Be Careful What You Wish For
On December 7, 2009, EPA Administrator Lisa Jackson stated that greenhouse gases (GHGs) “threaten the public health and welfare of the American people”. This CAA endangerment finding was what everyone had expected due to the strong proposed finding and the inevitable result of legislation that the Obama administration has been supporting.
Now that the U.S. has a position to take to Copenhagen - either EPA or Congress will tackle and reduce GHGs - so count on the U.S. to do its part. Despite all the discussions about the costs of the U.S. policy on the U.S. economy, which are not close to being resolved, where will the money come from to help the 3rd World countries? Amounts of $10B a year and upwards of hundreds of billions of dollars are used like the money is easily available in today’s economy.
If GHGs are a serious threat, reductions are necessary and need to start soon. However, let’s be very careful to not to solve the problem by pushing the cost of energy so high that most of the world will eventually enjoy clearer skies and air, while sitting in the dark or shivering during the winter months.
In shifting to cleaner fuel sources like natural gas (or solar or wind) as preferred sources of energy we need to be certain that the supply system can be created in a cost-effective manner and in time to meet the GHG emissions reduction goals. We also need to be sure that siting such generation facilities meets with the expectations of the host communities.
MIXED RESULTS FOR OREGON CLIMATE CHANGE LEGISLATION
In my February 23, 2009 posting, I described Oregon Governor Ted Kulongoski’s ambitious agenda for state action to reduce green house gases (GHG). But then the tumbling economy got in the way and GHG lost its position at center stage. Still, some things did get done in the session that ended last month.
Oregon had already adopted renewable energy portfolio standards (RPS) for its electric utilities, adopted California automotive emissions standards and had the nation’s most generous business energy tax credit (BETC). This year the plan was to add a GHG cap and trade program and establish fuel standards, among other things. Some of it passed, some didn’t, and the Governor has said little as to which he will sign into law.
SB 80 would have established the cap and trade program, in line with the Western Climate Initiative, but failed. The principle reason seems to be that a federal bill may be imminent. That legislation, the Waxman-Markey bill (HR 2454) passed the House on June 26 by a razor thin vote along party lines (219-212). The bill includes a provision pre-empting state legislation. Its fate is in the Senate, where it will need at least 60 votes to survive a filibuster, and the final shape of the bill is anyone’s guess. If it appears a federal cap and trade bill is not achievable or indefinitely delayed, SB 80 is likely to be reintroduced in Oregon in some form.
Other climate bills did pass.
- SB 38 authorizes a rulemaking to require registration and reporting for import to the state of electricity or fossil fuels.
- SB 101 establishes a GHG standard for electricity generation and prohibits utilities from long-term financial commitments for resources that do not meet the standard, effectively banning import of coal fired plant output.
- HB 2186 calls for development of a standard to reduce GHG emissions from transportation fuel 10% by 2020 and to conduct a study on retrofitting of trucks to make them more efficient; this element was proposed as mandatory, but a compromise calling for the study was adopted. This provision is intended to piggy-back on a California study of improving existing truck efficiency. HB 2186 also established a task force to look at reducing GHG emissions through integrated land use and transportation planning.
- HB 3039 promotes solar energy and provides a 2:1 RPS credit for each kWh produced from a qualifying facility operational before January 1, 2016 and that generates at least 500 kW. The bill sets a limit of 20 MW of capacity for the RPS credit.
- HB 2940 allows RPS credits for biomass facilities in place before 1995, capped at 100 MW. There are 8 biomass plants and one garbage burner in the state. This controversial bill was not proposed by the utilities, rather it was driven by the Oregon forest products industry in the interest of maintaining jobs and to provide a source of income for declining mills. Thought the bill had broad bi-partisan support among legislators, many observers see it as inappropriate to give RPS credits to old generating plants, predicting that existing hydropower will be right behind. The concept behind RPS for many is to offer an incentive for new development of renewable resources, not to reward existing ones. As of this writing the Governor has not acted on the bill but is known to be considering a veto.
- HB 2472 modifies the BETC to include manufacture of electric vehicles among the industries eligible for the credit, along with renewable energy facilities and manufacturers of equipment for renewable energy production. The BETC was reduced to match budget concerns, and the Governor is also considering a veto of this bill in the interest of keeping Oregon competitive to attract clean tech business.
All eyes now shift to the U. S. Senate to see if there will be federal GHG controls enacted. It may take a while, these things take time.
Section 115 of the Clean Air Act - A Useful Tool for Climate Change?
We are not going to have Congressional action on a regime for reducing greenhouse gas emissions by the time EPA will feel compelled to respond to the Supreme Court's direction in the Massachusetts case and announce whether CO2 emissions endanger public health or welfare. If endangerment is found under Section 109 or 202 of the Act, it appears to lead to ambient air quality standards for CO2 which are then to be met through state implementation plans. By controlling the sources of CO2 within its borders, no state is likely to be able to reduce CO2 to whatever ambient level is established. This is the practical result of the fact that greenhouse gases are a global problem not a local or regional problem. Moreover, the regulation of CO2 under other portions of the Act will likely follow. Perhaps the chaos likely to ensue from following this course will push Congress to pass legislation addressing greenhouse gases. But relying on Congress to do the sensible thing may well be an imprudent course.
Why not try an endangerment finding under Section 115 of the Act instead? It addresses international air pollution which is what GHG emissions are. It calls for a determination of endangerment in a foreign country from sources in the United States. The determination is deemed a finding under Sec.110(a)(2)(H)(ii) of the Act; that finding may be that the relevant SIP is substantially inadequate to comply with the requirements of the Act but need not be that it is inadequate to attain the NAAQS. The affected foreign country must be invited to appear at public hearings on appropriate revision of the SIP and the United States must be given reciprocal rights by the foreign country. Making the determination and establishing reciprocity would take EPA into comparatively unfamiliar territory; starting GHG reduction through state action would follow the path that the US has already started down.
The advantages of this approach that I see are, first, that it deals with the GHG issue as a global, or at least an international, problem rather than as a local or regional one. Second, it gives the states the opportunity to proceed with cap-and-trade regimes which I think will, in some form, be the Congressional solution. Third, it may be able to avoid introducing GHG regulation into other CAA programs such as New Source Review which may be hard to untangle if and when a cap-and-trade regime is established.
The disadvantages are that it is certainly not a perfect fit with a national cap-and-trade or GHG emission tax scheme which I view as the most rational approaches that Congress might enact (though the rationality of a tax scheme is much greater than the likelihood that Congress would embrace it). If you favor command and control regulation and the complexity of New Source Review, this is not the solution for you. There are also risks in what the courts may do in interpreting Section 115 which has rarely been subjected to judicial scrutiny.
In sum, I suggest Section 115 as the best of the ill-fitting options which the Clean Air Act offers for a rational approach to reducing GHG emissions.
