Climate change, the Clean Air Act, and industrial pollution.

• Author: Kaswan, Alice

1. THE ROLE OF CO-POLLUTANT CONSIDERATIONS IN CLIMATE POLICY A. The Value of a Comprehensive Approach B. The Benefits of Integrating Co-pollutant Considerations into Climate Policy 1. The Environmental Benefits of Integrating Co-pollutant Considerations a. Existing Air Pollution b. Do Climate Policies Reduce Co-pollutants? c. How Significant are Climate Policies' Co-pollutant Benefits in Light of Existing and Emerging Direct Co-pollutant Controls? 2. The Administrative and Technical Benefits of Taking a Multi-pollutant Approach C. Addressing the Potential Economic and Political Implications of Incorporating Co-pollutant Considerations D. How Co-pollutant Implications Could Influence Climate Policies II. REGULATION OF STATIONARY SOURCES UNDER THE CAA A. The Prevention of Significant Deterioration Program B. Section 111 Standards III. THE CO-POLLUTANT IMPLICATIONS OF REGULATORY VERSUS MARKET STRATEGIES A. Cap-and-Trade B. Integrating Co-pollutant and GHG Control Strategies C. Co-pollutant Distribution D. Impact on Stringency and Associated Co-pollutant Benefits E. Certainty of Reductions F. Offsets and In-sector Reductions G. Incentives for Technology Transformation H. Participatory Benefits I. Conclusion IV. PERFORMANCE STANDARDS FOR EXISTING SOURCES: EXTENDING THE CAA's REACH A. Extending the CAA to Previously Unregulated Facilities B. The Nature of Section 111(d) Standards: Modest or Transformative? V. CONCLUSION This article, prepared for UCLA Law's spring 2011 symposium entitled "Perspectives on Climate Change, Pollution, and the Clean Air Act," begins by addressing an interesting but narrow question: what are the co-pollutant implications of applying the Clean Air Act (CAA) to stationary source greenhouse gas (GHG) emissions? That inquiry has led inexorably to deeper issues, including the appropriate role of co-pollutant consequences in developing climate policies, the co-pollutant benefits and drawbacks of traditional versus market-based regulation, and, more specifically, the value of using the CAA to reduce GHG emissions.

   The CAA's GHG provisions for industrial sources are controversial. Environmental Protection Agency (EPA) Administrator Lisa Jackson, environmental organizations, and industry would prefer new climate legislation to implementing the CAA. (1) Further, numerous congressional bills and appropriations riders have sought--persistently but unsuccessfully--to strip EPA of its authority to regulate GHGs under the CAA. (2) An analysis of the CAA's co-pollutant implications can help inform the larger debate about the CAA as a climate policy tool.

   Given the strong correlation between GHGs and traditional pollutants, there is little question that regulating GHGs from stationary sources will have important co-pollutant consequences. Fossil fuel combustion to produce energy contributed eighty-seven percent of GHG emissions in the United States in 2009, (3) and stationary sources contributed over half of those emissions. (4) Climate policies addressing stationary sources will therefore significantly impact fossil fuel combustion. In most instances, as GHG emissions decrease, associated co-pollutants, like sulfur dioxide, nitrogen oxides, particulates, and other hazardous components, are also likely to decrease. (5) Given the persistence of ongoing air pollution and its pervasive public health and environmental consequences, this "co-pollutant benefit'.' is significant.

   Yet, for the most part, co-pollutant benefits have played little role in climate policy debates. A recent study on the role of co-pollutant benefits in climate policy analyses observed that decision-makers "do not usually consider the full range of effects of actions to address climate change." (6) The omission of more thorough discussions of climate policy benefits, including the reduction of traditional air pollution, "diminishes the role of benefits" in policy selection. (7) The study concludes that "[a]s a result, well- established [air quality] benefits are not a central part of the climate policy discourse." (8)

   Part I of this article begins by exploring the threshold issue of why co-pollutant consequences should be an important parameter for evaluating and designing climate policies. It articulates the value of comprehensive analyses in general, and then explores the environmental, administrative, and technical advantages of taking a multi-pollutant approach to regulation. Part I also considers the economic and political implications of integrating co-pollutant concerns. The part ends by exploring how co-pollutant concerns might impact climate policy design.

