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Carbon emissions pose danger, EPA finds

Agency’s move lays the foundation for expanding US regulation of thousands of companies.

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Scare claims, he says, “did not convince the Supreme Court and should not convince anyone [that CO2 regulation] is going to go beyond the big central sources.” The EPA “is able to focus on the big stuff – the big sources of global warming pollution,” the biggest of which are motor vehicles and power plants. Other stationary sources, such as cement plans and oil refineries, would also probably be required to reduce emissions, says Mr. Doniger.

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Before the finding becomes final, the public will have the opportunity to comment on it. The EPA says it based its work “on rigorous, peer-reviewed scientific analysis” of six gases – carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.

“This finding confirms that greenhouse-gas pollution is a serious problem now and for future generations,” the EPA’s Ms. Jackson said Friday in a statement. “Fortunately, it follows President Obama’s call for a low carbon economy and strong leadership in Congress on clean energy and climate legislation. This pollution problem has a solution.”

A prod to congressional action

One immediate beneficiary of the EPA move may be a piece of legislation in the House of Representatives. The Waxman-Markey bill, named after cosponsoring Reps. Henry Waxman (D) of California and Edward Markey (D) of Massachusetts, would reorient the nation’s sources of power generation to renewables and set up a carbon trading system that includes a cap on CO2 emissions from power plants and other key sources.

Many business interests and lawmakers are resisting the legislation – yet they could ultimately come to see it as a lesser evil than EPA regulation. The bill contains two sentences that “succinctly defuse regulatory triggers” under the Clean Air Act, “positioning Waxman-Markey as a way to limit the EPA threat,” writes Kevin Book, an analyst for ClearView Energy Partners, an investment analysis company focused on energy.

Representative Markey, at a conference Monday on climate and energy at the Massachusetts Institute of Technology, described a carrot-and-stick approach to passing the energy-climate bill.

The possibility of EPA regulation of carbon-dioxide emissions “has become a very real factor in our deliberations,” he said. “If Congress doesn’t act, then clearly there is a residual decision by the US Supreme Court for the EPA to regulate greenhouse gases. The only way to avoid that is to have Congress act.... It becomes a real factor.”
EPA at work on another rule

Even without Friday’s finding, thousands of US companies were preparing to report their CO2 emissions in anticipation of another new EPA rule. That proposal would require about 13,000 facilities nationwide to report annual greenhouse-gas emissions beginning in 2011. Companies that emit 25,000 or more metric tons of CO2 equivalents a year are responsible for as much as 90 percent of the nation’s greenhouse-gas emissions, the EPA estimates.

Although that reporting requirement would not impose any limits on emissions, it would be a first step toward establishing a national emissions-reduction plan, regulatory experts say.

Friday’s finding may also accelerate disclosure requirements on Wall Street. For years, environmental groups, state officials, and state pension fund managers have called for public companies to be required to report climate-change risks that could affect firms’ operations, including the cost impact of complying with greenhouse-gas regulations.

Though the Securities and Exchange Commission has not acted, it is likely to feel greater pressure to require more corporate disclosure about climate-change risks as a result of the EPA’s endangerment finding and its mandatory-reporting proposal, David Lynn and coauthors at Morrison & Foerster wrote in a newsletter on the topic.