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The E.P.A. Puts on the Heat
By The Editors
New York Times
February 19, 2009
(Photo: David McNew/Getty Images)
Under orders from the Supreme Court, which the Bush administration ignored, President
Obama’s new head of the Environmental Protection Agency is expected to determine
whether carbon dioxide is a pollutant that endangers public health. If the agency decides
to regulate carbon emissions and other greenhouse gases under the Clean Air Act, the
effect on transportation, manufacturing costs and power generation would be profound.
Such a decision would also set off one of the most extensive regulatory rule makings in
history.
Should the E.P.A. be the lead agency in regulating greenhouse gases? Is there a better
way to carry out climate change initiatives?
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John D. Graham and Kenneth R. Richards, Indiana University
Nina A. Mendelson, University of Michigan Law School
Robert Hahn, American Enterprise Institute
Peter Passell, the Milken Institute
Jonathan H. Adler, Case Western Reserve University School of Law
Better to Craft New Legislation
John D. Graham is dean of the School of Public and Environmental Affairs at Indiana
University. Kenneth R. Richards is an associate professor at the school.
There are two alternative approaches that the Obama administration can take to regulate
greenhouse gases, like the carbon dioxide emissions from coal plants. One is to craft
regulations under existing legal authority, particularly the Clean Air Act. The other is to
work with Congress on the enactment of legislation to address climate change. Although
either approach is feasible, we believe new legislation is preferable for four reasons.
First, greenhouse gases are global pollutants that have different properties than the
pollutants typically regulated under the Clean Air Act. Clean-air rules are aimed at
pollutants with regional and local effects (for example, smog and soot) whereas
greenhouse gases have the same impact on the climate system, regardless of where in the
United States or the world they are emitted.
The Obama administration should work with Congress on an alternative to the Clean Air
Act.
Second, regulation of greenhouse gases should be carried out via a system that
complements other nations’ programs. The Clean Air Act, since it is so legally
prescriptive, would not accommodate that need. By contrast, new legislation could be
coordinated with developing policies in Asia and Europe.
Third, greenhouse gases, and especially carbon dioxide, are emitted broadly across the
economy, not just from a few entities. More than for any other pollutant, it is important to
find the most cost-effective mechanisms for reducing emissions. Using the Clean Air Act
would lead to complex, and in some cases counterproductive, regulations. This is not the
path to follow when there are much simpler and more affordable options.
Finally, the national public debate over climate legislation would provide a forum for
stakeholders, politicians and the public to contribute to the design of climate-change
policy. Regulatory approaches crafted under existing current authority are likely to be
informed primarily by litigation risks, not the public’s willingness to incur near-term
costs to slow the rate of global climate change.
For these reasons, the Obama administration should work first with the Congress on
climate legislation. If that effort is not successful, it could shift to the more awkward
regulatory approach under the Clean Air Act as a second-best approach. In fact, we
suspect that as a matter of strategy, President Obama may be using the threat of
inefficient rulemaking under the Clean Air Act to prod Congress to take decisive action
on climate legislation. Assuming he succeeds, Congress should clarify that the new
climate law supersedes the Clean Air Act on all matters related to greenhouse gas
emissions.
This Is a Good Start
Nina A. Mendelson is professor at the University of Michigan Law School and a member
scholar at the Center for Progressive Reform.
The announcement by Lisa Jackson, the Environmental Protection Agency’s
administrator, that she will determine whether greenhouse gases endanger public health
and welfare seems a welcome signal that the agency will respond to the urgency of global
warming. As a legal matter, Ms. Jackson probably has little choice.
The E.P.A. has been charged for decades with regulating air pollutants under the Clean
Air Act. As the Supreme Court recognized in Massachusetts v. the Environmental
Protection Agency, greenhouse gases are such air pollutants. An endangerment
determination would confirm the agency’s power, but also its obligation, to regulate
greenhouse gases now. Indeed, the agency should begin by setting performance standards
to reduce greenhouse gases from new major stationary sources, like coal-fired electric
utilities and industrial facilities, and from new motor vehicles.
Waiting for Congress to act would be environmentally costly.
As a policy matter, there are excellent reasons to have the E.P.A. move ahead, rather than
awaiting congressional action. While the regulatory process may not be nimble, agency
experts have already done considerable preparation. And Congress may trail the agency.
Senator Barbara Boxer, a Democrat from California who chairs the relevant Senate
committee, has already announced that she does not expect a Senate vote on climate
change legislation before 2010.
Delay would be environmentally costly. The Sierra Club has estimated that there are
applications for 100 coal-fired power plants currently in the pipeline. These will
contribute substantial quantities of carbon dioxide in the absence of emissions controls.
The Center for American Progress says that approximately 145 gigawatts of new power
from coal-fired plants may be built in the United States by 2030, increasing carbon
dioxide emissions by roughly 15 percent of current annual rates.
The E.P.A. should require now that new major greenhouse gas sources be built with
technology that meets the best emissions performance standards, rather than figuring out
how to offset excess emissions later. By the same token, federal standards should be set
for new cars rolling off assembly lines. Building new plants and new cars with the best
technology at the outset keeps new greenhouse gas contributions to a minimum. It is also
cheaper and easier than trying to retrofit later.
Furthermore, new source standards could address power, transportation and industrial
sources — the three biggest carbon dioxide contributing sectors. The standards could
give us a head start in achieving our global warming goals once Congress does pass
legislation. Finally, requirements aimed at new sources may spur innovation among a
wider array of facilities than under a carbon trading regime alone, which is the leading
legislative proposal.
While some might charge that this unfairly burdens new sources rather than existing
ones, Congress could give “credit” to early technology adopters. Some bills have already
made similar proposals.
