The Economist: GHG Emissions Caps Could Fall to EPA, States

According to The Economist, the energy legislation currently before the Senate shows that Senate Majority Leader Harry Reid, D-Nev., "having earlier abandoned as hopeless an effort to limit America's emissions of greenhouse gases through a 'cap-and-trade' scheme, is proposing nothing more substantial than subsidies for home insulation and trucks that run on natural gas."

Republicans' opposition to cap and trade, which they have called an energy tax, derives from the correct conclusion that energy bills would go up if a price were put on carbon, The Economist wrote. Their opposition could be even stronger after the November elections. Coal-state Democrats remain unenthusiastic, the American public appears to be losing interest, and President Barack Obama's involvement has been detached, despite his campaign statements and his work at the United Nations climate talks last year in Copenhagen.

Nonetheless, the administration has opened other paths: Should legislation fail, EPA has indicated its intent to regulate GHGs. Federal agencies have discretionary power to set fuel-efficiency and appliance-efficiency standards. And states could continue setting their own standards. Nicholas Bianco and Franz Litz of the World Resources Institute estimated that emissions could be cut 13 percent by 2020 using just existing state and federal laws.

But piecemeal regulations would leave confusion and uncertainty. "That may leave big energy firms regretting their opposition to cap and trade. As one old utility hand puts it, 'There's a sense of ruefulness in the industry.' It is widely shared," wrote The Economist.