1. Global Climate Change and the US Response Johns Hopkins University Nanjing Center 3-4 March 2012 updated for presentation at the Indian Institute of Technology 16 December 2013 Samuel A. Bleicher Adjunct Professor, Georgetown University Law School J.D., Harvard Law School Principal, The Strategic Path LLC SamBleicher@StrategicPathLLC.com www.StrategicPathLLC.com SamBleicher@StrategicPathLLC.com www.StrategicPathLLC.com

2. “An Inconvenient Truth” 2

3. OUTLINE I. Causes of Global Climate Change II. Effects of Global Climate Change III. Sources of GHG Emissions IV. Controlling GHG Emissions V. New Regulations Around the World VI. US Congressional Action on GHGs VII. EPA Authority to Regulate GHG Under the CAA VIII. Massachusetts v. EPA, 200 US 321 (2007) IX. EPA Action 2008 – X. Presidential Action 2009 – 3

4.  Our planet’s climate is determined by the balance among a wide variety of factors and processes –  Ice, snow, deserts, forests, clouds, and oceans reflect varying amounts of sunlight, determining the earth’s overall reflectivity - its albedo.  Certain gasses in the atmosphere, “greenhouse gasses” (GHG), absorb solar energy and turn it into heat. Primary GHGs are carbon dioxide (CO 2 ), methane (CH 4 ), and nitrous oxide (N 2 O)  Plants take in CO 2, humans and animals give out CO 2 ; cows and other ruminant animals produce CO 2 and CH 4 ; oceans absorb CO 2 ; dead plant materials release CO 2 and CH 4  During the dinosaur era, the earth was much warmer than it has been for many millions of years since. In part our cooler climate resulted from the entrapment of vast quantities of plant material, which became oil and coal instead of releasing CO 2 I. Causes of Global Climate Change The Role of GHG in the Atmosphere 4

5.  Over the past 200 years, humans have vastly increased the use of coal and oil as fuels. The extraction and burning of these fuels releases large additional quantities of GHGs into the atmosphere.  In 2011 the concentrations of CO 2, CH 4, and N 2 O were 391 ppm, 1803 ppb, and 324 ppb, which exceeds the pre-industrial levels by about 40%, 150%, and 20%, respectively  Unlike particulates and photo-chemical smog, most GHGs stay in the atmosphere for periods ranging from decades to hundreds or thousands of years  These human-caused emissions are already changing Earth’s climate. These changes will continue for centuries even if humans completely stop adding GHG to the atmosphere today IPCC Fifth Assessment Report November 2013 http://www.ipcc.ch/http://www.ipcc.ch/ I. Causes of Global Climate Change Increasing GHG in the Atmosphere 5

6. I. Causes of Global Climate Change Cumulative Effects of CO 2  The two most important characteristics of a GHG are how efficiently the gas absorbs energy and how long the gas stays in the atmosphere  The Global Warming Potential (GWP) for a gas is a measure of the total energy that a gas absorbs over a particular period of time (usually ~100 years), compared to carbon dioxide (CO 2 ).  Carbon dioxide emissions cause changes in atmospheric CO 2 concentrations that persist for thousands of years. 6

7. I. Causes of Global Climate Change Other GHGs  Methane (CH 4 ) has a Global Warming Potential (GWP) more than 20 times higher than CO 2 for a 100-year time scale. CH 4 emitted today lasts for only about a decade in the atmosphere. However, on a pound-for-pound basis, CH 4 absorbs far more energy than CO 2, making its GWP higher. Recent studies indicate that methane released from oil and gas drilling in the US is several times larger than previously estimated. http://www.nytimes.com/2013/11/26/us/emissions-of-methane-in-us-exceed- estimates-study-finds.html?_r=0 Large quantities of carbon are currently locked into the Arctic and Antarctic permafrost. An especially worrisome possibility is that a significant proportion will emerge not as CO 2, but as CH 4, produced when the breakdown occurs in lakes or wetlands. (More detail on this problem below.) 7

8. I. Causes of Global Climate Change Other GHGs (continued)  Nitrous oxide (N 2 O) has a GWP 300 times that of CO 2 for a 100-year timescale. Nitrous oxide emitted today remains in the atmosphere for more than 100 years, on average. http://www.epa.gov/climatechange/science/causes.html http://www.epa.gov/climatechange/science/causes.html  Chlorofluorocarbons (CFCs), hydrofluorocarbons (HFCs), hydrochlorofluorocarbons (HCFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6) also trap substantially more heat than CO 2. Some HFCs remain in the atmosphere for only a few years, but SF6 can remain in the atmosphere for thousands of years. http://www.epa.gov/climatechange/science/causes.html http://www.epa.gov/climatechange/science/causes.html  Reductions in emissions of these fluorocarbons pursuant to the multilateral treaty to phase out HFCs may explain the “pause” in temperature increases in the 1990s. http://www.bbc.co.uk/news/science-environment-24874060 http://www.bbc.co.uk/news/science-environment-24874060 8

9. I. Causes of Global Climate Change Cumulative Character of CO 2 (and other GHGs) 9

10. 10  How big is the bathtub? The November 2013 IPCC Report says about 531 BMt of CO 2 have been emitted by human activities since 1750. It estimates that capping total GHG output at 840 BMt gives a 50% chance of staying within the 2 o C increase target.  That leaves enough capacity in the atmosphere for 309 BMt of CO 2 - about 22 years of emissions - to prevent runaway climate change.

