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President Barack Obama greets Premier Wen Jiabao and members of the Chinese delegation.

The Global Reach of EPA Rulings on Greenhouse Gas Emissions

When president Barack Obama arrived in Copenhagen for the Summit of chiefs of government, Congress was still discussing a comprehensive climate and energy bill. Expectations were set too high for COP15. Most delegates and environmentalists hoped that Obama would lead the way towards a global climate agreement. EPA administrator Lisa Jackson explained on a side event her agency would soon start regulating carbon emissions.

The Copenhagen Accord fell short of expectations, but Obama’s last minute deal with the leaders of the emerging powers was pivotal to its approval. The Cancun Agreements would not be possible without the groundwork done in Copenhagen. One of its major achievements was to make core elements of the Copenhagen Accord official. The most important were mitigation pledges and provisions for transparency.

On the eve of COP16, there was generalized concern that parties from the developing world could refuse to close a deal because the U.S. failed to approve a legal framework to enforce federal climate policy. U.S. top climate negotiator Todd Stern stated repeatedly that a climate law was Obama’s final goal, but there were other means to enforce domestic mitigation actions. EPA’s forthcoming rules on carbon emissions were mentioned as part of a broader climate change policy.

The fact that EPA has started to gradually regulate carbon emissions could be an important asset in global climate negotiations. It creates a new context that may strengthen arguments for additional steps towards a binding agreement at COP17 in Durban, South Africa, next December. Regulatory action would increase confidence of parties skeptical about U.S. pledges to reduce carbon emissions. The Greenhouse Gas Reporting Program could give more substance and fairness to U.S. insistence on transparency at global climate negotiations. Transparency was the most divisive issue during the Copenhagen talks, causing a sharp confrontation between the United States and China. The issue was finally settled in the last hours of the Summit on a face to face negotiation between Obama and Wen Jiabao. Former Brazilian president Lula and India prime-minister Manmohan Singh actively helped them to reach an understanding. Transparency was also one of the hardest issues for negotiators to tackle on the path toward the Cancun Agreements. The baseline was the solution reached in Copenhagen.

EPA’s rulings could have a strong demonstration effect on the role of regulation on climate change policies. EPA rules framed by the Clean Air Act are probably not a suitable substitute for a climate change law. But they may help policy-makers to see that cap and trade is not the only way to tackle carbon emissions. Setting standards and letting the economy find the best way to meet them may be a good alternative, especially when coupled with targeted incentives.

There are many obstacles for EPA rulings to take hold. Rules enforced under the Clean Air Act are to be implemented by the states individually. Some states can fail to meet the standards, and face penalties. But the ruling could be the push several states need to shape emissions reduction policies that best fit the particular structure of their economies.

EPA actions on climate change without a specific legal framing carry many political risks. But they may prove to be manageable. Republican opposition to EPA decisions in the new Congress is not necessarily an unsurmountable threat. The majority of Congress would hardly choose a too radical stance against EPA. On a constituency where the bulk of voters is situated between the center-right and the center-left, Congress majorities tend to lean towards the middle. Unless there is a public clamor against EPA actions or overwhelming business opposition to their implementation, the likely attitude would be one of oversight rather than intervention. There are business voices against Congress curtailing EPA’s mandate because this would further raise uncertainty. There are strong corporate interests vested in the quest for a low-carbon economy. If EPA pursues a measured and moderate course, as Lisa Jackson has promised, it is also likely to pass judicial review.

EPA rules will nevertheless harm many interests. Finding the balance between loose ruling, and rules carefully crafted to meet the goals while ensuring business support is no easy task. That’s EPA major challenge. If it solves this conundrum it might open the way for a future climate bill.

Forestalling EPA could negatively impact global climate change politics. It would motivate emerging powers such as China to delay any further global commitment. China is moving fast on renewable energy use. Its emissions will continue to grow, but at a much slower pace due to the strong policies the government is carrying out. India and Brazil would also tend to synchronize their plans to the pace and breadth of the actions taken by the U.S. The expected Legislative battle and the legal road ahead of EPA regulation are due to attract global attention. The future of global climate change policy depends to a significant extent on what happens in the U.S.