No regulation without legislation!

by David Manor 6. October 2009 07:41

This is what the Chamber of Commerce is chanting lately. The National Association of Manufacturers is threatening to sue. Yet the Environmental Protection Agency has announced that if Congress won’t legislate to cut green-house gases, they will regulate.

The EPA’s announcement is the ace Obama’s administration has been holding in its pocket, an ace that may trump the US’s attempts to control carbon emissions. A Supreme Court decision earlier this year has empowered the EPA to assert that CO2 is a pollutant, and as such must be regulated from vehicles. Now, the administration has authorized the agency to start regulating GHG’s from power stations and industry, the backbone of the US economy. "We are not going to continue with business as usual," said Lisa Jackson, EPA’s chief, to the New York Times. “We have the tools and the technology to move forward today, and we are using them."

The new rules would cover plants that emit at least 25,000 tons of carbon dioxide a year. The regulation primarily focuses on 400 power plants, which will suffer fines if they fail to utilize the cleanest available technology. In addition to the power plants, another 14,000 or so facilities and smaller power plants will also face the threat of fines, and would need to renew construction and operating permits based on their ability to cut their emission of carbon dioxide, methane, nitrous oxide, and other GHG.

The rules could take effect as soon as 2011, unless Congress legislates. "The Economist" argues that businesses would prefer the carrot of a cap-and-trade legislation to the stick of government regulators nosing around their plants and telling them what technologies to use.

Senators John Kerry and Barbara Boxer have stepped up and published their own version of the cap-and-trade bill previously know as Waxman-Markey. They upped the ante by proposing a 20% GHG reduction by 2020 over 2005, rather then the 17% previously proposed.

The stakes are high and the battle over them is turning fierce. The Chamber of Commerce is opposing cap-and-trade, stating that corporations do not need to pay for the right to emit carbon. According to the "WSJ," that was enough for giants such as PG&E, Exelon and Nike to resign their membership and weaken one of the best funded opponents of climate legislation.

Suddenly, “no regulation without legislation” is beginning to sound climate friendly.

David Manor

Tags: ghg, climate bill, legislation, co2, epa

Carbon Abatement

July 3. 2009 05:56 james

interesting stuff

July 3. 2009 06:06 Anshuman Tiwari

Interesting and incisive piece of article David. Perhaps industry thinks that it's easier to influence the legislators that administrators/regulators....
Keep blogging....
Good luck !!!

July 29. 2009 02:57 T. Cooper

It seems that executive power (here executed through the EPA) could end up being the key to moving American climate change policy forward. Moreover, decisive action by the EPA may allow the United States to arrive at the Copenhagen negotiations with a workable position than previously expected.

This post also serves as a good reminder of the power and ability of individual (albeit large) companies and organizations to play a central role in restructuring climate regimes. Should a national government not be on board with enforcing carbon regulations, companies with environmental ethics (at least to some degree) can voluntarily set their own, influential standards. This idea is relevant to the Ecuador Pod’s look at the possibilities of sectoral approaches for mitigation. Though different from exertion of corporate philosophies in many capacities, the sectoral approach of targeting emissions and environmental practices through particular industries and important actors, rather than at a broad national level, can be understood to hold similar and encouraging potentials.

July 30. 2009 12:18 Grady O'Shaughnessy

While I don't generally side with the position of the Chamber of Commerce on...anything, I do agree that getting Congress to enact legislation that will reduce carbon emissions is a more sensible option. It's certainly not any easier than turning the task over to the EPA, but would seem to be more sustainable politically and acceptable socially (a 'bipartisan' solution vs. command and control). That's where my agreement with the CoC ends.

Without cap and trade, or any mechanism that puts a price on carbon that effectively internalizes its impacts on the environment and human health and results in a 'true' price (and setting the forces of capitalism on creating solutions), the problem will never be solved. Continuing with more of the same that created the mess is incredibly myopic and plainly seems to lack common sense. Not that we should be surprised that the group that gets paid to advocate for consumption for consumption's sake would act in any other way. I commend those organizations that have that common sense and the courage to walk away.

As 'The Economist' points out, the purpose of the EPA announcement of power is to essentially wave the stick over the House and Senate, reminding them of the unappealing alternative to Congressional action - or inaction. Given the importance of the long-term life of effective action to reduce emissions, a few additional months of politics as usual in Washington are well worth it if we can get legislation passed. It might not be the legislation we truly need, but it's a start - something we can build upon. And it won't take anyone getting whacked with the stick..

