NS4054 Fall Term 2015 U.S. Climate Regulations

1. NS4054 Fall Term 2015U.S. Climate Regulations

2. Overview • Oxford Analytica: “United States, Climate Regulations Will Advance”, June 11, 2015 • June 10, 2015 EPA announced that it will begin to craft rules to limit greenhouse gas (GHG) emissions from airplanes • President Obama has directed several departments and agencies, notably the EPA to issue directives and regulations that would impose progressively lower ceilings on GHG emissions • However Republican controlled Congress has repeatedly targeted these regulations for repeal • What to expect the next several years – and into the future

3. U.S. Climate Regulations I • Obama administration’s climate change proposals have been developed over the past two years • After failure to get Congress to pass comprehensive energy and environmental laws. • In June 2013 Obama called for regulations to reduce emissions by 30% from 2005 levels by 2030 • Components of this plan have included • EPA has introduced regulations on new power plant construction so stringent that coal-fired plants cannot meet them • New coal plants would have to capture and store 20-40% of carbon produced • The EPA set carbon emission rate targets for each state for existing fossil fuel plants. • States must submit implementation plans for EPA approval between 2016 and 2018

4. U.S. Climate Regulations I Political considerations • These climate-related rules follow other environmental initiatives started from the White House including: • Rules requiring the reporting of chemical discharges in fracking operations off-shore in California • New regulations on discharges by power plants into waterways and • An expansion of national jurisdiction over inland waterways. • As with the cuts to carbon emission, none of these regulations followed passage of new legislation • All relied on expansive interpretations of existing statutory authority for executive agencies

5. U.S. Climate Regulations II • Party Splits • Strategic political problem that induced President Obama to direct agencies to promulgate all these wide ranging regulations is his lack of a working majority in Congress • In purely political terms, any presidential initiative should • unite his own party, • split the opposition, and • leave some opposing party legislators vulnerable in the next election • However many of Obama’s environmental initiatives • especially those involving coal or oil do the opposite, • uniting Republican opposition and dividing the Democrats

6. U.S. Climate Regulations III • Democrats from consumer states (such as Missouri, which relies on coal for 80% of its energy) worry about the higher energy prices that may result from new emission controls • In states that produce oil and coal, Democrats have already paid a price, as in West Virginia, Ohio, and Pennsylvania, especially in the state legislatures. • International Efforts • President Obama has also pursued strategy to implement international agreements that can make a serious dent in emissions by demonstrating US credibility • Even so international agreements are not likely to be approved by Congress

7. U.S. Climate Regulations IV • Consequently the White House will probably rely on a variant of the arms control agreements known as parallel unilateral policy declarations (PUPDs) in which the parties to an accord • Do not sign a a binding international treaty • Or conclude an executive agreement, • But rather simultaneously declare that that they each unilaterally implement a limitation

8. U.S. Climate Regulations V • Domestic Pushback • Congress can overturn executive orders by passing subsequent conflicting legislation • Already a Senator from West Virginia is using her chairmanship of the Clean Air and Nuclear Safety Subcommittee to push legislation which would give state governors power to prevent implantation of an EPA plan on emissions • President Obama would veto such a bill, while court challenges are unlikely to succeed • In Massachusetts v EPA in 2007 the Supreme Court held the Clean Air Act gave the EPA authority to regulate greenhouse emissions • However States can slow enforcement whether or not Congress and the courts act against the EPA’s new regulations

9. U.S. Climate Regulations VI • States may back national regulationbecause national standards prevent one state from eporitng its pollution downstram to another • States may also participate in national intragovernmental programs to avoid losing out on available funds • When a regulatory regime promises significant costs and where costs are highly constrained, it is a blueprint for state resistance • In many states (especially those dominated by Republicans) governors, state legislatures and attorneys genral will oppose the new rules • In 32 states, officials are readying to resist that part of the regulations • Coal buring states are starting to pass lws that provide for cost-benefit analysis for each new power plant

10. U.S. Climate Regulations VII • Regulatory Politics • EPA strategy is to reduce state opposition by getting more of the corporate sector on board. • Coal sludge, • This strategy has worked with: • Methane reduction in pipelines and natural gas leaks, • Sea drilling rules, and miles per gallon increases mandated for automobiles.

11. U.S. Climate Regulations VIII • The price of obtaining such cooperation involves: • some dilution of rule-making authority and targets which is likely to occur in each individual state plan over the next two years • a great deal of industry self-reporting • Good faith efforts at reporting in many industries are often lacking while information is received late and incomplete • Penalties for non-compliance or uneven compliance are often token • They will not be as effective as mandatory regulating

12. U.S. Climate Regulations IX • Outlook • Market factors will continue to be more significant than government action in determining the mix of energy in the electrical grid • Government policy is more likely to be successful when it involves distributive politics such as • Loans, • Loan guarantees, • Subsidies for research and development and • Guaranteed procurement of product • To the extent that regulation is promoted it is more likely to be successful whien it co-opts the major energy and emissions producers, or water and air pollouters • They often have a stake in promoting national standards

13. U.S. Climate Regulations X • This is a more costly way to proceed if one simply counts up federal expenditures and guarantees, but may be far cheaper in the long run when counting up te societal and economic costs of failing to lower emissions through development of new technologies and energy sources • Nonetheless when looking beyond 2030, government policy and ability to set industry expectations will be the primary driver

14. Assessment • Conclusion • Nether Congress not the judiciary will overturn the principle that the EPA may regulate greenhouse emissions. • However weak enforcement capability at the national level • The reliance on state officials when a majority of state governments are controlled by the Republican paety and the pattern of self reporting by industry will slow implementation • Markets and price effects will have a fater impact in the sort-term than regulations.