Common Tragedies

Thoughts on Environmental Economics

EPA denies California’s request to regulate auto GHGs

Posted by Daniel Hall on December 20, 2007

Lots of action in DC this week on energy and environment.  From the Washington Post:

Environmental Protection Agency Administrator Stephen L. Johnson yesterday denied California’s petition to limit greenhouse gas emissions from cars and trucks, overruling the unanimous recommendation of the agency’s legal and technical staffs.

The decision set in motion a legal battle that EPA’s lawyers expect to lose and demonstrated the Bush administration’s determination to oppose any mandatory measures specifically targeted at curbing global warming pollution. A total of 18 states, representing 45 percent of the nation’s auto market, have either adopted or pledged to implement California’s proposed tailpipe emissions rules, which seek to cut vehicles’ greenhouse gas emissions by 30 percent between 2009 and 2016.

It’s worth reading the rest of the article.  Here’s the New York Times.  The rationale given is that the new energy bill obviates the need for state-specific regulation, since the effective fuel economy implied by the proposed California standards is relatively close to the new CAFE standards.

The economics of this case are a little interesting.  Regulating fuel economy through standards such as CAFE doesn’t get a lot of support among economists — they would generally prefer that we “target the externalities directly” through prices, i.e., a carbon tax.  Then those consumers that value fuel economy from their cars will demand higher efficiency vehicles, and producers will supply them.  On the other hand, a benefit-cost test suggests that CAFE standards have net societal benefits, and so the case is somewhat ambiguous, at least.

The legal angle is probably the more interesting side of the case.  The Supreme Court said that the EPA has the authority to regulate greenhouse gas emissions under the Clean Air Act.  The new decision indicates… they don’t want to use that authority?  For automobiles only, or also for other emissions sources?  It’s not clear yet from the articles.  An inevitable fallout from the original Supreme Court case was that EPA was not only going to have to say whether it was going to use its authority to regulate automobiles, but also all other GHG sources.  Is the EPA implying it won’t use its authority for ANY emissions, or just those from automobiles?  On the narrow issue of automobile standards, California will sue (and win, by all accounts) in court to force EPA to allow them to issue stricter standards.  But the broader question of whether EPA is going to attempt any regulation of GHGs at all under the Clean Air Act is probably the most interesting question going forward.

2 Responses to “EPA denies California’s request to regulate auto GHGs”

  1. Bobby said

    California’s concern about the enviornment and clean air is a joke, and it always will be. Why else would they single handedly kill GM’s EV-1 program?

  2. Chris said

    You’ve got to be kidding me – calling California “single-handedly” responsible for killing the EV-1 program might be the most ridiculous thing I’ve heard today (and I watched like five minutes of Fox News). CARB repealed the ZEV mandate because they were being sued by the federal government, Daimler-Chrysler, and – wait for it – General Motors.

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