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Is climate policy reaching a turning point? An interview with EPA head Gina McCarthy.

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Over the past three years, President Obama has quietly made global warming a major focus of his second term. And just about everything he's done has had to go through Gina McCarthy.

McCarthy is the head of the Environmental Protection Agency, which has lately proposed a barrage of rules and regulations designed to curb US greenhouse gas emissions. That includes new rules on power plants. New rules on trucks. New rules on methane leaks from fracking. None of this has gone through Congress — it's all being done under authority the Supreme Court granted the EPA back in 2007.

In a recent interview, I spoke with McCarthy about the most sweeping EPA rule yet to come: the Clean Power Plan, which is expected to be finalized this coming Monday and aims to regulate emissions from thousands of coal- and gas-fired power plants around the country.

This plan was proposed in draft form last summer, but has since received 4.3 million comments — many positive, many quite negative — and is now undergoing revisions. Under the plan, every state will have a specific goal for reducing emissions from power plants, and state policymakers can decide for themselves how to get there. (The initial draft estimated that US power plant emissions could fall 30 percent below 2005 levels by 2030 as a result.)

In our talk, McCarthy conceded that the Clean Power Plan obviously won't solve climate change once and for all. It's just a tiny piece of what's needed to avert drastic temperature increases. Instead, the administration is hoping to create a "turning point" in which the US takes action on emissions and other countries follow. There's at least some reason for optimism: Since the EPA proposed the Clean Power Plan last summer, nations like China and Brazil have come out with fresh pledges for constraining emissions, and the hope is that all these proposals will get stitched together into a global climate agreement at the UN talks in Paris this December.

Climate experts say this still won't be enough to avert significant temperature increases. Still, McCarthy said, "The whole tone of the discussion has changed."

Below is a transcript of our talk, in which McCarthy discusses whether these rules could really make a difference on climate change, responds to Republican opposition to the rule, and explains how the US electricity sector may have to reinvent itself to move toward a low-carbon future.

Brad Plumer:Let’s start with the broader climate context. Right now, we’re in a situation where no country is really cutting emissions enough to avoid significant temperature increases [i.e., more than 2°C of warming] in the future. So is this rule really going to make that much of a difference in the big picture?

Gina McCarthy: Well, I appreciate the focus on the bigger picture. Many of us do feel that we need to do a lot more to address climate change. But what we need to do, more than anything, is get started. So I think we’ll see that the Clean Power Plan and the president’s broader initiative is really going to be historic. Not because it solves the problem, but because it can be a turning point in the global discussion.

I’ve been doing this work for a long time, and I don’t think there’s ever been a better point in time for us to make a big leap forward that would spark the kind of global action that we think is necessary. But you do have to get started. And I think we’re seeing that with this president calling climate change a moral responsibility, with the pope calling it a moral responsibility, which may be even more important globally.

Just since the Clean Power Plan came out as a proposal, we’re seeing a new dynamic with China and Brazil and other countries really stepping up [with their own commitments to tackle climate emissions]. The whole tone of the discussion has changed. So we think that EPA can be part of delivering that big leap forward that will lead to a good outcome in Paris but also, eventually, a real global solution.

Brad Plumer:All of the EPA’s actions on carbon dioxide are being done under the auspices of the Clean Air Act, a law that’s more than 40 years old. A lot of critics say this law was never designed for dealing with carbon dioxide, that in some ways Obama is resorting to it as a sort of kludge because Congress couldn’t pass a climate bill in 2010. Is the Clean Air Act really the best tool here?

Gina McCarthy: I think the president has made clear in his first term and beyond that congressional action would be welcome, that there are other, more flexible approaches we could use that may be beneficial. But Congress is not there. And that is very clear.

The Supreme Court has spoken directly to the issue of whether the Clean Air Act applies to carbon pollution, and they told us [in 2007] that it was not just our authority but it was our responsibility to look at whether carbon pollution was impacting public health. And there’s a wealth of scientific data that supports that. So this is the Supreme Court. That’s an extremely strong foundation.

But I actually do think the Clean Air Act is a strong tool to get significant reductions. This is a tool where we have 40 years of history of being extraordinarily successful in getting air pollution reductions. Over that time, we’ve reduced air pollution 70 percent while GDP has tripled. So if you want to take a big leap forward, [the Clean Air Act] makes sense in terms of its ability to get reductions but also to keep the lights on and to keep energy affordable.

