The EPA took the first step toward establishing cap and trade legislation or a GHG regulation on March 10, 2009 by proposing the first comprehensive national system for reporting emissions of carbon dioxide and other GHGs produced by major sources in the United States. This rule was published in the Federal Register on April 10, 2009 and comments must be filed by June 9, 2009.
The rule is designed to establish an inventory of all GHG emissions in the U.S. In other words, in order to figure out what needs to be capped and at what level it needs to be capped the government needs to know what is out there.
This rule will affect approximately 13,000 stationary sources or approximately 85% of all such sources in the U.S.. The rule will require that the following types of facilities will have to report:
1. A facility which will emit greater than 25,000 metric tons of GHGs (huge catchall category)
2. Suppliers of fossil fuels
3. Manufacturers of motor vehicles
Because power producers are unpopular and their emissions are easy to quantify, they are the most likely industry to be capped in the first phase of a cap-and-trade program. The reporting rule would provide the background information to set a cap and to distribute allowances to the power producers, probably on a mega-watt capacity basis (where the amount of GHGs that each power company would be allowed to release would be based on the amount of electricity that it can generate). In later phases, this same information would be used to determine how much the other kinds of facilities could release.
An interesting aspect to the rule is that it will require reporting to begin in the year 2011 for emissions that occur in the year 2010. This means that a final rule will need to be passed in the next eight months – an unusually fast pace for federal rulemaking.
--Paul Gosselink
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