Obama Could Bypass Congress to Fulfill Climate Pledge

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President Barack Obama speaks in front of solar panels about the Recovery Act legislation at Nellis Air Force Base, Nevada, in this file photo. Close

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Photographer: Ronda Churchill/Bloomberg

President Barack Obama speaks in front of solar panels about the Recovery Act legislation at Nellis Air Force Base, Nevada, in this file photo.

President Barack Obama, whose inaugural address made climate change a second-term priority, could bypass Congress and implement much of his environmental agenda unilaterally through regulations and executive action.

Obama, for example, is set to impose curbs on coal-fired power plants of companies such as American Electric Power Co. (AEP) and faces pressure to limit methane discharged during hydraulic fracturing, environmentalists say. He could reject Keystone XL, a pipeline that would carry Canadian tar-sands crude to U.S. Gulf Coast refineries. Nebraska’s governor yesterday approved a new route, clearing the way for Obama’s decision on the TransCanada Corp. (TRP) project.

The president can accomplish with rules much of what was sought in the next few years under the failed 2009 cap-and-trade legislation, relying on authority in the four-decade-old Clean Air Act and a 2007 Supreme Court decision applying it to carbon- dioxide emissions.

“He doesn’t need new legislation in order to make significant progress,” David Doniger, climate policy director for the Natural Resources Defense Council, said. “The primary pathway is to use the legal authority he clearly already has.”

Each of the actions sought by Obama’s environmental allies faces opposition from industry groups eager to develop new North American oil or gas resources, or to keep alive a struggling coal industry.

Coal’s Opposition

“He’s doing everything he can to circumvent Congress, which has steadfastly refused to do his bidding on climate change,” said Luke Popovich, a spokesman for the National Mining Association. The group represents coal producers such as Arch Coal Inc. (ACI) and Peabody Energy Corp. (BTU)

The mining group opposes Obama’s proposal to issue caps on greenhouse gases from power plants. Such a move would “virtually rule out new coal plants,” Popovich said.

New regulations would invariably face legal challenges or attempts by Congress to repeal them, he said.

Judging from his Jan. 21 speech, Obama won’t be deterred.

“We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations,” Obama said in his inaugural remarks. “That is how we will preserve our planet, commanded to our care by God.”

“I don’t know if he can match the rhetoric, but he can do a whole lot,” said Melinda Pierce, deputy director for federal policy at the Sierra Club in Washington. “The president is stating emphatically that he is going to take the reins himself.”

White House

While “it’s clear that bipartisan opposition to legislative action is still a reality,” White House spokesman Jay Carney said yesterday that Obama would build on moves he made in his first term to deal with climate change. He didn’t provide details.

Ultimately, solving the problem of global warming will require more than American action. While the U.S. has one of the world’s highest carbon-emission rates per capita, it’s not the largest or the fastest-growing source of the pollutants. As U.S. emissions have fallen since 2007, when the recession took hold and then natural-gas usage surged, India and China are driving demand for coal and will continue to do so in coming years, according to the International Energy Agency in Paris.

“The real concerns are in China, India and elsewhere, where emissions are rising,” said U.S. Representative Ed Whitfield, a Kentucky Republican who leads the energy and power subcommittee of the House Energy and Commerce Committee.

Whitfield said he expects Obama will be aggressive with environmental regulations in his second term because the Republican House majority won’t go along with his agenda.

Hurricane Sandy

Public pressure may help the president overcome criticism from lawmakers such as Whitfield. With Obama re-elected, 2012 marking the hottest year on record for the U.S. and Congress working on a $60 billion relief package for the victims of Hurricane Sandy, climate change has growing political resonance.

Under Obama, the Environmental Protection Agency ruled that carbon dioxide pollution endangers public health, opening the way for the agency to regulate its release under the Clean Air Act. The 2007 Supreme Court decision made it possible to regulate the gas if it meets that threat level.

Obama has raised mileage standards for automobiles, and now his administration is focusing on power plants. New rules for long-haul trucks, aircraft or refineries may follow.

Rules for new power plants are set to be finalized by the end of March, and EPA will then face legal and political pressure to issue related standards for existing plants, one of the most substantial single actions Obama could take.

Power Plants

If structured correctly, new rules for existing plants could let the U.S. meet Obama’s goal of cutting greenhouse gas emissions 17 percent by 2020 at a cost of $4 billion in that year, according to a report last month from NRDC’s Doniger.

Companies such as American Electric Power have tried to head off those rules, saying that legislation is a better way to deal with the issue. “If the EPA does move forward, it will be important that the program provide maximum flexibility,” said Melissa McHenry, an AEP spokeswoman.

In addition to power plants, environmentalists are pushing the agency to issue limits on methane emissions from oil and gas production, transport and use. The EPA has set rules to combat air pollution from wells where hydraulic fracturing, or fracking, is used, and it should now enact caps on methane releases, according to Mark Brownstein, chief counsel for energy at the Environmental Defense Fund in New York.

API Opposes

Existing rules already force the capture of much of these methane emissions -- which are a more potent cause of climate warming -- so calls for new regulations are a “red herring,” Eric Wohlschlegel, a spokesman for the American Petroleum Institute, said by e-mail. His Washington-based group represents producers and refiners such as Exxon Mobil Corp. (XOM)

The most symbolic choice Obama faces is over the bid by TransCanada (TRP) to build the 1,661-mile (2,673-kilometer) Keystone XL pipeline to carry oil sands products from Canada to Gulf Coast refineries. Obama rejected the company’s application last year and invited a new application with a route that protects an environmentally sensitive area of Nebraska.

Yesterday, Nebraska Governor Dave Heineman, a Republican, approved TransCanada’s revised route, clearing the way for a final decision from the State Department, which has to approve the project because it crosses the U.S.-Canadian border. The department won’t conclude its review before the end of March, Victoria Nuland, a department spokeswoman, said yesterday.

TransCanada rose in early trading today, after slipping 0.7 percent in Toronto yesterday.

Pipeline Decision

“I wonder if the president hasn’t backed himself into a corner on the Keystone pipeline,” Nebraska Republican Representative Lee Terry, a supporter of its construction, said today on C-SPAN cable television. “I worry that he’ll make a decision based on politics.”

Climate activists will bring as many as 40,000 people to the White House Feb. 17 to protest the project, one they say would be a disaster for the climate by encouraging development of an especially harmful pollutant. Tar sands need to be melted and refined into usable petroleum products.

The decision lies entirely with the Obama administration.

“Keystone has become this huge litmus test to show if Obama is serious” about his pledge, said Daniel Kessler, a campaigner for 350.org, a group organizing the White House protest. Approving it would make “a mockery of his rhetoric.”

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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