How to Regulate Emissions of Greenhouse Gases?

In a policy memorandum that the Obama administration will likely revisit, current EPA administrator Stephen Johnson announced December 18 that Clean Air Act (CAA) operating permits for new or modified power generating plants need not be conditioned on the developer implementing best available control technology (BACT) to reduce plant emissions of carbon dioxide (CO2) and other greenhouse gasses that cause climate change.  The controversial memorandum responds to a November 13 decision of the US Environmental Appeals Board that validated in part the Sierra Club's objection to EPA Region 8's failure to impose greenhouse gas BACT on its issuance of an operating permit to a proposed coal-fired power station in Bonanza, Utah.  The CAA program for the prevention of significant deterioration (PSD) of air quality requires BACT in power plant operating permits for emissions of "each pollutant subject to regulation under" the CAA.  Administrator Johnson's memorandum concludes that CO2 is not subject to regulation under the CAA and therefore does not trigger BACT under the PSD program.

The administrator's interpretation of the CAA is directly contrary to a Georgia state court ruling last June that CO2 is a pollutant subject to regulation under the CAA.  Arguably, it also cannot be squared with the ruling last April of a sharply divided (5-4) Supreme Court in Massachusetts v. EPA.  In that decision, the Court held that EPA could promulgate rules regulating vehicular emissions of CO2 as a greenhouse gas that contributes to climate change.

The policy memorandum is representative of both the Bush administration's reluctance to regulate directly emissions of greenhouse gases and its often-stated belief that the CAA is somehow an imperfect framework for addressing anthropogenic climate change.  The Obama administration has already committed to reverse course as to the former and regulate greenhouse gas emissions directly through a framework that caps tradable emission allowances.  But unresolved is whether - in addition cap and trade - to subject CO2 and other greenhouse gasses to traditional CAA technology-forcing controls such as BACT under the PSD program.   Contrary to opponents of CAA regulation of greenhouse gasses, the two approaches can co-exist synergistically.  Requiring performance technologies can advance domestic reductions in greenhouse gas emissions at their primary sources - coal-fired power plants and cars.  At the same time, cap and trade is probably the most viable international framework for industrial nations to reduce those emissions globally.