The U.S. Senate Environment and Public Works Committee held a timely hearing on the effect of the Court of Appeals decision vacating CAIR. There was testimony from US EPA, State, Utilities and one Environmental Group.
The Senators and all who testified agreed on certain items:
- Substantial health benefits will be lost without action to replace CAIR (17,000 fewer premature deaths avoided each year)
- Tremendous uncertainty exists- the market for trading allowances collapsed following the decision (NOx trading stopped, SO2 allowance prices lost 70% of their value in a day)
- States air quality compliance is in disarray- All who relied on CAIR must redo their clean air plans (SIPs) and will find it extremely difficult to make up the reductions attributable to CAIR
- Utilities risk losing billions in investments in new pollution controls and purchases of allowances (one utility declared a $100 million dollar loss due to collapse of the allowance market)
With so much agreement, one would assume that quick legislative action is likely to address the problem. Not so fast- Don’t forget that the CAIR rule came into existence because Congress could not agree on Clear Skies (a cap and trade legislative proposal). Those same rifts emerged during the Senate hearing.
- How many P’s? (which pollutants should a program cover- NOx, SO2, CO2 or Mercury)
- How many States should be in? (28 versus a national program)
- How steep and fast should reductions be? (there is disagreement even for the two pollutants everyone agrees should be covered- NOx and SO2)
This really is going to boil down to a game of chicken. On the one side (Democrats, downwind-Eastern states and environmental groups) on the other (Republicans, upwind-Midwest states and the utilities).
Do those advocating for an aggressive four pollutant bill really want to risk achieving no short term benefits in hopes of more aggressive legislation in the future? Are they willing to withstand the mess that will ensue in their States without at least a stop gap measure? Is this really the vehicle to adopt climate change legislation?
On the other side….do Utilities want to face this much uncertainty, especially heading into an election cycle? Are the Midwest states comfortable that CAIR reductions will be sufficient to meet tougher federal air quality standards? Are they willing to impose even more costly controls on businesses within their State if cap and trade is taken off the table?
It appears this may be the perfect storm that may actually result in something getting done. Lets hope so.