Will carbon rule prod gridlocked Congress to act on climate change?

Source: Evan Lehmann, E&E reporter • Posted: Wednesday, June 4, 2014

The Obama administration uncorked its carbon rule yesterday. Now one major question is whether Congress will try to put it back in the bottle.

Lawmakers worked yesterday to put a fingerprint on the historic regulations with their own measures, prompting potentially a flurry of climate-related legislation not seen since the marathon sessions on cap and trade in 2010.Even before analysts had digested the 645-page document, some lawmakers were saying it sidestepped Congress’ authority to price carbon. Others used it to promote bills on things like energy efficiency, carbon capture and sequestration and carbon taxes.

Something similar happened four years ago when the notion that U.S. EPA could use its authority to reduce carbon emissions pushed lawmakers to come up with a tailor-made alternative to supersede agency command and control with cap and trade. Now some hope that Congress will try to repeat that exercise.

“Congress could have legislated this problem away many times … but obviously that hasn’t happened,” said Andrew Moylan, executive director of the R Street Institute, a conservative think tank that favors taxing carbon over “extraordinarily expensive” regulations.

Rep. John Delaney (D-Md.) is attempting to do just that.

The freshman lawmaker introduced a bill recently that would allow states to substitute a carbon tax for EPA’s regulations on power plants. The tax of $20 a ton could cut more emissions than the agency’s rule, which just focuses on the electricity sector, and provide funding for things like education and infrastructure, Delaney said in an interview.

“One of my goals here was to get people to think differently about a carbon tax,” Delaney said. “I think it has been too unfairly marginalized as a potential solution. When I sit down with Republicans and start talking about a tax swap, taxing greenhouse gases in exchange for a tax break for individuals and businesses, and it’s changing behavior in a way that’s leading to more energy independence, you start to getting a very different reaction.”

No ‘limitations’ on states

Now Delaney hopes that the looming rules from EPA will spur action, but he harbors doubts that House Republicans will get on board.

“It’s basically like you’ve got two options,” he said. “You have a market-based solution and non-market-based solution. What do you like?”

The R Street Institute is supportive. The group has been pitching a national “tax swap” that would create a fee on emissions while cutting tax rates on income, as a way to shape climate policy toward conservative principles.

“So basically a state-level equivalent of the [national] revenue-neutral carbon tax as a substitute for regulation,” Moylan said. “We think that’s the right sort of path forward.”

Hill aides and analysts are unclear about whether EPA’s new rule would let states meet their reductions through a carbon tax. The rule doesn’t mention it, though it does point to cap and trade as an approved method.

Asked directly about state efforts on carbon taxes, a senior EPA official told reporters yesterday that states are free to choose their method of compliance.

“There are a number of measures that states can use, and EPA is not really putting limitations on the measures that states can use as long as they end up helping them meet that ultimate carbon rate,” the official said.

EPA also encourages state lawmakers to get involved. It gives states an extra year — until June 2017 — to submit a plan to cut their carbon levels if they embark on complicated legislation on energy efficiency programs or renewable portfolio standards — or potentially adopting a carbon tax.

More climate action or less?

Other Republicans want to repeal the rule altogether, but that’s an unlikely outcome. Even if Republicans seize control of the Senate this fall, giving them both chambers, President Obama would still wield his veto power until the end of 2016 — by which time states have to submit plans to cut carbon emissions with EPA.

“The House has already passed legislation to prevent these rules from taking effect without the approval of the people’s representatives,” House Speaker John Boehner (R-Ohio) said in a statement yesterday. “The question now is: Will Senate Democrats listen to the American people and stop this disaster or will they back the president all the way?”

In March, the House passed the “Electricity and Affordability Act,” which seeks to banish EPA’s rules unless they’re approved by both chambers of Congress.

Rep. Ed Whitfield (R-Ky.), chairman of the Subcommittee on Energy and Power and an author of the bill, said yesterday that the measure would permit Congress to have “a national debate about American energy before President Obama forces his cap-and-tax policy through the backdoor and around the American people.”

The other side also wants legislation. Environmental advocates say a finely tuned bill would be cheaper than regulations for industry and cut more emissions.

“We, like many others, continue to believe that economywide carbon pricing is the best approach,” said Eileen Claussen, president of the Center for Climate and Energy Solutions. “But as long as this Congress won’t act, the law and the science demand that the administration use the tools at its disposal.”

Sen. Bernie Sanders (I-Vt.), who introduced a carbon tax bill last year with Sen. Barbara Boxer (D-Calif.), described EPA’s rules as just the beginning.

“Much more must be done to avoid a planetary crisis, but reducing emissions from dirty coal-fired power plants is a good step,” he said.

Also weighing in to promote legislation was Sen. Rob Portman (R-Ohio), who promised to rekindle an energy efficiency bill that has died twice in the Senate, and Sen. Heidi Heitkamp (D-N.D.), who made a pitch for her bill that would encourage carbon storage.