Alternative climate policy pathways in the US

Abstract

Although it is likely that the political–economic coalition required for implementing a federal cap-and-trade programme for GHGs in the US is now sufficiently strong, the structural impediments that have prevented its legislative passage remain impressively durable and can be expected to continue to lay waste to congressional proposals for the foreseeable future. Indeed, given the complex history of environmental policy gridlock in Washington since the early 1980s, any expectations that a cap-and-trade programme could have been realistically achieved through the traditional legislative passage in Congress are fundamentally misplaced. Building on previous research, it is argued that – as with most other forms of environmental policy in the US over the past three decades – a national carbon market is more plausible given alternative policy pathways, which if taken are capable of circumventing the Federal Congress altogether. In particular, the interaction between litigation against the federal government and the ‘rulemaking’ authority possessed by the Executive Branch provides the potential space for the current administration to unilaterally establish a model rule for a national carbon-trading programme.

Policy relevance

This article aims to contribute to American climate policy debates by re-thinking the policy mechanisms most capable of establishing a national carbon market in the US. By taking into account the array of structural factors that have prevented the legislative passage of such a programme in federal Congress, a range of alternative policy ‘pathways’ is considered that have historically allowed progressive environmental policies to endure in Washington (despite increased Congressional gridlock over the past few decades). Two specific alternative strategies and the relationship between them are assessed: the use of litigation to impose legal obligations on federal agencies to regulate effluents, and the use of executive authority to define the nature and scope of environmental regulation. The administration's current potential to unilaterally develop a model-rule for a cap-and-trade programme under the Clean Air Act is emphasized, and the political implications of such a strategy are considered.

Keywords:

• American Clean Energy and Security Act
• carbon markets
• Clean Air Act
• climate policy
• CO₂ reductions
• emissions trading
• Massachusetts v. EPA

Notes

See also Senator Baucus’ statement that ‘There's no doubt that this Congress is going to pass climate change legislation’ as reported in Romm (2009).

There is a large and compelling body of literature that contests the adequacy and efficacy of carbon markets as a means to address the problem of climate change, as well as their unjust social foundations (e.g. Bachram, 2004; Lohmann, 2006; Bumpus & Liverman, 2008).

Key unifying organizations of the antiregulation coalition included inter alia the Global Climate Coalition, the American Petroleum Institute, and the International Chamber of Commerce, all of whom helped to organize a broad, coherent, and well-funded, trans-Atlantic voice of opposition to climate regulation.

This coalition is sometimes referred to as a ‘Baptist-and-bootlegger’ coalition: the environmental NGOs being the Baptists, and the business community the bootleggers.

Notable members of USCAP include BP, Shell, Duke Energy, DuPont, General Electric, AIG, Lehman Brothers, General Motors, Chrysler, Dow Chemical, ConocoPhillips, Environmental Defense, Johnson & Johnson, Natural Resources Defense Council, Pew Center on Global Climate Change, Caterpillar, PG&E Corporation, World Resource Institute, Alcoa, PepsiCo, Siemens, Alcan, the Nature Conservancy, and the National Wildlife Federation.

A small handful of trading programmes have evolved at the state and regional level, including the Regional Greenhouse Gas Initiative (RGGI) now in operation in the Northeast, and others under negotiation in the Southwest, Midwest, and in California (see Rabe, 2010). Even these subnational developments have been the subject of immense struggles and have been strongly contested over past years. Indeed, the political viability of the proposed cap-and-trade schemes that were supposed to lie at the heart of the Midwest Greenhouse Gas Accord and the Western Climate Initiative have faced a series of setbacks and remain highly uncertain at the time of writing, while the RGGI (in addition to seeing its auction prices consistently fall since the programme's inception) has seen member states such as New Jersey (and potentially New Hampshire) withdraw from the programme in response to political opposition. This is to say nothing of the programme's technical ability to meet its stated environmental and economic goals.

See www.eia.doe.gov/emeu/international/reserves.html.

See www.eia.gov/dnav/ng/ng_sum_snd_a_EPG0_FPD_Mmcf_a.htm.

This is not to suggest that there is a lack of continued debate in Western Europe regarding the detrimental effects to economic growth and competitiveness created by GHG emissions reductions efforts.

The themes of individualism and antitaxation that have been so integral to the American experience have made it particularly difficult to regulate energy consumption. Indeed, the idea of personal limitations imposed by climate regulation has been a key trope focused upon by antiregulatory coalitions to reduce public consensus and delegitimize climate legislation. The example of the Canadian Federal Liberal Party's disastrous inclusion of a carbon tax in their 2008 election platform – and successful vilification of the policy by the Conservative government – provides an instructive, if somewhat idiosyncratic, example of this in the North American context.

To be sure, a comprehensive climate bill would almost certainly be subject to filibustering attempts by Senate Republicans, which would force the bill to obtain a full 60 votes in order to pass on cloture (‘filibustering’ is the term given to a range of obstructive processional tactics and procedures used to prevent a bill from coming up for a formal vote in the upper chamber). Although the filibuster has existed as part of Senate protocol since 1789, its use since the early 1980s (as each party's contemporary electoral coalition coalesced) is entirely without precedent in Washington. See www.senate.gov/pagelayout/reference/cloture_motions/clotureCounts.htm.

