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December 5, 2008

Cap'n Trade's Coup
A minor brou-ha-ha (or given the season, perhaps I should say brou-ho-ho) has broken out over the possibility that Obama might use the Clean Air Act to impose a carbon cap-and-trade system by executive fiat. Marc Ambinder of the Atlantic Monthly recently raised the possibility. Dave Roberts, an environmental activist as well as a writer for Grist, is inclined to support it and sources the idea to comments made in an October interview by Jason Grumet, one of Obama's lead energy and climate advisors. Meanwhile Mother Jones' Kevin Drum thinks doing it without congressional involvement is both inflammatory to conservatives and frankly undemocratic.

I don't claim to understand the CAA in any meaningful detail but I'm certainly not going to let a minor detail like that prevent me from weighing in. It's the blogosphere after all! Anyway, much of this argument rests on two legs. The first is the 2007 Supreme Court decision that declared that the EPA has the jurisdiction to regulate carbon emissions, which in theory protects the EPA from further litigation on the subject. This ruling has already been put into practice with the recent Environmental Appeals Board ruling that the EPA must come up with carbon emissions standards for new coal plants. The other leg involves the growing number of regional carbon markets coming on line in the Northeast, the West, and the Midwest. Knit them together, require all states to join one and poof! instant national system!

What's missing from the analysis above is the fact that these systems only cover power generation and possibly manufacturing, not all industries and certainly not transportation systems, much less the economy as whole. Just doing what Obama and some of his advisors have apparently hinted they might would be a far cry from a complete cap-and-trade system. Plus, if you look at what Grumet actually said, he's talking about starting the process with the EPA, not ending it.
"The EPA is obligated to move forward in the absence of Congressional action," Grumet told Bloomberg. "If there's no action by Congress in those 18 months, I think any responsible president would want to have the regulatory approach."
Kevin Drum already observed that the supposed shortcut of using the EPA would take a long time to enact - just implementing the aforementioned emissions standards for coal plants will take up to a year as the EPA determines what exactly the "Best Available Control Technologies" for carbon emissions are. A national carbon market is no sweater to be quickly knitted together and thrown on when the sweater is the size of the continental United States.

Still, watching how strategically Obama has operated so far - a prime example being his arm's length treatment of the auto bailout - I would think he probably will hang the CAA like a sword of Damocles over Congress. If he should charge the EPA with regulating carbon or creating a national cap-and-trade system for power plants and manufacturers using the statute, that would clearly prod Congress to action. Given the time required to develop standards, Congress - with Henry Waxman in the House and probably Barbara Boxer in the Senate taking the lead - would have ample opportunity to endorse or even broaden any proposed system before any deadline. Should they fail, the sword would fall and the EPA's version would go into effect. All in all, a pretty nifty play on Obama's part. But then, that's why he's the President of the United States and you're not.

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