Michael Grunwald is a senior staff writer for Politico Magazine.

As President Obama has amped up his climate rhetoric in his second term, Gina McCarthy, the administrator of the Environmental Protection Agency, has been responsible for translating his lofty aspirations into thousands of pages of complex regulations. The EPA has until next summer to finalize its Clean Power Plan limiting carbon emissions from power plants, especially coal plants; it is also pushing tougher restrictions on ozone and mercury pollution, which will hit the coal industry as well, and on methane, an issue for oil and gas drilling. McCarthy was once a top environmental aide to a Republican governor named Mitt Romney, but times have changed; the GOP has vowed to use its control of both houses of Congress to roll back EPA regulations in general and the carbon rules in particular.

Politico Magazine senior staff writer Michael Grunwald spoke to McCarthy on Wednesday, after the House had passed a budget that cut EPA funding, while blocking U.S. aid to the global Green Climate Fund that Obama has pledged to support. The following is a transcript of their conversation, condensed and lightly edited for clarity.


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Michael Grunwald: Let’s start with this budget, since I saw it’s going to reduce EPA staffing to the lowest level since 1989. There are some riders on environmental issues. And the new Senate majority is talking about going after your carbon regulations. Why does everybody hate you? What’s going on?

Gina McCarthy: Actually, we were pretty pleased by how the budget came out on the whole. We know the EPA has challenges in terms of numbers, but we’re really rethinking how we do business so that we can do it more efficiently. We’re going be OK on the budget, and I was actually really excited about the riders. You probably noticed we didn’t have anything in there that would prevent us from moving forward with the Clean Power Plan and our other climate change initiatives. On the whole, we think we batted a thousand on the riders. I think we’re facing what other agencies are facing in terms of trying to make the numbers work.

MG: You have this historic climate crisis, and the other party—even the Republicans who don’t deny the problem, they certainly don’t like the idea that you’re doing something about it. How are you going to fight back against that?

GM: Well, I don’t think it’s a matter of fighting back. It’s a matter of doing our job, the job that Congress gave us to do. Environmental issues have never been, in the past, partisan issues. There’s always been a bipartisan effort to make sure every kid can breathe clean air and have clean water and have a healthy, safe place to live. The most important thing for the EPA is to keep our eye on public health and the environment, to make sure we’re staying within the authority that Congress gave us. And we think a lot of folks outside in the general public really care about the issues we’re working on, are very supportive of our agency—every poll shows that. As long as we’re doing what the American people tell us to do to protect their interests, I think we’ll do just fine. We’re not going to let that contention get in the way of doing the job that Congress actually gave us and that I took an oath to do.

MG: Emissions are down almost 11 percent from 2005 levels. But in the last couple years, emissions have started to creep up. What’s going on, and how are you going to turn that around?

GM: The president clearly has provided tremendous leadership in his climate action plan. He’s made it really clear that we have a moral obligation to act and that we are going to act. EPA’s premiere piece is our Clean Power Plan, and we’ve shown that it can be done in a way that continues to allow the economy to grow and jobs to be produced. We need to make that case very clear, because the reason we’re doing it is public health, but the outcome is going to be a stronger economy. One of the challenges—you’re right—is that we have a long way to go. This is a marathon, but we need to get out of the gate and get way past the 100-yard dash line during this administration so we have a shot at getting that race won. And so I think that we can show the rest of the world, as we did I think with [the recent climate agreement with] China, that these aren’t two separate issues. You don’t have to worry about the economy if you’re taking smart climate action. You need to worry significantly about the economy if we fail to act.

MG: When you guys put out these regulations, you talk a lot about clean air, about reducing asthma. Let’s face it: You’re talking about dirty coal plants. But then at the same time, you guys say you’re not fighting a war on coal. How do you balance this? It seems like in the short term, a lot of the opportunities for emissions reductions are going to come from removing coal.

