Without Congress, There’s Still a Path to U.S. Progress on Climate

Don’t expect the U.S. Congress to take any action on climate change in the next four years. But by continuing to use its regulatory authority and working with the states, the Obama administration can make significant progress on reducing greenhouse gas emissions.

When Barack Obama won his first term as president in 2008, expectations were high that the United States would finally tackle the threat of climate change. In fact, the administration quickly raised fuel economy standards for cars and light trucks, and the House of Representatives passed a sweeping bill that would have imposed economy-wide caps on greenhouse emissions and set targets for future reductions.

But the legislation died. And Obama’s brave talk of slowing the rise of the seas and healing the planet vanished from the political discussion after climate change-denying Republicans seized control of the House in 2010. All that remained were some states moving ahead with their own emissions reductions policies, and the U.S. Environmental Protection Agency (EPA) cautiously proposing to limit the amount of carbon dioxide from new power plants.

So what can we expect in the second term? In some ways, more of the same. No action in Congress, so no cap-and-trade program or carbon tax. State action and EPA regulation will continue to be the only major climate games in town. “Most likely we will blunder along as we are doing now, achieving some genuine progress through regulatory solutions, but grossly underfunding technological change and not having a price on carbon,” predicts Mark Muro, senior fellow at the Brookings Institution.

Yet such a path could prove to be surprisingly productive. “There is an assumption that working with the tools of the existing law is just fiddling around the edges,” says David Doniger, policy director of the Natural Resource Defense Council’s climate and clean air program. Not so, he says: “We can do something big.”

Climate change has leapt back into the larger policy discussion in Washington.

Indeed, thanks to the auto standards, the sluggish economy, and the dash to use more of newly abundant natural gas to generate electricity, the U. S. is on track for substantial emissions cuts by 2020, according to a recent analysis by Resources for the Future economist Dallas Burtraw. “A 10 percent or more reduction is already baked in,” says Burtraw. If the Administration takes the contentious step of putting curbs on existing power plants, the country could come very close to meeting the commitment Obama made in Copenhagen in 2009 of slashing emissions 17 percent below 2005 levels by 2020. It might even cut emissions more than the failed House climate bill would have done — although progress beyond 2020 would require far stronger measures.

“When you start adding the pieces up, the surprise is that there is more going on than people thought,” says Burtraw.

Moreover, there are two crucial differences between the start of Obama’s second term and the last couple of years. The first is that President Obama has put climate change back on the table. In his first post-election news conference on November 14, Obama said: “If… we can shape an agenda that says we can create jobs, advance growth and make a serious dent in climate change… I think that’s something that the American people would support.” As Nat Keohane, who did a 20-month stint as special assistant to the president on energy and environmental issues before returning to the Environmental Defense Fund (EDF) in September, argues, “The president really cares about his legacy on this issue.”

The second is that climate change has suddenly leapt back into the larger policy discussion. The devastating human and economic toll of Hurricane Sandy has brought an explosion of new interest in making cities and communities more resilient to extreme weather. In addition, the combination of Sandy and the search for the revenue needed to shrink the national debt and avoid the fiscal cliff has revived ideas that once seemed close to dead, most notably — in the long term — carbon taxes.

Just one week after the election, the right-leaning American Enterprise Institute held a standing-room-only, all-day carbon tax conference, and conservative groups like the Energy & Enterprise Initiative at George Mason University are pushing the idea as a winning strategy for Republicans.

The work being done now could lay the groundwork for a price on carbon in the U.S. in the future.

“Conservatives don’t have to be in science denial anymore. We can engage in the debate because we have the answer to climate change,” says initiative head, former Congressman Bob Inglis (R-S.C.), who supports a carbon tax. The blogosphere is humming with carbon tax punditry, and even Grover Norquist initially acknowledged that such a levy, if it returned the proceeds to the American people, would not violate his famous “never raise taxes” pledge. “It’s welcome to be having a serious policy discussion on an issue that seemed pretty moribund six months ago,” says the Brookings’ Muro.

Just don’t expect the discussion to result in legislation anytime soon. Passing a carbon tax in the next four years is politically impossible, most policy experts believe. Even if Republicans signed on, they would demand preemption of EPA regulation, which Democrats and environmentalists would never accept. But the work being done now could help lay the groundwork for a price on carbon in future years, especially because it’s clear that regulation gets us only part way to the sweeping economic transition needed to successfully fight global warming.

“Reducing our greenhouse gas footprint while increasing standards of living will require deploying a huge range of clean energy technologies,” explains Manik Roy, vice president for strategic research at the Center for Climate and Energy Solutions (C2ES). “We can’t do that through command and control regulation.”

