Though President Obama is apparently set for a major address on climate tomorrow, US policy faces an uncertain future. EPA is moving haltingly ahead with regulations under the Clean Air Act (and may redouble its efforts after the speech), but some in Congress are pushing to revoke its authority. Others in Congress support new legislation setting a price on carbon (with most recent attention focused on a revenue-neutral carbon tax). While the near future is in EPA’s hands, Congress will—by action or inaction—determine the longer term path for US policy. That path hinges on two decisions. First, will Congress pass new comprehensive legislation, like a carbon tax? And second, will Congress preempt EPA’s authority? These are independent decisions, so there are four possible outcomes:
EPA authority mostly/wholly preempted EPA authority mostly left intact
No new climate legislation
1. No U.S. climate policy 2. EPA regulates under the CAA (status quo)
New climate legislation
3. Carbon price supplants EPA regulation 4. Parallel EPA regulation and carbon price
Preemption is a real possibility. Any new climate legislation appears (to us) likely to preempt at least some EPA authority, as the Waxman-Markey cap-and-trade bill would have done. Removing EPA’s authority without any new policy is also possible, but less likely given the President’s veto. That means two options – the Clean Air Act status quo and a new policy replacing it – appear the most likely outcomes.
In a new paper, Comparing the Clean Air Act and a Carbon Price, we try to evaluate these two pathways. ...
Read the rest at Common Resources.