Year in Review 2019: Climate Policy

 The Trump administration this year continued to dismantle key components of President Obama’s climate policy “legacy.” Supporting and guiding those efforts is a top priority of CEI’s energy and environment team. We oppose coercive schemes to rig the marketplace against fossil fuels for many reasons, which may be summarized as follows:
 

• The climate catastrophe narrative is concocted out of unreliable climate models, inflated emission scenarios, political hype, and unjustified pessimism about human adaptive capabilities.

• Abundant, affordable, reliable energy is a blessing, underpinning all the unprecedented improvements of the past 70 years in global life expectancy, health, per capita income, food security, and access to information.  

• The very real costs of climate “solutions” hugely exceed their hypothetical benefits.

• The more “ambitious” the climate policy, the more likely it is to damage economic growth, consumer welfare, and our institutions of self-government.

For further discussion and documentation, see CEI’s Citizen Guide to Climate Change. 

What follows is a 2019 progress report on the ongoing rollback of the Obama administration’s climate policies.

President Obama’s climate policy architecture may be visualized as an edifice composed of two foundation stones, three main pillars, and a capstone. The foundations are the Environmental Protection Agency’s 2009 endangerment finding, by which the agency obligated itself to regulate carbon dioxide and other greenhouse gases, and the 2009 California waiver, by which EPA deputized the California Air Resources Board to regulate motor vehicle fuel economy.

The pillars are EPA’s 2015 carbon dioxide emission standards for new and existing power plants (the so-called Carbon Pollution Standards and Clean Power Plan rules), and the 2012 EPA-National Highway Traffic Safety Administration (NHTSA) rulemaking to establish greenhouse gas and fuel economy standards for model year 2017-2025 motor vehicles.

The capstone is the Paris Climate Agreement, the treaty which aims to bind the United States in perpetuity, as a matter of national honor, to retain President Obama’s climate policy regulations and pursue an agenda of deep decarbonization.

As in 2017 and 2018, the Trump administration did not challenge EPA’s endangerment finding, and apparently has no plans to do so in 2020.

Clean Power Plan Repeal Rule

EPA’s so-called Clean Power Plan (CPP) was President Obama’s marquee domestic climate policy proposal and the regulatory centerpiece of his Paris climate treaty emission-reduction pledge. It was a plan to establish the framework for rapid decarbonization of the U.S. electric power sector by imposing carbon dioxide emission performance standards on existing (already built) coal- and gas-fired power plants.

Twenty-six states sued to overturn the CPP in 2015. In February 2016, the Supreme Court took the extraordinary step of staying the rule even though the D.C. Circuit Court of Appeals was still reviewing it. On October 16, 2017, EPA proposed to repeal the CPP. CEI filed comments in April 2018 on behalf of twenty free market groups in support of full repeal. On June 19, 2019, the EPA finalized its Affordable Clean Energy (ACE) rule, which simultaneously repealed and replaced the Clean Power Plan.

The Clean Power Plan was plainly unlawful. Section 111 of the Clean Air Act authorizes EPA to adopt emission performance standards for stationary sources of air pollutants. The standards are to reflect the “best system of emission reduction” that has been “adequately demonstrated,” taking “cost” into account. Emission reduction systems are designed for and apply to sources, so the legal meaning of “system” depends on that of “source.” The text defines stationary source as a “building, structure, facility, or installation” that emits air pollutants. As should thus go without saying, a source is an individual physical object located within the boundaries (“fence line”) of the owner’s property. 

The clear implication is that a best system of emission reduction consists of technologies or practices that can be applied to and at the source. The Obama administration refused to accept that limitation because there are no adequately demonstrated technologies or practices for achieving dramatic reductions in carbon dioxide emissions from existing power plants. 

To decarbonize the power sector despite the absence of affordable carbon dioxide emission control technologies, the Clean Power Plan construed “source” to mean power plant owners and operators in their role as economic actors in the electricity marketplace. More precisely, the Obama EPA reimagined “source” to mean the entire U.S. electric power sector conceived as a single “machine” of which individual coal and gas power plants are mere cogs.

Thus, the Obama EPA claimed, the best system of emission reduction for the electric power sector is to shift generation from coal to gas power plants, and from fossil fuel power plants to renewables. The Clean Power Plan set standards no individual coal power plant could meet, but gave owners and operators the “flexibility” to comply by purchasing power from lower- or zero-carbon facilities, investing in new renewable facilities, ceding market share to gas or renewable generation, or simply shutting down. The Clean Power Plan’s so-called performance standards were, in fact, non-performance mandates.

In contrast, the Trump administration’s Affordable Clean Energy rule determines that for coal power plants, the best system of emission reduction consists of affordable technologies and practices that make coal power plants more efficient in turning heat into electricity.

Although EPA did not accept CEI’s argument that the Clean Air Act prohibits the agency from imposing any Section 111(d) emission standards on existing fossil fuel power plants, ACE is a massive improvement over the CPP. It gets the EPA out of the business of playing electricity czar to the states and revokes the Obama administration’s unlawful imposition of unattainable emission standards on fossil fuel power plants. 

Most importantly, by reaffirming the Clean Air Act’s clear directive that Section 111 standards apply to individual facilities and not, as the Obama administration pretended, an entire economic sector, it establishes a regulatory roadblock to any future administration tempted to resume the war on coal. 