GM: Well, a lot of emissions reductions are coming from coal now as a result of other rulemaking that we’ve done to address these air pollution problems. And I think the most important thing here to understand, Mike, is we’re treating carbon pollution the same way as we are treating every other pollutant that we regulate under the Clean Air Act. Coal has just as much opportunity to stay a part of the mix as any other fuel, and we fully expect that it will. But what you are going to see are much more highly controlled and efficient plants moving forward, and you’re going to see the coal plants not being the entire centerpiece of how we look at our energy in decades to come.

You already see under the president’s administration that we have tripled wind generation. We are looking at a tenfold increase in solar energy. The whole point of the Clean Power Plan is to look at how the energy world is already transitioning, to recognize that coal is an area that has begun to be disinvested in because of market forces. It does not compete well in most areas against inexpensive natural gas. We want to provide a real market certainty for the kind of clean energy technologies and generation that you want to see as a significant part of any energy mix. And so we believe that we’re following the trend in the energy world, and we believe that we’re moving towards much more cleaner generation, taking advantage of the market shifts that are already happening. And you are still going to have significant jobs, significant growth in the economy as a result. Only they’ll be the jobs of the future.

MG: We talked in the past about the actual plan and some of the projections in the plan. I’ve made the case that it doesn’t seem that ambitious, particularly on the projections for adding renewables and shutting down coal. You’ve now got 1.6 million comments—do you think this thing is going to get tougher?

GM: I think we’re up to 2.2 million, just to give you our latest count, and that will increase. The comments are certainly going to provide us a wealth of things to think about. But this proposal is going to not try to achieve a specific reduction level because that’s not how the Clean Air Act works. But we also know that in the end, this could either become more aggressive or slightly less, or the trajectory could change. But I have heard nothing that tells me that we won’t be entirely successful in making this an aggressive and reasonable proposal and also in making sure that it holds the test of time in terms of its legal vulnerability, or legal certainty, I should say.

In the end, you will probably see significantly more emissions reductions than we anticipated. Number one: That’s usually what happens when we regulate utilities—they bring in a big margin of safety. But most importantly because these will be investment signals—not just what the utilities are investing, but these are going to be investments in renewables, investments in energy efficiency, investments in keeping costs low for consumers. This is an opportunity to explore real investment that is going to fuel our future in a way that’s respectful of the economic and public health challenges that climate change poses for all of us.

MG: Meanwhile, you’ve got more rules coming out on ozone, smog, mercury. Presumably when you talk about sending a signal, part of the signal you’re sending is that coal is going to get more and more expensive as the other stuff gets cheap.

GM: The signal is that what we’re going to go after is pollution where it’s emitted. And we all know that we’ve been working with the coal sector for a long time to close the loop on things like mercury and arsenic, which we did with the Mercury and Air Toxic Standards. There is no reason in the world why we should not pursue similar types of regulatory action for carbon. And in fact, the Supreme Court told us that that’s what we do under the Clean Air Act, and that’s what the president has told us we should pursue in order to take action on climate now.

MG: Can you explain to the layman why, say, Kentucky is going to have to do so much less than New York to comply with the carbon regulations? Why they don’t have to achieve the same kind of reductions, even though they’re burning more of the coal?

GM: Well, it’s important to remember that we have to look at whether the costs associated with our rules are reasonable, and we also want to take advantage of the economic opportunities available to each state, so they can look at where their energy mix is heading and align their strategy on carbon pollution to be sustainable. In other words, we have to look at where each state is to begin with in order to understand what’s reasonable to ask them. So under the Clean Air Act, we are setting an overall standard that we have to achieve overall for each of the individual states, depending upon where they are. And all those states can then develop their own plan on how to get there. It’s important from the get-go for us to understand what states are heavily coal, what states have access to natural gas, what states have renewable resources, what states already have functioning energy efficiency programs, and what states need time to ramp up. We looked at where each state was in terms of what opportunities for carbon reduction are available to them and when, so we could make a reasonable expectation on what each state could achieve by 2030. And then we saw overall what those would mean in terms of national reductions, and fortunately, it lined up to be an aggressive number. You will likely see some adjustments. But it would have been unfair to think that a Kentucky was in the same position as a New York, because New York has been working on these issues for a long time. And frankly this is not about punishing; this is about opportunity. New York has really saved the consumer significant money by doing energy efficiency work, and there are real payoffs for this that will make it valuable for Kentucky to go way beyond what we might require and provide them the same kind of benefits that a low-carbon energy system produces.

