Clear Skies Act of 2003 - Background: The Clear Skies Initiative

Background: The Clear Skies Initiative

On February 14, 2002 President George W. Bush announced the Clear Skies Initiative. The policy was put together by Jim Connaughton, Chairman of the Council on Environmental Quality, and involved the work of Senators Bob Smith and George Voinovich and Congressmen Billy Tauzin and Joe Barton. The Initiative is based on a central idea: "that economic growth is key to environmental progress, because it is growth that provides the resources for investment in clean technologies." The resulting proposal was a market-based cap-and-trade approach which intends to legislate power plant emissions caps without specifying the specific methods used to reach those caps. The Initiative would reduce the cost and complexity of compliance and the need for litigation.

Current power plant emissions amounted to 67% of all sulfur dioxide (SO₂) emissions (in the United States), 37% of mercury emissions, and 25% of all nitrogen oxide (NOx) emissions. Only SO₂ has been administered under a cap-and-trade program.

The goals of the Initiative are threefold:

• Cut SO₂ emissions by 73%, from emissions of 11 million tons to a cap of 4.5 million tons in 2010, and 3 million tons in 2018.
• Cut NO_x emissions by 67%, from emissions of 5 million tons to a cap of 2.1 million tons in 2008, and to 1.7 million tons in 2018.
• Cut mercury emissions by 69%, from emissions of 48 tons to a cap of 26 tons in 2010, and 15 tons in 2018.
• Actual emissions caps would be set to account for different air quality needs in the East and West.

Through the use of a market-based cap-and-trade program, the intent of the Initiative was to reward innovation, reduce costs, and guarantee results. Each power plant facility would be required to have a permit for each ton of pollution emitted. Because the permits are tradeable, companies would have a financial incentive to cut back their emissions using newer technologies.

The Initiative was modeled on the successful SO₂ emissions trading program in effect since 1995. According to the President, the program had reduced air pollution more than all other programs under the Clean Air Act of 1990 combined. Actual reductions were more than the law required and compliance was virtually 100% without the need for litigation. Also, he said that only a "handful" of employees were needed to administer the program. The total cost to achieve the reductions was about 80% less than had originally been expected.

Bush mentioned several benefits of the Initiative:

• Reduces respiratory and cardiovascular diseases by dramatically reducing smog, fine particles, and regional haze.
• Protects wildlife, habitats and ecosystem health from acid rain, nitrogen and mercury deposition.
• Cuts pollution further, faster, cheaper, and with more certainty—replacing a cycle of endless litigation with rapid and certain improvements in air quality.
• Saves as much as $1 billion annually in compliance costs that are passed along to consumers.
• Protects the reliability and affordability of electricity.
• Encourages use of new and cleaner pollution control technologies.