EPA issues rules on biggest carbon polluters

WASHINGTON Thu May 13, 2010 7:37pm EDT

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WASHINGTON (Reuters) - The Obama Administration finalized greenhouse gas rules for big factories and power plants on Thursday, giving momentum to the troubled climate bill in the Senate.

Starting next year, the Environmental Protection Agency rules would require large power utilities, manufacturers and oil refiners to get permits to operate or prove they are using the latest green technology to cut emissions when building new capacity.

President Barack Obama has pushed the EPA to roll out emissions rules and polluters could face more stringent future climate regulations if the climate bill fails.

"It's long past time we unleashed our American ingenuity and started building the efficient prosperous clean energy economy of the future," EPA Administrator Lisa Jackson said.

The EPA said the new rules will cover nearly 70 percent of U.S. emissions from stationary sources.

Environmentalists praised the effort.

"By focusing its requirements on only the largest sources of emissions, EPA picked exactly the right place to start," said Eileen Claussen, president of the Pew Center on Global Climate Change.

Big industry said the permitting requirements would be onerous.

"The Portland Cement Association is concerned that the rule could act as a disincentive for expanding U.S. cement production, generally, thereby potentially impacting the ability of cement producers to meet market demand," said Andy O'Hare, a regulatory official at the PCA.

Capitals from Beijing to Brussels are closely watching how the United States addresses climate change, an effort seen as critical for building global agreement on a successor to the Kyoto Protocol, which Washington sat out.

BETTER DEAL

Although mounting industry lawsuits question the EPA's authority on climate, Obama hopes the rules will push lawmakers in states heavily dependent on fossil fuels to support the climate bill.

As written, the bill unveiled by Senators John Kerry and Joseph Lieberman on Wednesday, would preempt automatic EPA regulations. Preemption would come as a relief to emitters, who feel they have more influence with Congress to form new air laws than with the EPA, which is issuing rules from the top down adjusting existing laws.

The climate bill currently lacks the Republican support it needs to pass.

The bill faces additional obstacles, including the narrow span of time for negotiation before mid-term elections and the fact some Democratic senators are anxious about offshore drilling provisions as a massive oil leak in the Gulf of Mexico continues to gush unchecked.

But Kerry said polluters would get a better deal under the legislation.

"If Congress won't legislate a solution, the EPA will regulate one, and it will come without the help to America's business and consumers contained in the" bill, Kerry said in a release on Thursday.

The EPA is effectively trimming the Clean Air Act, or "tailoring" it, so it only applies to the biggest emitters of gases blamed for warming the planet. Without the tailoring, small emitters such as hospitals and schools would be regulated and overwhelm the agency with paperwork.

The rules would subject power plants, factories and oil refineries that emit 75,000 metric tones of carbon dioxide equivalent and already under clean air regulations to get operating permits beginning in January 2011. Regulated polluters would include big coal-fired power plants and heavy energy users such as cement, glass and steel makers.

Waste landfills and factories not already covered by clean air laws that emit at least 100,000 metric tones of greenhouse gases a year would get a six-month extension and would not be regulated until July 2011.

Sources that pollute less than 50,000 metric tones per year would not be regulated until 2016, if ever, said EPA air official Gina McCarthy.

Under the rules, polluters would have to get permits showing they are using the best available technology to cut emissions when building new plants or modifying existing ones.

The rules could hit big operators of coal-fired power plants. Companies such as Calpine Corp, Southern Co and Dynegy Inc may benefit because they have "peaker" plants that only run in times of high demand.

(Additional reporting by Tom Doggett and Richard Cowan; editing by Russell Blinch, Lisa Shumaker and Andre Grenon)

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