Energy Policy Update - 2005-03

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Energy Policy Update
Energy and Environmental News
March 2005
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This newsletter is published by the Arizona Department of Commerce Energy Office and is provided free of charge to
the public. It contains verbatim excerpts from international and domestic energy and environment-related
publications reviewed by the Education and Community Outreach personnel. For inquiries, call (602) 771-1137 or toll
free (800) 352-5499.
Compiled and edited by Mark Hope, Energy Research Coordinator.
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To send your questions or comments, or to register to receive this newsletter electronically,
contact: markh@azcommerce.com.
For additional program information, access: http://www.azcommerce.com/newenergy/publications.html.
FOR YOUR CONVENIENCE, ARIZONA-RELATED TITLES ARE HIGHLIGHTED IN GRAY
General Motors Pushes Ethanol Use
[Arizona Republic web site, Feb. 11] Ethanol can help U.S. motorists kick the gasoline habit and
reduce dependence on foreign oil, General Motors [GM] officials said [on Feb. 8] in Paradise Valley
as they kicked off a campaign to promote the alternative fuel. As part of its ethanol push, GM is
providing 28 state governments, including Arizona's, with Chevrolet Avalanche demonstration vehicles that
are equipped to run on a fuel blend of 85 percent ethanol and 15 percent gasoline, known as E85. The
E85 blend could help reduce national gasoline consumption as well as provide a clean, renewable energy
resource, the GM officials said during the Renewable Fuel Association's annual National Ethanol
Conference held at the Camelback Inn. Vehicles are ready today that can run on E85, but the challenge is
to create widespread availability of the fuel, said Thomas Stephens, vice president of GM Powertrains
group and keynote speaker at the conference, attended by about 1,000 people associated with the ethanol
industry. “As far as we're concerned, the challenge is getting the ethanol infrastructure in place and getting
the production up to the point where E85 becomes a real, viable alternative,” said Stephens, who's
responsible for development and production of GM engines and transmissions worldwide…. “If they all ran
on E85 fuel, it would equate to 45 million barrels of crude that we wouldn't have to import annually,” he
said. “This is really a big deal toward reducing our dependence on foreign oil.” Currently, about 30 percent
of gasoline used in the United States is 10 percent ethanol, with all vehicles in the Phoenix and Tucson
areas using the blend during winter months to reduce air pollution. That blend, called E10, already
produces a reduction in oil dependence, Stephens said, but industry can do more with higher percentages
of ethanol. During 2004, the use of E10 in this country reduced carbon-dioxide greenhouse-gas emissions
by more than seven million tons compared with pure gasoline, according to the Renewable Fuels
Association…. “We have the opportunity of developing ethanol as a viable alternative fuel now instead of
waiting around another two decades for hydrogen,” said Gary Herwick of GM's Public Policy Center for
Mobile Emissions and Fuel Efficiency. Ethanol, made from corn and other crops, could help relieve
Alternative Energy & Efficiency
Janet Napolitano, Governor
Gilbert Jimenez, Director, Arizona Department of Commerce
Ken Clark, Director, Arizona Department of Commerce Energy Office
Arizona Department of Commerce Energy Office, Energy Policy Update March 2005 2
growing international pressure on petroleum supplies, Stephens said, as emerging nations rapidly build
their economies and use more cars and trucks. China's fuel use rose 15 percent over the past year, he
added. Ethanol, natural gas, bio-diesel, gas/electric hybrid vehicles and hydrogen fuel cells are all part of
an alternative-energy future, Stephens said. The ethanol industry is expanding and providing an essential
service, said Bob Dineen, president of the Renewable Fuels Association.
Honda Urges Tougher Fuel Economy Standards
[Calstart web site, Feb. 7] Detroit - Honda Motors urged the federal government on [Feb. 4] to impose
tougher fuel-economy regulations, reports The New York Times. The request was meant as a gesture
to environmental groups after the [Feb. 3] decision by Honda and Nissan to join auto industry forces in a
lawsuit against California rules regulating the greenhouse gas emissions from cars and trucks. “Honda is
taking one step forward and one step back,” said Daniel Becker, the top global warming strategist at the
Sierra Club. “They are recognizing the need for cleaner cars, but it is unfortunate they are joining the
retrograde caucus of automakers in opposing California's effort to require cleaner cars.” Honda has long
been the most independent automaker on environmental policy and has not joined Toyota and the Big
Three domestic automakers in many lobbying efforts against tougher fuel economy rules.
Environmentalists who follow the industry said they could not recall any company actually asking to tighten
fuel economy regulations, and Honda officials would not say how much of a gas mileage increase they
would support. “We are not seeking to block greenhouse gas standards,” said Ed Cohen, Honda's vice
president for governmental affairs…. Automakers claim the California rules are actually an indirect attempt
to regulate fuel economy, since reducing fuel consumption is the most practical method of reducing
greenhouse gas emissions from automobiles and other vehicles. California has the right to set its own air
pollution standards, and along with other supporting states, has taken action on the state level, in the
absence of more stringent federal requirements on emissions and fuel economy.
Hybrids to Peak U.S. Market at Three Percent
[Arizona Republic web site, Feb. 4] Detroit - Despite the growing popularity of hybrid vehicles and a
slew of new models scheduled in the next few years, the fuel-saving vehicles will probably peak at
roughly three percent of the total U.S. market by 2010, a new study from the forecasting arm of J.D.
Power and Associates said [on Feb. 3]. Roughly 88,000 hybrids were sold in the United States in 2004,
accounting for about one-half of one percent of total vehicle sales. This year, the number of hybrid models,
which draw power from a gas or diesel engine combined with an electric motor, is expected to increase to
11 from eight, and J.D. Power-LMC Automotive Forecasting Services says sales will grow to 200,000, or
about 1.2 percent of the market. J.D. Power-LMC expects the number of models to expand to 38 by 2011,
17 cars and 21 trucks and sport utility vehicles, but that sales will plateau that year at about 535,000, or
roughly three percent of the U.S. market.
