This article originally appeared in the May/June 2011 edition of The Environmental Forum (www.eli.org), and is reposted with permission.
Given the dim prospects for climate change
legislation in the 112th Congress, all eyes
have turned to federal agencies and the
states as the primary drivers of climate
and energy policy in the United States. In
a July 2010 report for the World Resources Institute
titled “Reducing Greenhouse Gas Emissions in the
United States Using Existing Federal Authorities and
State Action,” we examined the emissions reduction
potential of federal authorities on the books and announced
state actions to determine whether the United
States could reduce its emissions of heat-trapping
gases that cause global warming, even as Congress refuses
to tackle the problem. We concluded that federal
agencies and states could indeed put the United States
far along on a path to meet its international commitment
to reduce emissions by 17 percent from 2005
levels by 2020 if the Obama administration pursues a
go-getter approach.
Since issuance of the report, we have been tracking
actions by federal agencies to reduce global warming
pollution. While it is too early to know whether the
administration’s actions will be enough to substantially
reduce U.S. emissions of heat-trapping gases, it
has made significant steps in the right direction. Additional
steps can and should be taken, using a variety
of laws and regulations under the aegis of several agencies.
This article identifies additional steps to drive significant
short-term abatement.
As the administration takes action to reduce greenhouse
gas emissions, some in Congress have mounted
efforts to stop them. A number of bills and amendments have been advanced that, if enacted, would
delay or stop EPA and other agencies from driving
reductions in greenhouse gas emissions. At the time
this article was finalized for publication, no significant
anti-regulatory measure had made it to the president’s
desk. Should such a measure be passed, the administration
has signaled that President Obama would
veto the bill. To overcome that veto, anti-regulatory
legislators would need to muster a two-thirds vote in
both the Senate and House of Representatives — a
feat that appears unlikely. Congressional pressure on
the administration can nevertheless have a dampening
effect on its policy decisions even if Congress fails
to strip federal agencies of their authority to regulate
greenhouse gases. Political pressure could result in less
ambitious regulations and fewer reductions.
As we watch the administration, hope for meaningful
reductions also comes from the states. In the past,
states have demonstrated capacity to effect change
when the federal government has not acted. While
the outlook has shifted with last fall’s elections, recent
actions by EPA, which require state participation under
the federal Clean Air Act, will provide impetus for
states to resume some work in this space.
Federal agencies currently possess regulatory authority
over a wide range of greenhouse gas emitters
in the United States. The most significant of these authorities
are contained in the Clean Air Act. In 2007,
the Supreme Court decided that greenhouse gases fit
within the expansive definition of a pollutant under
the act. That decision made a range of regulatory tools
to reduce emissions available to EPA. The CAA does prescribe limits on EPA action, however, as the major statutory authorities likely to be employed under the
act — Title II vehicle emissions standards, Section 111
performance standards for power plants and industry,
and Title VI regulation of hydrofluorocarbons, require
that EPA base emissions standards not solely on scientific
determinations of what is required to stave off the
worst effects of global warming, but also on careful
considerations of cost and other impacts.
Fortunately, EPA is not alone in its endeavor to reduce
emissions of the heat-trapping gases that cause
global warming. The National Highway Traffic Safety
Administration shares with EPA the authority to establish
Corporate Average Fuel Economy standards
for light, medium, and heavy-duty vehicles, which
together account for nearly one-quarter of all U.S.
GHG emissions. The Department of Energy has the
ability to drive reductions in emissions through efficiency
standards for appliances and equipment, and
the Federal Aviation Administration is empowered to
regulate the aviation industry. Meanwhile, the Department
of the Interior, through its Bureau of Land Management,
and the Department of Agriculture, through
its Forest Service and farm programs, have the ability
to improve the way that public and private lands are
managed.
Predicting what EPA and other federal agencies
will be able to accomplish when they
use the regulatory tools afforded them under
current federal law is not an exact science.
