EPA moves forward with optional cap-and-trade system for climate rule

EPA moves forward with optional cap-and-trade system for climate rule
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The Obama administration is moving forward with an optional cap-and-trade system that states could use to comply with its climate change rule for power plants.

The Environmental Protection Agency’s (EPA) final model trading rule went to the White House Office of Management and Budget for review, the office said Friday, despite the fact that the underlying Clean Power Plan is on hold by order of the Supreme Court.

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“Many states have asked EPA to move forward with our outreach and to continue providing support and developing tools related to the Clean Power Plan,” the EPA said in a statement.

“We are developing these tools in a way that is consistent with the Supreme Court’s stay of the Clean Power Plan,” it said.

Congressional Republicans and others opposed to the Clean Power Plan have repeatedly hounded the EPA for moving forward on initiatives related to the rule despite the Supreme Court’s order, issued in February.

That includes the Clean Energy Incentive Program, which the EPA has proposed to give states credit for early compliance with the rule.

The court “did not tell EPA to stop all work related to the Clean Power Plan, and, in fact, many stakeholders have asked the agency to continue providing assistance so that they can move forward on a voluntary basis,” the EPA said.

The Clean Power Plan requires existing power plants to decrease carbon dioxide emissions and assigns each state a reduction target, with some latitude in deciding how to comply.

The rule sent to the White House was proposed last year in an attempt to give states a pre-made compliance mechanism that the EPA would approve.

As proposed, the rule would set up an emissions trading system for a state’s power sector, mandating cuts for power producers but allowing them to trade reduction credits with low-carbon electricity generators like wind or solar power.

“The model trading rules do not impose additional requirements, and states are not required to use them,” the EPA said.

White House review is the final step before the EPA can issue the final rule, which it might do before President Obama leaves office.

The EPA has also proposed a model rule for a cap-and-trade system that it would impose on states that do not comply with the Clean Power Plan. The agency is not taking any action on that rule.