Cars and Climate: What Can EPA Do to Control Greenhouse Gases from Mobile Sources?
"As Congress considers legislation to reduce the greenhouse gas (GHG) emissions that contribute to climate change, attention has focused on “cap-and-trade” legislation. Such legislation would set a national cap on GHG emissions, with allowances (permits) to emit limited amounts of the gases distributed or auctioned to affected parties. Recently, there has also been discussion of taxes on greenhouse-gas-emitting substances (generally referred to as a “carbon tax”), which proponents argue would provide greater transparency and a clearer price signal.

Enacting greenhouse gas controls is not simply a choice between cap-and-trade and carbon tax options, however. A third set of options, using the more traditional regulatory approaches of the Clean Air Act (CAA), is available. Unlike a cap-and-trade system or a carbon tax, regulation under the Clean Air Act does not require new Congressional action. The ability to limit GHG missions already exists under various CAA authorities that Congress has enacted, a point underlined by the Supreme Court in an April 2007 decision (Massachusetts v. EPA).

Thus, controlling GHGs could follow a two-track approach, with Congress and the
Administration pursuing new legal authority (for cap-and-trade, carbon tax, or whatever) at the same time that the Administration, through the Environmental Protection Agency (EPA), exercises existing authority under the Clean Air Act to begin regulation of greenhouse gas emissions. The Administration has made clear that its preference would be for Congress to address the climate issue through new legislation. Nevertheless, it is moving forward on several fronts to define how the Clean Air Act might be used..."