TRIRIGA Insights

Although the economy has been the number one priority of business and political leaders over the last twelve months, climate change has remained a top issue across the globe. State and local governments continue to lead the way on legislation to reduce energy use and greenhouse gas emissions. As President Obama finishes his first year in office, federal legislation designed to reduce carbon emissions and address climate change gained momentum and will likely become law in 2010. Below is a recap of climate change legislation as 2009 comes to an end. The clear trend is for more stringent climate change legislation in the near future.

International
The much anticipated Copenhagen climate summit failed to deliver the legally binding climate treaty that many hoped for. However, the non-binding Copenhagen Accord that came out of the summit does demonstrate a commitment on the part of industrialized and developing countries to reduce global greenhouse gas emissions. Most importantly, China and other large developing countries made a commitment to reduce the carbon intensity of their economies. This step will help remove a key barrier to the passage of climate legislation in the United States.

Federal
The EPA Mandatory Greenhouse Gas Reporting rule is the first nationwide GHG regulation. Although this rule is focused on heavy emitters and requires only emission reporting and not actual abatement, it will most likely be used as a foundation on which to build federal legislation designed to reduce GHG emissions. Both of the climate change bills currently in Congress call for a cap and trade program that will likely use the EPA benchmark data to determine carbon emission allocations. The Waxman-Markey bill passed the House earlier this year and the Kerry-Boxer bill is still making its way through various committees. Although it is likely to take several months before a consolidated climate bill is passed by the House and Senate, the process is likely to move forward at a steady pace as long as EPA regulation of greenhouse gas under the Clean Air Act remains a possibility.

States
As is often the case with environmental legislation, California is leading the way with energy and greenhouse gas legislation. California's version of mandatory GHG reporting started in 2008. This year was the first year that organizations were required to report greenhouse gas emissions to the California Air Resources Board. In addition to California, at least 16 other states have passed some sort of mandatory GHG reporting legislation. A number of states, including California, have also enacted laws requiring large private buildings to provide an annual benchmark of energy use.

Cities
Many cities are also aggressively addressing carbon and greenhouse gas emissions within their jurisdictions. Since 2005, more than 1,000 mayors across the country have signed the U.S. Conference of Mayors Climate Protection Agreement. Participating cities commit to implement policies that will reduce GHG emissions in line with the targets set in the Kyoto Protocol. Although much of the effort to date has been focused on city owned buildings and operations, there is an increasing push to require private buildings to track and manage energy use and GHG emissions. Washington D.C. recently announced legislation that will require large privately owned buildings to provide an annual benchmark of energy use. New York City recently introduced a series of bills that require large privately owned buildings to benchmark energy use, make lighting improvements and sub-meter multi-tenant buildings. Several other cities will soon follow suit and, undoubtedly, legislation will include tougher measures to require privately owned buildings to make energy improvements to meet a minimum performance level.

Climate change legislation is a part of doing business
Increasingly organizations realize that the risks from climate change are real and have a material impact on the bottom line. Legislation to address this threat will only become more stringent and most organizations will likely be required to measure and manage energy use and greenhouse gas emissions. Organizations that begin managing energy use and GHG emissions today will have a competitive advantage over those that wait for regulation to compel action.