All posts tagged 'Externalities'

EPA COMMENTS SUGGEST EMPHASIS ON CREATIVITY AND INTERNALIZING EXTERNALITIES IN CLIMATE STRATEGY

October 14, 2014 06:29
by Jameson Tweedie
The American Bar Association's Section of Energy, Environment and Resources held its Fall Conference last week.  Noteworthy from a climate perspective were the keynote address by Environmental Protection Agency Administrator Gina McCarthy, along with comments by other officials within President Obama's Administration with specific responsibility on climate issues—including Samantha Medlock, Deputy Associate Director for Climate Preparedness (White House Council on Environmental Quality); Hilary Tompkins, Solicitor (Department of the Interior); Cynthia Giles, Assistant Administrator, Office of Enforcement and Compliance Assurance (EPA); and Lorie Schmidt, Associate General Counsel of Air and Radiation (EPA).  Two repeated themes have particular resonance on climate issues. First was a repeated focus on the role of government to level the playing field.  Emphasized, for example, was the EPA’s effort to strongly enforce existing regulations and permits to eliminate competitive advantages that environmental rule-breaking gains individuals or companies over their rule-abiding competitors—in other words, to internalize the externalities associated with environmental rule-breaking.  Or, as Administrator McCarthy put it, to make compliance the efficient decision.  An analogous focus was evident on reducing the advantage the Administration believes heavy carbon-emitting companies gain over their lower-carbon competitors.  Ms. Schmidt, in particular, made clear the Administration's intent, in the wake of the authority left to the EPA by the Supreme Court in Utility Air Regulatory Group v. EPA, 573 U.S. ___ (2014), to continue imposing carbon limits on all applicable large emission sources. All indications are that the Administration is looking for opportunities to expand the reach of carbon emission limits beyond just those large sources.  The goal of leveling the carbon playing field across sources would undoubtedly have been simpler in many respects through a nationwide carbon tax or cap-and-trade system.  Indeed, John Cruden (current President of the Environmental Law Institute and nominee to head the Department of Justice’s Environment and Natural Resources Division), quoted former Secretary of State George Shultz who expressed the pressing need to put "all forms of energy production on an even playing field" by internalizing the externalities associated with carbon emissions and other pollutants.  But, with a national carbon tax or cap-and-trade system a congressional nonstarter, the Administration is left seeking a piecemeal set of solutions that, taken together, can achieve its climate goals.  This challenge seemed to lead naturally into the second theme of Administration personnel:  the need for creative solutions.  While by no means limited to climate change (for example, this was also reiterated in CERCLA and other enforcement contexts), the need for creative solutions seems particularly apt in the broad climate context facing the Administration.  That is, congressional impasse on top of stalled or snail pace efforts to reach an international framework.  Within these parameters, any significant short term climate change efforts are left to state and local action, to action within the corporate world (as former EPA head William Reilly was quoted, CEOs are the "unsung heroes" of the environmental movement, making environmental progress cost competitive) and to administrative action.  Ms. Medlock particularly pointed out the burden likely to fall on state and local government to devise innovative, cost-effective solutions to build resiliency along the coasts to the double challenge of rising sea levels and the increased storm intensity and storm surges which climate change is predicted to bring.  (Evidencing the Administration’s focus on this issue, Administrator McCarthy headed directly from the Conference to an event on Miami Beach highlighting the rising seas and extreme tides facing South Florida.)  As recent reports have indicated, while climate change impacts will be unevenly spread, no region will be spared its share of challenges, whether they be sea level rise and storm surge, flooding or drought, extreme temperatures or otherwise.  Without a doubt, creativity is required.

Carbon Emissions | Climate Change | Climate Change Effects | Rising Sea Levels

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