Proposed climate regulations might not be too bad
JUNE 27, 2013
'The word "flexibility" is a very good thing from the perspective of economic efficiency: The Supreme Court has already ruled that it can be used to regulate greenhouse gases, which include carbon dioxide emissions, but figuring out how to do that within the technical requirements of the law will be a major challenge. The administration’s thinking appears to have been influenced by a proposal from an environmental group, the Natural Resources Defense Council. The group urged a creative approach, calling on the federal government to set a target level of greenhouse gases for each state, taking account of historical patterns. A state generating a lot of power from coal, then exporting it to other states, would not be unduly penalized, for instance. As the environmental group envisions it, states would meet their goals by tweaking the overall electrical system, not just by cracking down on individual power plants. States might urge companies to produce more renewable power, for instance, but they could also retrofit homes and businesses to reduce energy waste, or encourage the use of clean-burning natural gas instead of coal. States would presumably be allowed to use market signals, like a price on greenhouse emissions, to achieve their goals, as California and nine Northeastern states are already doing. It is unclear how much all this might cost at the retail level. The Natural Resources Defense Council argues that even if prices go up, electric bills for many consumers could actually decline as their homes were retrofitted to use less energy. Flexibility reduces costs by allowing emissions targets to be met in the cheapest way, and not with federally prescribed technology or uniform standards. And it sounds like the regional cap-and-trade plans might already be in compliance. The only problem is that pushing the policy design down to the individual states is risky. Won't some state legislatures try to reject the whole thing like they did with the er, um, health care thing?'