Most of the Congressional attention in Washington D.C. over the last three months has been directed solely on Health Care Reform. As the dust settles, the Senate Climate Bill will soon emerge as the next landmark decision awaiting the Obama Administration. As opposition to EPA regulatory measures continues to rise and as mid-term elections draw closer, the hope for the passage of a similarly contentious piece of American legislation hangs in the balance. Despite the challenges ahead, the latest news indicates that passage of the Senate Bill could still be a possibility in the coming months. 

One source of pressure fueling movement on the Senate Climate bill is the EPA’s GHG Endangerment Finding. This ruling requires the Federal agency to regulate GHG emissions in the economy under the authority of the Clean Air Act (CAA). The EPA has come under fire from business lobbyists, the oil industry and conservative senators, among others, who have issued letters, lawsuits and plans to thwart the Agency’s attempts at regulating GHG emissions. Those in opposition cite the potential for economic collapse and the stalling of investments as a primary reason to avoid regulation. Summarizing the thoughts of those against Agency regulation, Senator John D. Rockefeller IV (R-W.Va.) said “E.P.A. actions in this area would have enormous implications, and these issues need to be handled carefully and appropriately dealt with by the Congress, not in isolation by a federal environmental agency,” (NYTimes, 2010).

The EPA has responded to such criticism by relaxing the threshold for emissions reporting and has decided to delay the initial timetables for regulating industry emissions. EPA Administrator Lisa Jackson confirmed on March 30th 2010 that no stationary sources would face regulation this year, as was originally determined. Instead, plans have been put in place that will target large facilities in early 2011, medium-sized emitters in late 2011, and smaller emitters by 2016. Both Senators John D. Rockefeller and Lisa Murkowski (R-Alaska) have expressed approval of the EPA’s efforts to relax their initial implementation plan.

As EPA efforts to regulate GHG emissions flounder, a more commercially palatable Senate Bill equipped with a cap and trade approach has been brewing behind closed doors. Senators John Kerry (D-Mass), Joe Lieberman (I-Conn.), and Lindsey Graham (R-S.C.) have been working for months to put together a “hybrid” Climate Bill that infuses elements from a number of pieces of draft energy and climate legislation. Energy efficiency and renewable energy language for the bill is being pulled from the American Clean Energy Leadership Act which passed the Senate Energy and Natural Resources Committee in 2009. Ideas on “cap and dividend” carbon market regulation crafted by Senators Maria Cantwell (D-Wash.) and Susan Collins (R-Maine) in the CLEAR Act are also being considered.

The latest news from Environment and Energy (E&E) Daily indicates that the Senators plan to unveil their draft bill on the 40th anniversary of Earth Day, on April 22nd 2010. While the Senate Bill waits in the wings, the EPA continues to plan the implementation of its regulations against GHG emissions under the Clean Air Act. It is clear that climate policy in the United States will come alive in some form or another in the next year. Businesses will have to wait with baited breath to see what form it will take and what impact it will have on them. Do you think a Climate Bill will actually come to fruition in 2010? Which GHG regulatory method do you anticipate coming into action first: EPA emissions regulations under the Clean Air Act or a yet to be named Senate Climate Bill?

Photo credit: Margot Wolfs via Flickr CC

On December 7, 2009, the EPA released a statement concluding that greenhouse gases (GHG) threaten public health, welfare, and the environment, and in turn, warrant regulation under the Clean Air Act (CAA). The implications of such a statement will be substantial and far-reaching, as many businesses will soon have to report on and abate their carbon footprints under the EPA’s strict command-and-control regulatory approach.

Greenhouse gas legislation has been in the works for over a year now, however this endangerment finding has done more to strike fear into the hearts of business executives far more than the pending cap-and-trade Bill in Congress. The reason for this comes down to the fundamental differences in the way the regulatory regimes designed to reduce greenhouse gas emissions will be implemented. An NPR news report indicates that “Business groups have strongly argued against tackling global warming through the Clean Air Act, saying it is less flexible and more costly than the cap-and-trade bill being considered before Congress.” (NPR, 2009). The command-and-control regulatory approach under the CAA tends to be a more expensive measure for businesses because it involves a “one-size fits all approach” where the EPA will step in and recommend Best Available Control Technologies (BACT). These technologies typically involve expensive upgrades or retrofits that do not take into consideration other methods that may be more appropriate for the corporation.

The cap-and-trade market-based approach is favored by economists and corporations alike because it allows for more flexibility in implementation. A cap on emissions is determined at the Congressional level, polluters are required to purchase permits, or “allowances” if they are given away for free, to emit greenhouse gases in their operations. Under such a scheme, corporations will have an incentive to reduce their carbon footprint in order to sell their excess permits to those corporations unable or unwilling to reduce their emissions. The cap-and-trade method allows for money to be made, and hopefully, more efficiency measures to be established.

In the time since the EPA’s announcement, numerous business and conservative political groups have been gathering steam in their opposition to the ruling. On December 24th, 2009, the National Cattleman’s Beef Association filed a petition to the rule in the DC Circuit Court of Appeals, citing that “…increased energy costs associated with this ruling will be devastating for agriculture and the public as a whole.” (NCBA, 2009). Earlier in November 2009, the Republican Governor of Texas, Rick Perry, issued a statement to EPA urging that a proposed framework for regulating greenhouse gases be avoided due to its “devastating implications for Texas’ economy and energy industry” (Office of the Governor, Rick Perry, 2009). On January 20, 2010, U.S. Sen. Lisa Murkowski (R-Alaska) is expected to “shut down”the GHG ruling by “seeking an amendment to an unrelated debt bill… or will seek a resolution of disapproval, which would not be subject to filibuster” (Environmental Leader, 2010).

We have yet to see what will come out of this opposition. The good news for corporations is that the EPA ruling has done much to spur talk on the movement of the GHG legislation pending in Congress. For now though, the status of GHG legislation is at a standstill. After a failure at Copenhagen by the world’s nations to reach an agreement on a global climate accord, opinions in the U.S. are that current GHG legislation will suffer a similar fate. Congressional committees have been established to combine elements of the Waxman-Markey House Bill and the Kerry-Boxer Senate Bill to be re-voted on in the House and Senate in the first quarter of 2010. Pundits suggest that if a decision is not made before April 2010, the U.S. should not expect a climate bill to be passed this year, as attention will be focused on the mid-term elections.

Hold on to your hats, this could be a bumpy ride…