US: EPA administrator says 111D rules will give flexibility

07 April 2014 23:07 Source:ICIS

The US Environmental Protection Agency (EPA) administrator said the body will give states “enormous flexibility” to meet the upcoming rules on how existing power plants should cut carbon emissions, leaving the door open for them joining existing regional cap-and-trade programmes.

Gina McCarthy said the agency would allow flexibility for the proposed rules that could foster collaboration between states and the federal government. She was speaking at a Bipartisan Policy Center event on Monday.

The rules are set to be unveiled in June, and McCarthy said a draft was sent to the office of management and budget to be reviewed. The rules proposed in June, however, could be changed before the final version is submitted in June 2015.

While adding few details, she said the rules would not create a cap-and-trade programme or institute a carbon tax.

Traders believe the upcoming regulation could give states an incentive to join existing carbon programmes, because a regional approach could minimize the impact on power producers who could see higher compliance costs in a solo programme.

California and the states involved in the Regional Greenhouse Gas Initiative (RGGI), the US Northeastern carbon programme, sent a letter to McCarthy last year that asked the EPA to give states flexibility in complying with the rules. Various EPA officials have stressed over the past few months that they intend to give states that flexibility ( see EDCM 26 February 2014 ).

Environmental lawyers are expecting the rules to be challenged in court. Republican politicians, who oppose the rules, could also try to prevent the rules by enacting legislation. Dan X. McGraw

By Dan X. McGraw