over the role of technology transfers in any future climate change treaty is set to intensify as the UN Climate Change Conference in Copenhagen approaches. On one side, there are those who believe that intellectual property (IP) rights should not stand in the way of international cooperation on climate change. For example, Secretary of Energy Stephen Chu has suggested that it may be necessary to “share all intellectual property as much as possible,” especially when it comes to certain vital technology like systems for capturing and storing carbon dioxide. A report issued this month by the Center for American Progress and the Global Climate Network warns: “Intellectual property (IP) law can also act as a barrier, and measures to encourage companies to use or relinquish IP (and in some circumstances to use the flexibility already available through the World Trade Organization’s TRIPs agreement) may be necessary.” The report recommends that “patents could be withdrawn if developers seek inappropriately high rents from their IP protection or use IP to restrict a technology’s use.”
In contrast, groups such as the Global Intellectual Property Center (GIPC) of the US Chamber of Commerce and the Coalition for Innovation, Employment and Development (IDEA), an alliance of multinational corporations, worry that the inclusion of technology transfer provisions in any climate treaty poses a serious threat to the protection of IP rights. For example, a report issued by GIPC warns that there is “a growing movement of anti-IP activists drawn from universities, foundations, non-governmental organizations (NGOs), ideologically driven interest groups, and even governments. These activities promote the idea that IP rights should not be recognized and that the protection of IP impedes progress and hurts the poor.” In an interview with the New York Times, the head of IDEA refuted the notion that IP rights are an obstacle to cooperation on climate change:
“Cooperation and property rights are not mutually exclusive. Indeed, property rights are the solution, not the problem. If property rights become secondary, then we lose the incentive for innovators to pursue their ideas, and the world loses the opportunity to learn and build upon their innovation. Not only does this dampen technological advancements, it also would likely mean a major reduction in private sector investment in research and development funding for new technologies.”
Under Article 4.5 of the U.N. Framework Convention on Climate Change (UNFCCC), as affirmed by Article 10 of the Kyoto Protocol, developed countries have committed to taking “all practicable steps to promote facilitate and finance, as appropriate, the transfer of, or access to, environmentally sound technologies and know-how to other Parties.” On May 19, 2009 the UNFCCC released its draft negotiating text that includes various options for “Measures to address intellectual property rights.” One option provides: “Specific measures {shall} {should} be established to remove barriers to development and transfer of technologies from developed to developing Parties arising from intellectual property rights (IPR) protection, including: (a) Compulsory licensing for specific patented technologies; (b) Pooling and sharing publicly funded technologies and making the technologies available in the public domain at an affordable price; (c) Taking into account the example set by decisions in other relevant international forums relating to IPRs, such as the Doha Declaration on the TRIPs Agreement and Public Health.” The negotiating text includes another proposal that “LDCs [least developed countries] be exempted from patent protection of climate-related technologies for adaptation and mitigation, as required for capacity-building and development needs.”
In response, the US House of Representatives recently passed legislation that opposes any global climate change treaty that weakens IP rights. On June 10, 2009, the House passed H.R. 2410, the Foreign Relations Authorization Act, Fiscal Years 2010 and 2011. Section 1120A is entitled “Statement of Policy Regarding Climate Change” and stipulates that, “with respect to the United Nations Framework Convention on Climate Change, the President, the Secretary of State and the Permanent Representative of the United States to the United Nations should prevent any weakening of, and ensure robust compliance with and enforcement of, existing international legal requirements as of the date of the enactment of this Act for the protection of intellectual property rights related to energy or environmental technology, including wind, solar, biomass, geothermal, hydro, landfill gas, natural gas, marine, trash combustion, fuel cell, hydrogen, micro-turbine, nuclear, clean coal, electric battery, alternative fuel, alternative refueling infrastructure, advanced vehicle, electric grid, or energy-efficiency-related technologies.”
It remains to be seen what position the Obama Administration will take on the issue of technology transfers when climate treaty negotiations begin in Copenhagen in December. However, during the recent G8 Summit, President Obama co-chaired a meeting of the Major Economies Forum on Energy and Climate, which includes non-G8 countries like China, India, and Brazil. The discussions resulted in the Declaration of the Leaders of the Major Economies Forum on Energy and Climate. Leaders agreed to establish a “Global Partnership to drive transformational low-carbon, climate-friendly technologies” and to report in November on “actions plans and roadmaps and to make recommendations for further progress.” They will also “consider ideas for appropriate approaches and arrangements to promote technology development, deployment, and transfer.”
