EPA existing source CO2 regulations: A path forward for Obama.

A Path Forward for Obama on Carbon Emissions

A Path Forward for Obama on Carbon Emissions

A blog about business and economics.
Dec. 4 2012 1:59 PM

A Path Forward for Obama on Carbon Emissions

Machinery at a coal mine in Agujita, Coahuila State in Mexico on Nov. 13, 2012

Photograph by Yuri Cortez/AFP/Getty Images.

The Obama administration has two big leftover agenda items from its original 2009 hopes—climate change and comprehensive immigration reform. The White House has given every indication that what they'd like to pursue after the fiscal cliff is comprehensive immigration reform with climate basically languishing on the back-burner. But not only is climate arguably the more historically significant issue, it's the one in which the president has the most scope for action. On immigration he needs a deal with congress, and DC chatter aside I see zero evidence that a large bloc of John Boehner's caucus is feeling electoral pressure to liberalize immigration. On climate, by contrast, Obama can do a lot through executive action.

This is thanks to the Supreme Court's ruling in the 2007 Massachusetts v EPA case that carbon dioxide emissions fall under the regulatory purview of the Environmental Protection Agency.

The EPA dipped its toes in the water of actually regulating CO2 emissions with a "new source" rule last year. The terms of the rule are nuanced, but essentially make it unrealistic to build any new coal-fired power plants in the United States. That's been a source of anger to the coal industry, but realistically it doesn't make much difference. Ultra-cheap natural gas has made new coal uneconomical one way or another. What the new source rule does is offer a backstop—even if for some reason gas prices spike, new coal is still dead. But what about existing coal-fired power plants? That's a tough one. The EPA could promulgate a strict rule and start shutting them down, but it'd be a very hard lift politically that would risk having congress partially repeal the Clean Air Act and strip the agency of its regulatory authority.


The Natural Resources Defense Council is out with a new proposal to do existing source regulation in a more viable way, namely by regulating states' average power plant fleet emissions rather than regulating on a plant-by-plant basis. Grist's David Roberts has a great explanation of how this works that those interested in the details should check out. One salient point is that much like a carbon tax this creates a big short-term incentive for utilities to invest in energy efficiency, which is generally the lowest hanging fruit for de-carbonization. The other is that (unlike with a pure carbon pricing system) regulation would take states' existing emissions levels as the baseline meaning, in Roberts' words, "No state will be unfairly penalized for having a carbon-intensive fleet today."

I think this has the proverbial snowball's chance in hell of actually happening, but don't let anyone tell you Obama has no options. This regulatory agenda is not particularly elegant and certainly isn't adequate to "solve" the problem, but it could put a huge dent in emissions through executive action.