Second, the prohibition on promulgating regulation which limit greenhouse emission, allows for “carve outs” – in particular, specific language added to §202, §211, §213, §231 can authorize EPA’s Clean Air Act authority to limit greenhouse gases based upon the greenhouse gas effect of those emissions. In particular, this legislation adds language to §202 allowing for such regulation, and §202 is the section which authorizes the EPA’s CAA “tailpipe” standards. The EPA promulgated those “tailpipe” standards in conjunction with Corporate Average Fuel Economy (CAFE) standards. CAFE standards are mandated by a different section of the United States Code (49 U.S.C. Chapter 329, “Automobile Fuel Economy”, to be precise) and this language does not amend that language. The Nation High Traffic Safety Administration administers CAFE standards, and retains that authority. Similarly, this legislation amends the CAA to allow the EPA Administer to regulate the greenhouse emissions from nonroad engines and nonroad vehicles (in §213) and emissions from aircraft (in §231). And the somewhat mysterious (perhaps) reference to §290(b)(1) on p. 45 preserves California’s power to issue its own fuel economy standards for vehicles.
Third, the regulatory adjustment language carefully parses out the effects of different pollutants between the “greenhouse gas effect” (defined at §9901(p), p. 8) and their “standard” impacts on health and welfare. The EPA may still regulate the “standard” impacts of a greenhouse gas. The EPA may also continue to regulate all “criteria” pollutants and toxic pollutants. This legislation only prohibits regulations which limit greenhouse gas emissions because of their greenhouse gas effects.
So, where does the regulatory adjustment language have some bite? Once a fossil fuel has been priced (a critical condition!), the Administrator is prohibited from enforcing “any rule limiting the emission of greenhouse gases from the combustion of that fossil.” Within the context of the Clean Air Act statutory language, this includes EPA regulations under §111(b) and §111(d). Both those sections apply to stationary sources – mostly natural gas and coal-fired power plants. Section 111(b) covers new stationary sources and §111(d) covers existing stationary sources. Under the Obama Presidency, the EPA issued New Source Performance Standards for stationary source under its §111(b) statutory authority and, subsequently, standards of performance for existing stationary sources under its §111(d) authority (called the “Clean Power Plan”). Those regulations, or any other which might be issued under §111(b) or §111(d) are prohibited under this language.
Is this okay? It would be objectionable if this legislation undermined an essential tool of greenhouse mitigation and here I think there are two things to note. First, subjecting an entity to different (and potentially redundant, or worse, conflicting policies) is poor policy design, and the guiding principle in determining which CAA regulations where redundant turned on the principle of no double jeopardy: given the objective of reducing the emission of heat-trapping greenhouse gases, which EPA regulations subject entities to redundant requirements? The CPP’s mitigation obligations were state by state, and the EPA’s Integrating Planning Model showed that the CPP’s emission reduction schedules produced a “shadow” price on carbon of anywhere between $0 - $39. This legislation’s carbon price schedule exceeds the CPP’s “shadow” carbon price for almost all states within 1-2 years.
Second, modeling of the power sector shows that carbon pricing results in the reduction of greenhouse gas emissions superior to those required by the CPP. For instance, a recent run of the Haiku model, from the good folks at Resources for the Future, predicts that a carbon price of $50 produces both substantial changes in the mix of generation on the grid by 2030 and emission reductions greater than the CPPs. Recall also, that current Administration is replacing the CPP, and the projected emission reductions from that plan negligible at best. As a result, this legislation produces a carbon price in excess of the CPP’s “shadow” price for most states very quickly and trustworthy models predict carbon pricing on par with its carbon price produce emission reductions greater than the CPP.
Also on this account, under this legislation states retain authority over power plants, so if performance standards for new or existing power plants are still needed, states can still legislate and state-level environmental protection agencies can still regulate. States may, for instance, enact renewable energy portfolios which set out a multi-year mitigation pathway for their state (in a way similar to the mitigation pathways proposed by the CPP for each state).
We don’t want to lose any policy tools and this legislation’s regulatory adjustment language keeps a full-stocked toolbox. Good luck everyone – we’re here to make sure you have everything you need to be successful, so don’t hesitate to keep directing questions to this forum. Also, if you want to learn more about the interaction of the Clean Air Act and Pigouvian pricing on carbon, you can check out a training I gave on this topic here.
Ross Astoria is a Professor of Politics, Philosophy, and Law. He organizes CCL’s annual policy camp and published on carbon pricing, international law, and the utility sector.
‘‘(c) AUTHORIZED REGULATION.—Notwithstanding subsections (a) and (b), nothing in this section limits the Administrator’s authority pursuant to any other provision of this Act—
‘‘(1) to limit the emission of any greenhouse gas because of any adverse impact on health or welfare other than its greenhouse gas effects;
‘‘(2) in limiting emissions as described in paragraph (1), to consider the collateral benefits of limiting the emissions because of greenhouse gas effects;
‘‘(3) to limit the emission of black carbon or any other pollutant that is not a greenhouse gas that the Administrator determines by rule has heat- trapping properties; or
‘‘(4) to take any action with respect to any greenhouse gas other than limiting its emission, including—
‘‘(A) monitoring, reporting, and record-keeping requirements;
‘‘(B) conducting or supporting investigations; and
‘‘(C) information collection.