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Obama's New Rules for Coal Plants Are a B.F.D. The Ensuing Political Fight May Be Even Bigger.

SAUL LOEB/AFP/Getty Images

Conventional wisdom holds that second term presidencies rarely yield accomplishments and that this second term president, in particular, has lost the ability to get much done. In one week, President Obama has a chance to prove that the conventional wisdom is wrong.

And he can do it while helping to stop the planet from cooking.

On June 2, Obama will to unveil a new set of federal regulations on power plants, designed primarily to keep coal-fired plants from spewing so much carbon into the atmosphere. The hope is that these new regulations will slow down climate change—at first incrementally, by reducing emissions from existing plants in the U.S., and then more dramatically, by providing the Administration with more leverage to negotiate a far-reaching, international treaty on emissions from multiple sources.

Along with other steps the administration has taken, like setting higher fuel standards for cars and trucks, the new regulations could make climate change action one of Obama’s signature achievements—something historians will cite alongside Obamacare, rescue of the auto industry, and the Recovery Act. As Jonathan Chait has written in New York magazine, “By the normal standards, of progress, Obama has amassed an impressive record so far on climate change.”

Of course, a lot hinges on what the EPA actually proposes next week—in particular, whether the new regulations are strong enough to make a difference. It also depends on whether the new regulations can withstand the furious political and legal assault that conservatives, parts of the energy industry, and climate change deniers have launched. 

To prepare you for next Monday, and everything to follow, here’s a quick guide to what’s going on and why it’s so important.

1) What is happening on June 2?

The EPA will formally propose rules for carbon emissions from existing power plants. The “existing” part is important. The agency has already proposed limits on any new plants that utilities build. But the real problem at this point is emissions from plants already in operation. Today the energy sector is responsible for about one-third of domestic greenhouse gas emissions, according to official estimates, and most of that comes from coal plants.

Sources of Carbon Emissions

Sources of emissions

Source: Environmental Protection Agency

Once the EPA proposes the regulation, a one-year clock will start ticking. During that time, the EPA will listen to comments from everybody with an interest in these regulations, from power companies to environmental advocates. When the process is done, the EPA will finalize the regulations and they will formally take effect.

2) Why is the EPA doing this, rather than Congress?

Obama and his allies wanted to address carbon emissions by passing a law. Their idea was to create a cap-and-trade system that operated across the economy. To simplify a bit, it would have let states and companies buy and sell permission to pollute, while staying within overall limits set by the federal government. In 2009, the House of Representatives, then under Democratic control, passed such a bill. But supporters couldn’t rally the 60 votes they needed to overcome a filibuster in the Senate. Republicans wanted nothing to do it, even though cap-and-trade was originally a conservative idea and had figured prominently in the 2008 president campaign of John McCain. With some Democrats from coal-producing and coal-dependent states also opposed, the votes just weren't there.

Since then the congressional enthusiasm for serious environmental legislation has dwindled. The Republicans who control the House can’t even bring themselves to admit that man-made climate change is real. (Ron Brownstein of National Journal has a nice primer on the politics of climate change on Capitol Hill.) That’s why Obama has turned to the EPA, even though it's a less elegant and probably less effective way of addressing climate change. 

3) It sounds like Obama is defying Congress. Isn’t this exactly the sort of lawlessness that has the Tea Party so angry?

Actually, the opposite is true. The Clean Air Act of 1970, first signed into law by Richard Nixon and then amended twice, requires the EPA to regulate pollution that threatens public health and welfare. As the Supreme Court affirmed in a landmark 2007 ruling, it’s basically up to the EPA to decide what kinds of pollution meet that standard.

President Nixon

Photo by National Archives/Newsmakers

In 2008, Stephen Johnson, who was then the EPA Administrator, formally told President Bush that the federal government is “compelled to act” on climate change. Bush ignored the recommendation. One year later, Lisa Jackson, Johnson’s successor, issued an official “endangerment finding” that greenhouse gases were trapping heat inside the earth’s atmosphere and causing temperatures to rise. Among the dangerous consequences of this warming, the EPA warned, were higher rates of disease, stronger and more frequent extreme hurricanes, increasing wildfires and droughts, as well as rising sea levels that could literally wash low-lying coastal cities like Miami off the map. These are precisely the sort of harms that, by law, require EPA action.

To put it another way, the Obama Administration is carrying out the intent of Congress, as expressed in previously enacted legislation. This Congress is entitled to feel differently than its predecessors did. But to take away EPA's mandate to act, it would have to pass new legislation that supersedes the old. In other words, it would have to amend or repeal the Clean Air Act itself. That's not likely to happen. 

4) What’s all the suspense, if the EPA is merely doing what the law says?

The law says the EPA has to act. It doesn’t say exactly how the EPA has to act. It doesn’t say, for example, just how aggressively the agency must reduce carbon emissions. That’s a pretty important question.

5) OK. What’s a reasonable target?

Climate change is a massive problem, one that will ultimately require much more substantial reductions in carbon—not just here but in countries like China, which has already surpassed the U.S. when it comes to output. But that’s not going to happen without an international agreement, which would seem to require U.S. leadership.

One way to do that would be for the U.S. to meet goals that Obama set in 2009, prior to international meetings in Copenhagen. To accomplish that, experts believe, the U.S. would have to reduce power plant emissions by roughly a quarter, relative to what they were in 2012, by the end of the decade. That would count as "a major blow against climate change," according to Daniel J. Weiss, senior fellow at the Center for American Progress.

6) I’m guessing it’s not as simple as a defining a number.

