Energy

There’s A Good Reason Liberals Are Calling EPA’s New Plan ‘Cap And Trade’

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Michael Bastasch Energy Editor

Despite Congress rejecting cap-and-trade legislation during President Barack Obama’s first term, the administration is moving ahead with regulations pushing states to adopt carbon dioxide trading programs. The feds may even force cap-and-trade on states that fail to act on their own.

The EPA’s Clean Power Plan (CPP) actually encourages states to join regional cap-and-trade programs to reduce CO2 emissions from power plants. In its proposed rule, the agency suggested cap-and-trade as an option for compliance, but final rule explicitly promotes trading emissions.

A proposed federal plan written by the EPA could impose on defiant states “rate-based” and “mass-based” cap-and-trade programs. The agency says these proposed trading programs should be seen as a model for states looking for ways to comply with the rule. The EPA’s explicit endorsement of cap-and-trade immediately caught the eye of liberal news outlets.

“Obama Just Created a Carbon Cap-and-Trade Program,” according to a recent headline from the liberal news site Climate Central. “The final version promotes it,” Climate Central reported. “It encourages states to join an existing cap-and-trade program, or develop their own trading-based approach to pollution reductions.”

“Don’t Like the Clean Power Plan? Try Cap-and-Trade” reads an Inside Climate News headline. The site reported that if enough states “just say no” to the CPP, it could “hasten the emergence of an interstate cap-and-trade regime designed by the federal government.”

Republicans are urging states not to implement the CPP, saying they could be left holding the bill if the agency’s plan is overturned in the courts. But states that don’t design their own plans will be put under a federally-designed plan, which could very well be cap-and-trade based on EPA’s latest proposal.

“The EPA believes that a broad trading region provides greater opportunities for cost-effective implementation of controls compared to a smaller region,” the agency wrote in its proposal for a federal emissions plan. “[I]f a state does not submit an approvable plan … the EPA will develop, implement, and enforce a federal plan to reduce CO2 from the fossil fuel-fired power plants in that state.”

“These proposals also constitute proposed model trading rules that states can adopt or tailor for implementation of the final [emissions guidlines],” the EPA wrote. “The federal plan is an important measure to ensure that congressionally mandated emission standards under the authority of the [Clean Air Act] are implemented.”

The EPA’s plan also expressly allows states to implement a carbon tax as part of CPP compliance. The National Journal reports that carbon tax proponents are hoping the rule could revive the political viability of taxing emissions. The EPA’s rule says compliance “could accommodate imposition by a state of a fee for CO2 emissions from affected [electric generating units], an approach suggested by a number of commenters.”

A carbon tax has become an increasingly popular option to curb emissions among Democrats and left-wing groups, especially after the 2010 defeat of cap-and-trade in Congress. Since then, environmentalists have been working through the regulatory system for emissions controls. But in the end, the EPA has decided to push both options, putting a bigger emphasis on cap-and-trade.

“The EPA is very much interested in pushing the whole system toward trading,” Loyola Law School professor Daniel Selmi told Inside Climate News.

And the EPA may very well get a chance to impose federal plans upon states, assuming the CPP can withstand legal challenges. Several state governors have opposed the rule and promised to challenge it in court, but only Oklahoma has explicitly refused to comply with the rule.

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