Exelon’s John Rowe, the “Carbon Bandit” may be back for another cap-and-trade raid on taxpayer and ratepayer wallets courtesy of the EPA’s imminent ozone standard.
According to this morning’s Clean Energy Report,
EPA’s plan to offer ‘flexibilities’ to states to ease the implementation costs of its pending revised ozone national ambient air quality standard (NAAQS) could include emissions trading among power plants and credit for reducing ozone pollution through energy efficiency, renewable portfolio standards or demand-side management, sources say.
As nitrogen oxides (NOx) are one of the contributors to ground-level ozone formation and natural gas plants emit more than 50% less NOx than coal-fired plants — and nuclear, wind and solar emit 100% less — it’s not too hard to see how a cap-and-trade system for NOx would also operates as a collateral and de facto cap-and-trade system for carbon dioxide (CO2).
Major legal questions remain about the scope and viability of such flexibilities, particularly on trading after the U.S. Court of Appeals for the District of Columbia Circuit in 2008 remanded to EPA a cap-and-trade rule for power plants designed in part to help cut ozone pollution,
EPA Administrator Lisa Jackson in a July 13 letter to Sen. Tom Carper (D-DE) that,
There is much flexibility in the Clean Air Act that EPA can build into implementation of the reconsidered ozone standard, and I recognize that this flexibility will be critical to states working under constrained resources to continue economic development and job growth. As history has shown us, this flexibility will minimize the costs associated with updating the standard.
The Clean Energy Report notes,
EPA… could allow states to implement in their SIPs some type of market-based mechanism, such as a cap-and-trade program to reduce ozone pollution from power plants and other industrial sources.
Sources say there is a history under the air law of trading programs being used to meet air pollution control mandates, in place of traditional emissions controls on sources that would otherwise be required under [Clean Air Act-mandated State Implementation Plans (SIPs)]. An example includes the NOx SIP Call, a program for reducing NOx emissions that are ozone precursors,
The Bush EPA’s Clean Air Interstate Rule (CAIR) would have created a trading program to cut power plants’ NOx and sulfur dioxide (SO2) emissions. The DC Circuit in its 2008 ruling remanded the rule to the agency in part due to questions about the legality of some of its trading provisions. EPA subsequently finalized last month its Cross-State Air Pollution Rule (CSAPR) that creates a replacement SO2 and NOx trading program.
No doubt a NOx cap-and-trade plan would be favored by the same electric utilities that pushed for CO2 cap-and-tax.
John Rowe, CEO of large nuclear utility operator Exelon, said on a July 27 earnings call that,
Being clean is a competitive hallmark for Exelon. It will become even more advantageous as we move into this new era of EPA regulations. More and more, through a combination of economics, gas prices and pending environmental regulations, we expect to see the market bias towards cleaner forms of energy. Earlier this month, EPA issued its final Cross-State Air Pollution Rule, what we used to call the transport rule. The final rule contains many of the provisions that the Clean Energy Group, to which Exelon belongs, suggested and provides more regulatory certainty for lowering NOx and sulphur dioxide emissions beginning as early as next year. We applaud EPA’s use of a market-based solution with interstate trading where it could.
During the cap-and-trade debate, USCAP member Exelon salivated at the prospect of reaping substantial money-for-nothing — i.e., $750 million in revenues for every $10 increase in the price of carbon. Exelon would not have had to perform any act for such revenues other than selling the free carbon credits it anticipated receiving every year from taxpayers.
So if the EPA could pull off something similar for NOx, Exelon and the other non-coal-oriented utilities would profit from it. It would be cap-and-tax by another means.