Connecting the Dots on Climate Change and Economic Development

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In June 2014, the Environmental Protection Agency (EPA) issued a proposed regulation known as the Clean Power Plan rule. This proposed rule, which is a key component of the President’s Climate Action Plan, is intended to bring about major reductions in emissions of carbon dioxide (CO2) from existing fossil fuel-fired power plants. In the terminology of the proposed rule, these power plants are called “electric generating units” (EGUs). While the rule deals with all utility-scale fossil fuel power plants, it is mainly concerned with power plants that burn coal.

The proposed rule would not apply to Indian country. At least not on its face. The June proposed rule would require states in which there are covered EGUs (every state except Vermont) to develop plans to reduce emissions to achieve certain targets by 2030. EPA refers to these plans as “section 111(d) plans,” after the section of the Clean Air Act that serves as the basis for the rule. Like other state plans under the Clean Act, these plans will generally not apply to Indian reservations because states lack authority to regulate air emissions from sources within reservations. In any case, there are only four known EGUs located within Indian country, on three reservations, and, on November 4, 2014, EPA published a separate proposed Clean Power Plan rule for Indian country. Under the Indian country proposed rule, the tribes that have EGUs within their reservations would have the option of developing a section 111(d) plan, but, if they choose not to, EPA would develop a federal plan, that is, if EPA determines that such a plan is necessary to achieve emissions reductions goals. As for the tribes that don’t have EGUs on their reservations, the Clean Power Plan rule doesn’t apply to them.

When you take a closer look, however, you can see that the Clean Power Plan rule does have implications for Indian country, some of which are rather profound. These implications have to do with the transition in the national economy away from energy derived from burning fossil fuels and toward an economy that uses energy much more efficiently and which gets most of the energy that it does use from renewable resources, especially the sun and wind. The Clean Power Plan rule is intended to help make this transition happen. So, how is it going to work in Indian country? In the Indian country proposed rule, EPA has asked for comments on some of the issues, as discussed later in this article.

Before focusing on the implications for Indian country, first take a look at the big picture. In its Fifth Assessment Synthesis Report, the Intergovernmental Panel on Climate Change (IPCC) predicts that continued emission of greenhouse gases will cause “long-lasting changes in all components of the climate system, increasing likelihood of severe, pervasive and irreversible impacts for people and ecosystems.” For readers who seek detailed information on the likely impacts within the United States, I suggest the National Climate Assessment, which can be found at http://nca2014.globalchange.gov/.

That human activity is causing climate change is beyond reasoned dispute, and the kind of human activity that is the main causation factor is burning fossil fuels. The IPCC says that, over the past four decades, “Emissions of CO2 from fossil fuel combustion and industrial processes contributed about 78% of the total greenhouse gas emissions increase.” In the United States, according to EPA, fossil fuel-fired power plants are the largest source of CO2 emissions, and the electric power sector accounts for 32 percent of total U.S. GHG emissions.

According to IPCC calculations, since 1880 (about the beginning of the industrial revolution), globally averaged combined land and ocean surface temperatures have increased by 0.85 degrees Celsius. In analyzing future climate changes, risks, and impacts, the IPCC has considered a range of scenarios, including a scenario that includes measures to reduce GHG emissions intended to keep the long-term increase in global surface temperature to no more than 2.0 degrees Celsius. The IPCC has predicted that if we can keep from crossing through that two degrees threshold, then we stand a reasonably good chance of avoiding some of the more catastrophic impacts of climate change. The IPCC calculated that, if we can keep the atmospheric concentration of all greenhouse gases to no more than 450 parts per million carbon dioxide equivalent, then we will have a reasonable chance of keeping the warming below the two degrees Celsius threshold.

In the Fifth Assessment Synthesis Report, the IPCC says that to stay below the 450 ppm threshold, we will need to reduce global anthropogenic GHG emissions in the range of 40% to 70% below 2005 levels by 2050, and we will need to further reduce emissions levels to near zero by 2100. The National Climate Assessment says that, to make the lower emissions scenario a realistic possibility, we have about ten years to stop the growth in global emissions of carbon dioxide to reverse the trend. More specifically, the National Climate Assessment says that we need actions “to limit global carbon dioxide emissions to a peak of around 44 billion tons per year within the next 25 years and decline thereafter. In 2011, global emissions were around 34 billion tons, and have been rising by 0.9 billion tons per year for the past decade. Therefore, the world is on a path to exceed 44 billion tons per year within a decade.”

This doomsday talk is a real turn-off, I know, so that’s as far down that track that I’m going in this column. Take a look at the bright side. According to EPA’s analysis, as summarized in the June proposed rule, the Clean Power Plan rule will yield more benefits than costs, and more jobs will be created than lost. Most of those new jobs will be in energy efficiency and renewable energy. The use of energy is pervasive throughout our economic order. Displacing the consumption of fossil fuels with energy efficiency and renewable energy is going to take a lot of investments, and this is going to mean a lot of jobs and business opportunities. The Clean Power Plan rule is going to be a major force driving these investments.

How is this going to happen? In developing their section 111(d) plans, EPA expects the states to use what EPA calls four “building blocks”: (1) making existing fossil fuels plants more efficient; (2) using more low-emitting power sources (i.e., switching from coal to natural gas combined cycle plants); (3) using more zero-emitting power sources (e.g., more wind and solar power); and (4) using electricity more efficiently (including “demand-side” management). Under the proposed rule, the states will have a great deal of flexibility in combining these building blocks, including how much to support renewable energy and efficiency measures to avoid the demand for fossil fuel-fired electricity. In its discussion of building blocks 3 and 4 in the proposed rule, EPA cites examples such as Renewable Portfolio Standards (RPS) and Energy Efficiency Resource Standards (EERS). These kinds of policies are typically authorized in state legislation, implemented by state public utility commissions, and impose responsibilities on investor-owned electric utilities. EPA also takes note of a variety of demand-side energy efficiency programs, without going into much detail.

It is an open question the extent to which any state’s programs to encourage investments in renewable energy and efficiency will operate to encourage such investments in Indian country. My hunch is that, in most cases, the answer is “not much.”

In our national economy, we need to make the transition to the renewable energy future happen, sooner rather than later, if we are to have much hope of avoiding some of the more catastrophic impacts of climate change. The Clean Power Plan rule will be one of the main national programs for making this happen. With states in the lead for developing section 111(d) plans, how will it work in Indian country? And this brings us back to EPA’s request for comments on the proposed Indian country version of the Clean Power Plan rule.

EPA has specifically asked for comments on whether tribes that do not have fossil fuel-fired power plants on their reservations – that is, the great majority of tribes – may participate in multi-jurisdictional plans. In other words, is it even an option for a tribe to work out a deal with a state for the tribe’s reservation to be included in the state plan?

In addition, EPA requests comments on how CO2 emissions avoided through renewable energy generating sources and demand-side management energy efficiency measures from areas without fossil fuel-fired power plants – such as Indian reservations – could be used to adjust or credit CO2 emission rates in states that are required to develop CAA section 111(d) plans. In other words, how can the regulatory system be fashioned so that investments in Indian country get credit for reducing CO2 emissions? Counting such investments in Indian country toward a state’s emissions reduction goal should operate to create incentives for such investments. If emissions reductions from investments in Indian country are not counted, then I’m afraid that Indian country will likely be left behind in the transition to the renewable energy future.

I think these are important questions. The deadline for filing comments is December 19.

Mr. Suagee is of counsel to Hobbs, Straus, Dean & Walker, LLP, in Washington, D.C. He is a citizen of the Cherokee Nation. He may be reached at dsuagee@hobbsstraus.com.