July 30. 2009 13:05 Alexandra

A recent study by Deutsche Bank Asset Management has found that mandates AND a tax (essentially that is what a cap-and-trade is) is present in the most promising countries for green investing. Despite the highest absolute amount of investment in the space, the US did not top the list precisely because of the uncertain regulatory environment and insistence that trading is the be-all and end-all.
By their announcement, the EPA basically set an opportunity cost for a lack of regulation. This serves two purposes. First, the action sends a timely international message that the US will, in fact, do something to mitigate climate change, serving as an interim guarantee while a bill works its way through legislature. This message may prove crucial during negotiations in Copenhagen, though other parties likely hoped for a stronger interim or final outcome.
Even with all the legislation around the world in effect (including the Waxman-Markey Bill), the Earth Institute at Columbia has modeled that we will still be short of certainty for 450ppm (so 350 seems a long way off). Thus, private investment will be necessary. The EPA announcement also supplies a floor for a market for investments in clean technology. According to the DB study, investors require Transparency, Longevity, and Certainty. Such an announcement provides at least some degree of Transparency and Certainty.
However, looking to the EPA to fill the void the legislature has left may be problematic. Lest we forget, the EPA essentially relies on congress for funding.
The study is available "here":http://www.climatebiz.com/research/report/2009/10/26/deutsche-banks-global-climate-change-policy-tracker

July 31. 2009 01:01 Matt

1. The United States has taken a strong position against softening any of its IPR protections, even in the face of claims by developing countries that IPR is a barrier to technology transfer. As a firsthand observer to the climate of the negotiations at Barcelona, do you think the US’s hard line stance on IPR will last through Copenhagen, or do you see it as mostly posturing? Could the US using this stance as any sort of bargaining chip?

2. Developing nations have expressed the desire for technology transfer to be controlled not by an organization like the WTO, but by a new, independent body with equitable representation for all countries and guaranteed, predictable funding. Do you think this is a realistic goal, or will the financing and governance of technology transfer post Barcelona and Copenhagen more reflect the status quo of today? Will developed countries where the patents and other IPR are held cede control to a new international body? Will technology transfer just end up being done mostly in bilateral deals between pairs of countries?

August 1. 2009 00:13 Ana Karla Perea

Probably a regulation for plants emissions is a positive proposal as well as the authorizations of EPA to start regulating GHG’s from power stations and industry. It is also a positive thing that the regulation includes also smaller power plants because sometimes the attentions only focus in the larger plants, which sometimes are already using clean technology. However, it is important how the regulation will be implemented and if the government will give some kind of help to facilities (as time of incentives) to get the cleaner technologies.
Either with a cap or with a regulation from government emissions it is a fact that emissions need reduction.

August 1. 2009 00:31 Jaime Severino

US must reduce its overall emissions. A good first step is regulate one of the industries with most emissions as electricity production. According to the Energy Information administration "electricity generation consumes 40% of U.S. primary energy and is responsible for 41% of energy-related carbon dioxide emissions". The way US would regulate the emissions (taxation, cap and trade, etc) is another problem involving where the resources generated would be allocated, and its an internal decision that may be influenced by the results in the Barcelona and Copenhagen UNFCCC meetings this year.

August 1. 2009 01:28 Kat

In my opinion, regulation without legislation will not work in the long term. This method may provide short-term progress that will lead us to believe that something is getting done and that we are taking a strong stand to reduce greenhouse gas emissions. However, it would only be a matter of time before lawsuits from major corporations and industries would prevent this system from moving forward. Additionally, without standing legislation, there is no guarantee how long this system of reductions would be able to stay afloat. Legislation to reduce greenhouse gas emissions would send an assertive and more binding message to industries. This in turn would lead to more long-lasting efforts to reduce greenhouse gas emissions and would probably be more impactful overall. The quote from Lisa Jackson makes the plan seem very much like a knee-jerk reaction. Simply because we have the technology and the tools does not mean that we have the power, and does not mean that we should move ahead without the support of Congress and legislation.

The entire plan seems like it will only cause animosity and further divide these parties, when we should be uniting them towards a common cause. I agree with the Chamber of Commerce in its comments against cap-and-trade. I do think that something absolutely needs to be done, and quickly, but the idea of government officials regulating industrial processes without firm legislation seems doomed to fail when put into practice. Efforts right now need to be focused on putting together a climate bill before Copenhagen that can be taken to the meeting in December.

August 1. 2009 02:44 Jackson

Question - what are the implications of all of this to the US economy? If fines are administered to these companies, will they in turn increase the prices of their services? In a recovering economy, would this strategy be dangerous or would it be more likely to result in pretty impressive changes from the industry?

Also, have there been any analysis that can prove that cap and trade has made significant impacts thus far?

