The International Climate Conference held in Copenhagen this month yielded a tentative agreement from the 193 participating countries, including the United States, to begin reducing GHG emissions to mitigate the climate crisis. But it’s not clear exactly how the U.S. will achieve the reductions that have been pledged at Copenhagen. Basically, there two very possible approaches: EPA rulemaking under the Clean Air Act or Congressional legislation, most likely in the form of a cap and trade bill. (A third, less likely, scenario is one in which the President would issue an executive order or an executive agreement mandating reductions.)
Let’s take a closer look at these two more likely scenarios. President Obama’s EPA appears ready and willing to regulate GHGs in the event that Congress does not pass a climate bill this year. Armed with the authority to do so as a result of a 2007 Supreme Court decision, Massachusetts v. EPA, the agency is preparing to implement rules that will regulate GHG emissions using Title II of the Clean Air Act. With its recent endangerment finding, the EPA has said that GHGs such as CO2 are, in fact, a danger to public health, which means that GHGs can be regulated under the CAA. The agency has used its Title II authority to implement new fuel efficiency requirements for motor vehicles, and the agency may also attempt to regulate stationary sources such as power plants. Under this approach, EPA would required to prescribe a unique pollution limit to thousands of individual emitters, on a source by source basis. This approach would result in emissions reductions, but it could be extremely difficult to implement.
However, the most logical and efficient way to regulate global warming pollutants in 2010 is through a comprehensive climate bill that includes an aggressive “cap and trade” system. A cap and trade approach would establish a clear national limit—a “cap”—on the amount of GHGs that could be emitted in the United States. Major emitting facilities such as power plants and other large industrial sources would be allocated tradable emissions credits–which would set the maximum amount of allowable emissions. (The sum of these emissions credits would equal the national cap.)
The advantages of cap and trade legislation are many. First, there is the certainty of a definite cap on national emissions. Second, because emissions credits can be sold to other emitting sources, companies will have a financial incentive to reduce emissions as much as possible. It’s a market-based approach that is favored by many utilities and other industry. Finally, the cap structure would be an economy wide regulation, unlike rulemaking under the CAA which would attempt to reduce emissions on a source by source basis.
As we discussed briefly in our December 24 post, each of these approaches would face legal challenges, which could reach the U.S. Supreme Court. EPA regulation could be challenged as exceeding the scope of the agency’s or Congress’s authority. A challenge to EPA rulemaking, for example, could re-open Court’s 5-4 decision in Massachusetts v. EPA, which is the basis for the agency’s ability to regulate GHGs. Meanwhile, a climate bill could be challenge on a myriad of grounds, including as an unconstitutional use of Congress’s commerce clause power.
In sum, environmentalists may well have two battles to wage in 2010: 1) implementing climate change regulation and then 2) defending it at the U.S. Supreme Court.
Read our statement on EPA’s decision to use its CAA authority to increase fuel standards for vehicles