(American Lung Association)

Brad Plumer:In the draft version of the Clean Power Plan, each state has its own individual goal for emissions reductions, based on what EPA thinks is possible given the prospects for coal-to-gas switching, renewables, efficiency. But there are huge disparities in state goals. New York, which has already made strides in clean energy, has to cut power emissions 44 percent by 2030, whereas a coal-heavy state like Kentucky only has to cut 18 percent. Isn't this a bit unfair?

Gina McCarthy: We have heard that. Part of the challenge is that we’re trying to do a couple of things here. We’re trying to identify what further reductions are achievable by every state. Because we want to make sure that every unit [i.e., coal or gas plant] can actually achieve the reductions we’re intending to achieve.

So for some states, because of how far they’ve already moved with renewables and efficiency programs, they’re far ahead of others, and they have infrastructure in place that will allow them to continue this downward trend. Whereas states that have not been engaged or do not have that infrastructure will take a bit longer [to cut emissions].

We have gotten a lot of feedback on this aspect of the proposal, about whether it’s fair and equitable. And we’ve considered comments from states on where they are today, what resources are available for them tomorrow, what’s available for them in the coming years, and I think you will see [the final rule in August] addresses those concerns pretty effectively.

(SNL Financial LLC)

Brad Plumer:What about the flip side? Some critics have worried that the rule might not be strong enough, that some states might be able to hit EPA’s emission targets with minimal effort — say, because renewables are growing faster than expected or coal plants are retiring faster than you expected. Is there a risk the rule could be too weak for some states? Will there be a way to revisit targets if that happens?

Gina McCarthy: We certainly have obligations under the Clean Air Act to routinely revisit issues. But I am actually as optimistic as your question is about the ability of utilities to restructure and think about a cleaner energy system. Because this is exactly what's already happening in the energy market today.

We’re moving away from coal because it’s not competitive with natural gas. Folks are beginning to look at natural gas as more of a complement to strong renewables. We are seeing the growth in energy efficiency programs across the United States — and we’re seeing the benefits of those programs in people’s pocketbooks. I don’t know if you saw the report the Analysis Group put out on RGGI [a cap-and-trade program in the Northeast that puts a price on carbon emissions and uses the proceeds to fund things like energy efficiency], indicating that it cut consumer electricity and heating bills by about $460 million.

Similarly, if you just look at the Clean Power Plan, our proposal is estimated to reduce electricity costs 8 percent by 2030. Because that’s what energy efficiency does. That’s what renewable energy does. It builds an entirely different type of system that doesn’t require constant feeding and constant money to upkeep.

So I think what you’re talking about, and what we’re trying to allow the states to recognize, is that we’re not building a future that is more expensive. We’re talking about a transition that’s already happening, and, yes, states should want to go even further than we require, because that’s good for everyone.

Brad Plumer:I saw EPA has gotten more than 2 million comments about its rule. Many are supportive, but some have been critical: The coal industry, for one, argues the plan could hurt grid reliability [though other analyses disagree]. How do you decide which of these complaints to take seriously and which to just disagree with?

Gina McCarthy: We actually received over 4.3 million comments on the proposal, so it’s even more than you thought. But one of the things we do is that we’ll take every comment seriously. We don’t pick and choose among them. We actually do the analysis for each and every substantive comment so that people can see we did a thoughtful look.

And for EPA, reliability and affordability of the electricity supply is part and parcel of how we’re going to do this rule, because the section of the Clean Air Act that we’re working [section 111(d)] in requires us to take those issues into strong consideration. And anybody in the environmental world would want to do so, because delivering reliable energy is extraordinarily important from a public health perspective. So we take it very seriously.

Now, that doesn’t mean every comment that we receive raises a valid point. We have to take a look and ask what the points are. Do we think it’s a concern in the rule? Do we need to make changes? You’ll see that we will be making changes on the basis of all these comments, determining for ourselves whether they raise concerns and making appropriate changes.

