In reading the recent
Utilipoint article on “
What’s next for Greenhouse Gas”, I would have to say I agree with most of it. Noteworthy is that the US EPA's top two priorities are
climate change and air emissions, a reminder of the central role the power generation industry plays in some of the most important public policy issues facing our Nation today. I suspect, however, that the article may have been written before the most recent indications of how seriously the industry, the Obama Administration, and the US Senate are taking the need to get bi-partisan energy legislation passed this year. Check out, for example, the front page of the
Boston Globe earlier this week!).
Efforts to build further bipartisan support for the
Kerry-Graham-Lieberman bill have accelerated dramatically in the last few weeks, and the Administration, the power generation industry and now even the US Chamber of Commerce are lobbying in favor of it. While some major interests are still lobbying against it, the bill is definitely gaining momentum. Offshore drilling provisions are softening the petrochemical industry's opposition, and I expect its nuclear provisions will bring the whole remaining supply chain of the nuclear power industry into the fray, adding to the support of the big nuclear generators already rooting for it.
As for Alaska Republican Senator Lisa Murkowski, who is trying to keep the EPA from regulating GHG emissions, I think it is very doubtful this will make it through either chamber or congress despite the rarely-used procedural move being employed. But the very urgency of this proposed action highlights the widespread view that the Endangerment Finding and the EPA rulemaking resulting from it is beyond legal reproach, since it is rooted in two US Supreme Court rulings during the last two years of the Bush Administration.
That being said, the so-called "
Tailoring Rule" -- which exempts utilities emitting
less than 25,000 tons of greenhouse gases per year -- is quite vulnerable on legal grounds. These types of arbitrary carve-outs have a long history of being over-turned.
Try and imagine a scenario where the Endangerment Finding stands but the Tailoring Rule is overturned. If the statutory 250 ton per year (TPY) threshold applied to other pollutants covered under the Clean Air Act is applied to CO2, you might find that using your gas lawnmower one more time than last season triggers a new source review, and requires the lawnmower to be retrofitted with carbon capture and sequestration technology. Obviously this is an exaggeration, but the point is that regulating CO2 under the Clean Air Act with a 250 TPY threshold would be an absolute nightmare.
The strong consensus among generators I talk with suggests we will have federal cap & trade legislation as early as Spring 2010 and no later than early next year. Unlike health care, which is ideological and polarized, cap & trade still has strong support among voters. And for every conservative democrat from coal country against it, there is a moderate republican (or even conservative ones like Graham) behind it.
When considering the widespread support for the new proposed Senate legislations among affected industries, the costly and administratively burdensome command and control approach embodied in the EPA's response to the Endangerment Finding, the additional political and industry support stemming from the new provisions for nuclear power and offshore drilling, and the Obama Administration's urgent need for a high profile legislative victory, I am hard pressed to believe that federal CO2 cap and trade will not happen. The big question is how quickly.
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