Full Width Image

Power Shift: A Climate Policy Expert Roundtable

NYU Law Magazine recently brought together seven NYU Law faculty and alumni who are experts in environmental and energy regulation to discuss climate change and how an incoming presidential administration might approach it. In a wide-ranging talk, panelists weighed in on a number of topics including the strengths and weaknesses of US policy, the role of the private sector and the Enviromental Protection Agency, the future of the Clean Power Plan, and the significance of the Paris Agreement.

Ignacia Moreno ’90 (Moderator)

IGNACIA MORENO ’90 (Moderator) Former Assistant Attorney General for the Environment and Natural Resources Division of the US Department of Justice (2009–13); Chief Executive Officer and Principal, The iMoreno Group:

My first question is for Ricky Revesz and Ambassador Boyden Gray. The United States has taken a series of significant actions domestically and abroad to address climate change since President Obama’s 2013 Climate Action Plan. The US has pledged to reduce greenhouse gas emissions domestically by 26 to 28 percent below 2005 levels by 2025.

The Environmental Protection Agency has issued a number of major rules, including the Clean Power Plan to reduce carbon emissions from new and existing power plants. [Editor’s note: This discussion was held prior to the Supreme Court’s stay of the Clean Power Plan.] Most recently, the US played a leadership role at the UN Climate Change Conference in Paris to negotiate and sign a historic accord to strengthen the global response to the threat of climate change.

With less than a year remaining in President Obama’s term, and challenges to the legality of the Clean Power Plan making their way through the federal courts for some time to come, let’s look ahead. What actions, if any, would you advise a newly elected president to take in his or her first 100 days in office to address climate change? As part of your answer, you may assume that either a Democrat or a Republican has been sworn into office on January 20, 2017.

Richard ReveszRICHARD REVESZ Lawrence King Professor of Law and Dean Emeritus; Director, Institute for Policy Integrity; author, with Jack Lienke ’11, of Struggling for Air: Power Plants and the “War on Coal”:

If you give the choice, I’ll assume a Democrat has been sworn into office. I’m also assuming that congressional action to address climate change in a comprehensive way is not in the cards for the new president’s first term.

Here’s the problem: The Clean Power Plan is not enough to meet the Paris commitment. Where to go next? We can keep tackling this problem industry by industry. So there are new proposed regulations for methane release from oil and gas extraction. We could go then to refineries and so on. Doing what we’ve been doing has two serious problems. One is it’s very cumbersome: Getting one of these rules out is an enormous undertaking, taking years of regulatory work, followed by years of litigation. Two, most people assume that these rules allow trading only within the industry to which the rule applies. Therefore, you don’t get the advantage of the broader trading that would reduce costs further.

There is a solution to this problem that the new president could announce he is launching in the first 100 days. It’s called Section 115 of the Clean Air Act.

Section 115 authorizes the EPA to require states to address emissions that endanger public health and welfare in other countries. But in order to do that, a finding must be made that other countries are taking reciprocal measures that benefit the US. The Paris talks, and what will follow from that, provide a good basis for making the reciprocity finding. My advice to the president would be to announce that the administration will make such a finding as soon as it can be supported based on the Paris commitments of other countries. Then, use Section 115 as a one-stop effort to regulate greenhouse gases from the major sectors of the economy that create them.

C. Boyden Gray

C. BOYDEN GRAY White House Counsel to President George H.W. Bush; Counsel to the Presidential Task Force on Regulatory Relief; Founding Partner, Boyden Gray & Associates; Adjunct Professor:

I will assume that a Republican will be the president. And I would advise him to use what authority he has to free up competition in the fuels market so that lower carbon fuels can compete in an open-market level playing field, primarily on the transportation side. The EPA does a lot to gum things up.

How to regulate all this? I am in complete agreement with our former dean that the best way is by emissions trading. But I don’t think Section 115 is a viable method of doing it, because that section is tied to criteria pollutants. Greenhouse gases are not criteria pollutants regulated by state implementation plans under Section 110 of the act. I would encourage the president to think about a grand bargain where you do a cap-and-trade or a carbon tax, and whatever other revenue is generated is used in a revenue-neutral way to reduce, say, the corporate income tax.

