Yes, changes to the CAA carry danger. There are always attempts by vested interests to insert words/concepts into any bill to their industry’s favor. And do not think the folks with concerns are just the electric utilities and coal companies. Every operator of any major pollution source, which includes virtually all industrial plants as well as all electric plants, would welcome the end of the New Source Review rules that effectively block any modification to the process.

However, the NSR methodology is largely responsible for stagnant electric industry efficiency and it greatly retards efficiency improvements to industrial processes, because it is prohibitively expensive to give up an operating permit and redesign the process to comply with BACT.

Before clinging to this 1970 methodology, consider what we are suggesting in its place. Every plant, regardless of age, fuel, technology, or location, would have to achieve average emissions per unit of output and then drop emissions every year or buy allowances from cleaner plants. Today, all the old plants are free to continue emitting each pollutant at historic levels. Today, new plants bear all of the burden for cleaner air, and this often prevents new clean energy. Output based pollution allowances remove this goofiness and will clean the air much faster and much cheaper, and, as a bonus, reduce GHG emissions and fuel use.

Tom Casten

At the time of passage, technology did not exist for economic continuous emission monitoring, which removed output standards as an option. Today we have highly reliable devices that are affordable to measure criteria pollutants.

The CAA sets up a command and control structure in which a government official decides the appropriate BACT technology for each permit application. This forces the pollution control industry to focus on being named BACT, because nothing else has a market, even though it might control NOx, for example, at 2% of the cost per ton removed versus the current BACT approach. Output based allowances switch these choices to the market and enable every control technology to compete. This would greatly reduce the cost of emission control.

The CAA does not recognize efficiency as a control technology. In my view the problems of global warming dwarf the regional problems caused by other pollutants and we cannot afford to keep regulations that discourage or fail to reward efficiency. Output based allowances reward efficiency.

There are examples in Europe of output based regulation and they have induced rapid deployment of clean energy.

Tom Casten

This keeps all money in the energy system, causing no net increase to consumers (but shifting of wealth, as happens with all regs.)The carrots make all clean energy more attractive to develop, and match the cost of the sticks to dirty energy. Markets set the price of allowances. Then congress reduces schedules reduced allowances each year and corrects for load growth to assure absolute reductions of each pollutant every year.

Re tax credits for alternative energy:

Market forces will pick the best approaches if the values created by and costs of each approach are fully paid for/priced. The energy market has many distortions of price, guarantees of some technologies and/or owners, barriers, etc. that have led to hugely suboptimal decisions on heat and power plants. The best approach is to remove the barriers. Tax credits for the technology du jour are further distortions, that try to cancel out other regulatory flaws.

Given the magnitude of change needed to slow climate change, we have to do the heavy lifting of correcting the worst flaws. We simply cannot reduce emissions fast enough with band aids on the deeply flawed energy and environmental regulatory mess.

Tom Casten