Revised New Source Power Plant Rule

On December 20, 2018, the EPA proposed to revise the Obama administration’s carbon dioxide emission standards for new coal power plants, issued under Section 111(b) of the Clean Air Act. New coal power plants cannot meet the Obama standards unless they install carbon capture and storage (CCS) technology. Since new natural gas combined cycle power plants are already cheaper than new coal plants, and CCS technology increases the cost of coal plants, the Obama standards effectively banned investment in new coal generation—a policy Congress never approved and would not pass if put to a vote. The EPA’s proposal will help restore the separation of powers and safeguard affordable energy for American consumers. 

In March 2019, CEI submitted comments supporting the EPA’s proposal to scrap the Obama administration’s defacto carbon capture mandate. CEI’s comments confirmed and supplemented EPA’s analysis that CCS is too costly and geographically limited to provide uniform (industry-wide) performance standards for new coal power plants.

For example, CEI noted that the only two utility-scale CCS power plants in existence—Petra Nova in Texas and Boundary Dam in Saskatchewan—not only were built with generous subsidies, but also depend financially on the sale of carbon dioxide for use in nearby enhanced oil recovery operations. Many potential sites of new coal power plants are not near oil fields. A defacto CCS mandate thus flunks the Clean Air Act case law requirement that Section 111 new source performance standards be “achievable” in all parts of the country.

Revised Motor Vehicle Standards Rule

On August 28, 2018, EPA and the National Highway Traffic Safety Administration (NHTSA) proposed the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule. As originally proposed, SAFE would freeze motor vehicle carbon dioxide and fuel economy standards at the model year 2020 levels and rescind California’s defacto power to regulate fuel economy. 

The agencies later decided to finalize the SAFE rule in two stages. On September 27, 2019, the agencies published Part One, dubbed the One Program Rule. It determines that California’s tailpipe carbon dioxide emission standards are void and of no force. 

As explained in my recent testimony, California’s motor vehicle carbon dioxide emission standards inherently regulate fuel economy and, as such, violate the Energy Policy and Conservation Act (EPCA), which prohibits states from adopting or enforcing laws or regulations “related to” fuel economy.

The agencies have yet to finalize Part Two, which will revise the Obama tailpipe carbon dioxide and mileage standards for model years 2020-2026. Unconfirmed reports suggest the standards will increase in stringency from year to year but less rapidly than required by the existing (Obama-era) rule. By relaxing fuel economy standards, SAFE should help limit the cost increases that price millions of middle-income households out of the market for newer, cleaner, safer, more fuel-efficient vehicles. 

The big takeaway, though, is that SAFE will improve the institutional framework shaping the selection of fuel economy standards. Having terminated the California Air Resources Board’s defacto power to regulate fuel economy, EPA and NHTSA should face less pressure to ignore, discount, or deny the adverse impacts of fuel economy standards on vehicle affordability and occupant safety.

Paris Climate Treaty

President Trump’s June 1, 2017 Rose Garden speech, announcing his intention to withdraw the United States from the Paris Climate Agreement, was a pivotal moment in the unraveling of President Obama’s regulatory assault on fossil fuels. Trump’s resolve to protect America’s emerging “energy dominance” from Obama’s agenda of “deep decarbonization” was from that point forward no longer in doubt. 

All manner of special pleaders—former Obama officials anxious to preserve their handiwork, foreign service officers keen to grow the climate diplomatic corps, carbon tax advocates licking their chops at the prospect of a global vehicle for their agenda, scads of progressive politicians and activists claiming “we’re still in,” and even fossil-fuel companies invoking Paris as a rationale for carbon capture and enhanced oil recovery subsidies—lobbied President Trump to reverse course. CEI and its allies cheered on the President for keeping his campaign promise and continued to spotlight the perils the Paris Agreement poses to U.S. energy dominance, American prosperity, and the power of voters to decide the direction of U.S. energy policy.

Under Article 28 of the Paris Agreement, a nation must wait until three years after November 4, 2016, the date on which the Agreement entered into force, to submit a notification of withdrawal. Then it must wait an additional year for withdrawal to take effect. On November 4, 2019, the State Department notified the U.N. that America will withdraw from the Paris Agreement. However, per Article 28, withdrawal will not take effect November 4, 2020—the day after Election Day.

Every Democratic presidential candidate has vowed to put America back into the Paris Agreement. If any of them wins, he or she will be able to rejoin the Agreement after taking office in 2021. 

President Trump should follow CEI’s advice and avail himself of the quick and durable remedy provided by the U.S. Constitution. The Paris Agreement is the most “ambitious” environmental treaty in history. It binds each party to make promises, every five years, in perpetuity, to decarbonize its economy. Although the promises are not binding under international law, for the United States, that is a distinction without a difference, because Americans expect their government to keep its commitments, and Paris parties honor their non-binding pledges by turning those into binding domestic laws and regulations. 

Thus, if ever there were an environmental treaty with potential costs and risks so large that the president should not ratify it without first obtaining the Senate’s advice and consent, the Paris Agreement is it. President Obama pretended Paris is not a treaty because he knew there was no chance the Senate would approve it. Rather, he ratified it as an “executive agreement”—as if it were no more consequential than the bilateral executive agreements the Bush administration negotiated with Congo, Niger, and Ethiopia to promote environmental education in primary and secondary schools.

In 2020, CEI will keep making the case that President Trump should submit the Paris Agreement as a treaty to the Senate, where it would almost certainly fail to win the requisite support of “two thirds of the Senators present.” Once the Agreement is rejected and exposed as lacking broad public support, few if any future presidents would attempt to rejoin it on their sole authority. Or, if a future executive did so, the people and their representatives would be more likely to recognize and oppose such overreach.