Two weeks ago, the Supreme Court announced it would review a small part of the Environmental Protection Agency's (EPA) agenda for regulating greenhouse gases under the Clean Air Act. Yesterday, two members of Congress (Rep. Ed Whitfield, R-KY, and Sen. Joe Manchin, D-WV) floated a bill that would substantially limit EPA's authority to regulate GHGs under the Act, opening up a new avenue of attack on the agency's agenda.
This move is mostly about politics and appears extremely unlikely to become law - even if it made it through the Congress's backlogged calendar and received enough votes to pass, the President would surely veto it. It's also not a new move - other bills with the same general objective have been floated in both the House and Senate over the last few years, without success. But the new bill is worth a look since it shows what parts of EPA's agenda are the highest-priority targets for its coal-state opponents. The bill would essentially limit EPA in three ways:
1. No CCS requirement.
EPA's proposed performance standards for new fossil fuel power plants, which effectively require carbon-capture-and-storage, would be thrown out. Replacement proposals could only be based on technologies already deployed at at least 6 commercial plants. This requirement would prevent EPA from using performance standards to do any real technology forcing.
2. No existing-source rules without express Congressional consent.
EPA guidelines for future standards on existing sources, which the President has directed the agency to propose by next summer, would not enter into effect without specific new legislation. Since few coal plants are likely to be built regardless of what new-source standards look like, existing source standards are much more important. In fact, they are likely the single most important component of federal climate policy for the foreseeable future.
Given Congress' current inability to take action on any substantive policy issue, much less a politically controversial one like climate policy, the bill would doom existing-source standards. The Clean Air Act remains the vehicle for federal climate policy because of Congress' inability to act, either by replacing it or stripping out authority over GHGs. By requiring Congressional action for Clean Air Act policy to proceed, the bill would reverse this relationship.
3. Different standards for lignite coal, and for coal and gas generally.
For new and existing sources, EPA would have to issue separate standards for coal plants that burn lignite, which has greater emissions relative to its energy output. More importantly, EPA would be required to issue separate standards for coal and gas plants. In so forcing EPA to divide (or in legal terms, "subcategorize") the emissions sources subject to standards, the bill would significantly undermine the power of flexible standards to achieve emissions reductions at low cost.
Standards that allow trading across different types of sources result in emissions reductions at those sources where they are cheapest. Fragmenting sources into smaller markets means costlier reductions (or fewer reductions at the same cost). But there are winners and losers. Trading between more- and less-efficient sources implies a transfer payment between those sources. If the policy that's most cost-effective for society results in losses for coal (and in particular lignite) and gains for gas, then it's not surprising that coal interests will oppose it. This bill is direct evidence of that.