Then you would suspend in order to get the Republican votes. You would say as long as the cap-and-trade or carbon tax is in place, there is no EPA jurisdiction at all over any greenhouse gases. Now that is something that a lot of people on both sides of the aisle choke on. I have been told that the Republicans and environmental groups think they can bring their crowds along. I don’t know the truth to either assertion, but I would encourage a congressional-adopted bipartisan cap-and-trade program or carbon tax that replaces EPA’s piecemeal regulation.

MORENO: Nat, you’re an economist and have worked on these issues for quite some time. What do you think about a grand bargain and market-based approaches to addressing climate change? 

Nat Keohane

NAT KEOHANE Former Special Assistant to the President for Energy and Environment on the National Economic Council and Domestic Policy Council (2011–12); Vice President of Global Climate, Environmental Defense Fund; Adjunct Professor:

It would be great if we could get a grand bargain. But the environmental community will not support anything that entirely removes the EPA’s authority to regulate greenhouse gases under the Clean Air Act, so that’s a dead end. That doesn’t mean you couldn’t have a deal of some sort, because you could imagine ways in which EPA authority could be a backstop. If you think about a carbon tax from the point of view of economic theory, there are lots of things that economists in academia like about a carbon tax. From an environmental advocate’s point of view, the problem is it doesn’t have a limit on emissions. Ultimately what we have to do is stop putting carbon pollution into the air; we don’t only need to put a price on it.

So you can imagine the outlines of a grand bargain that would maintain the EPA’s Clean Air Act authority in order to provide that guarantee on emissions reductions, while using a tax or a market-based policy as the instrument to get the reductions we need. In such a scenario the EPA wouldn’t need to exercise its existing regulatory authority under the Clean Air Act unless it looked likely that we would miss our emission targets.

The Paris Agreement and the Clean Power Plan are both critical pieces of the puzzle, but neither is enough to tackle the problem in the long run. So the main thing we need to start thinking about now is how to raise the ambition of the steps that countries take under the Paris Agreement—and how to raise the ambition of the United States. Even to meet the 2025 targets, we need to do more than the Clean Power Plan or the other regulations already in place.

If we’re going to go beyond 2025 to the kind of cuts we would need in 2030 and beyond, we’re going to need entirely new policies. Maybe that’s Section 115, maybe that’s new legislation in Congress. Ricky has laid out one pathway starting with Clean Air Act regulation and creating pressure that way. Boyden has laid out another in terms of the grand bargain.

MORENO: Karl, what is your view on market-based mechanism opportunities?

Karl Kindig ’75

KARL KINDIG ’75 CEO and President of Pittston Coal (1995–98); Attorney at Law:

We’ve already seen in the United States a market-based response to reduce greenhouse gases—largely without a lot of government hands in the mix—with the replacement of coal by natural gas.

People talk about what’s going to happen in 2050, which is 35 years from now. Well, 10 years ago if you’d asked most experts, “Where is the United States positioned on natural gas?” they would have said, “We’re going to have to import a lot of it here very quickly because we’re running out.” Now we know through technological change that we have vast quantities of natural gas.

The private sector has been utilizing that gas to produce power. Last year was the first time that gas regeneration exceeded coal regeneration in the United States in decades. You get somewhere between a two-to-one or three-to-one reduction in carbon dioxide by using natural gas versus coal.

I’m watching what’s happening in Germany with their very aggressive program to move to solar and wind as part of their energy mix, and see a very interesting juxtaposition with what’s happening in France. Nobody talks about France, but it gets 75 percent of its electricity through nuclear, which doesn’t produce a molecule of carbon dioxide. It is an interesting model of what might possibly work in the United States.

Obviously it’s important to focus on Washington, what the president and the Congress might do. But for any of these programs to work, it also has to resonate with the other 330 million people in the United States. It’s got to be something that makes sense to them and that does not cause electric power to be unreliable or outrageously expensive. Otherwise, you can’t solve this problem just through promulgating a new regulation. 

Amelia Salzman ’85

AMELIA SALZMAN ’85 Former Associate Director for Policy Outreach at the White House Council on Environmental Quality (2009–11); Principal, Lazer’s Bight; Adjunct Professor:

I can’t agree more. What we need to accomplish is well beyond the regulatory or legislative capacity of the US alone. Getting where we really need to go will have to involve the private sector and the citizenry of the world. I love the backstop power of the EPA, which is charged with protecting people and the environment of this country and has played a huge role in changing the global response to pollution. The government is doing long-term research, investment, and great science, but that doesn’t always lead to breakthroughs.

