In the United States, legislation seeking to reduce CO2 emissions is stuck in the Senate. The Bill is not scheduled for debate until mid 2010 and may be overshadowed by other issues, most notably health care and the economy. But President Obama has another string to his bow with respect to climate change: The Clean Air Act.
Under the Act, evidence that pollution can be damaging to human health and or the environment requires the Environmental Protection Agency (EPA) to act to reduce the pollution and minimize environmental damage. In August 2009 the EPA signalled its intention to recognize CO2 as a pollutant, as required by a legal decision in the Supreme Court establishing C02 as a pollutant, and it issued a consultation notice inviting comment. Yesterday, December 7th – the first day of the Copenhagen summit on climate change – the EPA reaffirmed its intention to regulate CO2 in the US and indicated that it had finalized an endangerment finding – recognizing that CO2 is an endangered to health and the environment. Obama now has the basis for regulatory action without having the need of a new Bill in Congress. The regulations are likely to face legal challenges, especially given Climategate which gives rise to questions about the evidence on which the EPA’s endangerment finding is based. The Competitive Enterprise Institute has already announced that we will file suit in federal court to overturn the endangerment finding on the grounds that the EPA has ignored major scientific issues, including but not limited to those raised recently in the Climategate scandal.
Business is already reacting to the prospect of new, tough regulation with negative comments. U.S. Chamber of Commerce President, Thomas Donohue said in a statement, "the devil will be in the details” and he cautioned that care was needed to ensure “we don't stifle our economic recovery".
The news, however, played well in Copenhagen. The EPA decision was seen as a strong indication of President Obama’s commitment to reducing emissions, with or without the support of the Senate.
Under the EPA regulations Obama’s team could require the labelling of all products showing their carbon footprint, introduce emissions controls and penalties – a carbon tax – and regulate production processes so as to reduce the amount of pollutants involved in the process. What the EPA is not able to do is to create a carbon trading scheme, which would require new regulations.
Using regulation rather than new legislation makes it difficult for Canada to copy the US, which is the basis of Canada’s environment policy. Just how policy harmonization will now occur, especially when each Province has their own legislation, will be interesting to observe. No clues were offered in the announcement yesterday as to just what the EPA intends to actually do. Speculation in the media, however, is rife with one newspaper suggesting that all new construction and all furnaces and energy generation systems would need to be permitted. One even went as far as to suggest that breathing may well be taxed.
Robert Gibbs, President Obama’s media spokesman, acknowledged the development but suggested that Obama continues to seek legislative powers to regulate CO2and develop a market for carbon. Obama sees such as mechanism as a major device for lowering emissions, despite the fact that it has singularly failed to do so after several years of use in the European Union, where emissions have increased by 13% since cap and trade was introduced.
The obvious observation is that this is another stumbling development of the US’s journey to a climate change policy. The endangerment finding is a backstop pending legislation, but is a development that could regulate CO2 emissions if the courts continue to support the endangerment finding. The EPA regulatory regime is not, however, a substitute for a comprehensive approach to climate change, which is what Obama is committed to. So far he has committed to a three per cent reduction on 1990 emissions by 2020 – some twenty seven percent below the suggested target for the US by the scientific advisors Obama appointed. He has committed to introducing a cap and trade system and border tariffs on good imported to the US which do not meet the carbon emission standards set by congress, still to be defined. He needs legislation to turn these commitments into action and that legislation is bogged down in the Senate, with both republicans and democrats fighting against it. The EPA decision should be seen as a signal that Obama will do whatever it takes to get some legislation on the books in 2010.