The basic idea of EPA regulation of greenhouse gas emissions was supposed to be a political squeeze play. As a means of preventing catastrophic global warming, EPA regulation is worse than a statutory carbon pricing scheme. In terms of negative impact on business activities, EPA regulation is also worse than a statutory carbon pricing scheme. Consequently, the threat of EPA regulation was supposed to bring industry to the table to form a positive-sum compromise around a bipartisan statutory carbon pricing scheme. And with support for creating such a scheme spanning from the Republican Party’s presidential candidate to the Democratic Party’s presidential candidate, as of November 2008 the odds looked good.
Obviously, things have changed. And though EPA regulation isn’t a great idea, it’s still better than letting the planet burn. What’s more, under the Clean Air Act the EPA is actually required to do something about the situation. So yesterday they finally released their “tailoring rule,” the next forward step to Clean Air Act regulation. Brad Plumer explains what it’s all about. I’m crossing my fingers that some Senate Republicans will come to their senses and revive hopes for cap-and-trade, but I’m not expecting it to happen.