The New Administration holds the incentives to a strong federal climate bill.

What follows is the first in a four-post series written by the authors of Warming Law for the online environmental magazine, Grist. (Also see Parts II, III, and IV.)

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There can be little doubt that the U.S. needs a strong carbon-pricing system, such as a cap-and-trade program, to help combat the causes of global warming. Politicians have proposed a range of alternative policy measures that avoid carbon-pricing (e.g. traditional “command-and-control” regulations on emissions, renewable portfolio standards, massive investments in renewable energy infrastructure and technologies, etc.) but economists widely agree that none of these approaches will, on their own, be swift or strong enough to reduce the risk of irreversible climate change. Rather, the better approach to mitigating this risk is to attach a price to carbon emissions – one great enough to ensure that greenhouse gas-emitting fossil fuels are more expensive to consume, per unit, than are their clean and renewable alternatives.

To this end, members of the 110^th Congress, including then-Senator Barack Obama, focused on trying to pass a cap-and-trade bill. Last June, they pushed the Lieberman-Warner Climate Security Act, an ultimately-doomed effort that attracted harsh criticism from both sides of the political spectrum. As Grist readers will surely recall, progressives condemned the bill for being dangerously weak because it failed to meet the IPCC-established target of an 80% reduction below 1990 levels of greenhouse gas (GHG) emissions by 2050, while conservatives claimed the bill would ensure the U.S.’s economic ruin.

After the bill’s death, leaders in Congress – and indeed Barack Obama himself – promised a stronger follow-up to Lieberman-Warner. However, with the economic climate dramatically altered in the last six months, political support for such an ambitious program may be in doubt. As the severity of the recession came into greater focus in the weeks leading up to the November elections, candidates made a notable shift in their rhetoric on climate policy, subtly replacing the focus on cap-and-trade with one on clean energy investments and “green” recovery measures. Outside of Washington, state and local governments continued to demonstrate their lack of faith that federal climate action will be forthcoming, as evidenced by further development of regional cap-and-trade schemes, namely New England’s Regional Greenhouse Gas Initiative (RGGI), the Western Climate Initiative, and the Midwestern Governors Greenhouse Gas Reduction Accord. These initiatives are motivated by the widely-shared sentiment that even with hope of meaningful federal action on climate change in 2009, dramatic reductions in carbon emissions simply cannot wait a moment longer.

Yet despite political “cooling” toward any measure that may raise the price of carbon emissions, the path to realizing strong cap-and-trade legislation is surprisingly straightforward. President Obama has entered office already in possession of the tools he needs to prompt the passage of such a bill – tools that include the powerful Clean Air Act, a collection of key legal rulings, and an array of state and local law that can set the tone and pace of future federal policy. These tools give President Obama and his new environmental “dream team” (e.g. Browner, Jackson, Sutley, Chu, Solis, Lubchenco, Heinzerling et al.) the authority and leverage they need to trigger powerful climate legislation that is, as promised, much stronger than the failed Lieberman-Warner bill.

Using these tools, President Obama and his Administration can lay out a regulatory agenda that will encourage industry to support, rather than resist, a comprehensive federal climate bill. This entails promoting local, state, and regional innovation in climate policy — a strategy the President has already initiated by ordering the EPA to revisit the California waiver that will allow over a dozen states to start enforcing better-than-federal auto emissions standards — as well as reversing the Bush Administration’s position that federal law “preempts” state greenhouse gas limits from automobiles. It also entails using the EPA’s existing authority under the Clean Air Act (CAA) to tighten restrictions on CO₂ emissions from new power plants; authority plainly recognized by important rulings from the U.S. Supreme Court and the EPA’s Environmental Appeals Board.

These steps would bring greater sections of the country under powerful state and regional emissions programs, and make large sectors of the economy (e.g. the auto industry, utilities) subject to aggressive CO₂ emissions regulation under the EPA. This should, in turn, prompt industry actors to join state and local governments and environmental activists in demanding a uniform, comprehensive, long-term federal climate strategy from Congress, or else face a “patchwork” of short-term, unpredictable, and costly regulatory solutions. That is the history of federal environmental legislation in this country – it typically passes only once major segments of corporate America realize that some regulation is inevitable.

In three subsequent posts, we’ll go into greater depth explaining important details underpinning these steps. Part II will address how and why President Obama should continue supporting and exploiting state and local innovation in climate policy, while Part III will explore how he can use the EPA’s existing authority to regulate CO₂ emissions from new power plants, thereby signaling to industry that with or without additional congressional action, tighter restrictions on greenhouse gas emissions are on the way. A fourth and final post will explore the controversial subject of whether cap-and-trade can and should be implemented under the Clean Air Act, and why it may be preferable in the long run to use the CAA as a trigger, rather than as a substitute, for a much more tailored climate strategy from Congress. Taken together, these posts will outline President Obama’s “roadmap” to cap-and-trade — one that should soon lead to a bigger and better sequel to Lieberman-Warner.