Because we cannot forecast what each
federal agency will do, we developed three scenarios
meant to capture the range of reductions we might
see. The scenarios are based on a careful reading of
the statutory language and published technical studies.
The range of reductions projected under these scenarios
is depicted in Figure 1. Our analysis
finds the United States falling short of the its international
commitment to reduce emissions to 17 percent
below 2005 levels by 2020 even if federal agencies are
aggressive about achieving reductions. If federal agencies
fully take advantage of the regulatory authorities
and pursue reductions like go-getters, they could reduce
U.S. emissions to 12 percent below 2005 levels
by 2020, five percentage points shy of realizing the
U.S. commitment. If federal agencies fail to capitalize
on available reduction opportunities, however,
middle-of-the-road or lackluster reductions will result,
and the U.S. will fall far short of the 2020 goal. Emissions
reductions continue past 2020 as standards are made more stringent and as old, inefficient sources
are replaced. Thus, a go-getter approach would net
22 percent reduction from 2005 levels in 2030 due to
federal action alone. We depict the president’s international
commitment, to reduce greenhouse gas emissions
by 17 percent below 2005 levels by 2020, and by
83 percent in 2050, with the straight line labeled 17%
and 83% reduction pathway. For comparison purposes
we have indicated the reductions necessary to prevent
greenhouse gases from rising above 450 parts per million
of carbon dioxide equivalent, to prevent global
average temperatures from rising more than 2 degrees
Celsius.
[img_assist|nid=11691|title=Figure 1: Projected U.S. Emissions under Different Federal Regulatory Scenarios|desc=|link=node|align=center|width=600|height=335]
[img_assist|nid=11690|title=Figure 2: Projected U.S. Emissions under Different Federal Regulatory Scenarios and State Scenarios|desc=|link=node|align=center|width=600|height=335]
It might be possible to close all or part of the gap
through discrete legislative enactments that fill holes
in federal agency authorities. For example, the Department
of Energy could be granted the authority
to establish national energy efficiency codes for buildings.
Congress could improve the way that transportation
funding is allocated to encourage smart planning
that leads to reductions in the growth of vehicle miles
traveled. In the long-term, our study suggests that we
will need more significant legislative measures as the
gap between the go-getter line and the reduction targets
grows, and certainly if we are to achieve the much
deeper reductions warranted by the science.
States can also help close the emissions gap. Traditionally
states have exercised broad authority to regulate
energy production and delivery within their borders.
States have also been first movers when it comes
to enacting environmental laws to reduce pollution.
States are demonstrated innovators in the energy space,
with over half adopting renewable portfolio standards,
which require a stated percentage of renewable generation,
and another half adopting energy efficiency promoting
policies such as systems benefits charges and
energy efficiency portfolio standards.
States have more recently begun to take advantage
of their authority to regulate GHG emissions. New
Hampshire was the first to pass a law to cap greenhouse
gas emissions from power plants in January
2002, and Massachusetts sought to reduce GHGs
from its dirtiest power plants through regulations
shortly thereafter. In 2009, the Regional Greenhouse
Gas Initiative began to regulate carbon dioxide emissions
from large power plants in 10 northeastern and
mid-Atlantic states. California and New Mexico subsequently
passed regulations that would lead to the
implementation of multi-sector cap-and-trade programs
for GHGs. In addition, a number of states have
begun developing low carbon fuel standards. Given
this history, it is not a question of whether states will take action, but instead how many will act and how. In
an effort to help understand their contribution, we developed
state scenarios based on previously expressed
ambition. The cumulative reductions that could result
from various levels of combined state and federal
ambition are depicted in Figure 2. Reductions in the
2020 time frame for a go-getter approach amount to
14 percent reductions from 2005 levels by 2020 if
state action is factored in as well, still short of the 17
percent commitment.
Having briefly examined the available federal
authorities and assessed the potential
emissions reductions from federal and
state action, and suggesting ways that
additional reductions could be accomplished
to close the emissions reduction gap, we turn
first to the status of federal action. Federal agencies are
at various stages of setting regulations that would affect
approximately two-thirds of U.S. GHG emissions. In
the space that follows we lay out the progress made to
date across each major sector of the U.S. economy and
identify the areas where significant potential remains.
