The Supreme Court in West Virginia et al v. EPA et al ruled June 30 that the case is a “major questions case”, meaning that Congress must be clear and specific in authorizing an agency to make sweeping and economy-wide changes. The EPA felt that it had the power to shift electrical energy generation away from coal and to other sources, and the Court said “No”.
“This Court doubts that “Congress… intended to delegate decision(s) of such economic and political significance, i.e. how much coal-based generation there should be over the coming decades, to any administrative agency.” So, the EPA is now proscribed from doing what the Congressional statutes don’t clearly state regarding major changes.
How do we frame the fight against global warming now? Congress is no longer permitted to give the EPA inexplicit marching orders and leave it to fill in the blanks. Given all its other responsibilities, Congress itself does not have the expertise and bandwidth to write detailed statutes on the thousands of decisions that must be made to reduce greenhouse gases steadily without triggering major disruptions. What do we do?
There is a tested way to pass these decisions along to the consumers who are making them about purchases of cars, foodstuffs, homes, heating and air conditioning, lighting, travel, plastics, clothing, insulation, fertilizers, and a few thousand other goods and services.
This market-based approach is variously called greenhouse gas (GHG) pricing, emissions pricing, or carbon pricing. It puts a tax or fee on substances that create greenhouse gases like fossil fuels (coal, oil, and natural gas), methane leaks, fluorocarbons, etc. The tax is applied near the source of the substance, perhaps at the mine or the wellhead, and is passed down all the way to the consumer where it is buried in now-more-costly purchases. The tax is proportional to the amount of GHGs that a substance causes. The consumers notice that their air conditioning bill or the cost of corn or the price of a shirt from the Far East has risen and take corrective actions to reduce the impact on their budgets.
This carbon pricing approach or variations of it have been used successfully for some years in various places around the world, notably in Europe.
A natural question is the resistance that might rise to a “tax” or fee. A parallel program can greatly mitigate this resistance. The federal government would apply the tax, but then return the money to the public in the form of a dividend. This would be done in such a way that a family creating a lot of GHGs would still feel the pain of its taxes being greater than the dividends it receives, but the government would not be removing net monies from society.
How should Congress implement such an approach? First, it needs a Master Plan based on emissions pricing including a dividend. This Master Plan should be created by a Commission of Congress composed of scientists and economists highly qualified in their fields. The Plan will incorporate all elements of the costs to society of making the transitions from GHG-producing fuels, fertilizers, plastics, and other substances and realistic timelines for the changes. It will also estimate the value of avoiding severe climate occurrences in the distant future and determine the temperature goals to be attained. It will lay out a schedule for the amount of the taxes for every year covered by the Plan, calculating the amount of the taxes needed to obtain the desired results. Congress will then enact the Plan into law.
By enacting the Master Plan, Congress has made it a clear and explicit law, and the Supreme Court’s concerns about delegating excessive power to an agency without detailed authority will be moot. By relying on market forces to make the detailed decisions the EPA was trying to make, most of the details regarding incentives for improvement in GHG emissions and also for innovation will be driven by the market place rather than by a regulatory agency, in this case the EPA, so the global warming battle will be less of a government program, more innovative, and much quicker to produce some results – and we do need some real GHG reductions.
The Supreme Court’s decision truly is an opportune break in our painful gridlock and in our inability to make major strides in reducing GHG emissions. It opens the door for a pivotal change rather than doing more of the same and hoping for different results. Congress can grab the bull by the horns, create the Commission with a charge to draft the Master Plan in less than a year, enact it, and watch it succeed.
Comments