Obama, EPA actions make cap-and-trade more likely

The courts have approved many of the EPA’s pollution regulations, giving Obama license to propose new rules, former EPA Administrator Carol Browner said during a Politico-hosted panel discussion at the Democratic National Convention in Charlotte, N.C.

She explained those court victories have created momentum that might make industry-specific cap-and-trade plans more palatable than the prospect of facing new regulations. Though comprehensive cap-and-trade legislation might be off the table for now, Browner said that dynamic opens opportunities for piecemeal progress on cap-and-trade. 

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“I think we will look at this sector by sector,” she said.

Rep. Edward Markey (D-Mass.), who co-authored cap-and-trade legislation that passed the House of Representatives in 2009 but died in the Senate, said changing realities make it possible for a variation of his massive bill to surface. He pointed to increasing installations of renewable electricity capacity, recently finalized fuel economy standards and U.S. carbon dioxide emissions hitting a 20-year low as developments that would soften the impact of cap-and-trade.

“It creates a climate where there’s a business community that’s on our side,” Markey said.

But for now, that community — along with its vocal Republican allies and GOP presidential nominee Mitt Romney, who oppose regulations as an energy tax — is firmly opposed to such efforts, making cap-and-trade a politically toxic non-starter.

Romney said Tuesday in an online questionnaire that the administration's rules are "imposing enormous costs on the U.S. economy" in the name of curbing global warming, an endeavor he said would be ineffective absent coordinated international action. He also derided the president's support for Markey's "massive cap-and-trade bill that would have devastated U.S. industry," adding that when that failed, Obama "declared his intention to pursue the same course on his own and proceeded through his EPA to impose rules that will bankrupt the coal industry."

With Congress stalled on energy and emissions issues, the administration and EPA have chipped away at emissions by rolling out new rules. That has irked Republicans and the industry, which say the president has abused his powers and that the regulations are economically burdensome.

A court decision last month shooting down an EPA air pollution rule might give those accusations a boost. The U.S. Court of Appeals for the District of Columbia rejected a rule that curbed soot- and smog-forming power plant emissions that crossed state lines. The court instructed EPA to create a “valid replacement,” commenting that the one it put forth allowed EPA to encroach too far into states’ abilities to control emissions.

That ruling, however, did not weigh in on the merits of the argument that the regulation improved public health. The administration has repeatedly invoked the EPA’s Clean Water Act (CWA) and Clean Air Act (CAA), which it contends allow the government to manage emissions if they endanger public health, as its basis for the rules.

Though Romney has pledged to roll back many of EPA’s rules, the courts have generally sided with the administration. That will make it tough for Romney to fulfill his promises, Browner said, noting he could not simply ignore court orders if he were to win the White House.

Browner offered that Obama would use the CWA and CAA to go even further in his attempts to regulate air pollution if he wins a second term. She said he might propose greenhouse gas limits on existing coal-fired power plants, taking a significant leap from the first-ever limits on new coal-fired power plants EPA proposed in March.

“You’re highly likely to see the president and the administration continue to use their existing authority,” she said. She later added, “The president has been willing to use his executive authority ... I think you’ll see that kind of leadership.”

Sustained action from EPA might signal cap-and-trade is in the offing, Kevin Book, an analyst with ClearView Energy, said during the panel.

“EPA is on a pathway that may eventually take us to cap-and-trade,” he said.

—This story was updated at 4:11 p.m.