EPA Poised to Regulate Power Gen, Other GHG Emissions in Wake of Failed Congressional Attempt

The Environmental Protection Agency (EPA) will begin regulating greenhouse gas (GHG) emissions solely for the first time on July 1, 2011 under authority of the Clean Air Act.

Regulation will officially begin on January 2nd, if other pollutants currently subject to the New Source Review Prevention of Significant Deterioration (PSD) and title V Operating Permit programs trigger a review.  EPA will require large stationary sources to install best available control technology (BACT) on new or modified power plants, cement factories, and large industrial sources that emit over 100,000 tons per year of CO2 equivalent or that increase CO2 emissions by 75,000 tons per year for existing plants.  The appropriate technology to be used will be determined by the local permitting authority on a case-by-case basis.

Command-and-control regulation is the approach least favored by both Congress and industry and tends to result in more expensive outcomes.  A cap and trade program, which died in Congress earlier this year due to a myriad of factors including upcoming elections and a lagging economy with 9.5% unemployment, meanwhile, would allow industry to choose the most efficient way to reduce GHG emissions and is the method the electricity generation industry prefers over EPA regulations. 

Therefore, expect Congress to make a more concerted effort to take up climate change legislation again next year, not because of any deep desire to do so, but in order to wrest control from EPA.  And also expect such legislation to initially focus on the utility sector and then expand to other sectors over a period of several years.