How politically vulnerable is U.S. EPA's rule for existing power plants heading into the midterm elections? During today's OnPoint, David Cash, commissioner at the Massachusetts Department of Environmental Protection, discusses pressure on the agency to change the rule and its targets before it becomes final. He also makes the case for an emissions trading bank that could facilitate state compliance with the rule.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is David Cash, commissioner at the Massachusetts Department of Environmental Protection. David, it's nice to have you back on the show.
David Cash: Great to be here again.
Monica Trauzzi: David, since we last had you on the show the dialogue on EPA's Clean Power Plan has progressed significantly.
David Cash: It has.
Monica Trauzzi: The agency has sent strong indications that it plans to make some changes as it heads towards a final rule. How far can the agency scale things back and still maintain the integrity of the plan?
David Cash: It doesn't seem to me that EPA is planning on scaling back. My sense is what EPA has been doing throughout this process is trying to figure out the way to maintain the environmental stringency while providing the kind of flexibility that states are asking for. And that seems to be the direction that -- my understanding is that's the direction it's going.
Monica Trauzzi: So you don't think we're going to see any reduction in state targets?
David Cash: I think that there will probably be here and there reductions and maybe even increases in other states, depending on what kind of comments that the EPA is getting.
Monica Trauzzi: With the delay to the public comment period, do you think the agency will still be able to meet the aggressive timeline that they have to establish a final rule?
David Cash: Yeah, I think so. I think it's been very clear that the president has really been pushing this agenda, and the administrator has this as a high priority for her and the agency.
Monica Trauzzi: The president's pushing the agenda, but we are seeing EPA's Clean Power Plan make its way into political discussions, certainly heading into the midterm elections, both in coal and non-coal states. How politically vulnerable is the rule as we start to get closer to the midterms and as the general public starts to become more aware of it?
David Cash: Yeah, I think, you know, of course this has been a political hot button. In some ways I'm scratching my head about that because I think as the administrator has talked about and as states like Massachusetts and many others have seen, there are big economic opportunities by addressing climate change. We have seen growth in our clean energy sector, we have seen cost reductions, we have seen innovation -- everything a state would want in terms of economic development, and that's been replicated in many states. So, you know, obviously there's a lot of political discussions going on, but I think-
Monica Trauzzi: And in all fairness, we've said this before on this show, Massachusetts is not super-coal-heavy like some of these other states.
David Cash: No, it's not.
Monica Trauzzi: And that's where the key issue is in those coal-heavy states.
David Cash: Sure, but again I think there are states that have very different economies than ours that are seeing big advantages as well.
Monica Trauzzi: So if Republicans take the Senate we're likely to see strong efforts to halt the rule. Do you think we could see things go as far as the threat of a government shutdown over these regulations?
David Cash: Ooh. Yeah, you're way out of my league on this one.
Monica Trauzzi: Yeah. Is early action by states addressed significantly enough in the proposal?
David Cash: So there are a lot of questions that we have. As you know we're an early action state. There are parts of the rule that we have seen that doesn't give us enough credit; we'd like to see that kind of credit. But we'd also like to see the actions that we take other states have the ability to replicate, and I'm particularly talking about trading. Trading -- it's really interesting. I've been over the past months, as you know, in many conversations with commissioners from other states, environment commissioners and with PUC commissioners. That used to be my role. And there's a lot of concern about the building blocks, how to put the building blocks together, particularly in a state that's taken no action. And it just seems like a trading program solves so many of those problems. It's clear, the goals are set, it's more cost-effective, government doesn't have to be involved in designing specific kinds of programs. And I would suggest that EPA or a third party create some kind of plug-and-play emissions trading bank, something where you don't have to join RGGI. You don't have to join California. But if there's this third-party bank that a state that's interested in going this route can essentially join without a lot of administrative hassle, I think there'd be big benefits. And I think states are going to start seeing that. As they start trying to cobble together all of their programs, if they see that if they put a cap and that cap drives the economy, drives innovation, drives the most cost-effective reductions, I think we're going to see big benefits.
Monica Trauzzi: So when you consider these emissions trading partnerships, are the benefits equal to all states, or do states who've acted early lose out of it?
David Cash: Really good question, and that is something that we are asking EPA about. That is, in a world in which there are different stringencies, it raises the question about how the aggregate cap might work. And our goal would be that there would be equity and fairness about what the stringency is, and that would promote the kind of trading program that we're looking at.
Monica Trauzzi: Massachusetts is a part of the Regional Greenhouse Gas Initiative -- recently New Jersey Gov. Chris Christie was saying he thinks RGGI is a completely useless plan. Are regional plans less successful if not all the states within a region participate?
David Cash: It's actually just as effective. You know, carbon is one of these kinds of pollutants that regardless of where it's emitted, it causes problems. So we've actually had some queries from states who are far afield from RGGI who have said, "What would it be like if we joined RGGI? How would that work given that we're far afield?" There's no question that CO2 is the perfect pollutant for a noncontiguous region, if you will.
Monica Trauzzi: How many states-
David Cash: Which is, by the way, why a kind of clearinghouse trading emissions bank would be perfect, because then no matter where you are, you can plug and play.
Monica Trauzzi: How many states would RGGI be interested in sort of having join?
David Cash: I think ultimately RGGI would be interested in all 50 states be part of a trading program. That would reduce costs. That would be the most economical way to do it. In fact, what's so interesting is that trading programs came from neoconservative economists who in the '80s and '90s said the cheapest way to reduce SO2 in the acid rain program was at the trading program. So this is another head-scratcher for me, why there's a lot of pushback on this program that's the most economical, most efficient way of getting cost-effective reductions.
Monica Trauzzi: So do you think we'll see EPA moving towards establishing some kind of bank?
David Cash: I don't know; that's a good question. It's been clear that they are encouraging regional efforts. I think another step would be EPA or again some kind of third party, or EPA helping a third party, start this, some kind of plug-and-play trading bank.
Monica Trauzzi: All right, very interesting. We'll end it there. Thank you for coming on the show.
David Cash: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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