Major Economies Forum on Energy and Climate to address emissions targets, clean energy tech, more
President Obama has announced the launch of the Major Economies Forum on Energy and Climate. A preparatory session will be held at the Department of State in Washington, DC on April 27-28 and further talks will take place in La Maddalena, Italy in July. The goal of these meetings is to lay the diplomatic foundation for a successful outcome at the UN climate change negotiations to be held in Copenhagen, Denmark in December.
The leaders of the 17 major economies attending this preparatory session are expected to discuss emission targets, technology funding, sectoral agreements, deforestation, trade tariffs, and issues that deal with economically viable options for reducing greenhouse gases. President Obama, who has recently turned his attention to the need for more clean-energy funding in the US, also expects the meeting to “advance the exploration of concrete incentives and joint ventures that increase the supply of clean energy while cutting greenhouse gas emissions,” according to the White House press release.
With US leadership and the forum’s political momentum, climate-change experts are hopeful that the UN Copenhagen talks will be able to forge foundational principles for a post-Kyoto Protocol agreement, although they doubtful that a formal accord will be signed in December.
The 17 major economies invited to attend are: Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, South Africa, the United Kingdom, and the United States. Denmark and the United Nations were also invited to participate in the dialogue.
Waxman-Markey climate change and energy bill faces significant political hurdles
On March 31, 2009, House Energy and Commerce Committee Chair Henry Waxman (D-MA) and Energy and Environment Subcommittee Chair Ed Markey (D-MA) unveiled the American Clean Energy and Security Act of 2009 (ACES). Although the legislation sketches a skeletal framework for carbon regulation, it is conspicuously silent on several key issues. Most importantly, the bill does not discuss what percentage of allowances, if any, will be auctioned or provided free of charge; nor does it specify whether, to what extent, and in what form, the billions in revenue generated by allowances will be returned to US taxpayers. These critical questions have been tabled for committee deliberation.
Reps. Waxman and Markey have fast-tracked ACES to be out of committee by Memorial Day. This schedule is consistent with the administration’s larger objective of signing a comprehensive climate and energy bill into law in advance of the December 2009 UN Climate Change Conference in Copenhagen. With key questions yet to be addressed and stark policy differences between supporters and detractors of the draft bill, some are skeptical whether the US can agree on comprehensive climate legislation before the Copenhagen summit.
The far-reaching, 648-page draft bill sets forth standards and incentives designed to promote clean energy and energy efficiency while reducing greenhouse gas emissions. Employing a comprehensive approach, the legislation is intended to enhance US energy independence, reduce energy costs to American consumers, create green jobs, and curb global warming pollution. The draft bill’s global warming regime is modeled largely on US Climate Action Partnership (USCAP) recommendations from the Blueprint for Legislative Action. To reduce global warming emissions, the bill broadly outlines a market-based cap-and-trade program with aggressive carbon reduction standards and offset-availability to covered entities. Relative to 2005 levels, the bill calls for reductions of 3% by 2012, 20% by 2020, 42% percent by 2030, and 83% by 2050.
The bill’s energy provisions require that 25% of the US energy supply be generated from renewable sources such as wind, solar, and geothermal by 2025. In addition, the bill promotes development of carbon capture and sequestration technology (CCS), modernization of the US electrical grid, increased production of electric vehicles, and heightened energy efficiency across all sectors of the economy, including building, appliances, and transportation. To facilitate transition to a clean energy economy, Title IV of the bill subsidizes domestic education and training for green jobs as well as exportation of clean technologies to developing countries abroad.
The Waxman-Markey draft has sparked a chorus of approval among commentators and policymakers alike. In an email statement, White House spokesman Ben LaBolt affirmed that “President Obama is committed to an energy policy that launches a new sector of clean energy jobs, makes our economy more competitive, and weans the nation off its dependence on foreign oil,” adding that “[i]t is clear that Chairman Waxman’s legislation would advance all of those goals.” Echoing the response from Pennsylvania Ave., Dr. Richard H. Moss, vice president for climate change at the World Wildlife Fund issued a statement praising the draft as “a major first step toward a strong cap and trade bill that will cut emissions, jumpstart a new clean energy economy and strengthen the ability of the Obama administration to negotiate a fair and effective global climate deal this December in Copenhagen.”
