Climate Change: Regulating Emissions

Chapter 10

Climate Change: Regulating Emissions

This chapter covers climate change and its impact on the energy sector. It discusses (i) climate change and the energy sector; (ii) international climate control strategies; (iii) domestic climate change control strategies; and (iv) the cost and effectiveness of greenhouse gas controls.

• 10.1 causes/impacts of climate change, including GHG emissions from power plants
• 10.2 international politics behind climate control, including Kyoto Protocol and post-2012 negotiations
• 10.3 domestic climate change strategies at federal, state and regional levels, as well as judicial responses to those strategies
• 10.4 costs, benefits, and effectiveness of GHG controls.

When reading this chapter, think about the greenhouse gas (GHG) effect on climate change. Compare the approach of the United States with the approach taken throughout Europe. Should the U.S. have adopted mandatory GHG emission standards when most European countries did? Next, consider the reasons why the United States is so reluctant to sign the Kyoto Protocol. Think about the actions individual states have taken to moderate GHG emissions, and the impact state regulations have on federal law. Finally, consider the cost of reducing GHG emissions. At what point will the U.S. decide that the benefits of reducing GHG emissions outweigh the costs?

Some questions to consider when reading the chapter:

1. What is a “safe” amount of climate change, and what emission patterns over time are consistent with that level of “safe” change?

1. At what point should the United States take action to change our patterns of energy use?

1. What impact would a cap-and-trade emissions scheme have on reducing GHG emissions?

1. What are the problems of the EU-ETS? Should the U.S. adopt a similar model?

1. What are the significant flaws in the Kyoto Protocol, and can they be fixed?

1. What impact will the Regional Greenhouse Gas Initiative (RGGI) have on other states seeking to reduce GHG emissions?

1. Do you agree that the benefits of taking steps to solve global warming outweigh the costs of taking action?

10.1 Climate Change and the Energy Sector

There is a consensus among most climate scientists that GHG emissions are transforming the Earth’s climate. No other environmental issue poses as great a difficulty to the energy sector as does GHG emissions. GHG emissions come from the combustion of fossil fuels that contain carbon (fuels such as coal, oil and natural gas). Those emissions have increased the levels of carbon dioxide in the atmosphere. Scientists believe that if action is not taken to reduce these emissions, temperature levels will increase and cause drastic changes to the planet. Fortunately, it seems as though there is an international trend that advocates reducing those emissions.

10.1.1 GHG Emissions from Power Plants

In 2006, the U.S. total for GHG emissions was 7,054 million metric tons carbon dioxide equivalent. The amount of GHG emissions a power plant emits depends on the type of fossil fuel burned. Coal-fired power plants emit the most emissions out of the fossil fuels.

10.1.2 What Causes Climate Change?

The greenhouse effect is the process that occurs when GHG accumulate in the atmosphere and trap heat at the surface of the earth. This contributes to the increases in temperature levels. Though it is true that a certain level of GHG is needed to keep the earth at a habitable temperature, the increase in the levels of GHG means that more heat is trapped, and temperatures rise in correlation. There are three unchallenged facts about the greenhouse gas effect: (1) the atmospheric levels of GHG are increasing because of human activities; (2) the GHGs absorb and re-radiate in a way that heats the planet; and (3) these atmospheric changes are long-lasting, because the GHG stay in the atmosphere anywhere from decades to centuries.

Most of the science related to global warming was developed by the Intergovernmental Panel on Climate Change (“IPCC”). The IPCC was established by the United Nations Environment Programme and the World Meteorlogical Organization. Those organizations directed the IPCC to prepare a report every five years that indicates the consensus of scientists about the extent of climate change that was taking place, and what was causing the change. In November of 2007, the IPCC stated that the planet is warming, that human-generated emissions were the cause, and that reductions in GHG emissions needed to start immediately to mitigate the global climate.

10.1.3 Impacts of Climate Change

One of the significant impacts of climate change is the direct effect on crop yields. Further, the range or number of pests that affect plants, or diseases that threaten animals and human health will also be impacted by the climate change. Water supplies throughout the world will be affected; episodes of drought and flooding will also impact the global community. Additionally, the effect on natural ecosystems (such as a rainforest) is also a cause for concern. In 2009, the EPA issued a summary saying that GHG emissions threaten public health and welfare.

10.2 International Politics of Climate Change

[introduction]

10.2.1 Early Initiatives

In 1992, the world’s industrial leaders and developing nations pledged to reduce GHG at the United Nations Conference on Environment and Development. However, implementation of the non-binding goal to reduce emissions proved ineffective. The developing nations, as well as the already developed nations, found it hard to coordinate positions. The convention failed to provide any targets or timetables; instead, it only relied on the goodwill of nations.