In the meantime, though, regulation can make effective progress at the narrower task of cutting pollution and carbon emissions. That’s why “the most important thing the president can do on climate change on the domestic front is EPA regulations under Section 111 of the Clean Air Act,” says EDF’s Keohane. Using the Clean Air Act authority (affirmed by the landmark 2007 U.S. Supreme Court decision that CO2 is a pollutant under the act), the EPA proposed last April that new power plants could emit no more than 1,000 pounds of CO2 per megawatt-hour (lbs/MWh) of electricity produced. That’s about the amount that now comes from a clean natural gas power plant. The agency is expected to finalize those rules by the statutory one-year deadline in April 2013. Then it’s expected to begin seriously thinking about the nation’s single largest source of CO2 — existing power plants. Those plants emit about 2.5 billion tons a year, 40 percent of the U.S. total.

The challenge is that it’s difficult to substantially cut emissions from individual existing plants, at least until technologies like carbon capture and storage have been fully developed. As a result, “the question for industry and environmental groups is what interests do they have in promoting more flexible policies,” says Kyle Danish, climate and clean air law expert at the Washington, D.C.- and Seattle-based law firm Van Ness Feldman.

California’s nascent cap-and-trade program could spur federal regulatory efforts.

Many companies are willing. “We don’t want to stop regulation — we want it cheaper and better,” says Peter Molinaro, vice president of federal and state government affairs for Dow Chemical.

Environmentalists may also embrace innovative approaches. In fact, last week the NRDC formally unveiled a detailed 90-page plan that would give utilities and states enormous flexibility. Instead of putting curbs on individual plants, the proposal would set average statewide emissions limits aimed at achieving a national average of about 1,500 lbs/MWh by 2020. Individual plants could be retrofitted with more efficient boilers or CO2 capture systems, or switched to cleaner fuels. Or utilities with a fleet of plants could run their coal plants less often, and ramp up generation from natural gas plants or renewable sources. Or they could retire coal plants and build new natural gas and renewable capacity. Emissions reductions accomplished through energy efficiency improvements would also count. And states would have the freedom to adopt different approaches, such as California’s new cap-and-trade program, or the Northeast states’ Regional Greenhouse Gas Initiative.

NRDC says the plan would cut emissions by 26 percent by 2020, lower electricity bills, and bring billions of dollars in benefits from lives saved, illnesses prevented, and devastation from climate change avoided. “This is big, but not expensive,” says Doniger.

But it could be too much too soon, given the intense opposition and potential legal challenges. “A better strategy may be to go slower, with less ambitious reductions,” advises Robert Brenner, former director of the Office of Policy Analysis and Review in EPA’s air and radiation office and now senior fellow at Duke University’s Nicholas Institute for Environmental Policy Solutions.

The U.S. has a good shot at staying on track for substantial progress on climate.

Indeed, the Obama Administration is moving cautiously, saying that curbs on existing power plants are at least several years away. That stance is frustrating climate policy advocates, who point out that, in international climate talks, the administration is already touting the reductions those curbs would accomplish. “They are taking credit for something they haven’t committed to yet,” complains C2ES’s Roy.

But the NRDC proposal clearly charts a likely legal and regulatory path for EPA emissions curbs, first on existing power plants and then on other high-emitting sectors like refineries and cement plants. “I think that in four years there will be regulations in place for many of the key sectors,” Brenner predicts.

Climate policy advocates also expect that California’s nascent cap-and-trade program, which requires emitters to buy permits for carbon pollution and thus puts a price on carbon, will complement and spur federal regulatory efforts, especially if it brings hoped-for economic benefits and clean-energy innovations. “California can be the model for the nation, showing that we can indeed limit carbon emissions in a growing economy,” says Keohane.


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The bottom line: The U.S. still has a good shot of staying on track for substantial progress in the fight against climate change over the next decade — if the Obama Administration gets behind regulation of existing power plants. Beyond 2020, though, going farther will require putting a steep price on carbon. That’s the only way to provide incentives for cutting emissions throughout the entire economy, doing everything from changing people’s behavior to spurring new, cleaner technologies.

A carbon tax also can generate big bucks: A modest $15 per ton of carbon dioxide fee (equivalent to about 15 cents on a gallon of gas) that rises 4 percent above inflation each year would immediately bring in $80 billion per year and $170 billion per year by 2030. The money from taxing something bad — carbon pollution — then could be used for something good, such as reducing payroll taxes or the deficit.

So the hope is that by 2020, successful federal regulations and state efforts will have quieted the opposition to emissions limits, more Americans will be connecting the dots between extreme weather catastrophes like Superstorm Sandy and getting serious about climate change, and the current groundwork on carbon taxes and other carbon pricing policies will finally bear fruit.