IETA's Forrister discusses future of EPA air regulations for new and existing sources

What could a delay in U.S. EPA's New Source Performance Standards mean for the future of emissions regulation? During today's OnPoint, Dirk Forrister, CEO of the International Emissions Trading Association, weighs in on a possible delay and explains why he believes a simplified cap-and-trade measure is the best approach to emissions reduction in the United States.


Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Dirk Forrister, CEO of the International Emissions Trading Association. Dirk, thanks for coming back on the show.

Dirk Forrister: Thank you. Good to be here.

Monica Trauzzi: Dirk, we're hearing that the Obama administration has plans to delay its greenhouse gas rule for new power plants. What do you believe is the reasoning behind the move? Industry is saying that perhaps they're doing this because the rule is unworkable. Do you think that's why?

Dirk Forrister: Well, I don't know if it's unworkable or if it's just that maybe the process is working, that they've received comment, they think there are improvements that should be made. Maybe they're considering the interplay between the new source rule and the existing source rule down the line. So I think there are a number of factors that could be playing into it.

Monica Trauzzi: There's some speculation that this is just a tactical move, waiting on Gina McCarthy's confirmation to administrator, or, is it that, or could we be seeing EPA sort of retreating from its original position?

Dirk Forrister: I'm doubtful that they're retreating. My suspicion is that they're more intent on getting it right, and that they've maybe learned some things in the process of discovery, if you will, of getting comments in, and that they think there are improvements that should be made. So certainly the timing makes it appear that there's some link to the confirmation, but my sense is that it's probably in the cards in terms of the comments that they've received.

Monica Trauzzi: How critical is the precedent provided by this rule, or the potential precedent provided by this rule, to the U.S.'s overall push on emissions?

Dirk Forrister: Well, I think it's one of the major elements, this and the progress that they've already made in the transport sector, sort of a major component to what they're doing. Now when I say major, I mean the full set of rules from, involving new and existing sources, because there aren't that many new power plants being constructed that would, that this rule would impact, the new source rule. So the real action is more in the existing source rule, which was always going to take more time anyway.

Monica Trauzzi: The National Mining Association says the U.S. should stop trying to block new coal-fired power plants, and instead focus on efficiency. Could that be an effective approach? And is that more of a safe way in terms of the economics of all of this?

Dirk Forrister: Well, I think efficiency is one element that they need to take into account, but when you look at where the U.S. needs to get to over time to do its fair share of the global emissions effort, it's going to involve more than just efficiency. So I think they've got a piece of it right, but they're not telling the whole story.

Monica Trauzzi: What are your expectations for Gina McCarthy if she's confirmed?

Dirk Forrister: Well, Gina's, my dealings with her have always been quite pleasant. She's matter of fact. She's common sense. She's someone who likes to get things done. So I think she's going to be a terrific administrator if she's confirmed. She's certainly got the background for it, and I think she's got respect on both sides of the aisle, from having worked for both Democrats and Republicans. So I thought it was a terrific choice.

Monica Trauzzi: We're awaiting a final decision on the Keystone Pipeline. Does approval of the pipeline go against the rhetoric and the efforts that we've seen by this administration on climate change? Or could it work with some type of climate action?

Dirk Forrister: Well, I think the, in my own estimation, the decision on the pipeline itself isn't where the real action is. It should, much more of the focus should be going into the broader regulatory effort, and in fact, most of the effort should be on designing a new, workable law, a new law, not working with old laws. And I thought that was the most important thing that the President put forward in his State of the Union message, was a desire to get back to bipartisanship on this issue, to get back to that place where McCain and Lieberman left off, and working together for a bipartisan, market-based solution. And the rest of this, you know, the pipeline decision is a little bit of a sideshow, I'm afraid, because it's not really where the action should be done. It's - the focus should be on how are we going to reduce emissions from our major sources across the country.

Monica Trauzzi: So a new, workable law. Does that mean a carbon tax? We've seen Boxer and Sanders propose something already. Is that the right direction?

Dirk Forrister: Well, I'm an old veteran of the Btu tax, so I'm not one that thinks that taxes are easy and simple and more effective. In fact, I think they're the opposite. I think they get complex really quickly, and that they don't work that well to reduce emissions. So you'll be surprised to learn that I think they ought to return to a simplified cap and trade program that you don't have to have a 1,400-page cap-and-trade bill. You can do cap and trade in under 50. And the Europeans proved that that could be done. The Californians have proved that it could be done. So I, that's the direction I think that a bipartisan group should look at, and I think that's going to be more attractive than taxes, because in the U.S., we're never in favor of new taxes.

Monica Trauzzi: So we have a big regulatory push right now, because it doesn't look like legislation will move. Are you suggesting that maybe that is not the best way to approach this, and that it should be approached through legislation?

Dirk Forrister: Right. I, that's exactly what I think. I think the regulatory route is everybody's third or fourth choice. I don't disagree that the agency shouldn't be moving ahead, because the courts have sort of continually pushed them in that direction, that if they think it's a problem, they ought to use their authority to address it. I just think that it's impossible under existing regulation to put together the full set of comprehensive, cost effective solutions, international linkages, trade protections. Those need legislation. And so that's why I think that ultimately we're going to come back around to the point that some people on Capitol Hill need to get together and do their job and pass a bipartisan bill.

Monica Trauzzi: California has often been looked at as an example of what the United States might be able to do more broadly in the future. Right now, though, we're hearing that linkage of the California emissions trading system with Quebec's system may not be happening in the near term after all. How does that then impact the future prospects of something more broadly in the United States?

Dirk Forrister: Well, first of all, it's sort of a rumor that I don't know if it's true or not, that they may, that it may take more time. Again, my sense is that they need to get it right, because it will become a model for how other cross-border linkages might work between states or regions. And so I know this isn't exactly simple stuff for a state to work through, plus there's some aspects that I know they need to coordinate with the federal government. I still think it's possible that they could get it done this year. They're talking about a joint auction in August, so there's still some time. But we are waiting for the governor's pronouncement on whether he wants to take it forward, and I'll be looking forward to what the official statements are.

Monica Trauzzi: All right. A lot to watch there. Thank you for coming on the show. Nice to see you.

Dirk Forrister: Thank you, Monica.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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