11. I. Causes of Global Climate Change Increasing CO 2 in the Atmosphere 11  This chart shows the concentration of CO 2 in the atmosphere over the past 1,200 years. Concentrations were stable at around 280 ppm until humans began using fossil fuels  Since then levels have increased by 28%: 280 ppm to 360 ppm

12. I. Causes of Global Climate Change Human-caused GHG Emissions 12

13. II. Effects of Global Climate Change Consequences of Increased GHG 13 The 5 most adverse effects of global warming: 1.Polar ice caps melting, creating several dangers:  Rising sea levels. As all glaciers melt, the seas would rise about 230 feet (70 meters) - sea levels will rise continuously  Accelerated global warming. As white ice caps shrink, the ocean will reflect less light and heat, reducing the Earth’s albedo. Melting ice caps also release trapped CH 4  Ecological disruption. Melting ice caps release fresh water, making the ocean less salty. Desalinization will change ocean currents, which regulate temperatures, and damage sea life  Higher Arctic Circle temperatures. The increase will destroy the habitat of several species of animals 2.Spread of disease. As northern countries warm, disease-carrying insects and microbes migrate north, bringing plague and disease with them

14. 14 3.More hurricanes/monsoons and more frequent and serious flooding. Warmer ocean waters increase the frequency and strength hurricanes (monsoons) 4.Increased droughts and heat waves. Some areas of Earth will become wetter; other areas will suffer more droughts and heat waves. Africa will suffer most, then Europe, from these conditions 5.Economic and political disruption. Rapid climate changes will cause more crop failures, storm damage, disease, and mass relocations, probably resulting in conflicts over land and resources See http://www.environmentalgraffiti.com/sciencetech/5-deadliest-effects-of-global- warming/276; http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdfhttp://www.environmentalgraffiti.com/sciencetech/5-deadliest-effects-of-global- warming/276http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdf II. Effects of Global Climate Change Consequences of Increases in GHG (continued):

15.  As the earth’s temperature rises, other factors are accelerating the warming process:  Shrinking polar ice caps and mountain snow cover cause the earth’s albedo to decline, so more heat remains in the earth and atmosphere  Warmer ocean water absorbs less CO 2, so the ocean’s normal function of taking CO 2 out of the atmosphere is reduced http://www.nature.com/nclimate/journal/vaop/ncurrent/full/nclimate2060.html  Although increased temperatures also cause some mitigating effects - for example, expanding deserts reflect more light, and higher temperatures mean more evaporation which causes increased cloud cover – these effects are not enough to offset the accelerating increase in temperatures II. Effects of Global Climate Change “Runaway Climate Change” – 1. Natural Acceleration 15

16. “Experts have long known that northern lands were a storehouse of frozen carbon, locked up in the form of leaves, roots and other organic matter trapped in icy soil — a mix that, when thawed, can produce CH 4 and CO 2. But they have been stunned in recent years to realize just how much organic debris is there. A recent estimate suggests that the frozen ground known as permafrost contains twice as much carbon as the entire atmosphere. “Temperatures are warming across much of that region. Some permafrost has already thawed. An especially worrisome possibility is that a significant proportion will emerge not as CO 2, but as CH 4, produced when the breakdown occurs in lakes or wetlands.... The potential for large new CH4 emissions in the Arctic is one of the biggest wild cards in climate science. (continued on next slide) II. Effects of Global Climate Change “Runaway Climate Change” – 2. Methane in permafrost 16

17. “Preliminary computer analyses, made only recently, suggest that the Arctic and sub-Arctic regions could eventually become an annual source of carbon equal to 15 percent or so of today’s yearly emissions from human activities. But those calculations were deliberately cautious. “A recent survey asked 41 permafrost scientists to offer more informal projections. They estimated that if human fossil-fuel burning remained high and the planet warmed sharply, the gases from permafrost could eventually equal 35 percent of today’s annual human emissions.recent survey “In the minds of most experts, the chief worry is not that the carbon in the permafrost will break down quickly — typical estimates say that will take more than a century, perhaps several — but that once the decomposition starts, it will be impossible to stop.” http://www.nytimes.com/2011/12/17/science/earth/warming-arctic-permafrost-fuels- climate-change-worries.html?hp II. Effects of Global Climate Change “ Runaway Climate Change” – 2. Methane in permafrost 17

18. II. Effects of Global Climate Change “Runaway Climate Change” – 2. Methane in permafrost 18 Katey M. Walter Anthony, a scientist, investigating a plume of methane, a greenhouse gas, at an Alaskan lake. Dr. Walter Anthony is a leading researcher in studying the escape of methane.