Just over one quarter of U.S. emissions come from
the transportation sector. The bulk of these emissions
(16 percent of total U.S. emissions) come from lightduty
vehicles, a category that includes cars and small
trucks. The next largest sources of transportation emissions
are medium- and heavy-duty vehicles, categories
that account for eight percent of total U.S. emissions
and include tractor-trailers, refuse haulers, urban delivery
trucks, and very large pickup trucks. Congress
has vested authority in both the National Highway
Traffic Safety Administration and EPA to drive improvements
in these sources. The Energy Policy and
Conservation Act of 1975, as amended by the Energy
Independence and Security Act of 2007, provides
NHTSA with the authority to establish Corporate Average
Fuel Economy standards for light, medium, and
heavy-duty vehicles. Meanwhile, Title II of the Clean
Air Act provides EPA with the authority to establish
GHG emissions standards for these sources. NHTSA
and EPA have already finalized standards for lightduty
vehicles of model years 2012 through 2016, and
are currently working to develop standards for model
years 2017 through 2025. That proposal is due to be
released on September 1, 2011. In addition, NHTSA
and EPA proposed the first ever standards for medium-
and heavy-duty vehicles in October 2010. These
rules will affect medium- and heavy-duty vehicles sold
from 2014 through 2018.
The electric power sector represents approximately
one-third of U.S. emissions of heat-trapping gases.
Industry, chiefly manufacturing plants and refineries
and the like, make up another 15 percent of U.S.
GHG emissions. When EPA’s regulations for lightduty
vehicles went into effect on January 2, 2011,
CAA requirements for pre-construction permitting
of certain large power plants and industrial facilities
were triggered. Under the act, new and modified major
stationary sources that emit more than 250 tons of
GHGs must apply for pre-construction permits under
the Prevention of Significant Deterioration/Best
Achievable Control Technology permitting program.
Because the statutory threshold would have required
EPA to go through permitting processes for hundreds
of thousands of sources, EPA issued the so-called “Tailoring
Rule” in May 2010 citing “administrative necessity.”
This limited what facilities will be covered to
only very large greenhouse gas emitters such as new
and modified power plants and industrial facilities
and prevented regulation of small businesses, like the
proverbial mom and pop grocery, under the pre-construction
permitting program. The pre-construction
permitting program only applies to new and modified
units. In addition, it is carried out in a case-specific
manner that provides little certainty about the environmental
outcomes.
A much more appealing program for the regulation
of large sources such as power plants and industry
is performance standards under CAA Section 111.
Section 111 provides for the establishment of performance
standards for new and modified sources under
Section 111(b) and mandatory emissions guidelines
that require states to regulate existing sources under
Section 111(d). In December 2010, EPA announced
that it will propose the first GHG performance standards
and mandatory emissions guidelines under Section
111 for power plants by July 26, 2011, and finalize
those standards and guidelines by May 26, 2012.
The agency also announced that it will propose corresponding
standards and mandatory guidelines for refineries
by December 15, 2011, and finalize those by
November 15, 2012. States must follow the guidelines
and propose performance standards to cover existing
power plants and refineries. Together these sources
account for nearly 40 percent of the U.S. emissions
inventory.
While EPA is working to reduce emissions by making
power generation less carbon intensive, the Department
of Energy is doing its part to reduce emissions
by driving down energy demand. According
to the Appliance Standards Awareness Project, DOE updated 10 different efficiency standards between
January 2009 and February 2011 and is scheduled to
update another 13 standards by the end of 2011.
While the transportation, electric power, and industrial
sectors tend to get the most attention when
considering policies to reduce emissions, our study
finds that some relatively small sectors such as landfills,
coal mines, natural gas systems, and hydrofluorocarbons
can contribute in major ways at relatively low
cost. These sectors only account for 7 percent of U.S.
emissions, but can account for 37 to 60 percent of the
reductions in 2020.