10.2.2 The Kyoto Protocol

Then, in 1997, the Conference of Parties to the UN Framework Convention on Climate Change (UNFCCC) adopted the Kyoto Protocol. Under this protocol, the EU will be responsible for an 8% reduction in GHG emissions, but will have the authority to assign different targets to different countries. Although most nations involved signed and ratified the protocol, the United States did not. In 2001, President Bush rejected the Kyoto Protocol, saying it was too costly and unfairly excluded developing nations such as India, China and Brazil. President Bush argued that the protocol would place an unfair burden on developed countries, particularly the United States.

The Kyoto Protocol established three “flexibility mechanisms” to help Annex B nations lower the costs of achieving admissions targets. First, it established Joint Implementation. This allows Annex B nations to undertake emission reduction projects in other Annex B nations, and then receive a share of the emissions reduction. Secondly, it created a Clean Development Mechanism (“CDM”). This allowed Annex B nations to undertake projects to reduce emissions in developing nations without targets (called non-Annex B), and then claim credit for the emission reduction the projects achieve. Finally, the Kyoto Protocol established Emissions Trading. Emissions trading allows nations which have excess emissions reduction units to sell them to countries that are over their emissions targets.

Emissions trading gained popular support with the European Union. After the Kyoto Protocol was founded, the then existing 15 nations of the EU agreed to an 8% reduction in GHG. In an effort to incorporate more countries into the emission reduction program, the E.U. emissions trading system (“EU-ETS”) was officially founded in 2005, and included 25 countries. The trial period of the program went from 2005-2007, and although there were flaws in the system, the trial period succeeded in creating mechanisms for effecting greater GHG emission reduction in the future.

10.2.3 From Bali to Copenhagen: Negotiating a Post–2012 Agreement

The Kyoto Protocol garnered a great deal of criticism for not including enough countries, including the United States-one of the greatest producers of GHG emissions. In fact, because the agreement didn’t incorporate some of the largest producers of GHG, less than one-third of total global emissions were covered. Proponents of the Kyoto Protocol claim that it was a great step in the right direction and offer examples of other diplomatic successes like the WTO or the European Union, which took time to form and adapt. Soon after ratification of the Kyoto Protocol, further meetings took place in Bali and Copenhagen to make changes that would help lower GHG emissions further.

The achievements in Bali were focused on getting a greater number of countries to address global warming. In Bali, the parties wanted to make sure that GHG output peaks in the next 10 to 15 years and will then decline dramatically afterwards to about half as much by the middle of the twenty-first century. In order to obtain that goal, the parties recognized that industrialized and developing countries would have to make substantial cuts. Further, the United States, India, and China would have to greatly lower their emissions. The terms put specific cuts on countries, but the United States was unwilling to accept those terms.

In addition, the Bali meetings addressed issue revolving around technology. The developing countries wanted already developed nations to be accountable for actions to better technology for clean energy. This would be accomplished by requiring the developed nations’ actions to be immeasurable, reportable and verifiable. Although the United States did not agree with the language used, it went along with the proposal because most other countries believed it was a good idea. Developed nations also wanted language incorporated that provided steps for developing countries to take to mitigate emissions.

Financing was another major issue in Bali. In order to bring emission levels down only to the levels in 2007, the convention would need to raise $200–210 billion by 2030. The Bali Action Plan provides action to encourage investment for better technology and to help developing countries carry out mitigation plans.

During the Copenhagen convention, world leaders wanted to reach an agreement that would address five main components:

1. Enhanced action to assist the most vulnerable and the poorest in adapting to the impact of climate change;

2. Ambitious emission reduction targets for all industrialized countries on an individual basis;

3. Nationally appropriate mitigation actions by developing countries to limit the growth of their emissions, while safeguarding economic growth and sustainable development, with the necessary support;

4. Significantly scaled-up financial and technological resources; and

5. An equitable governance structure to guide financial resources.

In the end, participating nations adopted the Copenhagen Accord, even though it fell short of putting a cap on GHG emissions. The Copenhagen Accord provided that nations must take action to keep the Earth’s temperature from increasing more than 2* degrees Celsius, on average.

As we move forward in climate change negotiations, the United States and China will play a crucial role in accomplishing tactics to curb climate change. Together, these two countries account for over 40% of the world’s GHG emissions. Although non-climate related issues between the U.S. and China often puts them at odds, any kind of resolution going forward must incorporate them both. Each country stands to share in long terms gains from climate-related policy changes.

10.3 Domestic Climate Change Control Policies

While Europe was busy creating mandatory schemes to reduce GHG emissions, the United States only promoted voluntary GHG emission reduction. President Obama’s election changed the way other nations viewed the United States’ stance on GHG emission reduction. Although some organizations (i.e., the Chamber of Commerce and the American Petroleum Institute) continue to resist efforts to reduce GHG emissions, a large number of companies are acknowledging the threat of climate change and are vowing to take action. Some companies and organizations began to work with environmental groups to found the U.S. Climate Action Partnership. While federal law concerning emissions reductions is slow to occur, many states and regions of states are working together to reduce their emissions.

