Although the EPA has not yet made an official announcement, it is apparently ready to issue its first regulations regarding carbon dioxide emissions. The process dates back to the Clinton years, when states first asked the EPA to use the Clean Air (CAA) act to regulate greenhouse gasses as pollutants, with carbon dioxide getting extra attention due to its role in ocean acidification. After years of delay, the Supreme Court ruled that the EPA must determine whether CO 2 is a pollutant according to the CAA's definition. The Bush Administration's EPA found that it was, but its findings were never made public or acted upon (they have since been obtained by the press). The Obama EPA reached a similar conclusion, but deferred acting on it, at least until now.

According to various press reports, the EPA has been briefing stakeholders on its planned regulations. They would put the limit on emissions at 1,000 pounds of carbon dioxide per megawatt-hour of electricity produced, but will only apply to new construction. A modern natural gas plant should be able to meet that limit with little difficulty. Most coal plants in existence, however, produce roughly double that amount, and will not be able to meet it without adopting some form of carbon capture and storage technology.

The regulations will send a clear signal to the market: either find a way to capture carbon cheaply, or don't build new coal capacity. Although they do very little for existing emissions directly, they're likely to have an indirect effect, since many of the oldest and least efficient plants in use burn coal at costs that are significantly higher than that of natural gas. In addition, the renewable energy mandates adopted by many states will displace some existing power sources; these old plants will again be the primary target.