Cross-posted from the Wonk Room.
Today, the Obama administration proposed a sweeping plan to reduce power plant emissions that cross state lines and kill tens of thousands of Americans every year. The proposed Clean Air Transport Rule replaces the Bush administration's so-called Clean Air Interstate Rule that was shot down by the courts because it permitted so much interstate emission trading that even some power companies filed suit. A federal court ordered EPA to fix the shaky legal grounds of the Bush plan. Power industry pollution remains so pervasive -- and so often blows from one state to another -- that it basically handcuffs state efforts to reduce pollution within a state's borders. As EPA noted in a fact sheet:
Specifically, this proposal would require significant reductions in sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions that cross state lines. These pollutants react in the atmosphere to form fine particles and ground-level ozone and are transported long distances, making it difficult for other states to achieve national clean air standards.
Emissions reductions will begin in 2012. By 2014, "the rule and other state and EPA actions would reduce power plant SO2 emissions by 71 percent over 2005 levels," and power plant NOx emissions "would drop by 52 percent."
It has been nearly 40 years since passage of the landmark Clean Air Act of 1970. Since then, we've made significant progress towards cleaner air. Cars are dramatically cleaner. Lead is gone from gasoline. New trucks no longer belch out the familiar puff of smoke. And EPA statistics document the continuing overall trend of cleaner air with respect to traditional pollutants. Despite that progress, one major source of air pollution remains a notorious problem: the electric power industry. Indeed a recent assessment by Ceres, the Natural Resources Defense Council, and several power companies described the footprint of fossil-fueled power plants:
In 2008, power plants were responsible for 66 percent of SO2 [sulfur dioxide] emissions, 19 percent of NOx [smog-forming nitrogen oxides] emissions, and 72 percent of toxic mercury emissions in the U.S. -- not to mention that the electric industry also pumps out nearly 40 percent of the nation's heat-trapping carbon dioxide emissions.
A recent Clean Air Watch survey noted that no fewer than 40 states and the District of Columbia have experienced unhealthful levels of smog so far this year.
The Obama EPA hopes to put the cleanup concept on a sound legal footing by limiting the amount of emission trading. Anyone interested in clean air should hope this plan holds up in court. EPA projects the plan could prevent up to 36,000 premature deaths a year -- and bring monetary benefits of at least $120 billion a year -- at an annual cost of about $2.2 billion.
It is a big step towards taming the environmental monster known as the coal-fired power plant. But it is only the first step. EPA plans nest year to propose rules to limit mercury and other toxic emissions including arsenic, dioxins, and hydrochloric acid. The power industry has been evading toxic pollution requirements for two decades.
EPA has also pledged to follow up with a subsequent interstate pollution rule, if needed, as it surely will be, to make further reductions in smog-forming power plant emissions after the agency moves to set tougher national health standards for ozone, or smog, as it plans to do by the end of the summer.
Arsenic in kids' pee traced to pet chickens' feed
Greening--and feeding--the city with a 'garden block'
Cap-and-trade aside, what's the next move? 


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This is fantastic news. Coal power plant death by a thousand cuts works just fine for me.
What this story doesn’t tell you that emission allowance crashed even further (to effectively zero) when the EPA released the specifics of its proposal. And since this new program won’t start in 2012 this will essentially guarantee that power pollution will be essentially free until 2021. Then in 2012 this rule will have to survive judicial challenges just like the Bush rule. Essentially the EPA exchanged “now benefits” for the possibility of “future benefits”. The nearly 20-year old Clean Air Act is a complex beast and only 50% of these major rules judicial scrutiny.
This author just doesn't get it. By focussing this revised program on intrastate trading (which is not economically compelling to the power sector) with a limited interstate program, it weakens the argument that EPA has the authority under the CAA to promulgate a trading system for CO2. You certainly can't do that with a intrastate program. The emissions reductions would be nice but they have made it economically impossible for the power sector. That's not true - they can afford it once that significantly increase energy costs to consumers.
Re: Mark McIntosh. Do we care if EPA is backing away from interstate trading for hazardous pollutants? I don't know anyone calling on EPA to create a CO2 trading system. All I've heard about is creating emissions performance standards. I'd take a strong performance standard like we have in Connecticut for SO2 over a weak trading program any day of the week. Regarding costs, in a deregulated market I don't see how coal plants in particular can pass on the costs of compliance as they are not usually on the margin.
I'm not sure where you have been, but if you have not heard of a CO2 trading system under CAA, you will. Take a look at 111(d).
Even if the EPA has the authority under 111(d) to set up a CO2 program, their mere proposal of this new Transport Rule shows their willingness to change the rules at will. This results in a huge confidence gap. Like the value of the U.S. dollar, emission allowances are a fiat currency with no intrinsic value. All of their value is predicated on confidence in the government maintaining its policies. If the government pulls the rug out from under market participants they will adjust in future rounds (i.e CO2) and the program won’t send the proper price signal to garner the desired result. Once lost, credibility will be hard to get back.
How much of this going green transformation is/will be in the hands of privately-owned businesses? So far it seems cap & trade is a tax on entities, and if companies are taxed, they will pass on the tax in higher prices. How does cap & tax help an economy? Tax cuts to businesses, and incentives may help to develop sensible alternatives to a carbon “crisis”. Americans don't need more taxes --- they can barely afford the taxes that will surely be coming because of the tax and spend mentality now getting supported, and mandated, and we don't need more talking heads --- we need jobs.