Bloomberg | October, 16, 2008
By Jim Efstathiou Jr.

Oct. 16 (Bloomberg) -- Barack Obama will classify carbon dioxide as a dangerous pollutant that can be regulated should he win the presidential election on Nov. 4, opening the way for new rules on greenhouse gas emissions.

The Democratic senator from Illinois will tell the Environmental Protection Agency that it may use the 1990 Clean Air Act to set emissions limits on power plants and manufacturers, his energy adviser, Jason Grumet, said in an interview. President George W. Bush declined to curb CO2 emissions under the law even after the Supreme Court ruled in 2007 that the government may do so.

If elected, Obama would be the first president to group emissions blamed for global warming into a category of pollutants that includes lead and carbon monoxide. Obama's rival in the presidential race, Republican Senator John McCain of Arizona, has not said how he would treat CO2 under the act.

Obama ``would initiate those rulemakings,'' Grumet said in an Oct. 6 interview in Boston. ``He's not going to insert political judgments to interrupt the recommendations of the scientific efforts.''

Placing heat-trapping pollutants in the same category as ozone may lead to caps on power-plant emissions and force utilities to use the most expensive systems to curb pollution. The move may halt construction plans on as many as half of the 130 proposed new U.S. coal plants.

The president may take action on new rules immediately upon taking office, said David Bookbinder, chief climate counsel for the Sierra Club. Environment groups including the Sierra Club and Natural Resources Defense Council will issue a regulatory agenda for the next president that calls for limits on CO2 from industry.

`Hit Ground Running'

``This is what they should do to hit the ground running,'' Bookbinder said in an Oct. 10 telephone interview.

Separately, Congress is debating legislation to create an emissions market to address global warming, a solution endorsed by both candidates and utilities such as American Electric Power Co., the biggest U.S. producer of electricity from coal. Congress failed to pass a global-warming bill in June and how long it may take lawmakers to agree on a plan isn't known.

``We need federal legislation to deal with greenhouse-gas emissions,'' said Vicki Arroyo, general counsel for the Pew Center on Global Climate Change in Arlington, Virginia. ``In the meantime, there is this vacuum. People are eager to get started on this.''

An Obama victory would help clear the deadlock in talks on an international agreement to slow global warming, Rajendra Pachauri, head of a United Nation panel of climate-change scientists, said today in Berlin. Negotiators from almost 200 countries will meet in December in Poznan, Poland, to discuss ways to limit CO2.

`Back in the Game'

``The U.S. has to move quickly domestically so we can get back in the game internationally,'' Grumet said. ``We cannot have a meaningful impact in the international discussion until we develop a meaningful domestic consensus. So he'll move quickly.''

Burning coal to generate electricity produces more than a third of energy-related carbon dioxide emissions and half the U.S. power supply, according to the Energy Department. Every hour, fossil-fuel combustion generates 3.5 million tons of emissions worldwide, helping create a warming effect that ``already threatens our climate,'' the Paris-based International Energy Agency said.

The EPA under Bush fought the notion that the Clean Air Act applies to CO2 all the way to the Supreme Court. The law has been used successfully to regulate six pollutants, including sulfur dioxide and ozone. Regulation under the act ``could result in an unprecedented expansion of EPA authority,'' EPA Administrator Stephen Johnson said in July. The law ``is the wrong tool for the job.''

Proponents of regulation are hoping for better results under a new president. Obama adviser Grumet, executive director of the National Commission on Energy Policy, said if Congress hasn't acted in 18 months, about the time it would take to draft rules, the president should.

EPA Authority

``The EPA is obligated to move forward in the absence of Congressional action,'' Grumet said. ``If there's no action by Congress in those 18 months, I think any responsible president would want to have the regulatory approach.''

States where coal-fired plants may be affected include Nevada, Utah, New Mexico, Texas, Montana, Minnesota, Illinois, Michigan, Ohio, Pennsylvania, Virginia, Georgia and Florida.

The alternative, a national cap-and-trade program created by Congress, offers industry more options, said Bruce Braine, a vice president at Columbus, Ohio-based American Electric. The world's largest cap-and-trade plan for greenhouse gases opened in Europe in 2005.

Under a cap-and-trade program, polluters may keep less- efficient plants running if they offset those emissions with investments in projects that lower pollution, such as wind-energy turbines or systems that destroy methane gas from landfills.

McCain `Not a Fan'

``Those options may still allow me to build new efficient power plants that might not meet a higher standard,'' Braine said in an Oct. 9 interview. ``That might be a more cost-effective way to approach it.''

McCain hasn't said how he would approach CO2 regulation under the Clean Air Act. McCain adviser and former Central Intelligence Agency director James Woolsey said Oct. 6 that new rules may conflict with Congressional efforts. Policy adviser Rebecca Jensen Tallent said in August that McCain prefers a bill debated by Congress rather than regulations ``established through one agency where one secretary is getting to make a lot of decisions.''

``He is not as big of a fan of standards-based approaches,'' Arroyo said. ``The Supreme Court thinks it's clear that there is greenhouse-gas authority under the Clean Air Act. To take that off the table probably wouldn't be very wise.''

More Efficient Technologies

How new regulations would affect the proposed U.S. coal plants depends on how they are written, said Bill Fang, climate issue director for the Edison Electric Institute, a Washington-based lobbying group for utilities. About half of the proposed plants plan to use technologies that are 20 percent more efficient than conventional coal burners.

``Several states have denied the applicability of the Clean Air Act to coal permits,'' Fang said in an Oct. 10 interview.

In June, a court in Georgia stopped construction of the 1,200- megawatt Longleaf power plant, a $2 billion project, because developer Dynegy Inc. failed to consider cleaner technology.

An appeals board within the EPA is considering a challenge from the Sierra Club to Deseret Power Electric Cooperative's air permit for its 110-megawatt Bonanza coal plant in Utah on grounds that it failed to require controls on CO2. One megawatt is enough to power about 800 typical U.S. homes.

``Industry has woken up to the fact that a new progressive administration could move quickly to make the United States a leader rather than a laggard,'' said Bruce Nilles, director of the group's national coal campaign.