Proposed Wind Farm gets OK
[Arizona Daily Sun web site, Jan. 26] County planning and zoning commissioners unanimously
approved a conditional-use permit for a proposed 60-megawatt wind farm east of Flagstaff despite
nearby landowners' claims that the project's 40 400-foot windmills will destroy their view of the San
Francisco Peaks. Members of the nine-commissioner board said the project, called Sunshine Wind
Energy Park, will have benefits, such as hefty research partnerships with Northern Arizona University,
production of clean, renewable energy and economic impact on the local job market that will far outweigh
concerns over the viewshed….
Salt River Project to Use Biomass Power
[East Valley Tribune web site, Feb. 11] The plant being developed by Snowflake White Mountain
Power LLC will burn waste wood from sawmills and wood thinned from forests near the town – part
of the state government’s Healthy Forest Initiative intended to reduce damage from forest fires.
The 10-year contract calls for [Salt River Project] SRP to purchase 10 megawatts from the plant beginning
at the time the project is completed, which is expected to be no later than January 2008. The Snowflake
power company officials said they will build a plant that can produce between 15 to 20 megawatts of
power, with the remainder available for sale to other utilities…. Arizona Public Service [APS] is planning to
Arizona Department of Commerce Energy Office, Energy Policy Update March 2005 3
build a second three-megawatt biomass plant near Snowflake, which the utility hopes to bring on line by
the end of this year. APS also has started discussions to obtain some of the energy produced at the larger
Snowflake White Mountain Power plant, said APS spokeswoman Maria Arellano. One megawatt is enough
power to serve about 250 homes. Arizona utilities are being prodded into renewable energy production by
the Arizona Corporation Commission, which has set a goal that one percent of the state’s electricity be
produced from non-hydro renewable sources by the end of this year. The commission also authorized the
utilities to add a surcharge [of] .08 cents per kilowatt-hour to consumer bills each month to help cover the
higher expense of renewable energy. Although SRP is not subject to the commission’s rules, the board of
directors has set a goal for SRP to meet two percent of its retail energy requirements from sustainable
sources by 2010, and the Snowflake plant will help meet that goal, the project said….
Bush Administration Plans to Change Air Pollution Regulation
[Environmental News Network web site, Jan. 27] Washington, D.C. - The Bush Administration
embarked [on Jan. 26] on a renewed effort to replace large sections of the Clean Air Act with the
president's more flexible and industry friendly Clear Skies policies. The plan would make sweeping
changes in the way the government regulates air pollution. Among them, it would relax controls on power
plants and other pollution sources and allow their owners to buy or trade the rights to higher authorized
emission levels as long as a cap was maintained on overall emissions nationwide. White House attempts
to get a Clear Skies package through Congress in 2002 and 2003 ultimately failed, compelling the
administration to attempt a few changes through the regulatory process. But it had only limited success.
With the November elections expanding Republican majorities in the Senate and House, the
administration felt emboldened to renew its attempt to pass the legislation and quickly move on the issue.
[On Jan. 24], the full Clear Air package was reintroduced by Sen. James Inhofe (R-Okla.), chairman of the
Environment and Public Works Committee, and rushed to a required preliminary subcommittee hearing [on
Jan. 26] with the idea that the full committee would vote on it by Feb. 14. “The Clear Skies bill is the most
aggressive presidential initiative in history to reduce power plant pollution and provide cleaner air across
the country,” Inhofe said. “The bill reduces emissions of sulfur dioxide, nitrogen oxide and, for the first time,
mercury from power plants by 70 percent by 2018.” The measure would employ a practice currently in use
for facilities that contribute to acid rain, allowing power plant operators and other companies to trade or
buy the rights to higher levels of sulfur dioxide and nitrogen oxide emissions as long as the cumulative
emission totals do not exceed preset national caps. Deadlines would be imposed far in advance to ensure
compliance with the caps. The mercury provision, however, would apply only to emissions from coal-fired
plants. As in recent years, environmental groups immediately attacked the proposals, saying they would
lead to more, not less pollution. Environmentalists contend that the Bush Administration proposal relies too
heavily on voluntary polluter cooperation to succeed; removes the safety net of strict, across-the-board
limits that have controlled emissions for years; and delays emission reduction of dangerous pollutants until
2025 or beyond. “It is no secret that the administration wants to rewrite air pollution protections to favor
power companies and other industrial polluters,” Nat Mund, senior Washington representative of the Sierra
Club, said before the subcommittee meeting. “The Bush Administration's proposed legislation has the
dubious distinction of allowing two to three times more soot, smog and mercury pollution than strong
enforcement of current protections, and for as much as a decade longer. It leaves the fate of millions of
Americans, who are waiting for relief from existing air pollution problems, entirely in the hands of a risky
pollution trading scheme.” Clear the Air, a coalition representing about 40 clean air groups throughout the
country, asserted in a report [on Jan. 26] that, despite the Bush Administration's assurances, 54 percent of
the dirtiest power plants in the country increased their pollution since 1995. “When it comes to power plant
pollution, many of the nation's dirtiest power plants just keep getting dirtier,” said Emily Figdor, a policy
analyst for Clear the Air. “We know how to solve the air pollution problem, but the Bush Administration's air
pollution bill will set us back decades.” Bruce Buckheit, former director of the Environmental Protection
Agency's air enforcement division, said vigorous enforcement of existing laws and regulations governing
power plants could reduce the pollution they currently spew into the air every year from 11 million tons to
one million tons….
