International Greenhouse Gas Offsets Under the Clean Air Act

• Date: 01 September 2010

9-2010 NEWS & ANALYSIS 40 ELR 10887

International

Greenhouse Gas

Offsets Under the

Clean Air Act

by Nathan Richardson

Nathan Richardson is a Visiting Scholar at

Resources for the Future, Washington, D.C.

Editors’ Summary

Osets, and in particular international osets, have

been advanced as an important tool in climate policy,

capable of signicantly reducing the costs of emissions

reductions. As attention turns to the existing CAA as a

potential vehicle for general reduction of GHG emis-

sions, an important question is whether regulation

under the statute is compatible with international o-

sets. Certain regulatory programs under the CAA are

likely candidates for GHG regulation, but many of

them are legally incompatible with international osets.

ose programs that might permit use of international

osets have other problems that make them unpopular

choices for GHG regulation. To the extent that CAA

regulation depends on state action, state law and consti-

tutional limitations appear to oer more barriers than

opportunities for use of international osets. ese con-

clusions have implications for the costs and exibility of

climate policy under the CAA.

With the U.S. Congress’ failure to date to create

comprehensive climate legislation, attention has

turned to moves by the U.S. Environmental Pro-

tection Agency (EPA) to regulate greenhouse gases (GHGs)

under the existing Clean Air Act (CAA).1 Among the many

questions raised by this shift are whether and how policy

instruments such as emissions trading and osets can be

incorporated into CAA regulation. is Article will briey

analyze whether that statute provides any plausible basis for

use of international GHG osets for stationary sources.2 e

foundation for almost all of the analysis presented here is the

CAA itself—no federal court ru lings and very few scholarly

analyses have addressed this question.

e Article briey discusses osets as a policy mechanism

and the history of their use within the CA A, before detail-

ing the potential for incorporation of osets into various

CAA programs that mig ht plausibly be used for regulation

of GHGs.

For various reasons discussed in detail below, none of these

programs seems readily compatible with use of international

osets in the GHG context. ose programs that might be

compatible are a poor t for GHG regulation generally. Pro-

grams that are better candidates for GHG regulation contain

statutory restrictions that require, at best, creative and legally

questionable reinterpretation in order to be compatible with

international osets. State-level regulation under the CA A

faces similar challenges and restrictions along with addi-

tional barriers that may exist in state law.

I. Offsets and the CAA

A. Offsets as a Policy Mechanism

Osets are a n environmental policy mechanism in which

an emitter of a pollutant may increase emissions or avoid

required reductions in emissions by committing to reduc-

tions in emissions elsewhere. is commitment—the o-

set—may come from the same facility, a dierent facility

under the same owner, or as a result of a contractual agree-

ment between dierent emitters. e general result of oset

use is that emissions in the relevant area are at least no greater

than before their use, but that trade os are possible between

various emitting activities and facilities. Relative to a ban on

any emissions increase s or individually mandated emissions

reductions, o setting should be able to achieve equivalent

1. 42 U.S.C. §§7401-7671q, ELR S. CAA §§101-618.

2. at is, electricity-generation plants, industrial facilities, etc. Emissions from

vehicles—mobile sources—are regulated under separate CAA provisions and

are not discussed here.

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         

advice. All remaining errors are my own.

Copyright © 2010 Environmental Law Institute®, Washington, DC. reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.