An electric power plant in Queens, New York. (Shutterstock)

An electric power plant in Queens, New York. (Shutterstock)

Brad Plumer:With any large rule like this, there’s always the risk of unintended consequences. For example, some critics have worried that EPA could give too much credit for using biomass for electricity even in cases where that's not beneficial for climate change. Do you worry about that? Are there other unintended consequences you think about?

Gina McCarthy: In terms of biomass, the concern you raise is one we do acknowledge, and we’re going to be doing more upfront work to ensure that the biomass that is allowed to be calculated [for reducing greenhouse gas emissions] actually does so. So we’re going to let science determine those decisions.

You also hear concerns that things can happen in the utility world that are unforeseen. This arose with our Mercury and Air Toxics Standards, as well [a different rule to reduce mercury pollution from coal plants]. There we developed an opportunity for people to come into the agency and discuss unforeseen circumstances and work through them. We'll do the same with this rule, because we know that things can happen.

But frankly, we see this rule as being less vulnerable than the Mercury and Air Toxics Standards to unforeseen changes in the energy world. That was about shutting down facilities in order to install big equipment, while this rule is all about looking at opportunities to expand the way in which states invest in energy. But we’re certainly not going to be ignoring that in any way.

Brad Plumer:We've seen a few governors suggest they might not comply with the rule [Oklahoma and Indiana, mainly]. Sen. Mitch McConnell has urged states to resist. Does this worry you?

Gina McCarthy: I still think the vast majority of states are going to take advantage of this rule [i.e., develop their own state plans for meeting the emissions goals]. But if any governors decide for their own reasons that doing a state plan is not something they want to do, they have that choice.

That doesn’t mean, however, that those states won’t be obligated [to make emission cuts] under the rule — they certainly will be. It will just mean the federal government will have to take action instead.

We’re hoping that those outcomes are limited. We’re also hoping people will consider studies showing that the states that could most benefit from doing their own carbon pollution plan are the same states where governors are making these statements. We’re hoping that might have some influence in this discussion.

Brad Plumer:The fracking boom and the availability of cheap shale gas has played a big role in cutting US carbon dioxide emissions since 2005 — and it also seems like it's enabled EPA to pursue these CO2 rules. At the same time, environmentalists have raised concerns that things like methane leaks might undercut those climate benefits. How do you think about the role of fracking in climate policy?

Gina McCarthy: Hydrofracking has certainly changed the energy dynamic considerably. You are absolutely right, it has created an opportunity for a shift away from coal into natural gas, and that shift has been enormously beneficial from a clean air perspective, as well as from a climate perspective.

But it’s not EPA’s job to decide whether we like natural gas or coal better. It’s our job to actually look at where we can get continued carbon pollution reductions from both fossil fuels. And it’s also our broader responsibility to work with states and ensure that hydrofracking is done in a safe and responsible way. We also know there’s methane to be recaptured in hydrofracking operations, and in all oil and gas upstream work, and we actually have a rule that will try to address the methane issue.

That does not mean we think it will slow down or be a continued detriment to fracking operations. What it means is that there are considerable opportunities to save money by capturing methane. It is a product being leaked, not a waste product. We think we can have safer and responsible operations that will protect water, and protect our climate from methane leaks, while ensuring that we’re not forcing any fuel out of the mix in the near future, including coal and natural gas.

Brad Plumer:Coal would take the biggest hit under this climate rule — as well as all the other air pollution rules EPA has put out. What role do you envision coal playing in our future energy mix?

Gina McCarthy: I don’t know whether I envision it in any way, but what we see is that that coal has certainly been diminishing in terms of its position in the energy supply. This has been happening since the 1980s, although there’s certainly been a more significant decline with the advent of natural gas. What we look at is, where is the energy world heading, what are the cost-effective options to get reductions in the Clean Power, and how do we marry all that up?

I think what we’re seeing and expecting is that coal will continue to be a significant part of the energy mix in 2030. It won’t be as large as it was before — that is both a function of the energy market today as well as long-term investment signals that utilities will take from looking at carbon pollution reductions looking forward.

But this is also something the private sector was already looking at, that the business community has been looking at. The march toward a low-carbon future is not being led by EPA. It's a significant change that's already happening, and which the Clean Power Plan will hopefully continue to move forward.

Transcript has been very lightly edited for length and clarity.