19. 19 III. Sources of GHG Emissions Sources of CO 2 Emissions by Country 2009 Country & State Rank for Gross Domestic Product (GDP) Overall Rank by Country Rank by US State or Country GDP (in millions of USD) WorldWorld 58,133,309 1 European Union 16,374,529European Union 1 2 United States 14,119,000 United States 2 3 Japan 5,068,996Japan 3 4 People's Republic of China 4,985,461People's Republic of China 4 Germany 3,330,032Germany 5 France 2,649,390France 6 United Kingdom 2,174,530United Kingdom 7 Italy 2,112,780 This pageItaly California 1,911,822 74.8%California 8 5 Brazil 1,573,409Brazil 9 Spain 1,460,250Spain 10 6 Canada 1,336,068 43,457,463Canada

20. 20 III. Sources of CO 2 Emissions Sources of CO 2 Emissions by Country 2009 Country & State Rank for GDP page 2 11 7 India 1,310,171India 12 8 Russia 1,231,893Russia Texas 1,158,194Texas New York 1,078,161New York 13 9 Australia 924,843Australia 14 10 Mexico 874,902Mexico 15 11 South Korea 832,512South Korea 16 Netherlands 792,128Netherlands Florida 734,727Florida Illinois 627,952 This pageIllinois 17 12 Turkey 617,099 11.8%Turkey Pennsylvania 549,565Pennsylvania 18 13 Indonesia 540,277Indonesia 19 14 Switzerland 500,260Switzerland New Jersey 480,641 Both pagesNew Jersey Ohio 472,344 86.6%Ohio 20 Belgium 468,522Belgium

21. 21 III. Sources of GHG Emissions Growth in Sources CO 2 Emissions by Country 2005 Country Rank for GHG Emissions (billion metric tons) Annual ’99-’05 Growth /Person Cumulative World 26,544 100.0% 28.3% 4.2 1,169,100 United States 5,841 22.0% 19.9% 19.7 324,900 P.R. China 5,060 19.1% 128.9% 3.9 94,300 EU 15 3,271 12.3% 4.8% 8.5 284,800 Russia 1,544 5.8% -29.6% 10.8 92,500 Japan 1,214 4.6% 14.8% 9.5 46,100 India 1,149 4.3% 92.6% 1.1 28,600 Canada 552 2.1% 27.5% 17.1 23,800 South Korea 449 1.7% 97.6% 9.3 9,000 Iran 431 1.6% 142.3% 6.2 8,600 Mexico 393 1.5% 33.9% 3.8 12,500 [Data from World Bank’s World Development Report 2010 p. 362]

22. 22 III. Sources of GHG Emissions Allocation of the Effects of GHG to Sources of GHG Emissions  GHG emissions do not correlate directly with GDP – trade and finance do not cause much GHG emissions compared to making steel or electricity or petroleum products (EU vs. China)  Damage from GHG emissions is not always where the emissions occur. Long, urbanized coasts will suffer from rising sea level; central Africa will suffer more severe droughts  Benefit from GHG emissions is not always where the emissions occur. For example: 28% of China's 2004 emissions went into exports rather than goods for internal consumption – as argument for consumption-based accounting http://legal- planet.org/2013/11/25/passing-gas/http://legal- planet.org/2013/11/25/passing-gas/  Current per person emissions are far less in China and India than in the US – but emissions growth is much more rapid. Per person emissions in Chinese cities may be higher than in the US because of reliance on coal, energy inefficiency, and exports

23. 23 The Emissions Gap Report 2013, A UNEP Synthesis Report November 2013 http://www.unep.org/publications/ebooks/emissionsgapreport2013/ http://www.unep.org/publications/ebooks/emissionsgapreport2013/ III. Sources of GHG Emissions Latest UN Environmental Program Data and Projections  Relative contributions to global emissions from developing and developed countries changed little from 1990 to 1999. But the balance changed significantly between 2000 and 2010  The developed country share decreased from 51.8% to 40.9%, while developing country emissions increased from 48.2% to 59.1%  Today developing and developed countries are responsible for roughly equal shares of cumulative GHG for the period 1850-2010

24. 24 The Emissions Gap Report 2013, A UNEP Synthesis Report November 2013 http://www.unep.org/publications/ebooks/emissionsgapreport2013/ http://www.unep.org/publications/ebooks/emissionsgapreport2013/ III. Sources of GHG Emissions Latest UN Data and Projections (continued 2)  Available evidence from 13 of the parties to the Climate Convention that have made pledges or commitments indicates that 5 – Australia, China, the European Union, India and the Russian Federation – appear to be on track to meet their pledges  Four parties – Canada, Japan, Mexico and the U.S. – may require further action and/or purchased offsets to meet their pledges, according to government and independent estimates of projected national emissions in 2020  A fifth party – the Republic of Korea – may also require further action but this could not be verified based on government estimates.

