When prices for emissions allowances collapsed in Europe’s carbon market a year after trading began, critics said the collapse proved a regulatory product couldn’t be traded internationally. Sure...
The Art of the Plausible
Prospects for clean energy legislation in 2011.
new three-pollutant bill, but remains open to the possibility if enough participants in the power sector can agree on what it should contain. 9 Another possible approach to addressing the situation was included by Sen. Lugar in his CES proposal from last year, which adopted a 2018 retirement “glide path” option available to utility units that would otherwise have to shut down earlier to comply with expected new EPA requirements.
If any of these legislative scenarios come to pass—and that is a very big “if”—the administration essentially would have to decide whether to veto them or be willing to trade, in exchange for a CES, a prohibition on EPA’s authority to regulate GHGs under the CAA, and perhaps some legislative adjustments to elements of EPA’s power plant regulations or other regulatory reforms related to domestic energy production. While it’s unclear whether the administration has already decided at some level to proceed down that path if necessary, President Obama’s SOTU didn’t include, as some wanted, a strong endorsement of EPA’s air regulatory programs or its GHG permitting rules. A CES deal, and the resulting GHG emission reductions, could also lessen the administration’s need for EPA’s GHG regulatory authority to achieve GHG reductions. Finally, the administration is keenly aware that it can’t lose every coal state and win re-election, and it might decide that, on balance, a CES mandate and a ban on EPA’s GHG regulatory authority helps its coal-state politics.
While some Senate Democrats have already publically disclaimed any interest in such a compromise, it is still early, and the Obama administration might want a CES. But federal energy politics are always more complex than the simple binary partisan differences that make the headlines. While politics is the art of the possible, a grand compromise between the administration and Congress on a CES and GHG and power plant regulations seems merely plausible.
Energy Policy Possibilities
Since energy policy issues are generating at least some legislative interest, it seems useful to consider the sorts of specific pieces that might be in play. Most of these can be found in legislation introduced last term or, with respect to a GHG permitting ban, under consideration by Congress this term. The primary pieces of legislation stem from the concepts (but not necessarily the specifics) of: 1) the different CES proposals introduced by Lugar and Graham last Congress; 2) a GHG moratorium or bar as introduced in the House and Senate this year; and 3) the three-pollutant bill (NOx, SOx and mercury) introduced by Carper and Alexander last year. These pieces of proposed legislation have all sought to address in some fashion clean and renewable energy, EPA GHG regulation and elements of the forthcoming EPA power plant regulations.
• CES Basics: The idea for a CES, which is essentially a renewable electricity standard that includes additional “clean” sources like nuclear, carbon capture and sequestration (CCS) or energy efficiency, isn’t new in any respect. It’s a technology-based performance standard— i.e., compliance must come from the limited suite of technologies or fuels selected. At the same time, it retains elements