HFCs are a rapidly growing source of emissions.
They are primarily used in refrigeration and air conditioning.
Congress granted EPA the authority to regulate
these emissions through CAA Title VI. The first
indication that the administration intended to regulate
these sources was provided by its 2009 joint U.S., Canadian,
and Mexican proposal to amend the Montreal
Protocol submitted to the United Nations Environment
Program Ozone Secretariat. Those amendments
were resubmitted in 2010, but have not yet passed.
EPA and the State Department have indicated that
they intend to continue working with signatories over
the coming year in effort to pass those amendments.
Once those amendments are adopted, the CAA automatically
vests EPA with the authority to meet its
commitments under the Montreal Protocol. Independent
of this pathway, EPA could also begin to pursue
delisting of approved substitutes under its Significant
New Alternatives Policy program, which implements
CAA Section 612. Though the substitutes currently
only account for only two percent of the GHG
emissions inventory, significant growth in emissions
is expected if action is not taken. If the ramp-down
schedule put forth in the joint proposal is followed,
then considerable reductions from business-as-usual
projections are possible.
The case for reducing GHG emissions from large
non-agricultural methane sources such as landfills, coal
mines, and natural gas systems is just as strong, though
EPA has not yet indicated it intends to regulate these
sources. Even though such sources only represent a
combined 5 percent of the U.S. GHG inventory, reductions
from these sources are available at a relatively
low cost. For example, EPA estimates that landfills can
reduce their emissions by about 60 percent at $8 per
ton of carbon dioxide equivalent emissions (CO2e)
and 74 percent at $20 per ton of CO2e, and that coal
mines can reduce emissions by 86 percent at only $5
per ton of CO2e.
The contribution of these sources becomes even more significant when one considers the 20-year global
warming potential. Global warming is a long-term
problem due to the inertia behind our existing energy
infrastructure and the fact that the leading greenhouse
gas, carbon dioxide, resides in the atmosphere
for hundreds of years. Therefore, the most commonly
accepted measure of a greenhouse gas’s impact is the
100-year global warming potential. However, recent
data suggest that we are starting to see impacts of climate
change now, and so some have suggested that we
look at short-duration gases as a way to buy ourselves
time to make the steep reductions necessary. If we do
that, and instead consider the impact that the gases
will have over the next 20 years, we find that in 2020
reductions from non-agricultural methane sources
could mitigate climate change impacts as much as
emissions reductions from power plants and several
times the reductions possible from manufacturing.
EPA, however, has not yet signaled its intent to begin
regulating these sources.
Additional reductions may be possible through improved
management of public and private lands. For
example, the Forest Service could increase sequestration
on federal forest lands while the Bureau of Land
Management could increase sequestration on some of
the 264 million acres of public lands that it administers.
The Department of Agriculture could also encourage
practices that would reduce greenhouse gas
emissions or increase sequestration on farmland. In
the first iteration of the report we could not identify
any literature that would allow us to accurately quantify
the magnitude of sequestration possible using existing
regulatory policies without expanding program
budgets. As a result, we did not include such policies
in our analysis. We hope to close this gap in subsequent
updates to the report. Following our approach
in other sectors, once we can associate meaningful
greenhouse gas abatement with specific policies, we
will track progress towards their implementation.
Just as the outlook in Congress has changed,
so too has the outlook at the state level. The
northeastern and mid-Atlantic Regional
Greenhouse Gas Initiative, which covers
CO2 emissions from large power plants, was
launched in January 2009. RGGI was followed by the
Western Climate Initiative and the Midwestern Accord,
both of which are designed for implementation
in the 2012 timeframe. If fully implemented by all
participants, these initiatives would have covered 23
U.S. states. However, of the 13 states engaged in the WCI and Midwestern Accord, only New Mexico and
California have taken steps to promulgate regulations
to implement the cap-and-trade program, suggesting
that these two initiatives will fall considerably short of
their goals.