25. 25 The Emissions Gap Report 2013, A UNEP Synthesis Report November 2013 http://www.unep.org/publications/ebooks/emissionsgapreport2013/ http://www.unep.org/publications/ebooks/emissionsgapreport2013/ III. Sources of GHG Emissions Latest UN Data and Projections (continued 3)  Even if pledges are fully implemented, the 2 o C emissions gap in 2020 will be 8–12 GtCO 2 e/year, assuming least-cost emission pathways. Limited available information indicates that the emissions gap to meet a 1.5° C target in 2020 is a further 2–5 GtCO 2 e/year  Least-cost emission pathways consistent with a likely chance of meeting a 2° C target require global emissions in 2050 that are 41% below 1990 emission levels and 55% below 2010  The technical potential for reducing emissions to levels in 2020 is still estimated at about 17 ± 3 GtCO 2 e. This is enough to close the gap between business-as-usual emission levels and levels that meet the 2° C target, but time is running out

26. 26 III. Sources of GHG Emissions Latest UN Data and Projections (continued 4)  The longer decisive mitigation efforts are postponed, the higher the dependence on negative emissions in the second half of the 21st century to keep the average temperature increase below 2° C  The technologies required for achieving negative emissions may have significant negative environmental impacts  Later-action scenarios may not be feasible in practice and, as a result, temperature targets could be missed  Adaptation” suggests that we actually can, at some expense, restore ourselves to the same position we would have been in without climate change. But climate change will not be a marginal change; it will alter all aspects of human activity, just as the automobile has changed the whole concept and structure of modern life http://legal-planet.org/2013/11/18/the-limits-of-adaptation/http://legal-planet.org/2013/11/18/the-limits-of-adaptation/ The Emissions Gap Report 2013, A UNEP Synthesis Report November 2013 http://www.unep.org/publications/ebooks/emissionsgapreport2013/ http://www.unep.org/publications/ebooks/emissionsgapreport2013/

27. https://www.llnl.gov/news/newsreleases/2010/images/energy-flow-annotated.pdf III. Sources of GHG Emissions Energy Consumption and Inefficiency - US [Grey is wasted energy] [Sources of energy] [Uses] [Wasted energy 57.8%] [Used energy 42.2%] 27

28. 28 http://www.mckinsey.com/locations/greaterchina/mckonchina/reports/china_ green_revolution_report.pdfhttp://www.mckinsey.com/locations/greaterchina/mckonchina/reports/china_ green_revolution_report.pdf April 2009 III. Sources of GHG Emissions Energy Consumption and Inefficiency - China  China’s energy generation and consumption per unit of GDP can be substantially reduced if an aggressive but economically reasonable set of efficiency programs is adopted  The effect would be an emissions level 50% lower than the baseline projection by 2030  It would also substantially reduce China’s projected 2030 imports of oil and coal  Most of the benefits of this effort depend on rapid action to initiate these programs – a 10-year delay will seriously compromise the outcome  Even with such a program, China’s GHG emissions will be 10% higher than in 2005

29. IV. Controlling GHG Emissions Sector Reductions Needed to Meet GHG Targets  Sector reductions to limit global temperature increase to below 2˚ C during 21st century (based on results from Bridging the Emissions Gap Report, 2011) :  Power sector (2.2 – 3.9 GtCO ₂ e)  Transport** (1.7 – 2.5 GtCO ₂ e)  Buildings (1.4 – 2.9 GtCO ₂ e)  Forestry (1.3 – 4.2 GtCO ₂ e)  Agriculture (1.1 – 4.3 GtCO ₂ e)  Waste (about 0.8 GtCO ₂ e ) ** including shipping and aviation Industry (1.5 – 4.6 GtCO ₂ e) 29 The Emissions Gap Report 2013, A UNEP Synthesis Report November 2013 http://www.unep.org/publications/ebooks/emissionsgapreport2013/ http://www.unep.org/publications/ebooks/emissionsgapreport2013/

30. IV. Controlling GHG Emissions Counteracting the Increase in GHG  Mitigation costs will be counteracted by near-term co- benefits (e.g., improved health due to reduced air pollution, cost savings on fuel) that may offset a substantial fraction of mitigation costs  Changes in lifestyle, behavior patterns, and management practices can contribute to mitigation across all sectors  An effective price signal could realize significant mitigation in all economic sectors. A price of $20-80/ton of CO 2 is consistent with stabilization around 550 ppm by 2100 UN Intergovernmental Panel on Climate Change (2007) Http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdf Http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdf  In the next few decades, the world’s energy systems must be transformed so that global emissions drop 50 to 80% World Bank, World Development Report 2010 http://siteresources.worldbank.org/INTWDR2010/Resources/5287678- 1226014527953/WDR10-Full-Text.pdf 30

31. IV. Controlling GHG Emissions Conceptual Approaches  Direct regulation would impose GHG emission limits on power plants and industrial facilities and transportation equipment. Regulation only works if vigorously enforced, because there is no incentive to comply with uneconomic rules  Taxation and subsidies are economic mechanisms to make GHG emissions relatively more expensive by increasing the relative price of GHG-causing energy sources (oil, coal, natural gas) as compared to non-GHG-causing energy sources (wind, solar, nuclear). The incentives work to some degree, but the degree of GHG reduction is uncertain  “Cap-and-trade” systems fix the total quantity of GHG emissions, divide it into shares, and allow the transfer of shares through a market system, which gives shares an economic value and creates a financial incentive to reduce GHG emissions 31