Opponents of the bill do not share Dr. Moss’s optimism. House Minority Leader John Boehner (R-OH) claimed that bill, as proposed, would “raise energy taxes in the midst of a serious recession.” Likewise, Sen. Joe Lieberman (I-CT), a longtime supporter of climate legislation, opined that the draft bill’s emissions targets “impose too much of a burden [on industry]” making it unlikely the bill would garner the 60 votes necessary to pass in the Senate.
Signs point to US-China cooperation on climate change
Ever since President Obama announced in his Inaugural Address that the United States will “work tirelessly” to “roll back the specter of a warming planet,” momentum has been building for the world’s top two leading emitters of greenhouse gases to cooperate on the issue of climate change. Many feel the time is ripe for such cooperation. For example, earlier this year, the Brookings Institution released a report on Overcoming Obstacles to US-China Cooperation on Climate Change, while the Pew Center on Global Climate Change and the Asia Society produced A Roadmap for US-China Cooperation and Climate Change, a project which was co-chaired by current Secretary of Energy Steven Chu.
It was no great surprise, therefore, that last month during her first trip abroad as Secretary of State, Hillary Clinton visited the People’s Republic of China with her Special Envoy on Climate Change Todd Stern to propose a new partnership to combat climate change. According to Secretary Clinton, “the United States and China will build an important partnership to develop and deploy clean energy technologies designed to speed our transformation to low-carbon economies.” Secretary Clinton and her counterpart Yang Jiechi also agreed that the two countries would work together to produce a new comprehensive climate change treaty at the fifteenth Conference of the Parties to the United Nations Framework Convention on Climate Change to be held in Copenhagen in December.
The budding US-China partnership on climate change has grown out of the larger cooperative framework established by the US-China Strategic Economic Dialogue (SED), which was established in September 2006 by Presidents George W. Bush and Hu Jintao. During the fourth meeting of the SED in June 2008, the countries established the US-China Ten Year Energy and Environment Cooperation Framework. One product of that collaboration is the concept of EcoPartnerships, which are voluntary agreements between US and Chinese entities – such as cities, corporations, universities, etc. – to advance the energy security, economic growth, and environmental sustainability of the partners. For example, the Ford Motor Company, Changan Auto Group, the City of Denver, and the Municipality of Chongqing have created an EcoPartnership that will focus on projects like developing electrified vehicle technologies, green city planning, efficient urban transportation, and grid integration.
Taken as a whole, all these developments bode well for increased U.S.-China cooperation on climate change. As the Chinese philosopher Lao-tzu once remarked, “千里之行, 始于足下” (“The journey of a thousand miles begins with the first step”).
EPA nears ruling on greenhouse gases
Lisa Jackson, the new administrator for the EPA, announced to the press last week that her agency would soon make findings on whether greenhouse gases are a danger to public health and welfare. In an interview with the Associated Press on February 17, Ms. Jackson stated "If EPA is going to talk and speak in this game, the first thing it should speak about is whether carbon dioxide and other greenhouse gases endanger human health and welfare." If the agency finds that greenhouse gases are a danger, they could begin to regulate them under federal law. Ms. Jackson added that "[i]t is clear that the Clean Air Act has a mechanism in it for other pollutants to be addressed."
The Supreme Court opened the door to such regulation with its 2007 ruling in Massachusetts v. EPA. In that decision, the Court held that the Clean Air Act could be used to limit carbon dioxide and other greenhouse gas emissions. The Court noted that any refusal by the EPA to regulate greenhouse gases had to be based on science and a “reasoned justification.”
The Bush administration ignored the opinion, insisting the Clean Air Act was not the proper mechanism for addressing global warming. In announcing the EPA’s intent to make findings on greenhouse gases, Jackson dismissed the stance of the Bush-era EPA as a “deafening silence,” and stated that the American people deserve an opinion on the dangers of greenhouse gases.
In making findings the EPA could improve the United States’ international standing on climate change issues. With negotiations on a global treaty set for December 2009 in Copenhagen, the United States faces increasing pressure to take decisive action on global warming.
