Obama administration eyes reduction in greenhouse gas emissions

By Karoun Demirjian

Monday, Jan. 3, 2011 | 5:56 p.m.

With the political momentum for energy legislation ground to a standstill in Congress, the Obama administration is taking the reins on emissions reform, issuing a sweeping new framework of greenhouse gas reduction requirements that are causing energy providers across the country to do a slow burn.

In a five-stage process, the Environmental Protection Agency plans to slice the admissible emissions levels for power plants and oil refineries that they say produce 40 percent of the country's greenhouse gas pollutants.

The clamp-down won't be total, and not all of the rules have been released yet: the first stage of regulations, which took effect Sunday, only applies to facilities that are being built new or upgraded and produce more than 50,000 tons of greenhouse gases per year. Proposals to encompass the rest of the industry will be coming down the pike for power plants in July 2011 and oil refineries in December 2011, with final regulations being released in May and November 2012, respectively.

But they are the most extensive steps the EPA has taken to date to regulate greenhouse gases -- a sign that the Obama administration is willing to use what power it has to turn the country toward adopting renewable and clean energy alternatives to carbon-belching greenhouse gas.

Obama had pledged to push Congress to pass cap-and-trade legislation: a system of trading energy credits within a closed market that is favored by environmentalists and derided by traditional energy source boosters, a category that includes most of the Republican Party. But the Senate came up short earlier this year, and no more modest energy proposals were able to garner the momentum to make it to a vote later in the session.

Obama said following the midterm elections that he planned to keep pushing on energy reforms. But the EPA's announcement was greeted with a backlash of criticism, especially from the GOP majority leaders in the House, where rising Energy and Commerce chair Fred Upton promised to beat the administration's decisions back. The state of Texas, home to more than a quarter of the country's refineries, has even filed a lawsuit.

Their complaint, basically, is that the changes will drive up energy prices severely.

That may be the case. The EPA's push is a not-so-subtle attempt to push energy providers toward investing in renewable and clean energy alternatives at a point in time at which the market does not yet favor those energy sources, environmental arguments aside.

But it's a trend that has been proven viable to developers in places like Nevada.

Nevada is no stranger to dirty power: a few years ago, the Reid Gardner plant topped the EPA's list of dirtiest plants in the country, a chart-topping trangression for which it was slapped with regulations under President Bush's administration in 2007, and is still scaling back its greenhouse gas-emitting activities.

But in the time since, developers have been responding to a popular and political push to steer clear of less-clean alternatives and make the slightly pricier investment in renewable energy areas. In the last two years, energy giants Blackstone Group LP, NV Energy, and White Pine Energy Associates have all pulled or abandoned their applications to build new coal-fired power plants in Nevada in favor of plants using solar or natural gas as fuel.