32. IV. Controlling GHG Emissions Some Complexities of the Carbon Tax Approach  A Carbon Tax seems administratively simple and effective, and it does raise revenue to offset inequities in its impact. But calibrating the tax to meet a given emissions reduction objective is tricky. Here’s a defense of China’s carbon tax against an attack by a Wall Street Journal columnist, who might be right – who can tell? “John Lee’s [January 2012] Wall Street Journal commentary “China’s Fake Carbon Tax”, arbitrarily claims that choosing to levy a carbon tax rather than adopting a cap-and-trade scheme “revealed the government’s true intent: [that there would be] no strict limit on the total amount of carbon emitted”China’s Fake Carbon Tax “The Chinese government recently announced the launch of carbon-trading pilot projects in five cities.... The truth is that China announced back in 2011 that it was gearing up to launch pilot carbon-trading platforms. In other words, China’s work on carbon trading predates its action on carbon tax.” http://www.chinadialogue.net/article/show/single/en/4742 32

33. IV. Controlling GHG Emissions Some complexities of “cap-and-trade” systems  Determining the national cap and allocating the shares. Industry emitters want an annual cap that starts high and declines slowly, and no-cost initial allocation of shares to existing GHG emitters. Environmental experts and NGO advocates want a low, sharply declining annual cap and auction of the shares  Regulating the market for shares. The right to trade shares means users who don’t need all of their allocation can sell excess shares to other users. Additional shares (“offsets”) can be created by absorbing GHG emissions by planting forests or building facilities that absorb GHGs. The offset reductions must be verified, in part because after the offsets are sold, the seller may have no incentive to continue carrying out the reductions  Controlling international share transactions. If the offsets are in other countries, verification becomes more difficult. Moreover, some of the economic benefits will then occur overseas, separating net costs from net benefits. 33

34. IV. Controlling GHG Emissions EU, Australia?, Canada, China, California  EU – The EC has created an Emissions Trading System (ETS). The EC establishes CO 2 emissions limits for every EU member state. CO2 emission allowances are granted to emitting facilities pursuant to national allocation plans. The allowances can be traded by to cover the quantities of CO 2 facilities emit in their operations  Australia – In November 2011 Australia’s Parliament approved the government’s proposal to adopt an ambitious emissions trading program. The new regulations would impose a carbon tax on 500 of the country’s biggest polluters in July, 2014 before becoming a market-based trading program in 2015. But Prime Minister Abbot (elected September 2013) intends to end this programemissions tradingimpose a carbon tax on 500 of the country’s biggest polluters  South Korea – President Lee Myung Bak’s proposal sets emission targets for almost 500 of Korea's largest polluters starting this year as a lead-up to cap and trade in 2015 (Bloomberg Feb 8, 2012)Lee Myung Bak 34

35. IV. Controlling GHG Emissions EU, Australia?, Canada, China, California – (continued)  Canada – In 2007, the federal government announced an Action Plan to Reduce GHG and Air Pollution (the Plan) through mandatory reduction targets (with trading) for all major GHG-producing industries to achieve an absolute reduction of 150 megatonnes in GHG emissions from 2006 levels by 2020. As of 2010, the federal government has indicated that while it remains committed to reducing Canada’s total greenhouse gas emissions by 17 percent from 2005 levels by 2020, this target is subject to adjustment to remain consistent with the U.S. http://www.uss.com/corp/proxy/annual-report 2010/U.%20S.%20Steel%20Annual%20Report%20and%20Form%2010- K%202010.pdf 35

36. IV. Controlling GHG Emissions EU, Australia?, Canada, China, California (continued) China - Officials experimenting with carbon trading and tax China is experimenting with carbon trading and has considered levying a carbon tax. A system of taxation on greenhouse gas emissions was submitted by the Fiscal Science Research Center of the Ministry of Finance for review in 2011 The tax is likely to start at a rate of 10 Yuan ($1.59)/ton of CO 2, but is expected to increase gradually over time. Tax cuts will be given to companies that take steps to reduce emissions. During the Durban climate talks in 2005, China pledged to reduce the amount of carbon dioxide produced for each unit of GDP by 17 percent by 2015. http://www.chinadaily.com.cn/bizchina/2012-01/06/content_14391943.htmhttp://www.chinadaily.com.cn/bizchina/2012-01/06/content_14391943.htm As of October 2013 China had still not instituted a carbon tax, saying that its experimental trading system seems to be working well. http://www.bloomberg.com/news/2013-10-17/china-working-on-carbon-markets-before- tax-ndrc-official-says.html http://www.bloomberg.com/news/2013-10-17/china-working-on-carbon-markets-before- tax-ndrc-official-says.html 36

37. IV. Controlling GHG Emissions California California’s plan to reduce GHG to 1990 levels (-30%) by 2020:  Produce 33% of electricity from renewable sources by 2020  Expand and strengthen existing energy efficiency programs, building and appliance standards, and clean car standards, goods movement measures, and the Low Carbon Fuel Standard  Develop a State cap-and-trade program covering 85% of GHG, with Western Climate Initiative parties (6 States, 4 Canadian provinces)  Establish targets for transportation-related GHG emissions in every California region, and policies and incentives to achieve them  Create targeted fees on water use, gases with high global warming potential, and fees to fund the administration of implementation http://www.arb.ca.gov/cc/scopingplan/document/adopted_scoping_plan.pdf 37