Bush Urges Congress to Pass Energy Bill
[Environmental News Network web site, Feb. 3] Washington, D.C. - President Bush urged Congress [on
Feb. 2] to pass legislation that would boost U.S. energy production and keep the country's
Legislation & Regulation
Arizona Department of Commerce Energy Office, Energy Policy Update March 2005 4
economy growing and less reliant on foreign energy imports. In his State of the Union address, Bush
pointed out that he sent to Congress four years ago his national energy plan to increase domestic crude oil
and natural gas supplies, modernize the electric grid, build more nuclear power plants, develop alternative
energy sources and promote energy conservation. However, lawmakers have been unable to agree on a
final energy package…. Bush also called for passage of his “Clear Skies” proposal, that would reduce the
amount of sulfur dioxide, nitrogen oxide and mercury emissions spewed by coal-burning power plants by
70 percent by 2018. Environmental groups and Democrats want a faster implementation date, saying 2018
is too far out. Separately, Bush said his 2006 budget, which will be sent to Congress [on Feb. 10], will have
“strong” funding to develop hydrogen-fueled cars, cleaner burning coal and increase ethanol production.
Bush's national energy plan includes opening the Arctic National Wildlife Refuge in Alaska to drilling, a
move opposed by moderate Republicans, Democrats and environmental groups. The Senate Republican
leadership is expected to attach language giving oil companies access to the refuge to budget legislation,
which cannot be filibustered under Senate rules. In its drive to pass energy legislation, the Bush
Administration does not plan to wade into a dispute over the gasoline additive MTBE [methyl tertiary butyl
ether] that threatens to bog down the bill in Congress, White House spokesman Trent Duffy said. The
White House is remaining silent on the contentious issue of whether oil companies that manufactured the
fuel additive MTBE should be protected from liability lawsuits for water supplies contaminated by the
chemical. MTBE … is a suspected carcinogen and has been found in the drinking water supplies of many
U.S. communities. “The priority for the president is to have the energy bill passed,” Duffy said in explaining
why Bush would prefer to let lawmakers resolve the dispute over MTBE on their own. House Majority
Leader Tom DeLay, a Texas Republican, again insisted [on Feb. 1] that oil companies must be protected
from such lawsuits because the Environment Protection Agency once required the fuel additive. But Sen.
Pete Domenici, a New Mexico Republican who heads the Senate energy panel, said the MTBE protection
will not be in the energy bill he is writing because it cannot pass the Senate. MTBE was widely used in the
1990s to meet federal rules for cleaner-burning gasoline…. The additive has been banned in some states.
The MTBE issue has stymied Bush's efforts for the past two years to secure passage of a sweeping
energy bill.
Congress Considers High Occupancy Vehicle Access for Hybrids
[Calstart web site, Feb. 4] Washington, D.C. - Legislation by lawmakers from California would let
states make their own rules for hybrids in car pool lanes, opening them on a selective basis for
single occupant use by the advanced technology vehicles, reports the Associated Press. Because
federal transportation money helps pay for car pool lanes, the federal government sets the rules for them,
and current regulations require cars in the lanes to carry one or more passengers. Virginia moved forward
with its similar measure despite the conflict with federal law, and federal officials allowed the state to
continue while Congress resolved the issue. Other states including Arizona, Connecticut and Georgia are
contemplating similar measures and could move forward with them, too. “This is a bill whose time has very
much come,” said Rep. Darrell Issa, R-Calif., who co-sponsored the legislation [on Feb. 1] with Rep. Brad
Sherman, D-Calif. But in Virginia, allowing them into car pool lanes sparked such huge sales that
carpoolers have begun complaining of bumper-to-bumper traffic. California's law requires hybrid drivers to
get decals from the Department of Motor Vehicles to enter car pool lanes. Only 75,000 will be issued, an
attempt to avoid the overcrowding Virginia has seen. The California law, which sunsets after three years,
also applies only to hybrids that get at least 45 miles per gallon, a standard that's now met only by the
Toyota and Honda versions and excludes models made by Ford and others. Another aspect often
overlooked is that in California, this privilege has been reserved only for truly alternative-fueled vehicles,
those using natural gas and battery electric power only. Granting carpool lane access to hybrids could
further cripple the support for those alternative fuels, which not only help clean the air and support reduced
oil dependence, but are also seen as bridging steps to a future hydrogen transportation infrastructure:
most hydrogen is currently derived from natural gas, and fuel cell vehicles use electric propulsion. Hybrids
have an important role to play in America's transportation future, but with the nation's dependence on
imported oil increasing, multiple strategies are needed, including alternative fuels.
FERC Rules on Access to Proposed Alaska Gas Pipeline
[Environmental News Network web site, Feb. 10] Juneau - Federal regulators on [Feb. 9] issued rules
on how exploration companies would tap into a natural gas pipeline from Alaska's North Slope.
Federal Energy Regulatory Commission [FERC] members say the rules will make sure the competition for
capacity is fair when smaller companies seek access to the proposed pipeline. The three major North
Slope oil producers – [British Petroleum] BP PLC, ConocoPhillips Co. and Exxon Mobil Corp. – are
Arizona Department of Commerce Energy Office, Energy Policy Update March 2005 5
negotiating to build the mammoth 3,500-mile pipeline through Canada to the Midwest. Smaller companies
say they are concerned about fair access to a pipeline that is built, owned and operated by the same
companies that will be using the line as shippers. The rules were outlined [on Feb. 9] at a FERC meeting
in Washington, D.C., but companies who could be using the pipeline reserved comments until they have
studied the documents. “We haven't actually seen the final details yet, but we're encouraged by what
we've heard so far about their proposal,” said Mark Hanley of Anadarko Petroleum Corp. “It sounds like
many of the concerns of explorers have been addressed.” In a statement, BP said it is reviewing the rules
and had no immediate comment. The FERC's decision has to do with the open season in which
companies would bid for capacity on the pipeline. Anchor shippers – companies that own large amounts of
the gas that will largely pay for the pipeline – will be able to pre-subscribe to pipeline capacity outside of an
open season, under FERC rules. But other bidders must have an opportunity to negotiate the same terms,
and the pre-subscribed agreements must be made public within 10 days, according to the FERC rules.