You’re right. The EPA regulation will basically give the states a target for emission reductions, and then a deadline by which that state’s emissions must meet the target. But the states today produce carbon at very different levels—because of the way local utilities generate electricity, the rate at which residents use that electricity, and the regulations already in place at the state level. The Pacific Northwest benefits from hydroelectric power, for example. An existing system of tradeable permits has reduced carbon output in the states of the Northeast. And so on.

Will EPA mandate that all states reach a fixed level of emissions, or that each state reduce existing emissions by a fixed amount?  If it’s the latter—as most experts expect it will be—how long will states have to comply?

Trends in CO2 Emissions, via NRDC

Source: Natural Resources Defense Council

Speaking of timing, a lot depends on the baseline that the administration uses. Carbon output has actually fallen in the last few years, thanks to a bunch of different factors. Utilities are increasingly relying on renewable sources, like wind and solar, as well as natural gas, which burns a lot cleaner. In addition, the recession has slowed energy consumption. That's why a 25 percent reduction from 2012 levels would be a much bigger deal than a 25 percent reduction from 2007 or 2008 levels. "Big polluting utilities will likely urge EPA to seek a relatively small amount of pollution reduction," says Weiss, "and base it on a year that would minimize their pollution cuts."  

7) How much flexibility will the states have?

That’s the other big issue. The EPA could dictate precisely how states must reduce emissions, or it could say nothing, or it could strike a middle ground—by offering up some models for emissions reductions but giving states freedom to come up with alternatives. As a general rule, states would like more flexibility—and it sounds like the EPA would like to give it to them, as long as the feds have a way to make sure states are following through on their plans.

For example, experts talk about three kinds of actions to reduce carbon emissions: fence-line, fleet-wide, and system-wide. Fence-line refers to regulations that cover only what happens inside the perimeter of the power plants. That could mean upgrading equipment, so that plants operate more efficiently, or altering the fuel mix of existing plans, so that they use more biomass (which can be used in conjunction with coal) and natural gas (which can be used on its own). Fleet-wide strategies involve all carbon-producing plans and, depending on who's using the term, all sources of power. A utility that wanted to meet carbon emission targets could simply build more solar, wind, and natural gas plants, and rely on those more heavily. A system-wide approach would include attempts to reduce the demand for electricity, by helping homeowners and businesses to improve their energy efficiency. That could include simple, relatively cheap steps like installing programmable thermostats and improving insulation.

System-wide approaches are potentially the most effective and the most efficient, since they offer the most options for action. A strategy that limited states to fence-line efforts, by contrast, could produce more limited gains—and would likely mean steeper increases in energy prices. As Ben Adler notes at Grist, this could cause a political backlash while creating real hardship among lower-income users of electricity. 

The Natural Resources Defense Council (NRDC) has proposed a strategy in which states would have the option of using system-wide approaches to carbon reduction. The new EPA proposal will probably resemble the NRDC plan, maybe quite strongly.  

8) That seems sensible. Is there a catch?

The EPA hasn't had many opportunities to use this particular part of the Clean Air Act. That makes the legal issues murkier.

Justices Roberts and Kennedy

Photo by Chip Somodevilla/Getty Images

Section 111d, the relevant portion of the law, states that EPA should use the "best system of emission reduction." The NRDC and its allies think that passage clearly allows EPA to give states the option of using system-wide reforms. Staff at the Environmental Law Project at Harvard Law School agree—and wrote a widely publicized brief laying out their arguments. 

Not surprisingly, industry representatives take a different view. Allowing the states to meet targets with system-wide reforms, they say, would exceed the authority that the Clean Air Act gives the federal government. "Any standard that is predicated on reductions happening outside the fence line is illegal and would be overturned by the court," Joseph Stanko, a prominent lawyer-lobbyist who works the energy industry, told the Washington Post

9) You mentioned higher costs. This is going to drive up my electric bills, isn’t it?

It's certainly true that climate change won’t slow or stop if people don’t reduce their reliance on carbon-based fuels. That won’t happen as long as the price of these fuels is so low relative to the cost of the pollution they create—which is a long-winded way of saying that the price needs to rise. You can depend upon the opponents of these regulations to point this out—to say that Obama’s climate regulations are forcing consumers to pay larger utility bills, killing the coal industry, and generally hurting the economy. Actually, you are hearing these things already.

But your electric bill doesn’t go up just because the price of electricity from one particular source increases. It all depends on how you and our utility react. If you find ways to use less electricity—whether it’s as simple as turning off more lights or as complicated as putting in new insulation—then your bill can stay the same or come down. And with the price of renewables like solar coming down, utilities may find it cheaper to shift away from coal anyway.

Damages from extreme weather events

Via Center for American Progress

Most important of all, doing nothing about carbon emissions imposes its own, very real, and very significant costs. It costs money to clean up after natural disasters. As my colleague Danny Vinik has written, it will cost even more—way, way more—to protect or abandon coastal cities like Miami that can’t withstand significant increases in sea level. “We’re going to pay for climate change one way or another,” says Kyle Aarons, a senior fellow at the Center for Climate and Energy Solutions. “We can pay to migrate coastal populations, build sea walls, transport water to regions in drought conditions, or we can put a cost on carbon to drive us to more sustainable resources. Ultimately we’ll have to pay both mitigation and adaptation costs, but mitigation is projected to be much more cost-effective.”

The NRDC has actually put a number on the savings that its proposal, or something like it, would generate. According to its latest estimate, the net savings to society would be between $25 and $53 billion in 2020. You don’t have to take those figures at face value to think that, on balance, regulating power plant emissions will save more money than it costs.