38. V. US Congressional Action on GHGs 2009 –  “The most important votes of 2010 were the ones that didn’t happen:... the Senate failed to even begin debate on a comprehensive clean energy and climate bill; next [it] failed to respond to the catastrophic oil spill in the Gulf of Mexico” US League of Conservation Voters Environmental Scorecard  Congress did not pass a law to set up a cap-and-trade program to control GHGs  Congress also did not pass a law to limit EPA’s authority to regulate GHGs under existing Clean Air Act (CAA) provisions  Congress did extend subsidies for clean energy, including wind and solar power and electric cars. Consumers who buy electric or hybrid cars can get as much as $7,500 off the price (about 15% of the typical car cost) as a tax credit from the government 38

39. V. US Congressional Action on GHGs 2009 – The Politics of Climate Change 39

40. V. US Congressional Action on GHGs 111 th Congress Senate and House Cap-and-Trade Bills – common provisions  The House of Representatives passed a cap-and-trade climate change bill (H.R. 2454) to control GHG emissions June 23, 2009  The Senate Environment Committee reported out a GHG bill (S. 1713), but it could not get the necessary 60 Senate votes  The bills had the following common features:  a goal of reducing annual GHG to 83% below 2005 levels by 2050  a cap-and-trade system to control GHG emissions from ~85% of current U.S. GHG sources – electricity production, natural gas distribution, petroleum refining, and industrial sectors  free GHG shares to certain sources and auctions to other sources, with funds from the auctions going to low-income consumers, infrastructure, and deficit reduction  authority for EPA to set GHG performance standards for some entities not covered by the cap-and-trade program 40

41. V. US Congressional Action on GHGs The Senate and House Bills – differences  The Senate bill contained a slightly lower emissions cap between 2017 and 2029  House & Senate bills each exempted certain entities from some provisions of the CAA, but the exemptions differed  The House bill included a regulatory system for the carbon market for trading GHG units among private parties; the Senate bill did not address that subject  The House bill allowed 50% of offsets to be international; the Senate bill allowed only 25% of offsets to be international  The House bill imposed a border charge (an “international reserve allowance” scheme) on imports from countries with inadequate GHG policies – effectively a compensatory tariff _______________________________________________________  No legislation was adopted and made law 41

42. 42  New Members of the House of Representatives in the 112 th and current 113 th Congress, almost all Republicans, oppose any program to regulate GHG – they doubt the GHG science and generally oppose more regulation. They do not have a majority in the Senate, however  The 112 th Congress did not try to enact a cap-and-trade program like the bills considered in the 111 th Congress  On February 18, 2011 the House voted 249-177 to prohibit EPA from regulating GHGs and to cut EPA’s budget by 30%. The Senate and President Obama opposed, and they were dropped V. US Congressional Action on GHGs No Progress in the 112 th and 113 th Congresses

43. VI. Authority to Regulate GHG under the CAA Provisions of the Clean Air Act  Environmentalists argued that the US Environmental Protection Agency (EPA) already had authority to regulate GHG under existing provisions of the CAA, without Congressional action  regulating GHG emissions from mobile sources (sec. 7521)  setting National Ambient Air Quality Standards (NAAQS) for GHG. Then each State must adopt a State Implementation Plan (SIP), which requires EPA approval, that regulates stationary sources to ensure NAAQS are met (secs. 7409, 7410)  regulating GHGs as “hazardous air pollutants” (sec. 7412)  regulating GHGs from new sources as “designated air pollutants” (sec. 7411)  regulating GHGs as “international pollution” (sec. 7415)  regulating GHGs under “stratospheric ozone” (sec. 7671) 43

44. 44 VI. Authority to Regulate GHG Under the CAA Mobile Sources (42 USC 7521)  CAA requires EPA to regulate emissions from mobile sources (cars and trucks) under uniform national regulations based on best available technology, considering cost  EPA “shall by regulation prescribe... standards applicable to the emission of any air pollutant from any class... of new motor vehicles... which in [the EPA Administrator’s] judgment cause[s], or contribute[s] to, air pollution... reasonably... anticipated to endanger public health or welfare”  “Air pollutant” is defined to include “any air pollution agent..., including any physical, chemical... substance... emitted into... the ambient air”  “Welfare” is defined to include “effects on... weather... and climate”

45. 45 VI. Authority to Regulate GHG Under the CAA Rulemaking Procedure under the CAA [enacted 1970]  A Notice of Proposed Rulemaking shall be published in the Federal Register, accompanied by a statement of its basis and purpose, and shall specify the period available for public comment. The statement of basis and purpose shall include a summary of — (A) the factual data on which the proposed rule is based; (B) the methodology used in obtaining the data and in analyzing the data; (C) the major legal interpretations and policy considerations underlying the proposed rule  The promulgated rule shall be accompanied by a response to each of the significant comments, criticisms, and new data submitted during the comment period

