24 Sep 2013
Four years ago, Congress rejected the idea of a cap-and-trade system to reduce carbon dioxide emissions by putting a price on them. But the plan announced by the Environmental Protection Agency on Friday to regulate emissions from existing coal-fired power plants could foster creation of such a system, at least on a regional basis, and a push for renewable energy and energy efficiency in states that so far have embraced neither.
It could also leave the business of carbon regulation in the hands of states that do not recognize climate change as a pressing issue.
The E.P.A. proposed regulations on Friday for emission limits on new coal plants, rules that the agency would create and enforce directly. But regulations it plans to introduce at a later date to regulate emissions from existing plants would happen through a different section of the Clean Air Act, one enforced by the states.
Enforcement by the states could produce an anomalous result, according to experts.
In some states with big coal extraction industries and a lot of old coal-burning plants — places where fears of climate change do not get much traction in the state government — officials might allow emissions from existing coal plants the same, but try to meet the new standards by embracing zero-carbon generation energy sources like wind. They could also take steps to reduce electric demand through efficiency. Both alternatives now fare poorly in coal-dependent states, because electricity prices there tend to be low, which depresses investment in alternative generation or steps to use less electricity.
State enforcement could also lead to some foot-dragging by state environmental agencies in places where greenhouse gas production is not thought of as a pressing problem.
“A recalcitrant state that wanted to throw sand in the gears could do that,” said Manik Roy, vice president for strategic outreach at the Center for Climate and Energy Solutions. Most of the pollution goals imposed under the state-by-state process have eventually been achieved, but for carbon this could easily stretch beyond the end of President Obama’s term of office. The state of climate politics in the next presidential administration is hard to predict now.
Gina McCarthy, the E.P.A. administrator, told reporters on Monday that state plans on carbon should be written in ways “that make sense for them.” She said controls on existing plants would be imposed by something similar to the “state implementation plans” that the E.P.A. has required for most of the last three decades, to regulate pollutants like sulfur dioxide and nitrogen oxides.
Some states, Ms. McCarthy said, already have efficiency programs, which reduce emissions because they reduce overall generation, as well as renewable portfolio standards, which require generation from wind, sun and other zero-carbon sources.
“The states are thinking about these things,” she said. “This is not going to be new to them.”
Experts say the E.P.A. might set a simple limit in pounds per kilowatt-hour, or might let the states convert that rate of emissions into an overall cap. The cap might be met by blending in wind power, or by shutting one coal plant and earning credits that could be applied to another. Experts point to the trading system that the E.P.A. allowed when it was phasing out lead in gasoline as one possible model. In that case, credits could be traded among refineries.
Although utilities that burn coal do not like the idea of limits on emissions from their plants, either existing or old, they might push for a system that allows them to trade credits within their systems, even if those systems extend across state lines, said Dallas Burtraw, a climate and energy specialist at Resources for the Future, a nonprofit group.
Making the states establish the details of the regulatory system could have an advantage in disseminating it beyond Washington, he said. “This moves the climate policy debate outside the Beltway,” he said. “It launches it in 50 state capitols, where the forum is not yet polluted.”
But the regulation will create other disputes, he said, including what the baseline would be. Colorado, which has already forced its utilities to invest heavily in renewable energy, would probably want credit for that, he said.
S. William Becker, the executive director of the National Association of Clean Air Agencies, whose members are state and local officials, said some Western states were already expressing interest in the Regional Greenhouse Gas Initiative, an organization of northeastern states whose utilities trade carbon credits. But the Waxman-Markey climate bill of 2009, which passed the House but was defeated in the Senate, was a cap-and-trade bill. Some regional cap-and-trade systems might work, he said, but calling them something else “might be more palatable politically.”