The Obama administration's greenhouse gas ruling Monday was meant to send a warning to industry, the U.S. Congress, and the world: with or without a law, Washington will tackle global warming in a serious way.
The Environmental Protection Agency issued a final ruling that greenhouse gases endanger human health, allowing it to put limits on emissions even if U.S. lawmakers fail to pass a law to achieve the same objective.
These are the ramifications of the:
Timing: as the EPA made its announcement, negotiators from nearly 200 countries met in Copenhagen to work toward a political agreement to address climate change.
The timing was no coincidence: the EPA announcement was aimed at an international audience as much as a domestic one.
The U.S. position at the talks is undermined by not having a domestic law in place to curb emissions, but the EPA ruling should reassure other nations that Washington will force businesses to reduce their greenhouse gas pollution one way or another.
Obama's message to world leaders: the United States is a serious partner in Copenhagen and on the climate change issue as a whole.
Pressure: The House of Representatives has passed a bill that would cut U.S. greenhouse gas emissions but the Senate has not. As lawmakers go back and forth on whether such rules would be good or bad for industry and the country, the EPA ruling will now be firmly in the back of their minds.
Obama's message to lawmakers: hurry up and agree on a law, or the administration will take the reins and accomplish this goal without you.
Risk: Though the White House has given the green light to the EPA finding, officials near Obama would prefer not to talk about it that much. Why? The president still firmly prefers a legislative solution to the problem of regulating carbon dioxide and other greenhouse gas emissions.
By making the threat that regulation will result if a law fails, Obama risks having to actually follow through.
Politically it will be more palatable for the president to tell Americans--especially in coal-producing states that will be hard hit by emissions curbs--that rules governing climate change were approved by their elected representatives rather than imposed by the executive branch.
If the economy does not recover soon, the short-term costs to industry of regulation could create long-term costs for Obama, whose fellow Democrats could lose seats in Congress.
Practically, EPA regulation could also get tied up in a series of legal challenges from businesses and environmental groups. A law would be less messy and potentially more efficient at cutting emissions quickly.
Certainty: Companies often say certainty is crucial for business planning. Even those that are opposed to climate legislation or EPA regulation- and there are many--would prefer knowing what's coming to not knowing, even if the ramifications are costly.
With the EPA's announcement, pending legislation in Congress, and the U.S. position in Copenhagen all spelled out, industry can now assume that, one way or another, the United States will aim to reduce its greenhouse gas emissions roughly 17 percent from 2005 levels by 2020.
For those that have not already started, making investments to cut industrial emissions and reduce carbon pollution would make sense...now.
This analysis was written by Jeff Mason.