Why the EPA Should Regulate Carbon July 7, 2010

…because the Senate won’t.

Despite what is shaping up to be the hottest year on record, the ongoing oil spill  and pubic opinion polls showing that Americans are finally ready to address our entwined energy and climate crises, legislation remains blocked by the usual suspects: Republicans, lobbyists and perpetual election year politics.

Most people think that Congress is the governmental entity that ought to address an issue as sweeping as climate change.  I agree.  So do most congressmen – loudly.

Unfortunately, many those congressmen who angrily rant about the importance of congressional authority are the very same people blocking congressional action.

The Obama Administration has made it clear that it does not want to have to regulate greenhouse gas emissions through the Environmental Protection Agency.  Everybody would prefer that Congress pass a bill instead.  The House has.  The Senate, it seems, cannot.

Yet we must address a threat of this magnitude.  So if Congress won’t, the EPA should.  The Supreme Court agrees; if Congress doesn’t act, the EPA is legally obligated to regulate GHGs as a pollutant under the Clean Air Act. The EPA will not supersede legislative climate action; it will act in accordance with the Clean Air Act (written by Congress) unless Congress passes a newer law.

As the chances for such a law fade, it is worth examining what EPA carbon regulations might look like.

What Would EPA Regulations Looks Like?

There have been a number of bureaucratic hoops to jump through on the road to EPA carbon regulations.  Next January, when the EPA’s new gas mileage standards for cars comes into effect, greenhouse gases will finally be “subject to regulation” under the Clean Air Act.

First, new polluting power plants and industrial facilities would have to adopt the “best available control technologies” (BACT) for regulating carbon emissions.  The EPA gets to determine which technologies are “best.”  Carbon capture and sequestration technology could fall into this category if it was proven, but that’s a long way off.  In the meantime, the EPA would the mandate the use of existing technologies to reduce emissions and/or increase efficiency.

For example, the EPA could require any and all new coal-fired power plants to utilize integrated gasification combined cycle (IGCC) technology.  IGCC plants convert coal into a synthetic gas so that it can be burned more cleanly (in terms of non-GHG pollutants) and use excess heat from the primary combustion and generation to power a secondary steam turbine that generates extra electricity per unit of coal burned.  Or it could require new power plants use natural gas instead of coal.

Natural gas emits much less carbon than coal.  It’s not a long-term solution, but significant short-term gains could be achieved by switching from coal to natural gas.  The EPA could propose this change.

What is the “Tailoring Rule”?

Under the Clean Air Act, anyone trying to build or upgrade a facility that will emit a baseline level of a regulated pollutant (usually 100-250 tons per year) needs to get a permit from the EPA certifying that they are utilizing the “best available control technology” (BACT) to minimize their emissions.

For other Clean Air Act pollutants, like lead, 100 tons per year is quite a bit and well worth of regulation.  The problem here is that carbon emissions are on a much larger scale.  As the Clean Air Act is written, as many as 6 million buildings would need permits for their carbon emissions, including schools, churches, buildings that use heating oil…you get the idea.  Not the real targets of these regulations.

In May, the EPA released its “Tailoring Rule” to limit the focus of the permitting process to facilities that release >75,000 tons of carbon dioxide per year and already apply for other Clean Air Act pollutant permits.  This way, only the major polluters are subject to these regulations. The Tailoring Rule brings down the number of regulated buildings from 6 million to about ~550 of the biggest polluters.

For the record, when originally proposed, the cutoff was set at 25,000 tons per year, but after the comment period, the EPA realized that too many buildings would be unintentionally regulated (like schools and small businesses).

Additionally, any new power plants expected to emit more than 100,000 tons of GHGs per year would need to get a permit.  This would certainly cover all new coal plants, whose emissions are on the order of million of tons per year.

If the EPA does end up implementing these regulations, conservative groups such as the U.S. Chamber of Commerce will likely challenge the Tailoring Rule in court so that schools etc. would need be regulated as well.  Why?  Because they hate children.  …ok fine, because if the EPA enacts this policy, conservatives want it to become a regulatory nightmare.  Making the EPA permit the 6 million buildings that emit much smaller amounts of carbon each year would be impossibly cumbersome and cause considerable public backlash – so conservatives hope we would just scrap the whole thing and let them keep polluting for free.  Potential legal vulnerabilities such as this are a weakness of this less than elegant regulatory route.

Benefits of EPA Carbon Regulations

EPA regulations would hopefully be designed with less lobbyist influence than in Congress.

Most climate/energy bills – including the climate bill that pass in the House last year – end up “grandfathering” in some dirty coal plants.  That is, their emissions are exempted from regulation.  Such provisions completely undercut the energy bills that contain them by providing utilities with a perverse incentive to keep their oldest, most polluting plants open as long as possible.  They are written by lobbyists and exist solely as thank you’s from American legislators to their industry supporters.

Disgustingly, even the original Clean Air Act grandfathered in existing coal plants.

Everything Congress touches that is at all energy-related comes out blackened with soot and covered in tar balls.  The EPA is not impervious to industry demands, but it is certainly in a better position to stand up to industry than Congress (which isn’t saying much).

In fact, in many ways,

The EPA is Better Suited to Address this Issue than Congress

In 1997, economist Alan Blinder presented an interesting argument that some governmental challenges could and should be better solved by unelected experts.