46. 46 VI. Authority to Regulate GHG Under the CAA Judicial Review of CAA Rulemaking  Any person may commence a civil action on his own behalf —  against any person (including the United States, and any other governmental instrumentality or agency...) who is alleged to... to be in violation of an emission standard or limitation under this chapter or an order issued by the Administrator or a State  against the Administrator where there is alleged a failure of the Administrator to perform any act or duty under this chapter which is not discretionary with the Administrator  A petition for review of... final action taken, by the Administrator... may be filed only in the United States Court of Appeals for the District of Columbia

47. 47  A court may reverse a rulemaking found to be —  arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;  contrary to constitutional right, power, privilege, or immunity;  in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; or  without observance of procedure required by law VI. Authority to Regulate GHG Under the CAA Judicial Review of CAA Rulemaking (continued)

48. 48  In Chevron v. NRDC, 467 U.S. 837 (1984), the Supreme Court held that when, reviewing EPA’s interpretation of the CAA  If the intent of Congress is clear, the court as well as the agency must give effect to Congress’ unambiguously expressed intent  If the statute is silent or ambiguous with respect to the specific question, the issue for the court is whether the agency's answer is based on a permissible construction of the statute VI. Authority to Regulate GHG Under the CAA Judicial Review of CAA Rulemaking (continued)

49. 49 VI. EPA Authority to Regulate GHG Under the CAA Judicial Review of CAA Rulemaking (continued)  This statutory authority is limited by the Article III, Section 2 of the Constitution, which limits Federal courts to hear only “cases or controversies.”  The Federal courts cannot give advisory opinions, but only decide actual controversies where the court’s decision will have an effect on the parties  The Supreme court has ruled that to have standing to bring a case, a Petitioner must show –  injury, causation, and redressability  “such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court depends”

50. 50  In 1999, Massachusetts and other States and NGOs petitioned EPA to regulate GHGs from mobile sources. In 2001, EPA requested and received nearly 50,000 public comments on the petition. In 2003, EPA denied the petition. EPA concluded  it lacked authority under the CAA to regulate carbon dioxide and other greenhouse gases (GHGs) for climate change purposes  even if it had authority, it would not regulate mobile source GHGs for policy reasons: o scientific uncertainty about the impact of GHG o ineffectiveness, since rules would control a small % of GHG o unilateral action would harm efforts for global agreement  In 2005, the 3-judge DC Court of Appeals split 3 ways –  1 judge would grant petitioners’ standing and reverse EPA  1 judge would grant petitioners’ standing but uphold EPA  1 judge would deny standing and (if necessary) uphold EPA The combined ruling upheld EPA’s decision to deny the Petition VII. Massachusetts v. EPA, 200 US 321 (2007) Background - EPA and lower court decisions

51. 51  In 2007, the US Supreme Court reversed the Court of Appeals decision by a 5-4 vote. First, it held that at least one petitioner has standing:  The US Constitution only allows the Federal courts to decide “cases or controversies;” it cannot give advisory opinions.  In this case Massachusetts has standing, in light of (1) Congress’ authorization for “any person” to challenge an EPA action under the CAA (2) the likely adverse effect of rising sea levels on State land (3) the likelihood that EPA action will reduce the injury to some degree, even if other GHG emissions are not controlled VII. Massachusetts v. EPA, 200 US 321 (2007) US Supreme Court Decision - standing

52. 52  On the substance of the argument, the Court agreed with Massachusetts, reasoning as follows:  EPA agrees with petitioners that GHGs contribute to global warming. EPA’s failure to regulate GHG therefore contributes to petitioners’ injury  GHGs fall within the statutory definition of air pollution. The injury that petitioners seek to avoid is an adverse effect on their welfare  EPA does not have authority to decline to regulate for non- statutory policy reasons when Congress has established the criteria for decision in the statute  EPA’s rejection of the Petition is therefore “arbitrary, capricious,.. or otherwise not in accordance with law” http://www.supremecourt.gov/opinions/06pdf/05-1120.pdf VII. Massachusetts v. EPA, 200 US 321 (2007) US Supreme Court Decision - merits

53. 53  In July 2008, EPA filed an Advance Notice of Proposed Rulemaking on the findings below, and in April 2009 filed a Proposed Rulemaking. EPA received 380,000 comments from the public  In December 2009, EPA issued two final GHG findings:  “Endangerment”: Current and projected concentrations of the six key GHGs in the atmosphere threaten the public health and welfare of current and future generations  “Cause or Contribute”: Emissions of these GHGs from new motor vehicles and new motor vehicle engines contribute to GHG pollution which threatens public health and welfare http://www.epa.gov/climatechange/endangerment/downloads/Federal_Register- EPA-HQ-OAR-2009-0171-Dec.15-09.pdf VIII. EPA Action 2008 – Immediate responses to Massachusetts v. EPA

54. 54  In December 2010 EPA entered into two proposed Settlement Agreements with the Petitioners in Massachusetts v. EPA. They require EPA to issue rules controlling GHG from natural gas, oil, and coal-fired electric generating units (EGUs), and from refineries.  These two classes of sources cause 40% of the US GHG emissions from stationary sources. http://www2.epa.gov/carbon-pollution-standards/2013-proposed-carbon- pollution-standard-new-power-plants VIII. EPA Action 2008 – Immediate responses to Massachusetts v. EPA

