1. Climate Change Policy in an Obama Administration Tom Lindley Perkins Coie LLP November 22, 2008

2. The debate has shifted: From causes and effects to mitigation methods and timelines From voluntary, incentive- based programs to mandatory, market-based regulation U.S. Federal Approach to Climate Change

3. President Bush's approach focused on voluntary, market- based incentive programs and partnerships managed by the Environmental Protection Agency and Department Of Energy Only limited regulatory action has taken place recently: Carbon Sequestration Rules (July 2008) Advance Notice of Proposed Rulemaking (July2008) GHG Reporting Rules (draft to OMB) Federal Climate Change Policy in the Bush Administration: 2000-2008

4. Regional Action: RGGI, Midwest Accord, WCI California's AB 32 leads the way 18 states now have mandatory greenhouse gas reporting rules State & Regional Climate Change Policy There have been many more developments with regional and state-based regulation

5. U.S. Regional Programs Pew Center on Global Climate Change, Oct. 17, 2008

6. President-Elect Obama: Climate Change & Energy Campaign policies vague, but emphasize: Cap-and-trade-style emissions reductions Improved energy efficiency Energy independence Green job creation

7. Economy-wide cap-and-trade system Invest $150 billion over 10 years in advanced energy technologies Improve energy efficiency Make the U.S. an international leader in combating climate change Obama Campaign During the campaign, Obama proposed broad reforms in climate and energy policy :

8. Mandatory, economy-wide Reduce emissions to 1990 levels by 2020 80% reduction below 1990 levels by 2050 Allocation: 100% auction of allowances Limited use of offsets Obama's cap-and-trade plan: Obama Campaign

9. Sectors covered Reporting start date Emissions cap start date Early action credit Preemption of state/regional programs Obama's cap-and-trade plan does not specify: Obama Campaign

10. $150 billion over 10 years in: Plug-in hybrids Commercial scale renewable energy Energy efficiency and weatherization projects Low emissions coal plants Next generation biofuels and fuel infrastructure Transition to new digital electricity grid Assist workers and low income families with "transition" costs Obama's cap-and-trade plan would reinvest allocation revenues: Obama Campaign

11. Re-engage with the UNFCCC December 2008: UN Climate Change Conference, Poznań, Poland November/December 2009: UN Climate Change Conference, Copenhagen Create "Global Energy Forum" of largest emitters Technology transfer to developing countries Confront deforestation; promote carbon sequestration International Commitments: Obama Campaign

12. Agency roles in the Obama Administration Possible elevation to cabinet status EPA to regulate emissions under existing Clean Air Act CA waiver would be approved EPADOE Large role: climate change is an energy issue Clean energy initiatives Possible appointment of National Energy Security Director

13. Congress & Climate Change Policy New cap-and-trade legislation is expected to be introduced in the latter half of 2009 or early 2010. Until then, three recent bills are being discussed as starting points for the 111 th Congress: Senate: Lieberman-Warner House: Dingell-Boucher House: Markey

14. Recent Climate Change Bills: S. 2191 Lieberman-Warner First cap-and-trade bill to be voted out of committee Defeated by Senate procedural vote in June 2008 Some language/initiatives may carry over, but bill will die in 110 th Congress New sponsorship needed: McCain, Boxer expected to lead Congress & Climate Change Policy

15. Recent Climate Change Bills: Dingell-Boucher "discussion draft" Released for comment October 7, 2008 Four scenarios proposed Less aggressive initial reductions Blanket preemption of state/regional cap-and-trade initiatives May become leading bill in 111 th Congress unless Waxman replaces Dingell as chair of Energy and Commerce Committee Congress & Climate Change Policy

16. Recent Climate Change Bills: H.R. 6186: Markey's iCAP Act Chair of select committee on Energy Independence and Global Warming Named by House Speaker Pelosi to specifically address global warming issues Introduced June 4, but no further action taken Committee may dissolve in favor of Rep. Dingell's Energy and Commerce Committee Congress & Climate Change Policy

17. PolicyLieberman-Warner (S.2191)Dingell-Boucher (discussion draft)Obama (campaign policies) Targets  19% below the 2005 emissions by 2020  71% below the 2005 emissions by 2050.  6% below 2005 levels by 2020  80% below 2005 levels by 2050  Reduction to 1990 levels by 2020  80% below 1990 levels by 2050 Allowance Allocation  Initially: 76% allocated and 24% auctioned  By 2036: 27% allocated and 73% auctioned  Mix of allocation and auction until 2026  100% auction of allowances beginning in 2026 with revenues returned on a per capita basis to citizens unless Congress reauthorizes the legislation  100% auction from beginning Preempt state/regional programs No explicit preemption, incentives to encourage states to fold into national program Blanket preemption of state cap-and- trade initiatives Not specified, but probably would not favor blanket preemption Use of offsets2012: 30% of allowance allocation may be satisfied with offsets Initially limited to 5% of allowance allocation due to low initial reduction targets 2024: up to 35% Not specified ("limited") Cap-and-Trade Policy Comparison

18. Many competitors… Recession, economy Subprime mortgage crisis Tax and healthcare reform Wars in Iraq & Afghanistan Will emissions reductions remain a top priority in an Obama Administration? Federal Climate Change Policy

19. Level and timing of cuts Offsets: domestic, international, or none? Grandfathered vs. auctioned allowances Federal preemption of state and regional programs Many key issues under a cap-and-trade program remain unresolved… Federal Climate Change Policy

20. Leakage: whether to first obtain international commitments from developing countries Support for bridge technology (CCS, nuclear) Expansion of renewables (wind, solar, biofuels) Early action credit Key cap-and-trade debates continued: Federal Climate Change Policy

21. Questions & Comments