Certain types of problems, Blinder correctly argued, are by nature better addressed by experts than by elected laymen in Congress.  These types of problems meet three criteria (discussed below):

1. The issue deals with technical subjects requiring specialized knowledge.
2. The issue is long-term, both in problems and solutions.
3. The issue imposes short-term hardship to avert long-term hardship of much greater magnitude.

Consider the legislative challenges of issues that meet these criteria.  What follows are not critiques of our democracy but rather explanations of some unfortunate effects that institutional design can have upon policymaking.

Congress Lacks Specialized Knowledge:

Everybody knows that our elected representatives are not experts.  They are elected to represent us and cannot possibly be expected to have in-depth knowledge of all the issues our legislature must tackle.

To overcome this deficiency, they summon experts to testify before them.  But most testimony has little impact on legislation, and as anyone who has ever watched C-SPAN (or even the Daily Show) can tell you, sometimes “expert testimony” is nothing short of political theater.

For example, in 2005, the notorious Sen. James Inhofe (R-OK and Congress’s most vocal climate-denier), who at the time chaired the Environment and Public Works Committee, invited fiction author Michael Crichton to advise the Senate on climate science because he had recently written State of Fear, a fictional story about murderous eco-terrorists.  Inhofe also made that book “required reading” for members of the top Senate environmental committee.

When you hear about the final deal-making and compromises being made to pass a law, it has nothing to do with expert testimony or pure policy considerations – it’s often just about pork barrel politics and a particular legislator’s demands.

It is easy to see why under certain circumstances, our country would be better served if experts in the field at hand were asked to craft sensible and efficient policies to address technical problems.

Congress Cannot Address Long-Term Problems:

It is never more than two years from an election year in Washington.  If congresspersons want to be reelected, they need to deliver short-term results to their constituents.

It is no surprise, then, that long-term problems are not legislative priorities; they appeal to our legislators’ responsibility and duty, but those are not the forces that drive Washington.

Even if addressing a long term problem did not cost anything today, it would present an opportunity cost because a House representative only has 2 years to deliver demonstrably for his constituents.

For long term solutions that have short term costs, the future prospects grow bleaker.  Add a degree of uncertainty and magnify it with disinformation and demagoguery, and it is obvious why climate bills are hard to pass.

Congress Cannot Impose Short-Term Costs for Long-Term Benefits:

Legislators are held accountable for the present, not the future.  Until the end of their careers, the desire for reelection prioritizes short-term considerations.  Think about a Representative in the House.  If a bill in the House could save his constituents money in 10 years but will cost them money this year, he would have to be reelected 5 times before his constituents would feel the actual benefits of that bill, but he would surely be held responsible for the cost.

If that representative’s constituents are totally on board with that bill, they may give him credit for his work in the short term.  But if it’s a contentious law and there is disinformation circulating, that vote could well cost him his job.

If the problem that bill solves is only a small one today, even if it’s going to get much bigger in the future, his constituents may resent him for imposing a cost to solve a problem that was not unbearable yet.  This is why Congress is a reactive, not proactive, body.

Climate change is a long-term threat with long-term solutions.  Unfortunately, we only have a short-term window to address it and it will impose short term costs.

It is the perfect storm of an issue that Congress really cannot handle.  It is exactly the type of issue that Alan Blinder was talking about.  That is why the responsibility of carbon regulation may well fall to the EPA.

Downsides to EPA Action

1. Limited Scope: EPA regulations, at least early on, would do very little to clean up our existing power plants.  Recall from the Tailoring Rule that these regulations apply only to new or upgrading plants (unless they release other Clean Air Act pollutants too).  Obviously, we would need to reduce our current emissions to meaningfully reduce our climate pollution.

2. Cost: Congressional action could achieve emission reductions more cheaply than the EPA regulations could.  If EPA establishes carbon regulations under the Clean Air Act, they will be traditional “command and control” regulations.  The EPA will dictate what emissions-reducing technologies are best, and mandate their use.

Instead of that approach, Congress could use more modern market-based initiatives like cap-and-trade to put a price on carbon.  This would spur innovation and let us achieve our emission reductions for less.  The EPA would mandate the use a current technology, with no incentive to develop better ones.

The cost factor and other differences between market-based initiatives vs. command and control regulations are outlined in this recent post.

3. It’s Not Enough: EPA carbon regulations would provide emissions reductions where we need them most – the energy sector.  But they couldn’t put a price on carbon, which is a vital step to achieving the long-term reductions necessary to avert the worst effects of climate change.

“The only way to cut emissions 80 percent by 2050 is to put a price on carbon, and the only folks who can do that are in Congress.” –David Bookbinder, Sierra Club.

4. Threat of Being Overturned: Legal challenges could slow the EPA process but probably not derail it altogether.  The real threat is that Congress could overturn anything the EPA does, as Lisa Murkowski has already attempted to do preemptively.

Conclusion:

By virtue of not having gone through Congress, EPA climate regulations would likely emerge looking more like a sound policy solution than anything Congress has ever produced.  However, these regulations would not be enough. Combined with a good energy bill, they could be part of a real solution, but we would still need some congressional action to truly address this threat.

A comprehensive climate/energy bill would be preferable to EPA regulations.  But if Senate conservatives block another climate bill, the EPA will take action.  It will at least be a long overdue step in the right direction.