Applying the Clean Air Act to Greenhouse Gases: What Does It Mean for Traditional Pollutants?

EPA’s March 27 release of a proposed rule to control greenhouse gas (GHG) emissions from new fossil-fuel power plants has reignited the long-standing debate over whether the Clean Air Act is an appropriate mechanism for controlling industrial sources. Congressional bills to repeal EPA’s CAA authority have been repeatedly (though unsuccessfully) introduced. Many environmentalists, while welcoming EPA’s initiative in the absence of any alternative, have suggested that new federal climate legislation would be preferable to applying the CAA.

In a recently published article, Climate Change, the Clean Air Act, and Industrial Pollution, published in a UCLA Journal of Environmental Law and Policy symposium on the Clean Air Act and GHG regulation, I take up a slice of the complex debate about the value of the CAA.  I explore how using the Clean Air Act to reduce GHGs from stationary sources, including industrial and fossil-fuel electrical generating facilities, would affect many other pollutants, termed co-pollutants. Though co-pollutant impacts are only one of many relevant factors, the inquiry helps shed light on the benefits and drawbacks of the Clean Air Act as a climate policy mechanism, both on its own terms and in comparison with a frequently proposed alternative – a cap-and-trade program. The article reveals that there are no easy answers, and contributes to a more nuanced understanding of the CAA in particular and climate policy choices more generally.

An initial question demands an answer: if we’re talking about GHG controls, why should we care about their impacts on other pollutants? Ultimately, addressing climate change will require fundamental transformations in our energy and industrial infrastructure, changes with widespread environmental, economic, political, and social implications. Climate policies premised on a vision that integrates those implications, co-pollutant implications among them, will provide greater benefits and fewer drawbacks than a narrow focus on GHG reductions alone. Given the strong connection between GHGs and their co-pollutants, climate policies are likely to have significant co-pollutant consequences that could, in some instances, impact our assessment of alternative climate policies.  In the energy sector, for example, continued reliance on coal combined with carbon capture and sequestration would substantially increase co-pollutant emissions, while increased energy efficiency or renewable energy would reduce co-pollutant emissions. 

The article explains the environmental value of maximizing co-pollutant reductions given persistent on-going air pollution. It also explains the administrative and technical advantages of taking an integrated multi-pollutant approach to regulation: government agencies and regulated entities have been frustrated by pollutant-specific approaches that fail to recognize the inter-related challenges of controlling multiple pollutants from the same sources.

While some might criticize efforts to consider co-pollutants due to fears of higher industry compliance costs, it is important to consider the complete economic picture.  Because pollution currently imposes substantial costs on society, environmental regulations can provide economic benefits, not just costs, and both costs and benefits are relevant to assessing a regulation’s overall economic impact. In addition, some might question the political wisdom of complicating the climate policy debate by incorporating multiple ancillary factors. Ultimately, however, given their far-reaching consequences on the established order, climate policies raise fundamental questions about energy and environmental policy. Given widespread public concern about everyday pollution, climate policies’ impacts on pollution are a salient component of the climate policy debate.

After defending the legitimacy of considering co-pollutants in climate policy debates, the Article turns to the merits: How is EPA regulating GHGs, and what might that mean, now or in the future, for co-pollutants? The process is still unfolding. The article describes EPA’s progress under the Prevention of Significant Deterioration (PSD) Program, where EPA is requiring states to impose, on a case-by-case basis, controls that represent the “Best Available Control Technology” on the largest new sources. The article also addresses direct federal requirements under the New Source Performance Standards for new sources and performance standards for existing sources, exploring both action to date and the long-term potential of these provisions. Ultimately, the effectiveness of these provisions, for both GHGs and co-pollutants, will depend upon how aggressively EPA and the states implement them.

Moving beyond the CAA on its own terms, the Article then engages one of the primary controversies surrounding the CAA:  its use of direct regulation rather than a market-based approach. The Article evaluates the co-pollutant consequences of this choice, exploring the co-pollutant advantages and disadvantages of traditional versus market-based mechanisms.

Direct regulation offers numerous co-pollutant benefits.  The CAA’s regulatory approach facilitates integrated multi-pollutant control strategies, more widely distributes GHG and associated co-pollutant reductions, ensures in-sector reductions by eliminating the possibility of offsets, provides better participatory opportunities, and avoids the risk that a cap-and-trade program will have an insufficiently stringent cap or experience market failures that blunt the program’s effectiveness.

A cap-and-trade program could, however, offer its own distinct co-pollutant benefits. If (and it’s a big if) a market-based program were more stringent than the CAA’s technology-based regulatory program, then a cap-and-trade program could lead to greater reductions in GHG emissions, with correspondingly greater decreases in co-pollutants. A cap-and-trade program’s flexibility could also create incentives for a wider range of emission-reducing activities, like the development of renewable energy and increased consumer energy efficiency, than is possible using the CAA’s traditional mechanisms.

In comparing the relative co-pollutant benefits of traditional versus market-based regulation, the devil is in the details. All depends upon how aggressive EPA and the states will be in implementing the CAA and in the stringency of a currently hypothetical cap-and-trade program. The co-pollutant advantages of the CAA are worth considering in evaluating what the statute can accomplish, but sweeping generalizations about the CAA’s superiority to market-based mechanisms are premature without the details of a market-based alternative. A weak cap-and-trade program would sacrifice the important co-pollutant benefits offered by a regulatory program. If, however, a market-based mechanism could prompt substantially greater emission reductions and alternative energy incentives, it could offer co-pollutant reduction benefits that might compensate for the loss of the co-pollutant benefits associated with traditional regulatory programs.

The Article ends by exploring, in more detail, EPA’s implementation of the CAA’s controversial provisions for existing sources, section 111(d) – a provision that EPA is currently hesitating to implement. While EPA’s new source controls are key to controlling future investment decisions, controls on existing sources are key to reducing current GHG emissions. Given the distinctive nature of GHGs, EPA has more authority over existing sources’ GHG emissions than it usually has over their emissions of traditional pollutants. Through GHG regulation of existing sources, EPA could indirectly impact associated co-pollutants that have escaped federal control to date. More significantly, the existing source standard arguably gives EPA more flexibility than it has for new sources, flexibility that could potentially allow some form of a market-based approach. As noted above, the choice between direct and market-based regulation would have co-pollutant consequences, consequences that are relevant to the climate policy choice. Also as noted above, the relative value of each approach would depend upon how aggressively each was implemented.

Although the CAA is an imperfect and likely insufficient tool for addressing GHG emissions, it is affecting new source investments and has the potential to impact existing source emissions. Those initiatives are likely to have ancillary co-pollutant benefits that should be considered in debates over the CAA’s value as a climate policy tool and in the emergence of new climate polices.

The article, Climate Change, the Clean Air Act, and Industrial Pollution, 30 UCLA Journal of Environmental Law & Policy 51 (2012), is available on the Social Science Research Network.