The United States Environmental Protection Agency (EPA) continues to move ahead with regulation of greenhouse gas emissions under the Clean Air Act (CAA). Previous work has indicated that basic forms of compliance flexibility—trading—appear to be legally permissible under section III of the CAA. This Article takes a close look at more expansive and ambitious types of flexibility: trading between different kinds of sources, biomass co-firing, and above all, offsets. It concludes that most types of such extended flexibility are either legally incompatible with the CAA, or so legally problematic that EPA is unlikely to adopt them. This has important implications for both the costs of the CAA climate policy and the level of environmental benefits that are achievable. It also creates tension between the CAA climate policy and state-level policies, such as California’s, that aim to include various forms of extended flexibility.
Nathan Richardson, Playing without Aces: Offset and the Limits of Flexibility under Clean Air Act Climate Policy, 42 ENVTL. L. 735 (2012).