Climate Regulation Has Begun in the U.S.

In the last several days, some of the attention in our nation’s capital has shifted back to the issue of

In the last several days, some of the attention in our nation’s capital has shifted back to the issue of climate change. Most concretely, EPA has finally taken the essential step of regulating Carbon Dioxide as a pollutant under the Clean Air Act. Meanwhile, over in the U.S. Senate, Senators Kerry and Boxer have introduced a bill that focuses on energy and climate, the upper house’s counterpart to the Waxman-Markey climate and energy bill that passed in the House of Representatives earlier this year. Both are crucial developments, but EPA’s decision is more important in the short run since it means that the U.S. finally has a functioning form of climate law.

According to EPA’s website, the new rule was announced by EPA Chief Lisa Jackson on September 30:

“The Administrator announced a proposal requiring large industrial facilities that emit at least 25,000 tons of GHGs [greenhouse gases] a year to obtain construction and operating permits covering these emissions. These permits must demonstrate the use of best available control technologies and energy efficiency measures to minimize GHG emissions when facilities are constructed or significantly modified.”

Jackson remarked that:  “By using the power and authority of the Clean Air Act, we can begin reducing emissions from the nation’s largest greenhouse gas emitting facilities without placing an undue burden on the businesses that make up the vast majority of our economy.” EPA’s proposed climate regulation applies to the approximately 14,000 large businesses that emit about 70% of the nation’s greenhouse gases.

In Washington, the U.S. Chamber of Commerce and the National Association of Manufacturers have already voiced their opposition to the proposed rule. That is far from surprising, but, paradoxically, an interesting impact of this rule might be an increase in industry support for legislation like Waxman-Markey because it provides more flexibility in meeting emission caps. Waxman-Markey’s cap and trade provision allows companies to trade pollution allowances. The new approach to climate in Waxman-Markey also attacks the root causes of global warming by promoting the development of new energy technology and encouraging greater energy efficiency. It includes programs for climate adaptation, carbon sequestration and the transition to a green energy economy. EPA’s new rule, on the other hand, is good, old-fashioned command and control. The business community might prefer a bill with both carrots and sticks, if the alternative is the current law, which only provides sticks.
In comparison to Waxman-Markey, the Clean Air Act is a non-comprehensive, one-dimensional approach to climate policy. EPA’s proposed rule is a hacksaw, when the Obama Administration would rather operate with a scalpel. Nevertheless, if Congress is unable to provide an elegant tool to begin the process of reducing greenhouse gases, then the EPA will simply have to use the best tool they can grab hold of.  Though outdated, the Clean Air Act is far better than nothing. This approach to environmental regulation finds its historical roots in the early days of EPA. Seven days after EPA was created in 1970, its first administrator, William Ruckelshaus, used provisions from the River and Harbors Act of 1899 to force a number of large cities (run by mayors that were not of the President’s political party) to stop dumping sewage into local waterways.

EPA’s strong action is possible because of President Obama’s deep understanding of the climate problem and his willingness to use the authorities he has available. In the 1970’s many industry groups eventually realized that the public demand for clean water and clean air would result in new and more stringent laws. Rather than opposing all efforts at change, some decided to try to shape the change they saw coming. Today, anyone running a business with even a small amount of foresight realizes that climate and energy policies are going to be changed over the next several years.  Better-managed businesses will be trying to figure out how to plan for change rather than continue to resist it.

Unfortunately, despite the President’s desire to usher in a post-partisan period, the lines only seem to be getting more sharply drawn. Let’s keep in mind that the lobbying business has grown dramatically in recent years, along with limitless electronic communication. Intense partisanship has become a big business. And there is simply more money to be made if you are part of the entrenched, hard line opposition than if you are a moderate, pragmatic deal maker.

EPA’s tougher approach to climate regulation will enable our negotiators at the Copenhagen Climate Conference in mid-December to claim that the U.S. has put in place a new policy to dramatically reduce greenhouse gases. While a new piece of legislation would be better than what we have now, using the Clean Air Act is better than doing nothing. Here comes the hacksaw.

Climate Regulation Has Begun in the U.S.