Since 1981, instances of what one might call ‘progressive state-building’ through federal legislation have been few and far between. Even given a broad understanding of what this might entail, there have been few more than half a dozen instances of such legislation (e.g. the Job Training Partnership Act of 1982, the McKinney–Vento Homelessness Assistance Act of 1987, the Clean Air Act Amendments of 1990, the Family and Medical Leave Act of 1993, and the Patient Protection and Affordable Care Act of 2010).

The ‘golden age’ is a term generally given to the period lying approximately between the mid-1960s and the late 1970s, in which a large manifest of federal environmental regulation was passed with bipartisan support in the US.

See Emison and Morrison (2010), who argue that although Southerners have traditionally held a strong cultural connection to the environment, their increased antistate bent has taken them away from their penchant to protect it through government policy.

This group included Robert Byrd (D-WV), Evan Bayh (D-IN), Robert Casey (D-PA), Mary Landrieu (D-LA), Carl Levin (D-MI), Blanche Lincoln (D-AR), Ben Nelson (D-NB), and Mark Pryor (D-AR). To give a sense of the strength of the indignation some coal-state Democrats felt towards the bill, it can be noted that when campaigning to fill Robert Byrd's empty Senate seat in West Virginia in 2010, Democratic nominee (and eventual winner) Joe Manchin actually released a campaign ad that depicted him shooting a copy of the cap-and-trade bill with a high-powered rifle.

This group included Tom Harkin (D-IA), Al Franken (D-MN), Roland Burris (D-IL), Byron Dorgan (D-ND), Herb Kohl (D-WI), Russ Feingold (D-WI), Kent Conrad (D-ND), Michael Bennett (D-CO), Amy Klobuchar (D-MN), Mark Udall (D-CO), Debbie Stabenow (D-MI), and Sherrod Brown (D-OH). The full text of this letter can be found at http://coloradoindependent.com/wp-content/uploads/2009/11/14Dems.pdf.

This group included Senators Claire McCaskill (D-MO), Jon Tester (D-MT), Jay Rockefeller (D-WV), Jim Webb (D-VA), and Tim Johnson (D-SD).

Including, perhaps, Senators John McCain, Lindsay Graham, Olympia Snowe, and Susan Collins.

An oft-cited study is one prepared by the conservative policy think tank, the Heritage Foundation, which suggested that, over the long term, the Waxman–Markey Bill would ‘reduce aggregate gross domestic product by $7.4 trillion; destroy 844,000 jobs on average, with peak years seeing unemployment rise by over 1,900,000 jobs; raise electricity rates 90% after adjusting for inflation, raise inflation-adjusted gasoline prices by 74%; raise residential natural gas prices by 55%; raise an average family's annual energy bill by $1500; and increase inflation-adjusted federal debt by 29%, or $33,400 additional federal debt per person, again after adjusting for inflation’ (available at www.heritage.org/research/reports/2009/05/the-economic-impact-of-waxman-markey).

‘BTU’ = British thermal unit. The BTU bill was killed in Senate committee after no less than 13 major exemptions were made to it (Lisowski, 2002; Christiansen, 2003). Indeed, in spite of the administration's best efforts, a small handful of senior senators from both Democrat and Republican parties chipped away at the bill in committee until what eventually emerged, after two years of intense battles over energy tax reform, was a paltry gasoline tax increase of $0.04 (Nivola, 2010).

Massachusetts was joined by a long list of co-petitioners, including the states of California, Connecticut, Illinois, Maine, Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Washington, the District of Columbia, the cities of Baltimore and New York, and a range of interest groups.

This petition was filed by the International Center for Technology Assessment.

Other concurrent and subsequent lawsuits that reinforced this ruling include New York v. EPA in 2007, and American Electric Power Co. v. Connecticut in 2011.

These include Sections 108–110 (National Ambient Air Quality Standards), Section 111 (New Source Performance Standards), Section 115 (International Air Pollution provisions), and Title VI (Protection of the Stratosphere provisions).

Under a haze of political fire following the administration's announcement in December 2010, EPA Assistant Administrator Gina McCarthy initially stated that ‘this is not a cap-and-trade program’ (see http://solveclimatenews.com/news/20101223/epa-sets-timetable-carbon-cutting-regs-coal-and-oil).

Burtraw, Paul, and Woerman (2011) found that flexible compliance mechanisms reduced overall costs by as much as 66% compared with an inflexible standard in a hypothetical scenario.

This is mostly due to the fact that ensuring that each entity submits a required number of allowances is simpler than permitting every covered source.

For example, according to its website (as of September 2011), the RGGI programme in the Northeast had raised over $900 million through allowance auctions (see www.rggi.org/rggi_benefits).

The Bush administration's Clean Air Mercury Rule was rejected by a DC Circuit Court in 2005, not because of the invalidity of cap-and-trade under Section 111 but rather because the administration tried to avoid regulating mercury as a ‘toxic air pollutant’ under the CAA. The Obama administration, for its part, has never challenged this interpretation of the validity of cap-and-trade under Section 111.

President Obama indicated his intention to do so in the event that the ‘Defending America's Affordable Energy and Jobs Act’ passed the Senate. This bill, submitted by Wyoming Senator John Barasso, would override the EPA's endangerment finding in the case of Massachusetts v. EPA and prevent the Executive Branch and any federal agency from regulating GHGs without the approval of Congress.