While we were all fascinated by torture memos and Susan Boyle, I think the EPA just cemented the future of ethanol. By declaring GHGs to be under their jurisdiction, they essentially removed the whole argument from the "politically inert" file.
For now, the finding will mostly put pressure on Congress to pass its own greenhouse-gas rules instead. Ed Markey, who's co-sponsored the big climate and energy bill in the House, put it bluntly on Monday: "Do you want the EPA to make the decision or would you like your congressman or senator to be in the room and drafting legislation? ... Industries across the country will just have to gauge for themselves how lucky they feel if they kill legislation." Even Republicans like Ohio's George Voinovich have been pondering much the same thing. As much as some members of Congress might prefer to kill cap-and-trade and ignore the climate issue entirely, that's not an option at this point. [More]Although I would much prefer a carbon tax - and there still might be faint hope for that much more efficient Pigovian approach - I suspect the enormous bureaucratic employment possibilities of a cap-and-trade system to be a more likely outcome.
So what to do right now?
- Buy farmland. (Of course, I always think that's the right answer). Seriously, by granting this considerable boon to ethanol, we may save that industry. I think any dip in land prices will soon revert to escalation.
- Invest in energy-saving stuff when replacing equipment. Fuel and electricity are about to get real costly. Take a harder look at less tillage.
- Finagle a seat at the various tables. There will be boards and oversight regulatory bodies galore. We need some producers to show up there.
A new carbon regulatory regime could basically act to accelerate obsolescence of dirty technologies. Consumers and businesses would be encouraged to scrap less efficient machines and invest in cleaner automobiles or homes or appliances sooner. Given the slack in the economy at the moment, it would be all to the good if everyone decided that now was a good time to start preparing for a world in which carbon costs money. It's regulation as stimulus. [More]You can place your bets how you think this will play out, but it looks pretty clear Congress will not be able to ignore this issue much longer.