May 31 (Bloomberg) -- The Obama admistration will propose a two-tiered regulation limiting U.S. carbon emissions from power plants while giving states broad leeway in how to achieve the cuts, according to people familiar with the proposal.
The plan will include a range of options and seek modest reductions in the next five years and as much as 25 percent over 15 years, according to the people who requested anonymity before the announcement.
In a sign of its significance, President Barack Obama is set to speak on climate change in his weekly address today and talk with the American Lung Association on June 2, the day the Environmental Protection Agency said it will announce the rule at agency headquarters.
The administration and its Democratic allies are bracing for a political fight over the rule, which is critical to Obama’s legacy on climate and his efforts to coax other nations to agree on limiting their emissions. Democrats -– particularly from coal-producing regions -– worry the rule will trigger power plant shutdown and higher electric bills, hurting their re-election chances.
The EPA is counting on coal plants being operated more efficiently and states shifting to natural gas from coal to get modest cuts in the next four or five years, the people said. Each state will have a target based on its emissions, and in the next decade the overall electric grid will need to become more efficient and use renewable generation to achieve the 25 percent cut, they said.
Some lawyers in the administration have said the approach favored by the White House will leave the rule open to legal challenges under the Clean Air Act because it relies on an interpretation of the law that counts emissions reductions that occur outside power plants.
Republicans have signaled they intend to make the rule an issue in the House and in campaigns in states where the coal industry is a major employer. Some Democrats have voiced opposition to a plan they worry will hurt them with voters.
Details of the rule emerged less than 24 hours after John Podesta, the president’s top adviser on climate issues, met with a handful of senior U.S. House Democrats, signaling the high stakes of the regulation for Obama’s legacy.
Podesta told Democrats gathered May 29 in House Minority Leader Nancy Pelosi’s office that he expects some Republican governors to resist the rules but not with the same intensity that they fought the Affordable Care Act, said two people who attended. That’s because the alternative to cooperating is enforcement by the Environmental Protection Agency, said the people, who requested anonymity.
Representative Henry Waxman of California, the top Democrat on the Energy and Commerce Committee, said he reached out to the administration to try to coordinate between the branches of government.
“Because of my strong concern about the climate change issue, I have been in touch with the administration on these rules as they have been developing,” Waxman said in an interview.
While many Democrats are eager to take aggressive action to combat climate change, others in the party -– particularly those from coal-producing regions -– worry that the rule will be politically painful as it forces power-plant closures and threatens to increase electricity rates for consumers.
One House Democrat said the administration is bracing for a floor fight in which Republicans will seek to embarrass Obama with a vote against the rule.
While Democrats know they’ll lose some coal state members in such a vote, they would prefer to see the number of defections closer to 10 rather than 50, said the lawmaker, who asked not to be identified to speak about confidential deliberations.
It’s unlikely Republicans could muster the votes needed to overturn the rule in the Democratic-controlled Senate.
House Speaker John Boehner, an Ohio Republican, asked about the rule at a morning briefing May 29, said he wasn’t “qualified to debate the science over climate change.”
“But I am astute enough to understand that every proposal that has come out of this administration to deal with climate change involves hurting our economy and killing American jobs,” Boehner told reporters. “That can’t be the prescription for dealing with changes in our climate.”
The Democrats who met with Podesta are key to rallying party votes in the House. They included Pelosi, Waxman, House Minority Whip Steny Hoyer of Maryland and Chris Van Hollen of Maryland, Doris Matsui and Scott Peters of California and Gerry Connolly of Virginia, according to a lawmaker who attended and asked not to be identified discussing the meeting.
Democrats familiar with the meeting described the discussion as light on substance and heavy on talking points. States are expected to have flexibility to devise their own systems for reducing emissions, according to several people briefed on the rule.
“This is about the air our children breathe. It’s about health as well as about jobs,” Pelosi said yesterday. “And it’s long overdue.”
Obama has pledged to reduce U.S. greenhouse gases about 17 percent by 2020 over 2005 levels, with deeper cuts to follow. At the heart of that effort is a plan being considered by the president that would cut power-plant emissions. The EPA proposal is scheduled to become final one year from June 2, and then states will have another year to submit their plants.
EPA Administrator Gina McCarthy said last week the rules will give states “flexibility to develop plans on how to achieve those reductions in a way that’s economically beneficial to them.”
The rules will let states “establish their own energy policies as long as the carbon pollution reductions that we are going to require in this rule actually are achieved,” she said at an event in Seattle.
The U.S. Chamber of Commerce warned this week that the climate plan could result in a $50 billion a year hit to the U.S. economy. Environmental groups counter that spending on energy efficiency and renewable sources of power will spur the economy along and add jobs. They say the approach could be a net benefit to the country.
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