The potential pipeline sponsors have said entering into early agreements is necessary to keep the financial
risks and uncertainty low before moving ahead with the gas line, which has been estimated to cost $20
billion. Small exploration companies had viewed pre-subscription warily, saying that could allow large
companies to cut favorable deals. The rules also would require that the costs of expanding the pipeline be
shared among all gas shippers unless a convincing argument can be made against it. The gas pipeline as
envisioned by the major producers would take about 10 years to build from the time an application is filed.
It would initially ship 4.5 billion cubic feet of gas per day. BP, ConocoPhillips and Exxon Mobil own the
rights to about 90 percent of the known gas reserves on the North Slope, about 35 trillion cubic feet.
Senators Reintroduce Bill on Gas Emissions
[Arizona Republic web site, Feb. 11] Washington, D.C. - Sens. John McCain and Joe Lieberman
announced [on Feb. 10] that they were reintroducing their bill to curb greenhouse gas emissions
after a similar measure failed in the last Congress. Meeting with reporters in the Capitol, the
Republican from Arizona and Democrat from Connecticut shared the podium with a bipartisan group from
both houses, stressing that concern over global warming is growing and that it crossed party lines and
geographic regions…. “The need is more urgent, the case is more clear than ever, and as we begin this
battle today, we know there are special interests who will try to stop it, but we are beginning with a sense
of commitment and optimism.” The McCain-Lieberman “Climate Stewardship Bill” would require that U.S.
emissions of greenhouse gases – in particular, carbon dioxide, a product of combustion – be no more in
2010 than they were in 2000. The law would apply to industry and transportation, including cars, but not to
homes or farms. Companies that achieve greater reductions would be able to trade their credits in the
open market, creating economic incentives to invent new technologies, the senators said. Greenhouse
gases in the atmosphere reduce the ability of the Earth to radiate heat into space, much like greenhouse
glass retains the heat of the sun. The rise of average temperatures, especially in the regions of higher
latitudes like Alaska and Antarctica, were predicted years ago by scientists concerned about the global
effects of pollution. Lieberman and McCain said that with glaciers in fast retreat, sea ice melting and
drought plaguing large parts of the globe, including McCain's state, it was time to act. “When John and I
began this battle, we were basing our concern about the impact of global warming on the planet on
scientific models, and we were projecting what we thought might happen,” Lieberman said. “That period is
over. Today, we can see with our own eyes what global warming is doing.” Their measure was defeated in
October 2003, when the Senate voted it down 43-55. The Bush Administration also opposed the bill, citing
its cost and asserting that global warming might be a natural phenomenon. Sen. Olympia Snowe, R-Maine,
who serves on the Commerce, Science & Transportation Committee with McCain, said that when
McCain chaired the committee in 2003, he held a number of hearings on global warming. Those hearings
“provided overwhelming and undeniable evidence that we had a serious and profound problem, that we
were impacting our environment not only in all the corners of America, but around the world.” The measure
would provide easier goals for the United States than its obligation under the Kyoto treaty of 1997.
President Bush said in 2001 that the United States would never sign the Kyoto agreement. Kyoto would
have required the United States to reduce emissions by seven percent below its 1990 levels, a target
about 20 percent harder to meet than the McCain-Lieberman bill, according to Lieberman environmental
counsel Tim Profeta.
Arizona Department of Commerce Energy Office, Energy Policy Update March 2005 6
Feds Ante $587 Million for Valley Light Rail
[Arizona Republic web site, Jan. 25] The federal government formally committed to its portion of the
Valley's light-rail system [on Jan. 21] in a funding grant that will pay nearly half of the construction
costs of the 20-mile starter line. The government is funding $587.2 million of the $1.3 billion cost of the
project, which has started construction, with Phoenix, Mesa and Tempe paying the remainder for the line
that will run through the three cities. The Valley Metro project is among the top light-rail priorities in the
nation, said Federal Transit Administrator [FTA] Jennifer Dorn, in Phoenix to attend an official signing
ceremony attended by dozens of Arizona's political and business leaders. “In terms of timing, the Phoenix
project is uppermost on our list,” Dorn said. “It's the most recent one to be approved by the FTA and
recommended by the president, so we're moving forward aggressively with that.” The signing is the
culmination of about five years of negotiations between local and federal officials, with the success of the
massive project hinging on the federal money. “There's a lot of competition (for federal transit funding),”
Dorn said. The requirements are pretty stringent, and this project met the requirements….. The light-rail
portion of the half-cent transportation tax that funds the plan would provide an estimated $2.3 billion for
light-rail extensions…. Before the ceremony, Dorn met with Valley real estate, banking and business
leaders about the Transit Oriented Development plans for the light-rail corridor, which promotes
pedestrian- and transit-friendly urban housing and commercial development. Transit Oriented
Development, which has been created as a zoning overlay along the light-rail system in Phoenix, is an
important part of maximizing the investment in light rail, Dorn said. “We're trying to build a national
consensus about the benefits of Transit Oriented Development,” she said.
SDG&E to Offer Broadband Service Over Electric Lines
[Los Angeles Times web site, Feb. 9] San Diego Gas & Electric Co. [SDG&E] said [on Feb. 8] that it
would launch a pilot program offering some customers broadband Internet access over power
lines, making it the first electric utility in the state to test the latest high-speed technology. But the
broadband connection would be a byproduct of what the utility really wants: a way for customers and the
company to better manage electric service. SDG&E spokesman Ed Van Herik said the company had not
yet ironed out many details of the test, including how many customers would be included. The utility, a unit
of San Diego-based Sempra Energy, serves San Diego County and south Orange County, where the
broadband providers are primarily regional phone giant SBC Communications Inc. and cable companies
such as Cox Communications Inc. An SDG&E executive, Lad Lorenz, revealed the pilot project at the end
of a daylong hearing on the status of broadband deployment. The meeting was held in the San Francisco
offices of the state Public Utilities Commission, which issued a preliminary report on broadband
deployment statewide. Lorenz said SDG&E wanted to make sure that broadband over power lines, or BPL,
could provide customers such services as minute-by-minute prices to help them manage their use of
electricity. The network also would have to provide the utility with some operational benefits, such as
precise data on any problems with the lines, he said.
