President Barack Obama will use his executive authority to cut carbon emissions from the nation’s coal-fired power plants by up to 20 percent, according to people familiar with his plans, and will force industry to pay for the pollution it creates through cap-and-trade programs across the country.
The president on Monday will unveil his plans in a new regulation written by the Environmental Protection Agency. It would be the strongest action ever taken by a U.S. president to tackle climate change and could become one of the defining elements of Obama’s legacy.
Cutting carbon emissions by 20 percent — a substantial amount — would be the most important step in the administration’s pledged goal to reduce pollution over the next six years and could eventually shut down hundreds of coal-fired power plants across the country.
The regulation would have far more impact on the environment than the Keystone pipeline, which many administration officials consider a political sideshow, and is certain to be met with opposition from Republicans who say Obama will be using his executive authority as a back door to force through a cap-and-trade policy he could not get through Congress.
Several Midwestern states could be hard hit by the regulations since they rely heavily on coal to generate electricity. Missouri relies on coal to generate 83 percent of its electricity. Kansas is less at 61 percent, in part because of wind energy, but still above average.
People familiar with the rule say that it will set a national limit on carbon pollution from coal plants but that it will let each state come up with its own plan to cut emissions based on a menu of options that include adding wind and solar power, energy efficiency technology and creating or joining state cap-and-trade programs.
Cap-and-trade programs are effectively carbon taxes that place a limit on carbon pollution and create markets for buying and selling government-issued pollution permits. They originally were a Republican idea as a more free market approach than a straight carbon tax would be.
But now electric utility trade groups have warned that customers in the hardest-hit states would see sharply higher costs as steps are taken to reduce carbon dioxide emissions.
The Natural Resources Defense Council said Thursday that those were scare tactics. The goals to reduce carbon emissions, the environmental group asserted, could be met in large part with energy efficiency efforts that would create jobs in a state like Missouri and save consumers money since less power would be used.
Coal plants are the nation’s largest source of the greenhouse gases that scientists say are the chief cause of global warming.
In his first term, Obama tried to push a cap-and-trade bill through Congress, but it died in the Senate in 2010. Republicans, tea party groups and the coal industry attacked Democrats who supported it, criticizing the legislation as a “cap-and-tax” that would raise energy prices.
“This EPA regulation will breathe life into state-level cap-and-trade programs,” said Peter Shattuck, director of market initiatives at ENE, a Boston-based climate policy advocacy and research organization.
Many states are already researching how to join or replicate the nation’s two existing state-level cap-and-trade plans, both of which bear the signatures of prominent Republicans: Mitt Romney, the 2012 presidential nominee and former Massachusetts governor, and Arnold Schwarzenegger, the former California governor.
As governor of Massachusetts, Romney was a key architect of a cap-and-trade program in nine northeastern states, the Regional Greenhouse Gas Initiative. He worked closely at the time with a top Massachusetts environmental official, Gina McCarthy, who today is immersed in the Obama administration’s new rule as the administrator of the EPA. Romney later disavowed the regional cap-and-trade program.
Despite the fierce Republican opposition, a number of officials at electric utilities say they welcome cap-and-trade programs because they offer an affordable and flexible way to comply with the new regulation.
“By trading on carbon credits, we'll be able to achieve significantly more cuts at a lower cost,” said Anthony J. Alexander, president and CEO of FirstEnergy, an electric utility with power plants in Maryland, New Jersey, Ohio, Pennsylvania and West Virginia. “The broader the options, the better off we’re going to be.”
John McManus, vice president of environmental services at American Electric Power, which has coal-fired power plants in 11 states, agreed.
“We view cap-and-trade as having a lot of benefits,” he said. “There’s important design considerations that would have to be factored in to consider each state’s circumstances. But we think it’s definitely worth looking at. It could keep the cost down. It would allow us to keep coal units running for a more extended period. There are a lot of advantages.”
Cap-and-trade was born in 1990 during the administration of President George Bush as a centerpiece of amendments to the 1970 Clean Air Act. Conceived as a business-friendly way to cut pollution without heavy-handed regulation, the idea was that the cap would ratchet down each year, allowing less pollution while market forces drive up the price of permits, creating an incentive for industries to invest in lower-polluting sources of energy.
In 2006 in California, Schwarzenegger signed a pioneering state cap-and-trade law. As the Republican presidential nominee in 2008, Sen. John McCain of Arizona pledged to implement a nationwide cap-and-trade law.
The Star’s Steve Everly contributed to this report.