Abstract: Over the last half decade, a variety of federal legislative proposals for limiting greenhouse gas (GHG) emissions have been put forward, most of which would set a price on carbon. As of early 2013, the one politically plausible policy appears to be a carbon tax, passed as part of a larger fiscal reform package. Meanwhile, the US Environmental Protection Agency has begun regulating GHG emissions from a variety of sources using its authority under the Clean Air Act. It may be necessary to choose between these two policies, however. The Waxman–Markey cap-and-trade bill that failed in 2009 would have preempted much of this authority, and it appears likely that a carbon tax law would do the same. But how can one make this choice? What are the key questions and issues to consider? The purpose of this paper is to compare these policies. Our aim here is therefore not to determine whether an exchange is wise or unwise. Instead, our intention is to give policymakers and other interested readers an impartial assessment of both policies and, in particular, the features that are important to a comparative evaluation. We don’t give answers, but hope at least to give the right questions to ask.

Abstract: While the U.S. Environmental Protection Agency (EPA) is in the process of regulating greenhouse gas (GHG) emissions under its Clean Air Act (CAA) authority, Congress has considered several different bills that would preempt CAA regulation of GHGs and replace it with a comprehensive national climate policy. Policymakers should be aware that there are other existing federal statutes granting GHG regulatory authority, and new legislation would likely preempt them as well. This paper surveys these other statutes in order to highlight existing federal authority that might be given up with the passage of a new comprehensive bill. It explores the possibility of direct regulation of GHGs under the Clean Water Act (CWA), along with federal authority to block projects that contribute to climate change under the National Environmental Policy Act (NEPA) and conservation statutes such as the Endangered Species Act (ESA). Newer statutes like the Energy Independence and Security Act (EISA) mandate narrower regulation, but they are also considered here.

Abstract: This paper explores the policy options available to the United States for regulating greenhouse gas emissions from aircraft under existing law: the Clean Air Act (CAA). Europe has unilaterally and controversially moved to include aviation emissions in its Emissions Trading System. The United States can, however, allow its airlines to escape this requirement by imposing “equivalent” regulation. U.S. aviation emissions rules could also have significant environmental benefits and would limit domestic emissions beyond the reach of the European Union. With new legislation unlikely, the CAA is the only plausible vehicle for such regulation. Title II Part B of the CAA does grant EPA broad regulatory authority over aviation emissions, though this authority has not been used aggressively. EPA could impose meaningful aviation GHG limits and, by using performance standards, give airlines incentives to creatively comply. It might further be possible to allow some forms of emissions trading, though the law is unclear. Emissions by foreign airlines in the United States could be covered under the act, though international law might impose barriers.

Abstract: The U.S. Environmental Protection Agency’s (EPA) proposed greenhouse gas (GHG) performance standards for power plants are an important step forward in regulating GHGs in terms of both their substantive impact and legal precedent. Nevertheless, we have some concerns with the proposal, which we discuss in the following comments submitted to the agency. The majority of our comments are directed to ways that EPA can increase certainty for the industry—reducing costs and, possibly, improving environmental outcomes. We highlight two specific areas of concern. First, the current proposal contributes to the significant uncertainty facing existing sources. Second, EPA’s proposed averaging option for new facilities that will install carbon capture-and-storage (CCS) technology in the future, although intended to create a flexible pathway, unfortunately creates some new regulatory uncertainty. We also comment on EPA’s decision to combine most coal and gas generators into a single source category. We believe this decision is legally valid and practically important, and that EPA should resist pressure to reconsider.

Abstract: EPA is in the process of regulating U.S. greenhouse gas (GHG) emissions using its powers under the Clean Air Act. The likely next phase of this regulatory program is performance standards under Section 111 of the act for coal plants and petroleum refineries, which the agency has committed to finalize by the end of 2012. Section 111 appears to allow use of flexible, market-based regulatory tools. In this paper, we discuss one such tool, tradable standards. Tradable standards appear to be a legally and politically viable choice for the agency, and evidence suggests they are substantially more cost-effective than traditional performance standards. The paper discusses implementation issues with tradable standards, including categorization, banking, and phased implementation, as well as broader issues with the Section 111 rulemaking process as it relates to state-level GHG regulatory efforts.

Abstract: The U.S. Environmental Protection Agency (EPA) continues to move ahead with regulation of greenhouse gas emissions under the Clean Air Act (CAA). Previous work has indicated that basic forms of compliance flexibility—trading—appear to be legally permissible under the relevant part (Section 111) of the CAA. This paper takes a close look at more expansive and ambitious types of flexibility: trading between different kinds of sources, biomass co-firing, and, above all, offsets. It concludes that most types of such extended flexibility are either legally incompatible with the CAA, or so legally problematic that EPA is unlikely to adopt them. This has important implications for both the costs of CAA climate policy and the level of environmental benefits that are achievable. It also creates tension between CAA climate policy and state-level policies, such as California’s, that aim to include various forms of extended flexibility.

Abstract: EPA will soon propose performance standards under Section 111 of the Clean Air Act for greenhouse gas pollution from the two largest emitting stationary source sectors—fossil-fueled power plants and petroleum refineries. The form these standards will take remains unclear. A key issue that will shape the effectiveness of the regulations is the degree to which they enable regulated entities to use flexible approaches to achieve the standards. This discussion paper provides the content of a letter to EPA Administrator Jackson that describes areas of general academic agreement on the EPA's authority to use compliance flexibility options under Section 111 of the Clean Air Act in the development of performance standards for greenhouse gas emissions.