Morning Bell: Central Planning Coming on Carbon

Conn Carroll /

Writing from the Aspen Ideas Festival, the Atlantic’s Megan McArdle recounts a Thomas Friedman presentation on global warming where Friedman mused “about how great it would be if we could be China for a day — have the government get in, totally reorganize the energy market, and then go forward from there.” Friedman is spending a little too much time away from Washington. According to the Advanced Notice for Proposed Rulemaking leaked widely last week, the Environmental Protection Agency plans to do just that.

Using authority derived from the Clean Air Act, the EPA’s plan to regulate greenhouse gas emissions is unprecedented in scope. Originally a response to states that wanted to mandate stricter fuel-efficiency requirements, the plan reaches far beyond the automotive sector to touch every aspect of our economy.

A few of the items the EPA wants to regulate: planes, trains, ships, boats, farm tractors, farm and mining equipment, lawn mowers, garden equipment, portable power generators, fork lifts, construction machines, and logging equipment. The EPA plan contemplates not only emission caps, but true central planning features such as mandated equipment redesign and operational changes. And that’s only the beginning.

The EPA plan also acknowledges that regulating carbon through the Clean Air Act would trigger regulation requirements under both the Prevention of Significant Deterioration (PSD) and National Ambient Air Quality Standards (NAAQS) programs. Under the PSD program, any building exceeding 100,000 square feet would be subject to an expensive permitting process for new construction or modification. The EPA conservatively estimates this item alone will bring 1 million new sources under its regulatory regime.

Just last month the Senate rejected, again, a cap-and-trade plan for regulating greenhouse gas emissions. But don’t fear, environmentalists: The EPA claims it can introduce a cap-and-trade plan by fiat. The EPA admits designing a cap-and-trade system “would entail working with a large number of diverse interest groups on difficult issues involving redistribution of wealth on a scale that typically is decided by Congress rather than the Executive Branch.”

But the bureaucrats at the EPA are undaunted. They fully believe they can and should design a system requiring massive “redistributions of wealth.” Should Congress democratically decide such issues as whether allowances are auctioned or allocated? No. Bureaucrats at the EPA will centrally plan such decisions, thank you very much.

For her part, the Atlantic’s McArdle was horrified by Friedman’s affection for China’s policymaking methods: “Where to start? Very few people think that China is succeeding because of its awesome industrial policy — China is succeeding very much in spite of its industrial policy.” The Bush administration has done an admirable job fighting EPA’s efforts to centrally plan domestic industrial policy the way China does. Hopefully, the next president will save us too.

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