Representative John Dingell, a Democrat from Michigan, has charged that letting the
E.P.A. regulate greenhouse gases would be a “glorious mess.” But regulating large new
polluting sources and new cars adds little complexity. These sources already must
comply with federal air pollution standards.
Some parts of existing law, aimed at improving local air quality, admittedly fit clumsily
with addressing climate change. This was also true for the regional acid rain problem,
which needed legislative supplementing. Congressional action would still be needed to
comprehensively address greenhouse gases. But in the meantime, the E.P.A. should lead
the way by using existing authorities to reduce the threat of global warming.
The Problem with Backing Into Policy
Robert Hahn is executive director of the American Enterprise Institute’s Reg-Markets
Center and a senior visiting fellow at the Smith School, Oxford University. Peter Passell,
a senior fellow at the Milken Institute, is the author of “Where to Put Your Money Now.”
President Obama promised to get serious about climate change, and with the signals
coming from the Environmental Protection Agency, it looks like he means it. That’s both
good news and bad.
On the plus side, some regulation of greenhouse gas emissions is long overdue. But the
Clean Air Act is a dubious means to a desirable end: Congress, after all, never envisioned
that the law would be used this way.
The best guess now is that the agency will formally rule that carbon dioxide (and perhaps
other greenhouse gases) endanger public health and welfare. And this finding will be
used to place limits on carbon dioxide emissions.
Electric utilities will almost certainly be the first target, but the regulations could also
affect petrochemicals, agriculture and autos. Virtually any policy that limits emissions
would lead to price increases in the regulated sectors. But there’s every reason to believe
that Lawrence Summers, the head of the National Economic Council, would not allow
the E.P.A. to impose major costs on industries during the economic crisis.
Think of this as Act 1, Scene 1 in a drama that will stretch across decades.
Think of this as Act 1, Scene 1 in a drama that will stretch across decades. The next big
question is whether President Obama will defer to the Democratically controlled
Congress’ wish to assert control over climate change policy. And the best guess here is
that the administration will try to have it both ways, outlining the key dimensions of the
policy but seeking the blessing (and political cover) of Congress to make very expensive
changes in the way the American economy uses fossil fuels.
The final form of the legislation — in particular, who foots the bill — is up for grabs. But
it will almost certainly take the form of a market-based “cap-and-trade” regime in which
carbon emitters are offered a variety of ways to reduce the costs of compliance. And it is
almost as certain that the process of building a legislative majority will involve a helping
hand to powerful interest groups ranging from ethanol makers to coal companies to wind
power enthusiasts.
However the United States climate change policy evolves, it won’t make much difference
if other latecomers can’t be convinced to join the party. American efforts at containing
climate change will be futile unless China and India — not to mention Brazil and
Indonesia — make the investment needed to decouple economic growth from carbon
emissions growth. And that isn’t likely to happen unless rich countries make it worth
their while in financial terms by subsidizing carbon-sparing technologies or investing in
research and development that drastically reduces the cost of such technologies.
All that said, this first act in the very long play is an important one. For an effective
global policy on climate change is simply not possible without leadership from the
United States.
There’s a Better Way
Jonathan H. Adler is professor and director of the Center for Business Law and
Regulation at the Case Western Reserve University School of Law. He is a regular
contributor to the Volokh Conspiracy.
The decision to reconsider whether greenhouse gas emissions from coal-fired power
plants are subject to regulation under the Clean Air Act was inevitable, but it does not
represent a sensible approach to climate change, and will likely spur legislative action.
The problem is that the Clean Air Act was written to address more traditional, local and
regional air pollution problems, and is poorly suited to the challenge of climate change.
Under 300 power plants and large industrial facilities are currently subject to the Act’s
so-called “P.S.D.” provisions. Once greenhouse gases are subject to controls that number
will increase to 3,000 or more, and likely include large commercial and residential
buildings. This surge could grind the program to a halt, as neither federal nor state
regulators have anywhere near the resources to handle such an increase in permit
applications.
If we are going to meet the climate challenge, we need huge investments in research and
development.
The prospect of trying to regulate greenhouse gases under existing law will likely
encourage Congress to reform the Clean Air Act. The Obama Administration’s preferred
approach is a “cap-and-trade” system that will cover all significant greenhouse gas
emitters with a national “cap” on emissions, and allocate emission permits. Such
proposals sound good in theory, but can be difficult to implement.
A better approach would be a revenue-neutral carbon tax. Placing a price on the carboncontent of fuels will provide an incentive, on the margin, for energy users to increase
efficiency and adopt cleaner technologies. Tax reform of this sort would also provide an
opportunity to revisit depreciation rules that discourage the turnover of capital stock,
thereby slowing the rate at which newer, cleaner technologies are deployed.
To maximize the effectiveness of such a measure, it is also important to adopt other
policies that encourage innovation. This is best achieved by ensuring that successful
innovators reap substantial rewards, both by removing regulatory obstacles to
technological deployment and guaranteeing supercompetitive returns for transformative
technological breakthroughs. The tens of billions the federal government has thrown at
alternative energy over the last few decades have produced little of commercial value. A
better approach is the offering of “prizes” for successful innovation, as was done in the
past to spur needed innovations for sea and air travel. Some private foundations have
begun sponsoring such rewards, but the federal government could do much more.
If even a fraction of the billions pledged to energy research and development in the
stimulus were packaged into prizes for commercially viable clean technology
breakthroughs, we might see the sort of innovation necessary to meet the climate
challenge, particularly if combined with broader legislative reforms, like a revenueneutral carbon tax and regulatory reforms that remove barriers to technology deployment.
Such an approach would be a serious and forward-looking climate strategy, and make
much more sense than relying upon a decades-old regulatory statute written for a
different purpose.