Cap and Trade Legislation may be dead for the year, but it is not gone forever. There are currently two pieces of legislation, the American Clean Energy and Security Act passed in the House and the Kerry-Boxer Bill pending in the Senate, but with 2010 being an election year, the chances of finalizing legislation before November continue to fade.
Both bills have the same goal in terms of global warming, which is to reduce greenhouse emissions by 80 percent by 2050, but differ in many ways. The House bill goes into greater detail about how the goal will be met and offers specific percentages of emission allowances for industrial sectors. The Senate legislation lacks the detailed provisions for training, funding and new green energy standards.
“Businesses will be impacted by greenhouse gas regulation, even if they are too small to need a permit for greenhouse gas emissions,” says Ted Esborn, member and chair of the environmental law practice at McDonald Hopkins LLC.
Smart Business spoke with Esborn about what businesses need to understand about carbon regulation, and how to prepare for any future Cap and Trade legislation.
What are some key things you need to understand about carbon regulation?
There are two tracks for achieving greenhouse gas emission reductions. One is the legislative approach by Congress, and the second is the regulatory track. The regulatory track was made available when the U.S. Supreme Court ruled that carbon dioxide and its greenhouse gas equivalents are air pollutants and subject to regulation under the current Federal Clean Air Act. Regulation is moving at a faster rate than its legislative counterpart.
The EPA already has three rules to address greenhouse gas regulation under the current Federal Clean Air Act. The first is the determination that greenhouse gases endanger human health and the environment. The second requires certain designated industries to determine their greenhouse gas emissions for 2010 and report them to the EPA no later than March 31, 2011. Industries required to report include petrochemical facilities, petroleum refineries, electric power systems and any other facilities that emit 25,000 tons or greater of carbon dioxide or its greenhouse gas equivalents from stationary fuel consumption.
The third rule would require that greenhouse gas emitters of more than 25,000 tons obtain Title V permits. These facilities would also be required to install best available control technology (BACT).
The SEC also adopted a new guidance for publicly traded companies’ disclosures on the impacts of climate change. This highlights four areas where climate change may trigger public disclosure: impact of legislation; regulation and international accords; indirect consequences of regulation or business trends; and physical impacts of climate change.