MG: We haven’t even talked about fracking, which is where some of these emission reductions are coming from as gas replaces coal. Is fracking a good thing? And what will EPA do about methane leaks? Are you thinking about voluntary measures, or will there be a hammer?

GM: Certainly, new techniques in how to explore for oil and natural gas have opened up opportunities in the market that I don’t think that anybody expected. That has been one of the significant market forces that has shifted so much of the market towards natural gas and made coal less competitive in so many areas. It clearly is something the president wants to make sure that we continue to take advantage of. But he’s made it clear it needs to be done in a safe and responsible way, which is why, in terms of methane, part of the president’s climate action plan was to put out a methane strategy, looking at a number of sectors, but most importantly oil and gas. And that is because that methane doesn’t need to be an emission or a waste. It is a product, and there are some tremendous cost-effective opportunities for us to recapture that and get it into the system for sale. We need to get at that issue, so we’re going to be putting out a methane strategy across the administration. We wanted to put it out this fall, so you’ll see it most likely this month. You will see both regulatory actions, as well as some significant opportunities for voluntary action.

MG: So it won’t be purely voluntary then?

GM: I think we’ve already taken a regulatory approach to this for natural gas wells. We already have proposals out that would expand that to oil as well. So this is a significant continued look at where regulations fit most effectively across the administration, as well as where voluntary actions can fill in the gap.

MG: What’s going to be the larger legacy? We talked a bit about how on the right people say this is all nonsense, but then on the left you see people saying the president hasn’t done anything. We haven’t talked about the fuel-efficiency regulations for vehicles, the stimulus investments that were so important for renewables. What do you think is going to be the president’s overall climate legacy, and how will we see it? Will we see emissions starting to crash soon?

GM: I think you’re going to see this is the turning point in the climate discussion. I have never seen this big an opportunity for the United States to send a clear signal that we’re not only talking the game on climate but we’re walking it. And seeing China come into the mix as well in such a strong way that really will require them to take action to achieve the goals they have put on the table. When we get aggressive and we pull in China, we have the two largest economies, the two largest carbon polluters, making serious commitments, you’re going to have an opportunity to turn the tide here and really take the kind of action we need to protect public health as well as our economies. We do not mar or hold back the competitive edge of the United States when we regulate environmental pollution. We actually sharpen the competitive edge.

It is essential to look at history—those light-duty vehicle rules were huge. They have made the car industry stronger than they have been in decades. They are exporting more than a third of their vehicles. They are selling energy-efficient vehicles that people want to drive. They are moving the dime for new technologies. This is what you want a robust economy to look like. So if you look at the one area where we have regulated, we have had enormous success. That is the same kind of success that we are going to achieve in the utility-sector in our energy world.

MG: You worked for Mitt Romney. You’re a technocrat; you’ve discussed climate today as a kind of technocratic issue. You’ve talked about how these things have always been bipartisan, but right now this is not. How can that change? I saw that Republicans are trying to kill this global [Green] Climate Fund, which presumably is really going to be important to getting a global deal. How can you make this sort of an American issue as opposed to a Democratic issue?

GM: I think we need to remember that we’re working for the American public. My job is to protect public health and the environment. There is nothing partisan about that. And we are going to continue to make the case that we are doing what we’ve always done, which is to protect our kids today and the future for our kids tomorrow.

MG: So EPA hasn’t changed, just the world has changed?

GM: No, I actually think that when we go in the world, to each of these states that we work in, people care about what we do, they support what we do, and I think you will see that being the predominant force behind EPA’s continued success.

MG: So just Washington has changed?

GM: Well, the politics always shift one way or the other. But eventually people will remember, and I think most do, that EPA has been the one that has protected their interests when we have had pollution impacting their public health, and we will continue to do that.