The changes that will come from Paris and that we’ve seen already from the mercury and air toxic standards, from the cross-boundary rule, from the threat of 115, from the Clean Power Plan, is in the private sector’s positive response. A good example is the coalition that Bill Gates launched to invest in clean energy technology.

MORENO: Bryce, much is made about the Paris Agreement, but given the many commitments of the parties that are left for years to come, is the Paris Agreement really going to be a pivot point? 

Bryce Rudyk LLM ’08

BRYCE RUDYK LLM ’08 Senior Legal Adviser to the Mission of Maldives to the United Nations; Climate Program Director and Senior Fellow, Frank J. Guarini Center on Environmental, Energy, and Land Use Law; Adjunct Professor:

Yes, and here’s an example: Since 1995 there has been an annual Conference of the Parties, which reviews progress made toward the UN Framework Convention on Climate Change that was agreed to in Rio in 1992. The most recent conference was held in Paris at an old airport. There was a street they called the Champs-Élysées. On one side there was a bunch of halls in which negotiators and government officials met. On the other side was another set of airplane hangars that was all private sector and NGOs.

While the government people were doing negotiations, the private sector and NGOs were actually making announcements about new actions. Sometimes these actions were happening with government support; often they were not. This went on for eight days, sector by sector. There were about 75 new global initiatives announced, many of which did not involve governments. So the private sector is engaged in a way that I don’t think we’ve seen before. That is different about what’s happening now.

The agreement itself is radically different than what has come before, in two ways. One is the number of countries that have been participating. The UN convention signed in 1992, and a protocol a few years later, had commitments from only the developed countries, or just under 40 countries. In Cancún in 2010 about 100 countries made commitments. These were not legally binding.

But now with the new Paris Agreement, we have potentially 188 countries that have put in commitments of what they’re going to do nationally, and this covers 99 percent of emissions. Just in terms of coverage, it’s fairly significant.

Second, the old system was very top down. You had a global amount that needed to be reduced. This was allocated among the countries that were making reductions and they each got a number that they had to meet. What has happened under the Paris Agreement is countries have nationally determined what they’re going to do. These national determinations of their contributions generally happened through domestic consultant processes, in which countries said, “OK, this is what we’re able to do in transport, in energy,” and looked across their entire economy. Then they added up these policies and got to a number. So for the US it was 26 to 28 percent, for the EU it’s between 30 and 40 percent. That’s important because no longer is there just a number out there and countries trying to figure out how they meet that number. But rather, they have these reduction plans that they can put into place.

MORENO: What about Ricky’s suggestion that we look at Section 115?

KEOHANE: I have enough of the economist in me to say that change is not going to happen without clear, strong, well-designed government policy. You’ll get a handful of leading companies that make commitments on their own because they see it as being in their business interests. But for us to really get the reductions we need, we need government to put in place the right incentives and market signals. They could come out of an economy-wide, cap-and-trade system through Section 115 that Ricky is talking about or the kind of carbon tax or emissions-trading system through legislation that Boyden is talking about. Karl mentioned the role of markets in the decline of coal in the US electric power sector and the rise of natural gas. Markets did play a role, but so did regulations—and actually not even primarily the kind of economically efficient, cost-effective regulations that Boyden, Ricky, and I would like to see, but good old-fashioned command-and-control regulations under the hazardous air pollutant provisions of the Clean Air Act, in response to the public-health threat posed by mercury and other air toxics from coal plants.

So even that story is one where regulation has played a key role. We need to keep in mind that it’s going to be government policies—hopefully economically sound, economically efficient, market-based policies—that put a price and a limit on carbon that create those incentives for the private sector.

MORENO: Boyden, you’ve proposed a different framework for proceeding.

GRAY: Natural gas is very clean. Its potential, somewhat realized already in the stationary power sector, could be major in the mobile source sector. And that’s where EPA has been a real roadblock.

Natural gas could be used as a fuel on its own, or as pressed or liquefied natural gas for heavy-duty trucks. It can be converted to methanol or ethanol. It could be the basis for the real home run, which is hydrogen. But that won’t happen if the regulations aren’t revised to provide for a level playing field, whatever is done about climate change. If there were really a level playing field, and if there were cross-sector trading permitted, which EPA has never indicated any tolerance for, you would find enormous innovation that would end up reducing carbon even without having directly put a price or limit on it.

