US Republicans try to block carbon emission rules

20 January 2014 18:30 Source:ICIS

A Republican Senator plans to use a little-used provision to derail the US Environmental Protection Agency’s (EPA) rule on new power plants.

Republican Mitch McConnell of Kentucky told the US Senate on Thursday that he plans to file a resolution of disapproval under the Congressional Review Act (CRA). If approved by the US House of Representatives, the Senate and President Barack Obama, it would nullify the rules recently submitted to the Federal Registry. The rule has only been used successfully once, when it was used in 2001 to repeal a Department of Labor rule on ergonomics.

“We believe the EPA regulation in question clearly meets the definition for congressional review under this statute,” McConnell said.

The EPA formally submitted rules last week that would limit emissions from new coal-fired plants to 1,100 pounds of CO2e per MWh on 8 January. Large natural gas-fired plants would be limited to 1,000 pounds of CO2e/MWh, and small natural gas-fired plants could not emit more than 1,100 pounds of CO2e/MWh.

Critics said the rules would make it hard to construct new coal-fired power plants inside the state without carbon storage and sequestration (CSS), which Republicans claim is too costly and onerous.

The California Air Resource Board (ARB) said it does not believe the rules for new power plants would have any significant impact on its cap-and-trade system. A bulk of new plants in the state are powered by natural gas, renewables or a combination of multiple fuel sources.

EPA’s rule on existing power plants

The EPA is still working on rules for existing power plants, or the so-called 111(d) rules. Some market participants believe those rules could change the landscape of the carbon market in the United States, especially for California.

Traders believe those rulings could give other states an incentive to join California’s cap-and-trade programme or the Regional Greenhouse Gas Initiative (RGGI), the country’s first emissions trading system, which focuses solely on the electricity generation sector.

The sentiment among market participants polled by ICIS is states may be more willing to join the RGGI system, because the programme only regulates the electricity sector and is much more simpler than California.

However, some traders believe California could be an attractive option for former Western Climate Initiative (WCI) members such as Washington and Oregon.

“I can’t see them joining RGGI,” a carbon consultant said. Dan X. McGraw

By Dan X. McGraw