Great blog. Thanks!

August 1. 2009 15:34 David Burns

Foremost, knowing that the Obama Administration can still act to curtail U.S. carbon dioxide emissions even without legislation is comforting (even if not ideal).  Mass v. EPA was a major victory not only for the state/city petitioners, but also for the rest of the world.  As we saw under Kyoto, any agreement reached without the U.S. will simply not be enough if we are to prevent catastrophic climate change.  Fortunately, because the Surpreme Court has already ruled on the issue, it is unlikely that the threatened litigation from groups like the Chamber of Commerce or National Association of Manufacturers would be successful.  The move by the Administration also sends a powerful message to the rest of the world before the COP-15 meeting in Copenhagen this December.  The move may help to divert would be pressure on the U.S. as a whole to individual states whose senators and congressmen oppose legislation.

Additionally, many of hyperbolized economic fears expressed by those opposing GHG regulation by the EPA are unfounded.  The emission requirement of 25,000 tons to trigger regulation is high enough that it excludes small business, offices, and farms.  Clearly organizations like the Chamber of Commerce don’t actually understand the threat of global climate change or the mitigation and adaptation efforts that will be needed – and this is further evidenced by several of its large members (the types they fear would leave the U.S. if regulation were to occur) pulling their membership and funding.

August 2. 2009 14:23 Angel

I think your assessment of the current U.S. position is accurate, and, in fact, there's been a lot of discussion at the negotiations that there most likely will not be a deal signed out of Copenhagen. My question is this - if we can't expect the U.S. to be ready to sign a meaningful agreement in Copenhagen, thus preventing any hopes of an agreement in general - what is the best outcome we can hope to have at COP-15?

August 3. 2009 12:33 Bidisha Banerjee

Thanks for highlighting the EPA's role in regulating CO2. This issue is often overlooked in discussions about Waxman-Markey and about Copenhagen. If Waxman-Markey were passed, it's unclear whether the EPA could go ahead with its plan to regulate CO2; regional initiatives like RGGI and the Western States' Initiative to regulate GHGs would also be pre-empted. Right now, it's looking like there won't be any domestic legislation this year. While this is bad news internationally, maybe it has a silver lining domestically -- rather than passing a bad bill, filled with compromises on nuclear power and give-aways to corporations, the delay may allow EPA to better calibrate its efforts to curb CO2 using regulation rather than cap-and-trade.

August 3. 2009 12:57 Troy Savage

Although regulation is a viable way to reduce carbon emissions, the preferred method of reducing emissions is market-based.  Either a carbon tax, or cap and trade regime is preferred to regulation.

Regulations are difficult and expensive to monitor, create resentment and reduce innovation.  Additionally, energy and resources that could be used to fight the actual problem (global warming) are instead used to lobby against regulations, find loopholes or game the system to avoid the effects of the regulatory regime.  Furthermore, a regulatory scheme for carbon reduction will not reduce GHGs efficiently - that’s what markets are for.  While regulations are often necessary, in the case of carbon emissions, there are viable alternatives.

Ironically, fear of regulation may be the best impetus for a changed approach.  With a timeline clearly looming businesses are starting to support the idea of climate legislation that would set a price for carbon.

The U.S. Supreme Court handed a large stick to an U.S. Administration whose threats to swing are credible.  Hopefully it is enough to spur legislation and innovation that will lead to substantial reductions in GHG without serious reductions in economic capacity.

August 6. 2009 09:18 William Lynam

If the rules regarding the EPA’s power to regulate carbon dioxide as a pollutant take effect as soon as 2011, I wonder how that will affect the outcome of the climate change negotiations in Copenhagen. At the moment, it seems like the USA is unlikely to agree to anything binding unless it seems feasible to pass it through domestic legislature. But if the USA can regulate carbon dioxide as a pollutant, hopefully they will be able to use that during the negotiations to create some binding emissions targets for post-2012. This would finally put the USA in a leading role in climate change negotiations. As a leading emitter of carbon dioxide, it is difficult to make any impact on global emissions without having the USA on board at the same time.
Although businesses may prefer the carrot of a cap-and-trade legislation to the stick of government regulation, cap-and-trade has not had much impact in the USA. Even though cap-and-trade it supposed to stimulate innovation, innovation seems scarce. And even when there are new green technologies available, they haven’t been implemented within industry. If the EPA starts regulating carbon dioxide as a gas, there seems to be a greater likelihood of actual change being created. If only this kind of regulation could be enacted internationally, we would have a better chance of actually reducing emissions like we did after international agreements on CFCs.

March 5. 2010 00:59 Randal Segner

This is interesting, post more often!

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