A White House statement on Friday announcing China’s plan to launch a landmark cap-and-trade program was coupled with a strong message to U.S. states that they too could get a federal cap-and-trade program imposed on them if they don’t comply with President Obama’s climate plan.
The cap-and-trade program that Chinese Xi Jinping announced from the White House with President Obama would complement the U.S. Environmental Protection Agency’s Clean Power Plan, which is the centerpiece of the president’s climate agenda.
Under the Clean Power Plan, states are on the hook to develop federally enforceable compliance plans detailing how they will reduce a third of their emissions by 2030. States have the option of complying in any number of ways under the plan, including participation in a cap-and-trade program. If a state refuses to comply, however, the EPA would step in to impose a federal plan without much input from the state, and leaving it open to having a cap-and-trade program forced upon it.
A cap-and-trade program places a firm limit, or cap, on emissions and then sells credits to emitters to help them comply. Democrats failed to pass cap-and-trade legislation in President Obama’s first term, and the Clean Power Plan is seen as the alternative.
In issuing the plan Aug. 3, EPA also proposed a separate “federal plan” that it would impose on a state if it refused to comply. The federal plan includes the option of placing a cap-and-trade system in place if a state doesn’t submit its own way of complying by next fall.
Friday’s joint statement with China says the U.S. is “committed to finalize, in 2016, a federal plan to implement carbon emission standards … in states that choose not to design their own implementation plans,” according to a White House fact sheet.
The federal plan helps to demonstrate with China that the U.S. is serious about reducing its emissions in the run-up to the signing of a global climate change deal at the end of the year in Paris. The Clean Power Plan is the linchpin in the administration’s plan to secure that deal.
Republicans are fighting the Clean Power Plan, and Senate Majority Leader Mitch McConnell of Kentucky is actively lobbying state governors not to comply.
But there are signs that the White House’s pressure play is undermining McConnell’s pitch. Michigan Republican Gov. Rick Snyder said recently that the fear of having a federal plan imposed upon him has forced him to make the decision to comply with the Clean Power Plan.
“The best way to protect Michigan is to develop a state plan that reflects Michigan’s priorities of adaptability, affordability, reliability and protection of the environment,” Snyder said earlier this month. “We need to seize the opportunity to make Michigan’s energy decisions in Lansing, not leave them in the hands of bureaucrats in Washington, D.C.”
A number of conservative groups are urging him to reverse his decision. But there is no indication that he will.
Bill Becker, executive director of the National Association of Clean Air Agencies, told the Washington Examiner earlier this week that most states, even those with attorneys general suing the agency over the rule, are complying with the president’s plan because of the fear they will have a federal plan imposed upon them.
“Almost every state is moving forward to comply, irrespective of whether the governor or [attorney general] is suing,” Becker said in an email. “The alternative to a state plan is a less flexible, more expensive federal plan.” Becker’s group represent’s the state regulators that are charged with managing compliance with EPA air regulations.
EPA says the proposed federal plan, once imposed, could be replaced at any time by a state plan. But transitioning from a federal to a state plan could be tricky, according to EPA’s proposal. “If a state subject to the federal plan transitions to a state plan, any affected [power plant] impacted by the change remains responsible for meeting any outstanding obligations under the federal plan,” according to the proposal.
Advisers to the Chinese government have told the Examiner in recent weeks that China has been observing the cap-and-trade programs already in place in California and several Northeast states to inform the one it is ramping up in 2017. The proposed EPA federal plan offers these same examples of cap-and-trade programs.