2004 Was Fourth-Warmest Year Ever Recorded
[New York Times web site, Feb. 10] Last year was the fourth warmest since systematic temperature
measurements began around the world in the 19th century, [National Aeronautics and Space
Administration] NASA scientists said [on Feb. 9]. Particularly high temperatures were measured over
Alaska, the Caspian Sea region of Europe and the Antarctic Peninsula, while the United States was
unusually cool. But the global average continued a 30-year rise that is “due primarily to increasing
greenhouse gases in the atmosphere,” said Dr. James E. Hansen, director of NASA's Goddard Institute for
Space Studies, in Manhattan. The main source of such gases is smokestack and tailpipe emissions from
burning coal and oil. The highest global average was measured in 1998, when temperatures were raised
by a strong cycle of El Niño in the Pacific Ocean; 2002 and 2003 were second and third warmest. Dr.
Energy-Related Environment
Arizona & Western Power
Arizona Department of Commerce Energy Office, Energy Policy Update March 2005 7
Hansen said a weak Niño pattern was likely to make 2005 at least the second warmest year and could
push it beyond 1998 and set a record….
Four of Top Five Spots in Environmental Sustainability Survey
[Environmental News Network web site, Jan. 28] Davos, Switzerland - The Nordic countries ranked
highest in environmental sustainability, a survey released on Jan. 28] at the World Economic
Forum [WEF] reported. Finland claimed the top spot among the list of 146 countries surveyed by a team
of environmental experts at Yale and Columbia Universities in the United States. Rounding out the top five
were Norway, Uruguay, Sweden and Iceland. Those countries were cited for their ability to combine good
management of their natural resources in concert with new development. The United States was ranked
No. 45. Despite ranking high in water quality and environmental protection, its production of greenhouse
gases dragged down its overall standing. Britain was No. 66. Finishing at the bottom of the Environmental
Sustainability Index were North Korea, Iraq, Taiwan, and the ex-Soviet republics of Turkmenistan and
Uzbekistan. The survey, done for the WEF, ranked the countries on 21 criteria, including the use of natural
resources, protection of the environment and countries' ability to improve their environmental acumen….
Big Refiner is Fined and Will Spend $525 Million to Improve Air
[New York Times web site, Jan. 28] Washington, D.C. - The Justice Department announced a
settlement on [on Jan. 27] with the largest oil-refining company in the country over violations of
the Clean Air Act. The accord, officials said, will lead to annual reductions of 47,000 tons of harmful
emissions. Under the settlement, the refiner, ConocoPhillips of Houston, will pay civil fines of $4.5 million
and spend more than $525 million for technological upgrades on nine refineries in seven states to comply
with a provision known as new source review. That regulation requires companies to add new pollution
controls when they expand their plants. The refineries are in California, Illinois, Louisiana, New Jersey,
Pennsylvania, Texas and Washington. They represent nearly 10 percent of the national refining capacity in
the United States….
Canada Split on Auto Emissions Policies
[Calstart web site, Jan. 31] Fredericton, New Brunswick - The two Canadian ministers negotiating with
carmakers over cuts in emissions are split on what to do, reports Reuters. Ottawa says that by 2010
it wants carmakers to cut emissions by 25 percent from 1995 levels. But major automobile manufacturers
say it would be hard to introduce new technologies at such short notice to meet Ottawa's demands and the
two sides have yet to reach a deal. Environment Minister Stephane Dion threatened on [Jan. 27] to impose
binding restrictions, saying the talks had gone on long enough. “This (imposing restrictions) is something
we want to avoid in Canada because we want an agreement with the carmakers. But at the same time, if
unfortunately we don't get an agreement, we'll have to act,” he told Reuters in an interview. Natural
Resources Minister John Efford, who along with Dion is talking to the carmakers, was noticeably less
enthusiastic about the idea of binding regulations on the major carmakers.... Cutting emissions from cars is
one way Canada hopes to meet its targets under the Kyoto protocol on climate change, which obliges
Ottawa to cut output of greenhouse gases by six percent from 1990 levels by 2012. One of the reasons
Canada is struggling is that the climate change file is shared between the environment ministry and the
ministry of natural resources, which is responsible for the well-being of Canada's booming energy sector.
Canadian emissions are in fact about 20 percent above 1990 levels and senior government officials
candidly admit the country has no chance of meeting its Kyoto goals. [On Jan. 20] Dion visited California,
which has told carmakers to cut emissions by 30 percent by 2016. “The Californians showed us that ... the
technologies are in place and this could be done easily. The higher (purchase) price people would pay
would very rapidly be made up by the savings at the pump,” he said.
‘Green’ Building is Taking Root Across Arizona
[Arizona Republic web site, Feb. 7] General Dynamics in Scottsdale is doing it. So are USAA, Arizona
State University and the cities of Phoenix, Tucson, Scottsdale, Apache Junction and Sierra Vista. It is
“green building,” also called “sustainability.” The terms refer to creating or renovating structures to be
energy-efficient, environmentally friendly, healthful for their occupants but still profitable. “Ten or 12 years
ago, (the green building concept) was more like Birkenstocks and the National Hempseed Foundation,
truly a fringe movement,” said Mark Wilhelm of Phoenix, an expert in sustainability. “Now it has become
Arizona Department of Commerce Energy Office, Energy Policy Update March 2005 8
more mainstream. It's taken off in many respects. It's become much more a way of doing business.”…
Among the states, Arizona has the 12th-highest number of green structures built or under construction and
vying for certification. Six buildings in the state have been certified. Sustainability results in lower
maintenance and operating costs, he said. Studies have shown that green construction raises a building's
construction cost an average two percent, he said. In return, the building makes back 20 percent of the
total construction cost over 20 years, thanks to lower power and water costs. Wilhelm said green buildings
also promote improved productivity, with “improved indoor air quality, thermal comfort and reduced
glare.”… Vivian VanPeenen, curator of education at the Reed Park Zoo in Tucson, has a second title: the
green champion of the zoo's $3 million education building, for which a capital campaign is under way.
