The Court’s Green Light for Green Tech

The Washington Post Sunday - - Outlook - By Juliet Eilperin

In San Fran­cisco last month, I found my­self dis­cussing the con­cept of car­bon se­ques­tra­tion with my friend Kevin while he was giv­ing his daugh­ter Emma a bath. The fact that we were chat­ting about in­ject­ing car­bon diox­ide into un­tapped oil fields as we squirted wa­ter at a 2-year-old high­lights just how trendy the U.S. green-tech mar­ket has be­come. Kevin is what you call a “se­rial en­tre­pre­neur,” who spots busi­ness trends and in­vests in start-ups be­fore sell­ing them and mov­ing on to the next promis­ing ven­ture.

So when the Supreme Court ruled last week that the En­vi­ron­men­tal Pro­tec­tion Agency has the author­ity to reg­u­late green­house gases linked to global warm­ing, I knew that Kevin was busy cal­cu­lat­ing how soon he might be able to en­ter the bold new world of car­bon cap­ture and stor­age. The le­gal de­ci­sion marked a wa­ter­shed mo­ment for the United States, with the na­tion’s high­est court send­ing a pow­er­ful sig­nal to the po­lit­i­cal and busi­ness com­mu­ni­ties that amanda­tory cap on car­bon diox­ide is no longer a mat­ter of if, but when.

Years from now, Mas­sachusetts v. EPA may be seen as akin to the Roe v. Wade rul­ing on abor­tion, in which the Supreme Court an­swered a ques­tion that U.S. politi­cians were un­able to re­solve. In this case, the jus­tices stepped in to ref­eree a sci­en­tific de­bate that had be­come so highly po­lar­ized that in­di­vid­ual states de­cided to sue the fed­eral gov­ern­ment for what they saw as its fail­ure to pro­tect them from a pos­si­ble fu­ture catas­tro­phe.

Mas­sachusetts’s at­tor­ney gen­eral had ar­gued be­fore the court that ris­ing sea lev­els and more in­tense storms linked to global warm­ing were threat­en­ing the state’s res­i­dents and their liveli­hood, and the court agreed. In the ma­jor­ity opin­ion writ­ten by Jus­tice John Paul Stevens, the court said that the EPA’s stead­fast re­fusal to reg­u­late green­house gas emis­sions presents a risk of harm to Mas­sachusetts that is both “ac­tual” and “im­mi­nent,” and that “The harms as­so­ci­ated with cli­mate change are se­ri­ous and well rec­og­nized.”

This is the sort of rul­ing that may fi­nally give Congress the oomph to deal with cli­mate change on its own. As Tim Pro­feta, di­rec­tor of Duke Univer­sity’s Ni­cholas In­sti­tute for En­vi­ron­men­tal Pol­icy So­lu­tions, ob­served, the le­gal author­ity to act “is firmly es­tab­lished, and ev­ery­body in the po­lit­i­cal arena knows it. I think this de­bate has ex­ploded it. It’s a pres­sur­ized sys­tem that’s had the lid taken off.”

And in fact, that’s what seems to be hap­pen­ing na­tion­wide, as private eq­uity firms pour mil­lions into clean-en­ergy projects in an­tic­i­pa­tion of stricter fed­eral curbs on car­bon diox­ide. In­vestors put $2.4 bil­lion into green start-ups in 2006, a 262 per­cent in­crease from 2005.

“If you ask me, the flood­gates had al­ready opened,” said Adam Wolfen­sohn, di­rec­tor of Wolfen­sohn and Co. in New York. “Peo­ple have been in­vest­ing in low-car­bon projects as they’ve been see­ing the writ­ing on the wall.”

I hap­pened to go to col­lege with Adam, who in the early 1990s was a tal­ented com­poser but is now — along with his fa­ther, for­mer World Bank pres­i­dent James Wolfen­sohn — an in­vestor in en­vi­ron­men­tally friendly projects such as sugar cane-de­rived ethanol from Brazil.

Adam is also preach­ing the glob­al­warm­ing gospel to other clean-tech in­vestors, hav­ing just made a film on the sub­ject ti­tled “Ev­ery­thing’s Cool” (billed on its Web site as “a real-life dis­as­ter movie”). Last month he showed the movie to clean-tech in­vestors at the Sun­dance In­sti­tute, be­cause th­ese money-mak­ers were ea­ger for a crash course on the re­al­ity of cli­mate change be­fore open­ing their wal­lets.

Pres­i­dent Bush made it clear last week that he’s not ea­ger to im­pose an in­dus­try-wide cap on green­house gases, in­stead tout­ing his ad­min­is­tra­tion’s pro­posed au­to­mo­bile fuel-ef­fi­ciency stan­dard, which aims to save 8.5 bil­lion gal­lons of gas by 2017. “What­ever we do must be in con­cert with what hap­pens in­ter­na­tion­ally,” he told re­porters. “Un­less there is an ac­cord with China, Chi- na will pro­duce green­house gases that will off­set any­thing we do in a brief pe­riod of time.”

But the ma­jor­ity of Supreme Court jus­tices didn’t buy that. “Agen­cies, like leg­is­la­tures, do not gen­er­ally re­solve mas­sive prob­lems in one fell reg­u­la­tory swoop,” wrote Stevens, who fur­ther noted that “re­duc­ing do­mes­tic au­to­mo­bile emis­sions is hardly a ten­ta­tive step. Even leav­ing aside the other green­house gases, the United States trans­porta­tion sec­tor emits an enor­mous quan­tity of car­bon diox­ide into the at­mos­phere.”

The im­me­di­ate ques­tion be­fore the EPA is whether it will grant a waiver to Cal­i­for­nia that would al­low it to reg­u­late tailpipe emis­sions. The state has passed a law that would cut car­bon diox­ide emis­sions from new ve­hi­cles by a third by 2016. Au­to­mo­bile man­u­fac­tur­ers are fight­ing this law in court. If they lose, the na­tion’s auto mar­ket will be trans­formed, be­cause 10 other states have moved to adopt the same rules and two more states — Ari­zona and New Mex­ico — plan to fol­low soon. Mean­while, Mary­land’s leg­is­la­ture adopted them last week.

The an­swer from the EPA will not come in­stantly. Spokes­woman Jen­nifer Wood said the agency will “shortly” give of­fi­cial no­tice of a pub­lic hear­ing-and­com­ment pe­riod on the waiver, and this process prob­a­bly will take a few months. But the Supreme Court has al­ready said what it thinks of the ad­min­is­tra­tion’s ar­gu­ment that it can’t reg­u­late CO from cars be­cause it’s re­ally the Trans­porta­tion De­part­ment’s job to set fuel-ef­fi­ciency stan­dards for au­to­mo­biles: It re­jected it.

None of this ad­min­is­tra­tive wran­gling inside the Belt­way both­ers my friend Kevin, who has plunged ahead with his car­bon cap­ture-and-stor­age idea since we spoke two weeks ago. He has al­ready put to­gether a busi­ness plan with his part­ner, and they’ve been shop­ping it to firms up and down Sand Hill Road in Palo Alto, Calif.

“The ven­ture cap­i­tal com­mu­nity’s ap­petite for green-tech deals has sky­rock­eted since the Supreme Court rul­ing,” he told me on the phone last Thurs­day, with ob­vi­ous plea­sure. “Peo­ple are com­par­ing it to the In­ter­net boom of 1999.”



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