The Story Behind the Clear Skies Initiative

Via the Commons, the story of how the Clear Skies initiative came off the rails, despite the fact it was initially seen as a win-win for both environmentalists and industry.  I don't know all the issues on the table, but I like the cap-and-trade concept for pollution control. 

Many folks, by the way, automatically assume that as a libertarian, I am automatically against pollution laws.  This is not the case.  In fact, this issue is a good example of how a thoughtful understanding of individual rights and property rights differs from just being blindly "pro-business".  In fact, pollution laws are nearly essential to strong property rights.  As I wrote then:

In fact, environmental laws are as critical to a nation with strong property rights as is contract law. Why? Imagine a world without any environmental legislation but with strong property rights. What happens when the first molecule of smoke from my iron furnace or from my farm tractor crosses over on to your land. I have violated your property rights, have I not, by sending unwanted substances onto your land, into your water, or into your airspace. To stop me, you might sue me. And so might the next guy downwind, etc. We would end up in an economic gridlock with everyone slapping injunctions on each other. Since economic activity is almost impossible without impacting surrounding property owners, at least in small ways, we need a framework for setting out maximums for this impact - e.g., environmental legislation.

Cap and trade strike me as the best, most free market way to limit pollution - this system shifts the burden of pollution control to the people and industries and technologies that can do it the cheapest.  Unfortunately, many environmentalists are command and control technocrats and/or socialists who greatly prefer having government micro-manage technology choices and industry by industry requirements.  Which is exactly what led to the problems referred to in the article around "new source review".

New source review is long and complicated, but basically says that existing power plants don't have to upgrade to new technologies, but new ones have to go through a very extensive environmental review and permitting process and have a suite of government mandated pollution control technologies installed.  OK, that has all been clear for 3+ decades.  The rub comes when a company considers upgrading or replacing a portion of a power plant.  For most of the life of the Clean Air Act, the government allowed utilities to upgrade and modernize plants without having to install the expensive suite of new controls.  The Clinton administration clamped down on this, making it harder to upgrade existing plants.  All the recent hullabaloo has occurred as GWB proposed to go back to the pre-Clinton rules.

This issue is a great test for environmentalists, because it separates them into those who really understand the issues and the science and legitimately want improvement, and those who care more about symbolism and politics.  Those who like symbolism have cast this move as a roll-back, and are fighting it tooth and nail.  Those who care about results know the following:

Experience under the Clinton rules has shown that most old plants will never be upgraded if they have to go through the planning process and install the new scrubbing and other technologies.  So, they will just keep running inefficiently, as-is, until they are finally shut down.  However, if allowed to be upgraded without review and new scrubbers, etc., they will become much more efficient.  No, they won't have the most modern scrubbing technology, but because they are more efficient, they burn less fuel (coal) to make the same amount of electricity and therefore will pollute less.  In some cases these rules even prevent switching to cleaner fuels like natural gas. 

In other words, most scientists, including scientific-oriented environmentalists, agree that GWB's proposal will result in less pollution, but environmentalists still oppose it because they don't like the symbolism of any pollution regulation appearing to be rolled back.  You can read a lot more about New Source Review and how it actually increases pollution in practice here.