10.3.1 Federal Government Strategies

Prelude to Clean Air Act Regulation. The EPA did not regulate carbon dioxide emissions under the Clean Air Act during the Bush Administration, which stressed voluntary action rather than mandatory federal laws. In 2007, the Supreme Court issued the opinion for Massachusetts v. EPA, 549 U.S. 497 (2007), which led to a change in the law and outlook for mandatory constraints on carbon dioxide.

The Massachusetts v. EPA casearose when rulemaking petitions were filed by private organizations seeking to have a rule made to regulate carbon dioxide emissions from new automobiles under the Clean Air Act. The EPA decided that carbon dioxide did not fall under the scope of the Clean Air Act because it was not an “air pollutant” as defined in the Clean Air Act. When the case reached the Supreme Court, there were two primary issues: (1) did Massachusetts have standing, and (2) did the EPA have authority under the Clean Air Act to regulate carbon dioxide emissions. Ultimately, the Supreme Court disagreed with the EPA and held that carbon dioxide did fall under the definition of “air pollutant.”

To bring suit, the state of Massachusetts had to show standing. Part of showing standing is having an injury in fact. The Court found that Massachusetts had shown the sea level had risen as a result of global warming. Because Massachusetts owns coastal land, that was enough to show an injury in fact. The Court also found causation since the EPA did not dispute the relation between GHG and global warming and, despite this relationship, the EPA refused to regulate GHGs (here, carbon dioxide). Last, the Court found redressability since reducing emissions would slow the rate of change of global emissions.

Having found that the EPA had the statutory authority to regulate GHG, the Court needed to decide whether the EPA’s reasoning in not regulating carbon dioxide emissions were consistent with the Clean Air Act. The EPA stated that even if it had the authority to regulate GHG emissions, the agency would not do so because global warming was an international problem making regulation a piecemeal approach to the problem at odds with the President’s comprehensive approach. The EPA also claimed that they would have to tighten mileage standards, which would make them regulate something intended for the Department of Transportation. The Court rejected both of these claims, finding that their reasoning was not in line with the statutory text. Ultimately, the Court found that the EPA’s decision was arbitrary and capricious.

Agency regulation of CO2 emissions. Shortly after the Court decided Massachusetts v. EPA, the EPA Environmental Appeals Board dealt with In re Deseret Power Electric Cooperative. While the former had dealt with mobile sources of GHG emissions, Deseret dealt with stationary sources. In this case, Deseret Power proposed a major modification to an existing stationary generating unit (a coal-powered facility). In order to add the modification, Deseret Power required a prevention of significant deterioration (PSD) permit. The permit was initially granted, and the Sierra Club sought review by the Environmental Appeals Board. The question was whether the permit must contain a “best available control technology” (BACT) emissions limit for carbons - each side debated whether carbon was a pollutant subject to regulation under the CAA. The Board determined that the EPA erred by not appropriately considering carbon dioxide in issuing an air permit. The Board remanded the permit and asked for the permitting body to reconsider the permit upon further consideration of carbon dioxide, and, subsequently, upon consideration of whether carbon dioxide emissions by stationary sources are subject to regulation under the CAA. While the case did not provide a definitive answer on the issue, it signaled for the incoming Obama administration that uncertainty relating to the handling of carbon dioxide in permitting decisions remains an issue of national scope that required attention.

EPA rulemaking on CO2 emissions. Following Massachusetts v. EPA (which dealt with GHG emissions from mobile sources) and In re Deseret (which dealt with GHG emissions from stationary sources), the EPA issued three proposed rules to regulate CO2 emissions directly under the Clean Air Act. The three rules included (1) regulation on emissions from mobile sources, (2) regulation on emissions from stationary sources that emit more than specified amounts of GHGs, and (3) regulation on the actual reporting of GHG emissions. Along with these three rules, the EPA also allowed California’s waiver so that it could implement its own auto GHG emissions standards.

Vehicle Emissions Standards (CAA §202(a) and California Waiver (CAA §209)). California was the first state to set its own vehicle pollution standards. California has asked, and ultimately been granted, a waiver from the EPA to set its own vehicle emission standards since 1975. California renewed its request in 2005 and, after much deliberation, was again conditionally granted the waiver on June 30, 2009. California’s waiver was conditioned on, first, the understanding that the state’s standards would be no less strict than federal standards. Second, California agreed to conform its own standards to the federal standards between 2012 and 2016, with the flexibility to make standards more stringent before and after this period. This conditional agreement was centered, in large part, upon giving the auto industry uniform, rather than individualized, piecemeal standards.