The Kansas Department of Health and Environment recently did something that no other governmental entity in the United States had done before – it denied a permit for a new coal-fired power plant because of the greenhouse gas emissions the project would have generated.  This, despite the fact that Kansas, like most states in the country, has no law expressly restricting greenhouse gas emissions.  Although the Kansas Department of Health and Environment staff recommended approval of the permit, the head of the Kansas agency indicated that he felt it was irresponsible to ignore emerging information about the contribution of carbon dioxide and other greenhouse gases to climate change.  In denying the permit, the Director relied upon the Kansas Attorney General’s opinion that the Director had the authority to reject a permit application – even if the proposed project would meet all applicable state and federal regulatory requirements. 

Shortly after the Kansas decision, Ohio’s Director of Environmental Protection, Chris Korleski, was quoted in a COLUMBUS DISPATCH article  as saying that Ohio EPA would not be following Kansas’ lead.  Instead, Ohio EPA will wait for Congress or U.S. EPA to set nationwide standards for carbon dioxide before using carbon dioxide emissions as a basis for denying permits in Ohio.  Denying permits without such standards in place would be, according to Korleski, “a fairness issue.” 

Such nationwide standards may, in fact, be imminent.  “There is a lot of state level activity on the greenhouse gas issue,” notes Dennis Hirsch, Professor at Capital University Law School and Director of Capital’s Environmental Law Concentration Program.  “You have state programs like the Regional Greenhouse Gas Initiative out of the northeast, state carbon dioxide emission regulations in California, nuisance law suits being brought by various states against individual companies over greenhouse gas emissions, and now, permitting decisions being made on the basis of greenhouse gas emissions in Kansas – all of these states are doing very different things to address greenhouse gases at the state level.”  According to Hirsch, “the more differing state activity is out there, the greater the uncertainty for business, and the greater interest business has in some kind of national regulatory regime that will be fair and predictable.  In my opinion, the increase in state activity increases the need for, and the likelihood of, federal legislation.”

Several bills have been introduced by Congress in recent years dealing with the issue of greenhouse gases and global warming.  To date, however, none have been enacted into law.  Most recently, United States senators Joseph Lieberman (I – Conn.) and John Warner (R – Va.) introduced America’s Climate Security Act (ACSA), commonly being called the Lieberman-Warner Bill.  The Lieberman-Warner Bill seeks to “establish the core of a federal program that will reduce United States greenhouse gas emissions substantially enough between 2007 and 2050 to avert the catastrophic impacts of global climate change” while at the same time “preserving robust growth in the United States economy and avoiding the imposition of hardship on United States citizens.”   The bill, which would restrict emissions of six primary greenhouse gases – carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons, and perfluorocarbons – uses a “cap and trade” approach to regulate and gradually reduce the amount of greenhouse gas emissions from “covered facilities” in the electric power generating sector, the industrial sector, and the transportation sector of the U.S. economy. 

“Cap and trade” systems have worked well in other contexts, such as the Acid Rain program.  At the outset, an overall cap, or maximum amount of emissions per compliance period, is established for all sources under the program. Authorizations to emit in the form of emission allowances are then allocated to affected sources, with the total number of allowances not to exceed the cap.  Individual control requirements are not specified for sources; sources that can afford to install controls may find that they have excess emission allowances, which they can then sell to others, for whom further reductions in emissions may not be economically feasible.  Allowance trading thus enables sources to design their own compliance strategy based on their individual circumstances while still achieving the overall emissions reductions required by the cap.  Typically, allocations are reduced from year to year. In the Lieberman-Warner bill, the year 2050 allocations are 70% less than the 2005 emission levels.

“There really seems to be momentum coalescing around a cap and trade system as opposed to a carbon tax approach,” says Hirsch.  “First, industry believes that a cap and trade system will involve allocations that are based, to some extent, on historical emissions.  From industry’s point of view, that will ease the transition to a carbon constrained economy.  A carbon tax, on the other hand, doesn’t offer that.   Second, environmentalists, I believe, also favor a cap and trade system over a carbon tax. With cap and trade, you get a definite amount of carbon dioxide reductions set by the cap.  The nation and the government can monitor compliance and can identify whether that cap is being reached or not.  With a tax, you don’t know what the environmental outcome will be.  If the fee is too low, there may be insufficient incentive to reduce emissions.”  According to Hirsch, “the political reality is that both industry and environmental groups have a strong interest in cap and trade, albeit for different reasons.”

Whatever type of program may be adopted, the general consensus is that it may be a couple of years before any federal legislation exists.  Until then, businesses in different states will potentially face very different requirements with respect to greenhouse gas emissions.  In Ohio, at least for the time being, greenhouse gas emissions are not a factor in permitting.

i. Emissions Debate; Ohio Won’t Block Plants Based on CO2 Ruling, THE COLUMBUS DISPATCH, October 24, 2007, at 1A.
ii. See The Lieberman-Warner America’s Climate Security Act (S. 2191), a Detailed Summary, available at http://lieberman.senate.gov/documents/detailedacsa.doc.