55. 55  On September 15, 2009 EPA proposed GHG regulations for new motor vehicles  “A New Generation of Clean Vehicles” In 2010 EPA and the National Highway Traffic Safety Administration (NHTSA) began taking coordinated steps to enable the production of a new generation of clean vehicles, through  reduced GHG emissions and improved fuel efficiency from on-road vehicles and engines  GHG regulations for trucks and further regulations for autos http://www.epa.gov/oms/climate/regulations.htm#1-1  Commitment Letters from stakeholders A broad range of stakeholders, including the California and major automobile and truck manufacturers, supported this effort VIII. EPA Action 2008 – Motor Vehicle Emissions

56. 56  Final GHG Tailoring Rule  On May 13, 2010, EPA set GHG emissions thresholds to define when permits are required under the New Source Review Prevention of Significant Deterioration (PSD) and Title V Operating Permit (NSPS) regulations governing new and existing industrial facilities  This rule "tailors" the requirements of these CAA permitting programs to apply only to the largest GHG emitters: EGUs, refineries, cement producers  Facilities responsible for nearly 70% of the US GHG emissions from stationary sources will be subject to permitting requirements under this rule VIII. EPA Action 2008 – GHG Limits for Major New Stationary Sources

57. 57  Standards for New Electric Generating Units (EGUs)  On September 2013 EPA issued a revised set of proposed rules for new natural, gas, oil, and coal-fired EGUs. The proposed rules would establish new source performance standards (NSPS) for new and modified EGUs.  Forthcoming Standards  A later rulemaking will establish emission guidelines for existing EGUs. Under the CAA, State governments regulate existing sources under their State Implementation Plans and rules.  For oil refineries, EPA would pursue a comprehensive approach simultaneously addressing different types of air pollution (GHG, toxics and “criteria” pollutants) from refineries http://www.epa.gov/climatechange/EPAactivities/regulatory- initiatives.html#stationary VIII. EPA Action 2008 – GHG Limits for New and Existing EGUs and for Oil Refineries

58. 58 “We, the people, still believe that our obligations as Americans are not just to ourselves, but to all posterity. We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations. “Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires and crippling drought and more powerful storms. “The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition; we must lead it.” President Barack Obama, Second Inaugural Address, January 21, 2012 IX. Presidential Action 2009 – Presidential Declaration of Policy

59. 59 1. Reducing Emissions:  Directs EPA to work closely with states, industry and other stakeholders to establish carbon pollution standards for both new and existing power plants  Makes up to $8 billion in loan guarantee authority available for a wide array of advanced fossil energy and efficiency projects to support investments in innovative technologies  Directs the Interior Department to permit enough renewables projects — like wind and solar – on public lands by 2020 to power more than 6 million homes; designates the first-ever hydropower project for priority permitting; and sets a new goal to install 100 megawatts of renewables on federally assisted housing by 2020; maintains the commitment to deploy renewables on military installations IX. Presidential Action 2009 – President’s Climate Action Plan, June 2013

60. 60 1. Reducing Emissions (continued)  Expands the President’s Better Building Challenge, helping commercial, industrial, and multi-family buildings cut waste and become at least 20 percent more energy efficient by 2020  Sets a goal to reduce carbon pollution by at least 3 billion metric tons cumulatively by 2030 – over half of the annual carbon pollution from the U.S. energy sector – through efficiency standards for appliances and federal buildings  Commits to partnering with industry to develop fuel economy standards for heavy-duty vehicles to reduce fuel prices and further reduce reliance on foreign oil and fuel after 2018  Leverages new opportunities to reduce pollution of highly-potent HFCs; directs agencies to develop a comprehensive methane strategy; and commits to protect forests and critical landscapes. IX. Presidential Action 2009 – President’s Climate Action Plan, June 2013

61. 61 2. Impact Mitigation  Directs Federal agencies to support local climate-resilient investment; establishes a short-term task force of state, local, and tribal officials to advise on Federal actions to help strengthen communities  Pilots innovative strategies in the Hurricane Sandy-affected region to strengthen communities against future extreme weather and other climate impacts; agencies will update flood-risk reduction standards for all federally funded projects  Seeks to create sustainable, resilient hospitals to deal with climate change using a public-private partnership with industry  Maintains agricultural productivity by delivering science-based knowledge to farmers, ranchers, and landowners; creates a National Drought Resilience Partnership and expands forest- and rangeland- restoration efforts to make them less vulnerable to catastrophic fire  Provides preparedness tools for state, local, and private-sector leaders through a centralized “toolkit” and a Climate Data Initiative IX. Presidential Action 2009 – President’s Climate Action Plan, June 2013

62. 62 3. International Leadership  Commits to expand major new and existing international initiatives, including bilateral initiatives with China, India, and other major emitting countries  Leads global sector public financing towards cleaner energy by calling for the end of U.S. government support for public financing of new coal-fired powers plants overseas, except for the most efficient coal technology available in the world's poorest countries, or facilities deploying carbon capture and sequestration technologies  Strengthens global resilience to climate change by expanding government and local community planning and response capacities IX. Presidential Action 2009 – President’s Climate Action Plan, June 2013