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Regulating Carbon Dioxide

Big news yesterday. The EPA is expected to follow the Supreme Court's landmark ruling in 2007 and begin regulating carbon-dioxide emissions in the coming months:

The environmental agency is under order from the Supreme Court to make a determination whether carbon dioxide is a pollutant that endangers public health and welfare, an order that the Bush administration essentially ignored despite near-unanimous belief among agency experts that research points inexorably to such a finding.

Lisa P. Jackson, the new E.P.A. administrator, said in an interview that she had asked her staff to review the latest scientific evidence and prepare the documentation for a so-called endangerment finding. Ms. Jackson said she had not decided to issue such a finding but she pointedly noted that the second anniversary of the Supreme Court decision, Massachusetts v. E.P.A., is April 2, and there is the wide expectation that she will act by then.

If the environmental agency determines that carbon dioxide is a dangerous pollutant to be regulated under the Clean Air Act, it would set off one of the most extensive regulatory rule makings in history. Ms. Jackson knows that she would be stepping into a minefield of Congressional and industry opposition and said that she was trying to devise a program that allayed these worries.

Yes, I'd say the odds are very good that the EPA will, in fact, decide that carbon dioxide is a dangerous pollutant. Hence, regulation. But what does this mean? It's still unclear. Bill Kovacs of the Chamber of Commerce has predicted a doomsday scenario if the EPA starts regulating carbon: "This is literally a moratorium on construction." Well, no, it's extremely unlikely the EPA will craft rules that will grind the whole economy to a halt. But what, then?

If you want the wonky details on how carbon might plausibly be regulated under the Clean Air Act, this mammoth post by Dave Roberts is your best bet. As he notes, one possibility is that the EPA could start requiring all coal-fired plants to install "best available control technology" for carbon-dioxide emissions. What technology would be prescribed? Co-firing the coal with biomass? Greater efficiency standards? Cogeneration? Carbon capture and sequestration? The latter is quite possible, but CCS isn't proven yet, and it's also unlikely that the EPA will order every coal plant in the country to shut down—they do still provide half of our electricity. What could arrive are rules that make new coal plants too pricey to build. But this is all speculation. We'll have to see.

And then there's the political angle, as I noted in my hostage video foray into new media yesterday. Most companies and utilities would prefer that Congress set the rules for greenhouse-gas emissions, rather than the EPA (no doubt in part because Congress is easier to lobby). So this could make some sort of cap-and-trade legislation more likely to pass.

--Bradford Plumer