Beginning in 2011, however, states will have new
impetus to regulate emissions from existing large stationary
sources, such as power plants and industry.
EPA sets performance standards for new and modified
units under CAA Section 111(b). EPA then establishes
guidelines that require states to regulate existing units
under CAA Section 111(d). States have considerable
flexibility in how they meet those guidelines so long
as they can demonstrate that their program is no less
stringent than the guidelines established by EPA.
States already moving forward with cap-and-trade
programs are expected to ask EPA to allow those
programs to be used for compliance with emissions
guidelines established by EPA via New Source Performance
Standards. In our joint WRI and Columbia
Law School Center for Climate Change Law working
paper “What’s Ahead for Power Plants and Industry,
Using the Clean Air Act to Reduce Greenhouse Gas
Emissions, Building on Existing Regional Programs,”
we find that there is room for EPA to honor such a
request. In short the argument is that while Section
111 does not expressively provide for the states’ establishment
of a cap-and-trade program for greenhouse
gases, it requires states to develop a plan that
establishes a “standard of performance” for the air
pollutant. EPA has previously interpreted “standard
of performance” to allow for cap-and-trade. This was
done in both the mercury and greenhouse gas context.
While this interpretation was contested in a legal challenge
to the Clean Air Mercury Rule, the D.C. Circuit
Court of Appeals never decided the legal challenge to
the CAMR cap-and-trade program, and instead vacated
CAMR on other grounds. The Bush EPA’s Advance
Notice of Proposed Rulemaking on greenhouse
gas regulations issued in July 2008 recapitulated this
interpretation of the CAA, concluding that cap and
trade is a permissible option for regulation under Section
111(d).
The Obama EPA, however, has neither endorsed
nor disavowed the previous administration’s
interpretation of the act to allow cap and
trade. Although the Supreme Court in 1978 held in
ASARCO v. EPA that trading is not permitted for new
plant standards under Section 111(b), EPA has argued
that this decision was later overturned by the Court
in Chevron v. NRDC and furthermore to the extent
that ASARCO is still good law, it applies only to standards of performance for new units under 111(b), and
not the more flexible process for existing units under
111(d). Though we find that there is likely to be considerable
flexibility afforded to states as they propose
plans to comply with EPA’s emissions guidelines, there
are likely to be some limitations around certain provisions,
such as scope, offsets, and cost-containment.
These issues are explored in more detail in the working
paper.
Moving forward it is likely that states will continue
to develop and implement new programs that drive
reductions in greenhouse gas emissions. For example,
states may adopt programs that encourage investment
in renewable energy and energy efficiency, drive improvements
in building efficiency, improve land use
management, or reduce the greenhouse gas footprint
of transportation fuels. Such policies could drive
greenhouse gas emissions reductions beyond what can
be achieved through federal action alone, helping us
to reach the Obama administration’s 17 percent reduction
target.
In the absence of comprehensive climate and energy
legislation, federal agencies and states can be
major drivers of greenhouse gas emissions reductions.
As our WRI report reveals, Congress has
provided federal agencies with valuable tools that
can help the nation achieve significant reductions in
the near term. EPA and other federal agencies have begun
the significant task of regulating emissions across
a number of economic sectors, including transportation,
electricity and some industry. Additional sectors,
such as coal mines, natural gas distribution
systems, and landfills, present promising areas for
low-cost regulation that EPA should address in
the near term. While some members of the 112th
Congress have expressed an interest in eliminating
these authorities, no such legislation has passed,
and the Obama administration retains the power
of the veto. So, the possibility for significant action
remains, and the 17 percent reduction target
is still within sight. Readers can track the administration’s
progress towards this goal using WRI’s
web-based regulations tracker at www.wri.org/federalclimateaction.
Finally, it is worth keeping an
eye on the states to see what role they will assume
moving forward in crafting creative solutions to
the climate problem as they comply with new EPA
regulations, and also to see to what extent they will
help drive deeper reductions than federal agencies
can achieve alone.