REVESZ: Cross-sector trading would clearly be allowed under Section 115. We should be pushing for it, because we’re not going to realize the full cost-reduction potential unless we do.

On a level playing field, I’m a fan of removing all subsidies, but the only way we can really create a level playing field is by also internalizing the pollution externality [an economics term meaning to adjust internal costs or benefits to take into account external social costs or benefits] because otherwise, we’re subsidizing the dirty energy producers, not with money but with people’s lives and with environmental harm.

KINDIG: In the short term, one thing that we could do today is to encourage the building of pipelines from Pennsylvania into the South so that areas that are totally dependent on coal can have access to natural gas while we continue to support research. The solution to this problem is probably not known today.

When you think about the technological changes that have occurred over the last 30 years, everybody talks about fracking and natural gas. But the real technological breakthrough is computer-controlled drilling that allows you to take a six-inch pipe, send it two miles, and keep it within 75 feet of where you want it. That’s a real technological breakthrough, and massive computing power made that happen.

As we look at the course of technological change, there will be other things that come along. But in the meantime we don’t want to let the perfect be the enemy of the good. Let’s take advantage of the opportunities that are in front of us while we look for these other solutions.

MORENO: Amy, would you like to address that?

SALZMAN: The government is a blunt instrument and doesn’t act like a California investor who can ferret out the next Groupon. But the government can play a role in opening that world up for longer-term research at the energy labs.

One reform that might be really helpful with the energy labs is to encourage them to do even more public-private partnerships with real goals. The writing is on the wall: We are going to have to get off carbon in the next 30 years, and that’s going to be very hard. It’s going to require kind of a scientific and technological crowdsourcing in government, in the private sector, and at the community level.

KINDIG: The government has a wonderful test bed that it can use to check out these ideas, called the Tennessee Valley Authority.

The government doesn’t need any regulation to tell the Tennessee Valley Authority what to do; it owns it. It is also one of the largest coal-fired electrical generators in the United States. But they also have nuclear plants and hydro plants and programs for solar and wind. Its headquarters is in Knoxville, right next to the Oak Ridge National Laboratory. What a great place to try and work out some of these issues.

MORENO: We talked earlier about a grand bargain, and others thought there could be no grand bargain as proposed. It seems like we might be stuck. We’re talking about different approaches—market-based approaches, cap-and-trade systems—that everyone thinks would be a good idea, maybe as part of a mix, but how do we get there? What can we look at by way of existing authority versus getting congressional action, which doesn’t seem very encouraging right now? What is the path to get us from here to there?

KEOHANE: We need much, much greater ambition in the US. We need more ambitious policies in place even to meet the 2025 target that the president has put forward. Bryce, I imagine you’d agree, one reason we saw success in Paris is real leadership from the US. The French did a masterful job of diplomacy; the Chinese have come along a huge way. But real US leadership was something that had been lacking, and Paris showed what that could accomplish.

To continue that leadership and get the ambition we need, we’re going to have to change the politics in the US. That has to start with a bipartisan conversation again in this country. It was only eight years ago, in 2008, that John McCain was running as the Republican presidential candidate and calling for a cap-and-trade program that was nearly as ambitious as what President Obama proposed.

I don’t mean to put you on the spot, Boyden, but it would be great to hear your thoughts. There’s a part of the Republican Party that has taken a stand of denial against climate change. We’re really only going to start making progress in this country on this issue when Republican support for climate change policy stops being a badge of courage and starts being the politically smart thing to do.

GRAY: I’m a lawyer. I’m a layman. I don’t know the science, but I still am impressed by the position that President Bush 41 took, a no-regrets policy: When you have a choice, and it’s not more expensive, and a signi cant way to take climate or some other externality into account, you do it because it’s a hedge against the future and nobody knows what the future is.

The acid rain program worked really well because no one tried to game it. But along came Waxman-Markey, the 2009 congressional bill for CO2, and the gaming began and it has never ended.

There are two points that affect Republicans that are often reflected in ideological statements. The first is—and this explains the massive vote against the Kyoto Protocol—the fact that China and India aren’t playing. You can use all the hype you want about this Paris Agreement, but what China agreed to do was to level off in 2030.