   Part II reviews the CAA's stationary source provisions and how EPA is applying them to GHGs. It provides an overview of the GHG and co-pollutant reduction potential offered by the CAA's traditional regulatory approach.

   The debate about the CAA's application to GHGs does not occur in a vacuum. Much of the controversy relates to a deeper issue: the value of the CAA's direct regulatory approach in comparison with a market-based approach like cap-and-trade. Part III explores how accounting for co-pollutant impacts could influence that debate. Assuming that EPA implements the CAA's stationary source provisions through direct regulation instead of market mechanisms, (9) Part III compares the co-pollutant strengths and weaknesses of these two approaches.

   Part IV turns back to EPA's implementation of the CAA, focusing on existing source standards. Applying the CAA to GHGs will give the agency an unprecedented role in controlling existing stationary source emissions, a role that will have important implications for both GHGs and co-pollutants. Due to quirks in the CAA, section 111(d) gives EPA a stronger role in controlling existing sources' GHG emissions than it has in controlling their traditional pollutants. CAA regulation of GHGs will therefore reach some existing sources that have thus far escaped direct federal control requirements. In addition, the CAA language for existing sources potentially offers EPA flexibility to promote significant changes in the power sector, the largest single source of GHG emissions. If those changes were to reduce reliance on coal-fired power and encourage natural gas, renewable energy, and efficiency, they would have substantial co-pollutant benefits.

   Although new climate legislation would accomplish these beneficial results more directly, new federal initiatives appear unlikely in the near term. In the meantime, the CAA can provide GHG and co-pollutant benefits. The scale of those benefits will depend upon how aggressively EPA interprets the CAA. If interpreted modestly, without requiring transformative changes, it will provide only a start, and will not offer a sufficient solution to the profound challenges posed by continued reliance on fossil fuels. If the EPA imposes more transformative requirements that further the transition away from fossil fuels and, most particularly, away from coal-fired power, then the CAA could provide more substantial GHG and co-pollutant benefits.

1. THE ROLE OF CO-POLLUTANT CONSIDERATIONS IN CLIMATE POLICY

   Climate policies to avert the risk of catastrophic climate change will require substantial changes to existing energy and industrial infrastructure and will have far-reaching impacts on the environment and the economy. Despite the significant societal implications of these policies, the political discourse has been limited. Rather than considering the multiple implications of alternative climate policies, the primary non-climate factor policymakers have addressed is short-term "cost minimization." (10) Policymakers have paid little attention to the relative co-pollutant benefits of alternative climate policies and the role of those benefits in choosing among policy options. (11) Focusing primarily on industrial compliance costs, without considering co-pollutant or other co-benefits, could significantly undervalue the benefits of alternative policies. (12)

   Integrating co-pollutant considerations into climate policy analysis and policy development has been controversial, with some scholars arguing that co-pollutant concerns should not inform climate policy. (13) This part argues that such integration would improve policy outcomes. It begins by articulating an overarching justification for and explanation of a comprehensive approach. It then addresses in detail how considering co-pollutants would improve climate policy outcomes, and discusses some of the criticisms against incorporating co-pollutant analysis. Finally, it articulates the ways in which integrating co-pollutant concerns could affect the practical design of climate policies.

   1. The Value of a Comprehensive Approach

      Before evaluating the specific benefits of considering co-pollutants in climate policy design, this article addresses a broader theoretical question: in developing climate policies, should decisionmakers consider only GHGs, or take a more comprehensive approach that considers co-pollutants, compliance costs, energy independence, and all of the many economic, environmental, political, and social implications of potential climate policies? A comprehensive approach could be useful in multiple contexts: (1) deciding whether to adopt climate policies; (2) determining how stringent climate policies should be; and (3) evaluating the strengths and weaknesses of alternative climate policies (like direct regulation, cap-and-trade, carbon taxes, energy subsidies, and the like).

      A comprehensive approach is appropriate because environmental policies do not operate in a vacuum; they have major social welfare effects. They are designed to control industries, businesses, and individuals and, as such, inevitably have a wide array of economic and environmental impacts that extend beyond the immediate environmental problem that prompted the policy. In many instances, determining the "best" policy solution requires not only an assessment of the...