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The EPA

U.S. government may be getting ready to regulate carbon dioxide emissions as pollutants, experts say

Friday, December 01, 2006 by: Ben Kage
Tags: the EPA, CO2 emissions, global warming


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(NewsTarget) A case before the Supreme Court over whether the Environmental Protection Agency has the authority to refuse to regulate carbon dioxide emissions may actually be the first sign of impeding government regulation of greenhouse gasses, experts say.

The case -- brought by Massachusetts, New York, California and other states -- charged the EPA with regulating CO2 emissions to protect Massachusetts' coastline and other environmental concerns, but the EPA says it neither has the authority to impose such regulations, nor would it do so. The reasoning, the agency said, is that such unilateral U.S. regulations would weaken the nation's position in future international negotiations over emissions reductions. A ruling on the case is expected some time next summer.

Still, some experts think that increasing environmental concerns mean the implementation of CO2-reduction guidelines is only a matter of time.

"The debate has shifted from whether or not there will be federal regulations, to when it will come," said Fred Wellington, a senior financial analyst at the think tank World Resources Institute. "The smart money understands that climate policy is coming."

The form of the guidelines remains undetermined, as does the level of cooperation between federal, state and local efforts to reduce greenhouse gas emissions, Wellington said.

Systems under consideration include a carbon tax, which would impose a fee on utilities, manufacturers and other large organizations, or a "cap and trade" system, which would place a specific limit on the amount of CO2 entities would be allowed to legally emit. The cap and trade system would allow pollutant sources to purchase extra credits -- or "offsets" -- on carbon-trading markets if they emit more than their allocated cap. It was introduced in Europe last year as part of the Kyoto Protocol on Climate Change, and although the United States is not part of the Kyoto Accord, the system is already used to regulate other gasses there.

Europe's cap-and-trade program can serve as a model for a U.S. system, said Wellington. He noted that the initial allocations of carbon emission credits are very important, because a inadequate emission limit can create a surplus of allowances, which can subsequently reduce the value of the credits on trading markets.

David Hullah, an associate with energy-related business investor RockPort Capital Partners, said that a carbon emissions tax or a cap-and-trade system could work with other clean-energy regulations.

"I expect to see (carbon-related regulations), and I think they'll have tremendous influence," he said. "I strongly believe they can be a direct lever to use less energy."

Concern over greenhouse gas emissions is growing across the United States, and some states and cities are calling for a federal price tag to be placed on carbon emissions, or voluntarily imposing their own restrictions. The mid-Atlantic states currently endorse the cap-and-trade system known as the Regional Greenhouse Gas Initiative (RGGI), and California passed the California Climate Act of 2006 last month, endowing the California Clean Air Commission with the power to cap greenhouse gas emissions from power plants and other "stationary sources." California has also mandated that cars and trucks reduce their greenhouse gas emissions. The act could be extended depending on the aforementioned Supreme Court ruling.

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