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Taking page from health care act, Obama climate plan relies on states

Coral DavenportThe New York Times,Peter BakerThe New York Times

WASHINGTON -- President Barack Obama's new plan to fight climate change depends heavily on states' devising individual approaches to meeting goals set in the nation's capital, a strategy similar to the one he used to expand health care, often with rocky results.

Rather than imposing a uniform standard for reducing power plant carbon emissions, the regulation unveiled on Monday offers the states flexibility to pick from a menu of policy options. But as with health care, the policy could lead to a patchwork of rules that frustrate businesses and invite resistance from states that oppose the policy.

Monday's announcement of the proposed regulation -- which is intended to cut carbon pollution from power plants by 30 percent from 2005 levels by 2030 -- represented Obama's boldest step in using his executive authority to halt the warming of the planet, an issue he vowed to address during his first presidential campaign six years ago.

Largely welcomed by environmentalists, the plan generated a torrent of criticism from industry, coal-state lawmakers from both parties and Republican leaders who called it a job-killer that would raise utility costs.

The proposal is chiefly aimed at cutting pollution from coal-fired power plants, the nation's largest source of greenhouse gas emissions. It assigns each state a separate pollution reduction target, but gives each wide leeway in tailoring its plan. The idea, Environmental Protection Agency officials said, is to allow states to design plans that best fit regional economies and mixes of energy sources.

While Rust Belt states rely heavily on coal, farmers in Iowa and Minnesota generate up to 20 percent of their power from renewable sources, and Southeastern states like North Carolina depend on nuclear power. California and nine Northeastern states have enacted cap-and-trade programs, putting a cap on carbon pollution and creating markets to buy and sell pollution permits. Those programs have substantially lowered the states' carbon footprints.

In order to comply with the new national rule, states can, among other actions, shut down coal plants, install wind and solar power and energy-efficiency technology, or join the California or Northeastern cap-and-trade programs. EPA officials said states could even choose to comply by enacting a state-level tax on carbon pollution.

"I've never seen anything like this, where states get this much flexibility. It's astounding," said Dallas Burtraw, an expert on electricity markets with Resources for the Future, a Washington research group. "The EPA is signaling maximal deference to the states."

In introducing the regulation, Obama called it "a sensible, state-based plan" and dismissed the criticism.

"I promise you, you will hear from critics who say the same thing they always say - that these guidelines will kill jobs or crush the economy," he told environmental activists in a conference call organized by the American Lung Association. "What we've seen every time is these claims are debunked when you actually give workers and businesses the tools and incentives to innovate."

The regulation, which must go through a public comment period before taking effect, will certainly be challenged in the courts and in Congress, but Obama has past judicial rulings to cite in his defense and enough votes on Capitol Hill that would allow him to veto any opposing legislation and make it stick.

If the regulation survives the lobbyists and lawyers intact, the battles will move to state capitals as businesses, environmentalists and lawmakers joust in 50 separate arenas over the scope of the resulting rules.

Just as some states balked at devising ways of carrying out Obama's health care program, forcing the federal government to step in in many cases, some governors are signaling that they will resist the new restrictions on power plants. Gov. Mike Pence of Indiana, a conservative Republican who has been mentioned as a possible presidential candidate in 2016, said he would oppose the rule while finding "common-sense solutions" that protect workers and consumers. Indiana gets about 80 percent of its electricity from coal.

"These proposed regulations will be devastating for Hoosier workers and families," Pence said. "They will cost us in higher electricity rates, in lost jobs, and in lost business growth due to a lack of affordable, reliable electricity. Indiana will oppose these regulations using every means available."

A number of states are expected to sue the EPA over the rule. Many Republican governors, in particular, are ideologically opposed to the prospect of enacting cap-and-trade programs. And some may follow the path of Gov. Rick Perry of Texas, who in the past has signaled his state's opposition to EPA pollution regulations by simply refusing to submit compliance plans.

That could set up a standoff in which the EPA would step in and force states to comply with a plan devised by federal rather than state officials.

White House officials recognized the possible challenges in a state-by-state plan, but said they had little choice given the language of the law on which the regulation is based, and they expressed optimism that industry would want an orderly process. "While I am sure that there will be holdouts amongst the states, most utilities will also want to work with their regulators to ensure successful implementation," said John D. Podesta, Obama's counselor.

In assigning the cuts, EPA officials said, they took into account state economies and current emission levels and what each could practically achieve without causing economic harm. The rule calls on a coal-dependent state like Kentucky to cut its plant emissions rate by 19 percent and one like West Virginia by 21 percent, according to an analysis by the Georgetown University Climate Center.

By comparison, the plan calls on Washington state, which has just one coal-fired power plant, and relies on hydroelectric power, to cut its emissions rate 84 percent.

"Otherwise, what would have happened to states like West Virginia and Kentucky would be unacceptable, economically," said Robert Stavins, director of Harvard University's Environmental Economics Program.

Gov. Jay Inslee of Washington, a liberal who, like Obama, hopes to make climate policy a signature of his tenure, cheered the rule. He said it would "encourage and empower ongoing state and regional climate action, such as our collaborative efforts to grow the Pacific Coast's clean energy economy."

As of Monday night, many state regulators said they had not determined how to respond to the 645-page plan. Andrea Morrow, a spokeswoman for the Texas Commission on Environmental Quality, said that state regulators were closely reviewing it. But, she said, her agency had "concerns about the EPA's use of the Clean Air Act in lieu of congressional action to regulate CO 2 emissions in this manner from either existing or new electric generating units."


By CORAL DAVENPORT and PETER BAKER
The New York times