“We're not just trying to improve energy efficiency by 20 or 30 percent; we're going for 50 or 60 percent,”
she said. Plans call for solar panels on the roof, the most efficient heating and air-conditioning system
available and good use of shade and insulation. Daylighting specialists are providing expertise with
skylights and lots of insulated glass. And recycling plays a big part, too…. It will contain recycled steel,
walls of recycled polystyrene blocks and carpets of recycled cotton material. The carpet backing will
contain no toxic chemicals…. “We'll have no chemicals, pesticides or fumes.” Workers will also recycle the
construction waste. “Not a scrap of wood will go into the landfill,” VanPeenen said. The shape of the roof
will allow for the harvesting of rainwater, which will be held in a cistern and used to irrigate plants. Toilets
will use reclaimed water from the zoo. The green team is aiming for a platinum rating, the highest rating
the Green Building Council bestows, a rating achieved by only seven buildings in the world…. Another
project aiming for the highest rating is the applied research and development facility, an $18.2 million,
61,000-square-foot building planned for Northern Arizona University in Flagstaff. Its project manager, Fritz
Westphal of Kitchell, said the structure is intended to be a showcase, powered by solar energy and built
with recycled materials and water-efficient technology. Westphal said the sustainability concept has drawn
converts mainly among public agencies and some schools. “However, there is definitely a trend where
private companies and clients are looking at it and asking a lot of questions,” he said…. In Phoenix, the
Pendergast School District is building an elementary school at 84th and Virginia Avenues, and
Superintendent Ron Richards is leading an effort to get it certified by using some solar energy and other
green concepts. He figures he will save $35,000 a year in energy costs. Wilhelm, adviser to the Salt River
Devco project, is a founding member and vice president of the Arizona Chapter of the U.S. Green Building
Council. “We can do things a lot better,” he said…. (A green building) is cheaper to operate over time, and
you get a return on investment.” People are recognizing the value of sustainability, he said. “It's good for
business and good for everybody.” …
Kyoto Global Warming Pact Takes Effect
[Reuters, Feb. 16] Kyoto, Japan - The Kyoto global warming pact went into force [on Feb. 16], seven
years after it was negotiated, imposing limits on emissions of carbon dioxide and other gases
scientists blame for rising world temperatures, melting glaciers and rising oceans. The landmark
agreement, negotiated in Japan's ancient capital of Kyoto in 1997 and ratified by 140 nations, targets
carbon dioxide and five other gases that can trap heat in the atmosphere, and are believed to be behind
rising global temperatures that many scientists say are disrupting weather patterns. The United States, the
world's largest emitter of such gases, has refused to ratify the agreement, saying it would harm the
economy and is flawed by the lack of restrictions on emissions by emerging economies China and India.
“We have been calling on the United States to join. But the country that is the world's biggest emitter has
not joined yet, and that is regrettable,” Japan's top government spokesman, Chief Cabinet Secretary
Hiroyuki Hosoda, told reporters…. Australia, the only other developed nation besides the United States not
to join, defended that decision; with Environment Minister Ian Campbell saying the country was
nonetheless on track to cut emissions by 30 percent…. The Kyoto agreement was delayed by the
requirement that countries accounting for 55 percent of the world's emissions must ratify it. That goal was
reached last year – nearly seven years after the pact was negotiated – with Russia's approval. In Japan, a
tireless supporter of the pact, the enactment was being met with a mixture of pride and worry that the
world's second-largest economy is unprepared to meet its emissions reduction targets…. The Kyoto
targets vary by region: The European Union is committed to cutting emissions to eight percent below 1990
levels by 2012; the United States agreed to a seven percent reduction before President Bush denounced
the pact in 2001. That proposal was opposed by the U.S. Senate so adamantly that the protocol was never
submitted for ratification by then-President Bill Clinton. Bush then pulled the United States out of the pact
in March 2001, less than three months after taking office, saying the Kyoto pact would have cost far too
much and exacerbated an already bothersome energy problem for the world's largest consumer of energy
from fossil fuels such as coal and petroleum. White House spokesman Scott McClellan said [on Feb. 15]
that “we are still learning” about the science of climate change.… The Bush Administration's stance has
Arizona Department of Commerce Energy Office, Energy Policy Update March 2005 9
since drawn fire from environmental experts, who say it is ignoring scientific consensus about global
warming, and that government reports have been censoring views not in line with its politics. Japan is
struggling to find ways to meet its obligations. A report this month by the Ministry of Economy, Trade and
Industry showed that 11 of 30 top Japanese industries – steel and power among them – risked failing to
reach targets unless they take drastic steps. Officials made solemn pledges [on Feb. 15] to fulfill Japan's
treaty requirement to cut emissions of carbon dioxide and other gases by six percent below 1990 levels by
2012. The Cabinet will draw up concrete plans by May, Environment Minister Yuriko Koike said. Some
officials are pondering a “carbon tax” to punish polluters – a move opposed by business – while others
favor expansion of nuclear power and promotion of energy-saving technologies. Japan also has been
especially active in carbon trading – a system under which governments have allocated carbon dioxide
quotas to industrial facilities. Those which emit less gas can sell the “credit” to other companies who emit
too much. Makoto Katagiri, whose Natsource Japan is acting as a credit broker between Japanese and
foreign companies, estimated in a study for the World Bank that Japan bought 41 percent of the carbon
credits on the international market last year.
