Carbon Pricing and The Clean Air Act

This training covers the important history of the Clean Air Act, how Clean Air Act regulations might interact with federal carbon pricing, as well as a framework to utilize for evaluating the interaction of greenhouse gas regulations and carbon pricing legislation.

Background

H.R.763 includes a Section 8 that adds some language to the Clean Air Act, entitled “Section 330 Suspension of Regulation of Fuels and Emissions Based on Greenhouse Gas Effects," which would provide in essence a regulatory pause.

This essentially only suspends EPA enforcement authority in two areas: (1) GHG regulations on any fuel that is covered by the carbon fee, and (a) GHG regulations on any fluorinated gas that is covered by the carbon fee. But that section also explicitly states that the EPA is entirely free to:

• Regulate emissions for any reason other than GHG effects.
• Consider collateral benefits of limiting GHG emissions.
• Regulate black carbon or any other non-GHG pollutant that causes warming.
• Continue monitoring, reporting, investigating, or collecting information on GHG emissions.
• Regulate methane leakage from industrial systems or water treatment facilities.

When 10 years have passed, if emissions are not meeting the targets spelled out in the bill, the suspension of regulations will end. Not only that, but the EPA would then be obligated to issue regulations strong enough to meet those targets. In other words, the law would chisel the H.R.763 targets in stone, whether or not the carbon fee is working well enough to meet them.

Section 8 also specifies that EPA retains authority to regulate GHG emissions from nonroad engines and vehicles and from aircraft. It also stipulates that in case of any ambiguity, the law should be interpreted on the side of the “most effective abatement of greenhouse gas emissions.” And finally, there will be no interference with any State law or regulation, meaning that States can impose stricter GHG regulations if they choose to do so.

How and Why Does H.R. 763 Restrict EPA Regulations?

To maximize broad bipartisan support, the Energy Innovation and Carbon Dividend Act limits the EPA’s ability to issue some regulations on greenhouse gases (GHGs). The changes under this provision mainly affects the Clean Power Plan (CPP) and related GHG limits for new and expanded power plants and factories. [1,2,3]

Vital aspects of the Clean Air Act remain intact, including the core EPA authority to regulate CO2 as a pollutant. [4] There is no change to EPA’s ability to regulate other forms of air pollution, [5] vehicle fuel economy (CAFE) standards [6] or renewable fuel content in gasoline. [7] Government can still enforce appliance efficiency standards [8] and regulate methane leakage from the natural gas system. [9]

With the aggressive carbon-cutting schedule under H.R.763, the limited GHG rules in question would be redundant. [10] They are not even currently active, [11] but would still pose a potential administrative and legal burden to businesses while not cutting a single additional ton of CO2.

H.R.763 would cut over a billion tons more GHG emissions than the Clean Power Plan 2030 goal, even if it were being implemented. [12]

Furthermore, this regulatory suspension would only be in place for 10 years, and then if the emissions targets mandated by H.R.763 are not being met, the restriction would not only be lifted, but the EPA would then be required to write regulations to meet those targets.

There is strong evidence from economic literature that a policy like the Energy Innovation and Carbon Dividend Act will reduce GHG emissions more efficiently than existing or proposed regulations, [13] so this regulatory pause will not in any way slow down our path to a livable climate.

1. “FACT SHEET: Overview of the Clean Power Plan.” U.S. Environmental Protection Agency (snapshot) (19 Jan 2017).
2. “Regulation Database – New Source Performance Standards for GHG Emissions from Electric Generating Units.” Columbia Law School Sabin Center for Climate Change Law (accessed 27 Mar 2019).
3. “PSD and Title V Permitting Guidance for Greenhouse Gases.” U.S. Environmental Protection Agency, Office of Air and Radiation (Mar 2011).
4. “Endangerment and Cause or Contribute Findings for Greenhouse Gases under the Section 202(a) of the Clean Air Act.” U.S. Environmental Protection Agency (11 Jul 2017).
5. “Clean Air Act Issues in the 116th Congress: Air Quality Standards.” EveryCRSReport.com (18 Apr 2019).
6. “Clean Air Act Issues in the 116th Congress: Standards for Motor Vehicles.” EveryCRSReport.com (18 Apr 2019).
7. “Renewable Fuel Standard.” Alternative Fuels Data Center, U.S. Department of Energy (accessed 28 Mar 2019).
8. “Appliance and Equipment Standards Program.” Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy (accessed 28 Mar 2019).
9. Tsang, L. “EPA’s Methane Regulations: Legal Overview.” Congressional Research Service (24 Jan 2018).
10. Gundlach, J. “To Negotiate a Carbon Tax: A Rough Map of Interactions, Tradeoffs, and Risks.” Columbia Journal of Environmental Law. (2 Mar 2018).
11. “Clean Air Act Issues in the 116th Congress.” Congressional Research Service (18 Apr 2019).
12. The CPP target for 2030 is a 32 percent cut in power sector CO2 emissions compared to 2005. From EPA data, 2005 power sector CO2 emissions were 2,401 Mt, so 32 percent lower would be 1,633 Mt. But 2016 power sector CO2 emissions were only 1,809 Mt, so compared to that amount, the CPP target for 2030 would amount to a cut of 176 Mt. In comparison, H.R.763 requires 2030 emissions to be 1,551 Mt lower than 2016 emissions. Therefore, H.R.763 would cut 1,375 Mt more than the CPP.
13. Rosetti, P., D Bosch, and D. Goldbeck. “Comparing Effectiveness of Climate Regulations and a Carbon Tax.” American Action Forum (2 Jul 2018).

Intro & Agenda
(from beginning)

How Administrative Law is Implemented & Legal History
(2:19)

The Clean Air Act History
(5:27)

EPA Greenhouse Gas Regulations
(14:07)

The Energy Innovation Act’s Pause 
(18:13)

Evaluation Framework For Carbon Pricing & Regulations
(26:50)

Final Takeaways
(39:10)

Download the PowerPoint or Google Slides presentation.

Download the video.

To skip ahead to a specific section go to the time indicated in parenthesis.

Intro & Agenda
(from beginning)

How Administrative Law is Implemented & Legal History
(2:19)

The Clean Air Act History
(5:27)

EPA Greenhouse Gas Regulations
(14:07)

The Energy Innovation Act’s Pause 
(18:13)

Evaluation Framework For Carbon Pricing & Regulations
(26:50)

Final Takeaways
(39:10)

• Emissions, Energy Market and Economic Impacts of the Energy Innovation Act - #CCL2019 Conference (external YouTube video)
• Columbia's Center on Global Energy Policy - "Interactions between a Federal Carbon Tax and Other Climate Policies" (external link)
• Energy Innovation Act Q&A - Regulatory Question
• Energy Innovation Act Section-by-Section Analysis
• See all resources associated with the Energy Innovation Act.