The U.S. Environmental Protection Agency proposed a national
system for reporting carbon dioxide and other greenhouse gas
emissions by major emitters Tuesday.
The registry, which was originally proposed in a 2007 energy
bill and is funded in U.S. President Barack Obama's 2010 Budget
outline, would lay the foundation for regulation of CO2 and other
gases thought to contribute to global warming.
"Our efforts to confront climate change must be guided by the
best possible information," said EPA Administrator Lisa Jackson in
a statement. "Through this new reporting, we will have
comprehensive and accurate data about the production of greenhouse
gases."
Jackson called the registry a "critical step toward helping us
better protect our health and environment."
Obama's energy and climate czar, Carol Browner, who is widely
believed to be directing the president's global warming agenda, has
told Dow Jones Newswires that the EPA would issue a finding that
carbon dioxide was a danger to the public, and that endangerment
document would trigger regulation.
"EPA...will make an endangerment finding," Browner said in an
interview late last month. A White House aide said later Tuesday
that the energy czar wouldn't be interfering in the scientific
process the EPA is conducting to make that endangerment
determination.
Business groups such as the U.S. Chamber of Commerce and the
National Association of Manufacturers warn that if the EPA moves
forward on regulation of CO2 under the Clean Air Act as proposed -
and which the registry prepares for - it could force the entire
economy to a grinding halt.
Some groups say that the Securities Exchange Commission should
now require companies to disclose to investors the liability that
carbon dioxide regulation represents to their earnings - as the
agency does with lawsuits or other factors that could have a
substantial impact on firms' bottom lines - and a registry
strengthens their argument.
"The SEC needs to protect investors from the risks companies
face from climate change, whether from direct physical impacts or
new regulations," said Mindy Lubber, Director of the Investor
Network on Climate Risk, a group of 77 institutional investors
managing approximately $7 trillion in assets. "Shareholders deserve
to know if their portfolio companies are well positioned to manage
climate risks or whether they face potential exposure," she
said.
For example, utilities such as Duke Energy Corp. (DUK) or
Southern Co. (SO) and oil majors such as Exxon Mobil Corp. (XOM) or
Chevron Corp. (CVX) that know their approximate carbon dioxide
emissions at their coal and refining plants could give the market
guidance based on several different estimates on the cost of
emitting carbon dioxide.
The EPA said around 13,000 facilities, accounting for about 85%
to 90% of greenhouse gases emitted in the country, would be covered
under the registry proposal.
In correspondence to Senators viewed by Dow Jones Newswires,
Jackson said that the Clean Air Act, "when applied carefully and
sensibly, (can) be an appropriate mechanism for regulating some
sources of greenhouse gases."
She also said the Act gives her agency discretion to regulate
emissions "in a way that does not necessitate direct regulation of
all emission sources regardless of their size."
But legal analysts that have been battling environmental
challenges to refineries and power plants say that the EPA's
endangerment finding and greenhouse gas regulations would likely
give many groups the legal foundation to challenge nearly any
emitting source, such as schools, hospitals, and lawnmowers.
The EPA said the new reporting requirements would apply to
suppliers of fossil fuel and industrial chemicals, manufacturers of
motor vehicles and engines, as well as large direct emitters of
greenhouse gases with emissions equal to or greater than a
threshold of 25,000 metric tons a year, which is roughly equivalent
to the annual greenhouse gas emissions from just over 4,500
passenger vehicles.
The vast majority of small businesses would not be required to
report their emissions because their emissions fall well below the
threshold, the agency said.
The direct emission sources covered under the reporting
requirement would include energy intensive sectors such as cement
production, iron and steel production, and electricity generation,
and other energy-intensive operations.
"EPA may find it more difficult than it believes to limit
greenhouse gas regulation under the Clean Air Act to only the
biggest emitters," said Peter Glaser, a partner at the lawfirm
Troutman Sanders who represents utilities. Glaser said
environmental organizations have told EPA that once the agency
starts down the path of regulating carbon dioxide under the Clean
Air Act, it will be under a mandatory legal duty to implement
regulations that will impose requirements on a multitude of small
and large sources in all sectors of the economy.
Businesses would have to report to the EPA in 2011 for the
calendar year 2010, except for vehicle and engine manufacturers,
which would begin reporting for model year 2011. The EPA said it
expected it would cost industry around $160 million in the first
year to comply with the reporting requirements and around $127
million in subsequent years.
The president said he would prefer Congress to pass legislation
that would cap greenhouse gas emissions and create a market to
trade the right to pollute. But political analysts say the
administration is using the threat of regulation of CO2 through the
Clean Air Act - a law that some believe is too blunt an instrument
for regulation of a gas that would impact the entire economy - to
encourage reluctant lawmakers on the Hill to pass its climate
change agenda.
A registry would provide the data for both types of regulation -
a Congressionally created law or EPA rules.
Obama's 2010 budget proposed increasing the agency's funding by
$19 million to pay for the new registration. He also accounted for
the government collecting around $646 billion in "climate revenues"
over the next decade, starting in 2012.
-By Ian Talley, Dow Jones Newswires; (202) 862 9285;
ian.talley@dowjones.com;