Energy/General
Gas Nears $2, Summer May be Bad for Wallets
[Arizona Republic web site, Feb. 7] Washington, D.C. - Gasoline prices rose more than seven percent
in January, which typically is one of the slowest driving months of the year. That is leading experts
to predict pump prices may surge past last year's record highs when highway travel picks up late in the
spring. Government figures show that the average price of regular unleaded has risen in each of the past
four weeks, jumping from $1.78 at the start of the year to $1.91 a gallon in the week that ended Jan. 31.
That's more than 30 cents a gallon higher than a year earlier. Prices are highest on the West Coast,
averaging $1.99 a gallon and lowest in the Rocky Mountain region, averaging $1.83 a gallon. Last year,
the average price peaked above $2 a gallon in May, just before Memorial Day, the unofficial start of the
summer driving season. To be just a dime short of that level in early February is not good news for
motorists, analysts said. Carl Larry, head of energy futures at Barclays Capital in New York, said he
expects retail gasoline prices to rise above last year's peak due to rising demand and the higher price of
crude oil, from which gasoline is refined. “We're starting to see the economy come back, so demand can
only go higher from where it's at,” Larry said. Over the past four weeks, nationwide demand for gasoline is
up more than one percent at 8.8 million barrels a day, according to the latest U.S. government data. Larry
said gasoline prices would be propelled higher this spring by fears about the nation's growing dependence
on imports and the possibility of supply-chain snags as refiners temporarily shut down, or turn around
operations in order to shift production from winter-grade fuel to cleaner-burning summer blends. "All these
things fall into place," he said….
Large Sport Utility Vehicles Lose Luster
[Arizona Republic web site, Jan. 26] Detroit - Sales of hugely profitable full-size sport utility vehicles
[SUV] such as the Chevy Tahoe and Ford Expedition are slowing down after zooming out of
showrooms for years. The cooling of America's love affair with the largest SUVs is a troubling sign for
Detroit automakers, which count on the vehicles to prop up their bottom lines. The typical full-size SUV
now takes more than three months to sell – up from a little more than a month in 2002 – despite carrying
more than $4,000 in rebates. “Their time seems to be over,” BMW Chief Financial Officer Stefan Krause
said. “You don't see huge SUVs here as you would have seen two years ago.” While some analysts and
research suggest that U.S. consumers are starting to have their fill of large SUVs, automakers are far from
ready to abandon a product segment that still produces nearly one million vehicles a year…. Sales of large
SUVs – a category that includes GMC Yukon, Hummer H2, Ford Expedition and Toyota Sequoia – were
down six percent last year, with many models posting double-digit declines, according to Autodata Corp….
More Trucks Likely to Come Under New CAFÉ Umbrella
[Chicago Tribune web site, Feb. 13] Fuel-economy standards for light trucks will rise slightly in the
next two years and could change dramatically as early as 2008, when new definitions of what
constitutes a truck may take effect. The National Highway Traffic Safety Administration [NHTSA] is
more than a year into a review of truck fuel-economy standards but has yet to indicate what might change
and how it will affect carmakers and thus consumers…. When NHTSA announced plans in December
2003 for a deep dive into corporate average fuel economy (CAFÉ) standards for trucks, the agency said
Arizona Department of Commerce Energy Office, Energy Policy Update March 2005 10
the current rules, written more than 25 years ago, bear “little resemblance to today's motor-vehicle
market.” Using a sales-weighted average, CAFÉ requires each manufacturer's passenger cars to average
27.5 m.p.g. [miles per gallon] and trucks 21 m.p.g. Among issues are loopholes that let car-based models
such as the Subaru Outback, Ford Freestyle and Chrysler PT Cruiser qualify as trucks to help
manufacturers meet CAFÉ. Also under review is a provision that exempts some trucks from fuel-economy
standards. Heavy-duty pickups and sport-utilities such as the Hummer H1 and Ford Excursion are exempt
if their gross vehicle weights are more than 8,500 pounds. One option is to raise the weight limit for “light
trucks” to 10,000 pounds to encompass those models. NHTSA has been mum on what might change
since it began its review…. NHTSA's timetable is to propose new truck CAFÉ rules this year, brace for
another round of comments, and issue a final rule by April 2006 to give manufacturers time to make
changes for the 2008 model year. Before the current review was announced, NHTSA boosted truck CAFÉ
for 2005 to 21 m.p.g. from 20.7, the standard since 1996. Next year, the standard rises to 21.6 m.p.g. and
in 2007 it goes to 22.2. Because NHTSA is looking only at trucks, CAFÉ for cars should remain 27.5
m.p.g…. A key requirement for calling a passenger vehicle a truck is that all seats except the driver's can
be removed or folded to create a cargo floor from front to back. When that rule was written, trucks made
up less than 25 percent of sales, and most were pickups and cargo vans. Today, trucks account for about
55 percent of sales, and most are passenger models such as SUVs and minivans…. Eron Shosteck, a
spokesman for the Alliance of Automobile Manufacturers, which represents several major automakers,
said the industry fears that higher fuel-economy requirements will force manufacturers to build vehicles
that consumers don't want. Automakers are improving fuel economy by adding gas/electric models,
diesels, cylinder deactivation, more efficient transmissions and other technologies, he said. “The challenge
is getting consumers to invest in them because they are generally very expensive until you achieve
economies of scale,” Shosteck said….
