REGULATION

U.S.-China climate deal will create some stormy political weather

A climate deal between the United States and China could spur new regulations on vehicle-efficiency standards, refrigerant pollutants and methane emissions from the oil and gas sector, launching a new round of executive action that is sure to raise objections from a Republican-dominated Congress.

President Obama agreed Tuesday to cut greenhouse gas emissions between 26 and 28 percent below 2005 levels by 2025, effectively doubling the U.S. pace for reductions, according to the White House.

At least some of that amount can be achieved through regulations already in the pipeline, mainly U.S. EPA's draft rule to slash carbon emissions from the power sector and other measures included in the administration's Climate Action Plan. But more of it will have to come from tightening regulations or expanding to more sources of emissions.

The administration has yet to release the calculations behind the new targets, but EPA Administrator Gina McCarthy said yesterday that the "entire target was based on a thorough interagency review of the available tools in each of the agencies -- the ones that are outlined in the Climate Action Plan, but also other tools and initiatives that could be teed up and brought to fruition quickly enough."

The Center for Climate and Energy Solutions estimates that about 14 percent of the reductions between 2005 and 2025 are already baked into proposed regulations.

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Senior Fellow Kyle Aarons said at least 10 percent could come from state progress on cutting carbon emissions from the power sector, assuming the draft rule moves ahead as proposed. Another 4 percent could come from parts of the Climate Action Plan that are already in progress -- including finalized fuel standards for new cars.

Those predictions leave the United States about halfway from the new target. McCarthy said the administration will build upon vehicle fuel emissions rules, regulations to reduce hydrofluorocarbons (HFCs) from refrigeration and air conditioning units, and future proposals to cut methane emissions from oil and gas production, as well as EPA's proposal to cut carbon emissions from the power sector.

The administration could also be taking advantage of predictions about how economic conditions and the increased use of natural gas might bring down emissions, according to James Rubin, an attorney with Dentons.

A reach beyond existing programs?

But Aarons said the Obama administration will need more than just existing programs to meet the goal. He noted that efficiency standards for appliances, buildings and industrial sources could all be ripe for regulation, as could standards for heavy-duty vehicles, or large trucks.

Former Energy Department Assistant Secretary for Policy Susan Tierney, now a principal in the Boston-based Analysis Group, said regulations underway put the United States "well on the pathway ... but many of them would need to be tightened up."

Tierney doesn't expect EPA to ask for more cuts from the power sector, although she thinks the White House is assuming that states will end up overshooting their required reductions once they start implementing their plans in 2020.

Power plants account for about a third of greenhouse gas emissions in the United States, and more reductions there would go a long way.

In EPA's proposed Clean Power Plan, states have between 2020 and 2029 to achieve their final targets, but many of those cuts would have to happen early on and could be a big part of how the White House plans to reach its raised target by 2025.

While the administration argues that there are plenty of venues for more cuts that don't require legislative action, Jeff Holmstead of Bracewell & Giuliani, a former EPA air chief, said he doesn't see the United States achieving its initial goal of cutting emissions 17 percent by 2020, much less a heightened target of 26 percent by 2025.

"[The initial figure] really includes all the low-hanging fruit, so additional reductions become more difficult and more expensive," Holmstead said.

Pushback from the new Congress

And the new targets could confront the Obama administration with more congressional pushback on climate work. Even as policy wonks speculated on where the U.S. emission cuts would come from, Republicans were harmonizing around a dire message -- that China is an untrustworthy partner and is outmaneuvering Obama.

Andrew Wheeler, a former staff director for the Senate Environment and Public Works Committee under Sen. Jim Inhofe (R-Okla.), called the announcement a "sweetheart deal" for China.

He predicted that Inhofe, who is poised to chair the committee, will open a series of hearings to explore how the agreement will affect energy prices in the United States and China and whether it could send U.S. manufacturing jobs overseas.

"It's kind of unilateral disarmament with China," said Wheeler, now a lobbyist with Faegre BD Consulting. "They want to make sure they have competitive advantage on the price of electricity for manufacturing goods. So they're trying to enter into these negotiations with Western countries to make sure that our energy prices stay higher than theirs."

There's also concern that the next administration could be saddled with rules it doesn't want, potentially setting up an elaborate unwinding of Obama-era regulations. Or, as some observers predict, the president might choose to institute the carbon goals through executive orders, having perhaps too little time left in his term to finalize regulations.

'Rescindable' orders

If that's the case, the agreement could hinge on who wins the presidency in 2016, said Mark McIntosh, who advised former Utah Gov. Jon Huntsman during the Republican primaries for president in 2012.

"They are rescindable," McIntosh said of executive orders.

He recalled that GOP presidential candidates two years ago studied all of Obama's first-term executive orders in preparation to kill a number of them when entering office.

More broadly, the agreement follows a disastrous midterm election for Democrats last week, revealing divisions between the party's legislative branch and Obama. It appears that the announcement could reinforce the idea that Obama's climate policies produce political discomfort for Democrats in conservative states.

Sen. Joe Manchin (D-W.Va.) said that he's "encouraged" by China's participation in the agreement, but otherwise views the arrangement suspiciously.

"We cannot enter into an agreement that asks little of the Chinese, while simultaneously promising more than we can achieve domestically with our current technology," Manchin said in a statement.

The pact also comes days after environmental groups and Obama accused many Republicans of denying climate change, prompting, perhaps predictably, a strong reaction from the GOP that will likely translate into probing committee hearings.

"I do believe there will be a lot of questions about the credibility and the reliability of the deal," said McKie Campbell, a former staff director of the Senate Energy and Natural Resources Committee under Sen. Lisa Murkowski (R-Alaska).

"The impact on the U.S. economy will be immediate. If the Chinese hold by the deal, their impact will be a lot later," Campbell said.

Reporter Robin Bravender contributed.

Twitter: @emilyhholden | Email: eholden@eenews.net

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