DOE’s Legal Authority Regarding Transferable Credits

CEI Responds to EPICI--Again Republished in Winter 2003 Edition of Failsafe

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I. Background & Overview


On September 20, 2002, the Electric Power Industry Climate Initiative (EPICI) submitted a supplemental comment to the Department of Energy (DOE), disputing the Natural Resources Defense Council’s (NRDC) argument, presented in NRDC’s June 5, 2002 comment, that DOE has no authority, under section 1605(b) of the 1992 Energy Policy Act, to provide transferable credits or baseline protection for “early voluntary” greenhouse gas reductions. On November 18, 2002, the Competitive Enterprise Institute (CEI) submitted a supplemental comment rebutting EPICI’s criticism of NRDC’s legal opinions. On March 3, 2003, Eric Holdsworth submitted a supplemental comment on behalf of EPICI responding to CEI’s rebuttal.

The present paper examines EPICI’s March 3 response. It finds that EPICI does not engage the substance of any of the arguments CEI presented in its November 18 comment. EPICI once again:

Fails to identify any legal authority to award baseline protection and transferable credits applicable to a future carbon cap-and-trade program;

Implausibly and erroneously suggests that even though Congress rejected a version of section 1605 that directed DOE to establish a crediting system, it nonetheless gave DOE authority to implement such a system;

Misconstrues the purport of Senator Joe Lieberman’s (D-Conn.) floor statement following final passage of the Energy Policy Act;

Confuses the discretion DOE has in implementing a reporting system with authority to implement a baseline protection/crediting system;

Confuses the absence of statutory prohibition against penalty protection and early credits with a grant of legislative authority to initiate such policies; and 

• Tacitly concedes that DOE does not really have authority to protect companies’ emission baselines or award early credits.

If implemented, the administration’s transferable credit plan will create the institutional framework and lobbying incentives for energy rationing. A more inappropriate project for a Department of Energy is hard to imagine.

Advances in climate science counsel against alarmism, and even alarmists acknowledge that the Kyoto Protocol would be all economic pain for no environmental gain. If the United States embraces Kyoto-style energy rationing, it will not be because science and the public interest carried the day. More likely, it will be because transferable credits corrupted the politics of energy policy, and because industry groups who could have pulled the administration back from the brink chose instead to profit from its confusion.