New Hybrid Sport Utility Vehicles Offer More Pickup
[MSNBC News web site, Feb. 2] Phoenix - The new Toyota Highlander SUV [Sport Utility Vehicle] –
which rolls out in March – looks like its conventional gasoline powered cousin. But what’s different
about this SUV – as well as other new hybrids now coming on the market – is that it’s not just about the
fuel efficiency and lower emissions. It's also about the performance. In Austin, Texas, Kent Benjamin is
part of the next generation of hybrid owners. He didn't buy his Honda Accord hybrid just for its improved
mileage or lower emissions. He went for its performance. “I was very surprised and pleased to find out that
this car actually drives, I think, noticeably better than the regular Honda,” he said. The Accord Hybrid is
just one of the new gas/electric cars with more oomph than their standard counter parts. In March, the
Lexus RX400h will have 270-horsepower. In April, Toyota's Highlander hybrid will go 0-to-60 almost a full
second faster than a conventional Highlander…. Even though the Highlander hybrid will have sticker price
$4,000 to $5,000 above a regular Highlander, Toyota believers it will sell well because the gas/electric
power train gives this six cylinder SUV the power and acceleration of a eight-cylinder.…
One-Year Ago: Global Warming Bigger Threat Than Terrorism
[Calstart web site, Feb. 8] Ottawa - Canadian Environment Minister David Anderson pronounced
global warming as a greater long-term threat to humanity than terrorism, reports Reuters. Not
downplaying the real threat of terrorism, Anderson nevertheless pointed out that the problem of terrorism
has historically waxed and waned, while the threat of global warming is clearly advancing. According to
some recent reports, there may even be a “tipping point,” where the consequences would ramp up
precipitously. Anderson disputed the assumption that compliance with the Kyoto protocol for greenhouse
gas reductions would be economically crippling, while potential results of global warming – including
potential impacts on agriculture – could wreak serious damage. “This is not a minor issue. That said, it will
also have many positive effects – health benefits, productivity benefits,” he said.
Hydrogen Powers Futuristic Car
[Hydrogen & Fuel Cell Investor web site, Feb. 9] The Hy-Light concept car, developed in collaboration
with tire specialist Michelin, was presented recently in Shanghai. According to Michelin, the Hy-Light
Industries & Technologies
Arizona Department of Commerce Energy Office, Energy Policy Update March 2005 11
was the most efficient fuel-cell vehicle taking part in the Bibendum Challenge in the Chinese city, beating
competition from major car manufacturers in the economy stakes. “It’s important for us to understand what
mobility will be in ten to 15 years’ time since it will affect our core business,” said Pierre Varenne of
Michelin. “So rather than sit and wait, we decided to develop our prototype.” The tire maker believes that
hydrogen-based fuel-cell technology is the best possible replacement for fossil fuels. To prove its point, the
company’s research center near Fribourg teamed up with the Paul Scherrer Institute [PSI], which has been
working on fuel cells. “We recognized it some time ago as one technology that could make mobility more
sustainable,” said the institute’s Philip Dietrich. Besides its fuel cell expertise, PSI also supplied special
condensers. These electrical parts store electricity generated by the car’s braking, further lowering the Hy-
Light’s hydrogen fuel consumption. Hydrogen is considered by many specialists to be the fuel of the future.
They say it is no more dangerous than petrol, and only produces water vapor as a by-product.….
‘Smart’ Aims to Rival Mini in U.S.
[Christian Science Monitor web site, Jan. 24] What's less than five feet wide, eight feet long, seats two,
and gets more than 60 miles per gallon? If you answered correctly, you must be Smart. The Smart is
the latest hip tiny vehicle hoping to follow the Mini Cooper and Volkswagen New Beetle in the United
States market. The difference is that Smart is even smaller — and not the least bit retro. While
DaimlerChysler shelved plans to unveil the Smart Formore [Sport Utility Vehicle] SUV at [the Jan. 17]
North American International Auto Show in Detroit, it did send Smart's tiny, colorful Fortwo coupes buzzing
around the city, drawing looks wherever they went. The car comes in a rainbow of Skittles colors, with
replaceable body panels if the mood strikes to change hues. Inside, there's plenty of room — for two. The
seats are comfortable and spacious. There's enough room on the floor or in the cargo area atop the engine
in the rear for a briefcase. The instruments and vents stick up from the dashboard like … frog's eyes. They
look funky, but not cheap. The diesel engine accelerates the 1,600-pound pod to 60 miles an hour in less
than 20 seconds. So it's not a racehorse, but fast enough. The car feels small only after it hits one of
Detroit's infamous potholes or pulls into a parallel parking space (with four feet to spare on either end). The
future of Smart, however, is unclear. Although they've zipped along European roadways for six years,
Fortwos haven't sold in large enough quantities to turn a profit, analysts say. Daimler has said it won't sell
Fortwos here, but is reportedly reconsidering that stance. One reason: Zap, a U.S. firm in Santa Rosa,
Calif., plans to import the car through middlemen, modify them to meet U.S. emissions standards, and
then sell them in the U.S. — just in time to look Smarter than the Mini driver who just showed up next door.
Toyota Unveils Hydrogen-Powered Fuel Cell Hybrid Bus
[Environmental News Network web site, Jan 31] Nagoya - Toyota Motor Corp. unveiled on [Jan. 31] a
next-generation hydrogen-powered fuel cell hybrid-electric bus which will carry visitors during the
2005 Aichi World Exposition, which opens March 25. Toyota allowed members of the press to a ride on
the advanced transportation system, developed jointly with Toyota subsidiary Hino Motors Ltd., in the Aichi
town of Nagakute. The bus will travel 4.4 kilometers to link two expo sites in 10 minutes. The hybrid bus
service will carry visitors between the Nagakute area and the other site in the city of Seto free of charge,
Toyota officials said. The hybrid buses are powered by fuel cell batteries, which generate electricity
through chemical reaction between high-pressure hydrogen and oxygen, and nickel hydride batteries.
Fuel-cell cars emit only water and are regarded as “ultimate environment-friendly” vehicles. Automakers
are working to develop them as such vehicles can help curb global warming because they emit no carbon
dioxide. During [the Jan. 31] presentation, journalists were able to ride on three green-colored hybrid
buses. Without an internal combustion engine, they felt no vibrations under their feet and could even hear
whispery conversations. Toyota plans to deploy eight fuel cell hybrid buses, each capable of carrying 65
passengers during the expo through Sept. 25. A hydrogen station will be set up in the Seto site for
refueling, according to the company. The carmaker started development of the bus in 1992. The vehicle
was actually used in local bus services in Tokyo from August 2003 to the end of 2004 in the run-up to the
expo, Toyota officials said.