CO2 from cars is a pollutant

A backlog of court cases have been awaiting Monday's decision by the Supreme Court. Justices said the Environmental Protection Agency has not only the power, but a responsibility, to regulate carbon dioxide in automobile tailpipe emissions.

"Greenhouse gases fit well within the Clean Air Act's capacious definition of air pollutant."
-- Supreme Court Justice John Paul Stevens

American automakers will feel the effect more than will importers. In most other countries -- even in China -- car emissions and efficiency rules are stronger than in the U.S., so importers' cars and trucks will have a competitive advantage.

The Bush administration has argued for years that it has no authority to regulate carbon dioxide because it is not a pollutant. CO2 occurs naturally in the atmosphere, unlike the harmful pollutants Congress had in mind when it passed the Clean Air Act.

The Clean Air Act allows California to set its own emission rules that are tougher than federal rules. California was fighting a serious smog problem at the time the Act was passed. Other states tend eventually to follow California's emission rules.

Old coal plants must install pollution controls

In another decision on the same day, the Supreme Court took a step toward breaking the utility industry's resistance to an initiative called the New Source Review. With this decision, utilities are more likely to be required to install modern pollution controls when they upgrade their oldest power plants.

Energy costs are likely to increase as a result of installing the equipment; when old plants are closed, the overall supply of energy declines.

Ageing coal plants are the worst of the worst when it comes to emissions, including greenhouse gases. Existing plants were grandfathered when the Clean Air Act was passed in 1963. Many of those plants continue to operate, with emissions far in excess of those allowed from any newer plant.

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New Source Review (NSR) requires owners to bring a plant up to compliance whenever the plant is modified or upgraded. It was intended to eventually clean up the fleet of plants, as old plants were decommissioned. Instead, utilities have kept the old plants running far beyond their intended life.

Pollution control equipment is expensive. (Duke says it is spending billions of dollars complying with the Clean Air Act.) When an old plant needs substantial maintenance, utilities must decide whether to install it, shut the plant, or try to skirt the EPA rules a little longer.

The court case focused on a narrow, but important, issue of NSR: whether the EPA should measure smokestack emissions on an annual basis, or on an hourly basis.

The court ruled for a yearly measurement of emissions, including carbon. Duke Energy wanted an hourly measurement. This would allow the plants to run more, without triggering the Clean Air Act requirement for pollution controls. By applying an annual measurement, the EPA can prevent those plants from increasing their total emissions without complying with NSR.

States accelerate toward an inevitable goal

Whether Congress, the EPA, or the states regulate CO2 emissions, they will be regulated. Affected industries will not be limited to automakers and utilities. These rulings are a harbinger for regulating other products and "smokestack" industries similarly.

Massachusetts and eleven other states brought the tailpipe-emissions case against the EPA last year. States have banded together to put carbon caps on utilities and other industries. California has moved aggressively to encourage more efficient vehicles that pollute less.

Automakers, utilities and other industry groups have gone to court to oppose the rights of states to enforce such regulations, but these court decisions are considered to give states a green light.

The case of Massachusetts vs. EPA was a 5-to-4 decision. The dissenting opinion was argued vigorously by Bush appointee Chief Justice John Roberts.

Utilities and automakers have more influence within the walls of Congress than at the EPA. Duke hoped to avoid EPA regulation, preferring new -- and probably more lenient -- federal legislation on greenhouse gases.

This is not the end of the fight. EPA can and will sue automakers who do not comply. Duke says it will find other ways to keep its plants from being subject to NSR.

Marc Manly, Duke Energy chief legal officer, said, “We continue to believe we have solid defenses against the government’s claims and will show in the lower courts that our power plant projects were not subject to NSR.”