Until 2030 they can do any damn thing they want, and they can build power plants they don’t even need, up until 2030. That’s just an open invitation to game the system. India is not really cooperating either. Without those two, Republicans are going to say, “We’re not going to put in rules that increase the price of energy for our manufacturers so that they will hightail it to China, India, or some other less-developed nation and get cheaper energy.”

We’ve lost a lot of jobs before, and we’re still losing jobs to China because of their traditional fine-particle pollution, 25 percent or 20 percent of which ends up in California or in the Rockies, where we have to clean it up. It’s very expensive, and some way ought to be found to nail the Chinese for that. That would really get the ball rolling in the right direction.

Just two weeks ago, China admitted that they completely miscalculated last year’s carbon output. They don’t have the measurement system, let alone the infrastructure, to implement anything.

And EPA continues to drive people crazy. There’s no reason why you have to use a root canal theory of regulation.

RUDYK: Nat was right when he said that without US leadership, and without the hand-holding and massaging that France did, we wouldn’t have ever had an agreement in Paris. But sort of contra to what Boyden has just suggested, China’s engagement in this agreement was almost as essential as the US’s. China was certainly a significant moderating force amongst the developing countries. If the US can bring along China, we’ll start to see a whole rush of countries to ratify this new agreement.

KEOHANE: I get frustrated when I hear the China argument. In 1997, before the Clinton administration had nished negotiating the Kyoto Protocol, the US Senate voted 97 to zero on the Byrd-Hagel Resolution, which basically said don’t bother bringing us any international agreement on climate that doesn’t ask big developing countries like China and India to be part of the same framework as the US. Well, no surprise—the Kyoto Protocol never even made it to the floor of the Senate.

The shift in how the Paris Agreement is constructed relative to Kyoto, with 186 countries coming forward in the runup to the Paris conference with national contributions to reduce emissions, is 180 degrees. We have come so far. China is going to have a cap-and-trade program on its electric-power sector in the next couple of years, well ahead of the US having one.

So when people say, “Well, China is not doing enough under the Paris Agreement,” that really starts to feel like moving the goalposts. In fact, Senator Hagel himself wrote an op-ed a couple of months ago that said the Paris Agreement would satisfy the conditions of the Byrd-Hagel Resolution. We’re in a different place.

The final irony is that the reason that there aren’t any legally enforceable binding obligations in the Paris Agreement is because the US Senate will not ratify an international agreement, and we’re never going to get the 67 votes necessary for ratification. So to then turn around and say it’s not enforceable and that means China can do what they want doesn’t reflect the reality of the Paris Agreement, of what China is doing, and of the politics at home.

We are going to need, as Bryce said, a lot of work to make sure that the Paris Agreement lives up to its promise. We need a lot of work to implement the monitoring, reporting, and verification provisions to make sure that every country, including China, does what it says it’s going to do. We need a lot of work to get India on a low-carbon track. But to say that the Paris Agreement doesn’t get India and China onto that track and therefore the US shouldn’t do anything at home is a real mistake.

MORENO: There’s been some discussion about capacity building and the role of communities. What is the role of civil society and communities as an action-forcing element?

SALZMAN: The Clean Power Plan, uniquely among EPA actions, really took lessons from the needs and different situations of communities. When the EPA worked on improving the Clean Power Plan between its initial draft and the final regulation, it spent a lot of time talking to communities, to people of color, to the private sector, and to local government.

The EPA did something called a proximity analysis for all of the states that essentially looks at the main sources of pollution and who lives near them. It wasn’t just looking at carbon, but it also requires looking at what we call criteria pollutants, the ones that can make people really sick.

EPA folded that analysis into the information that the states will have as they develop their state implementation plans. They also strongly encouraged the states to pay close attention to environmental-justice impacts and to have meaningful public participation.

This is huge. It’s also politically very valuable. The environmental-justice community has generally been opposed to action to address climate change, being concerned that it would result in higher levels of pollution in their communities and/or divert resources from reducing pollution in their communities.

Plus, the EPA did something smart and very consistent with President Obama’s vision, which is that they mandated that the distributional benefits of action to address carbon have to be equal; they also have to reach the environmental-justice communities. That means that clean energy and clean energy jobs will not all be where the rich people live, but these will benefit communities of color and reduce the burden of environmental-justice communities.

MORENO: With that, I’d like to thank each of the panelists. You were absolutely outstanding. Keep up your great work.

Posted September 2, 2016