14.2.1 General Description

Industrial development originated in the United Kingdom (UK) in the middle of the eighteenth century. Under the industrial revolution, technology innovation occurred in the textile industry that used coal to operate a steam engine. The change of industrial technology resulted in rapid urbanization of the UK population. Workers moved to settle around increasingly mechanized industrial centers. The industrial revolution later shifted to France, Germany, other European countries and the United States. From the end of the nineteenth century to the beginning of the twentieth century, technology innovation shifted from the textile industry to the metal and chemical industries that heavily used oil and electricity.

Economic prosperity was tempered by heavy social and environmental impacts. A famous archaic example is “Great Smog of 1952” in London¹, which killed more than 10,000 people due to SO_x and other air pollution substances emitted from coal combustion in industries and households. This disaster posed an opportunity for people to think seriously about the problem of air pollution, and it led to the establishment of the City of London Act in 1954 and the Clean Air Act (CAA) in 1956 and 1968.

The middle of the twentieth century was the birth of modern environmentalism and the development of public environmental conscientiousness among people. Understanding climate change showed the limit of a growth‐centered economic model and various environmental issues (e.g., air, water and soil pollutions). This limitation led to regulation at the national level, along with the development of a comprehensive body for environmental laws. Environmental law was rooted in a response to industrialization.

According to the EU Environmental Policy Handbook², edited by Stefan Scheuer, and the environmental policy of the European Union³, Europe’s environmental policy started in 1973, following the United Nations (UN) Conference on the Environment in 1972 in Stockholm. The conference addressed public and scientific evidences about “limits to growth.” After the conference, along with growing concern about the limits to growth, western societies increasingly acknowledged the importance of ecological awareness and an industrial shift towards sustainable development. Environmental conscientiousness was expressed by international laws concerning biodiversity, atmospheric pollution and climate change, which enshrined the “polluter pays” principle.

In addition to the UN Conference on the Environment in June 1972, the Paris Summit meeting, opened in October 1972 by the heads of state and government in the European Community (EC), was considered as the beginning of the EU’s environmental policy. A declaration on environmental and consumer policy was adopted at the summit which requested the European Commission to draw up an action program for environmental protection. The first environmental action program (EAP) was adopted in July 1973 that represented the EU’s first environmental policy. The task force within the European Commission, which drew up this action program, eventually led to the formation of a Directorate General for the Environment (DG Environment).

The primary reason at that time for introducing a common environmental policy was due to the concern, which diversified environmental standards, might result in trade barriers and competitive distortions in a common market within the EU. Different national standards for particular products, such as limitations on vehicle emissions, posed significant barriers on free trade within the EU. Additional motivations driving the EU’s emerging environmental policy were increasing international conscientiousness on environmental problems and growing recognition from the beginning of the 1970s that environmental pollution did not stop at national borders. Rather, it had to be addressed by cross‐border measures. The agreement was not finalized until the middle of the 1980s. After signing the Single European Act (SEA) in 1986, economic and ecological objectives were put on more equal footing within the EU community.

EU environmental policy was shaped by a variety of players, including all the main EU institutions as well as lobby groups, which made up the wider Brussels policy‐making community. Member states shaped EU environmental policy by working within the Council of Ministers. The Council is now a central player in decision making within the EU, which shares a policy‐making power with the European Parliament under an ordinary legislative procedure. There are different Council formations that specify ministers who are responsible for particular policy areas. One of them is the Environment Council. The number of Environment Council meetings has significantly increased over time.

The European Commission not only has the exclusive right to propose new environmental policy, but it has also a responsibility to ensure the implementation of environmental rules. Since its creation in the 1950s, the European Commission has served as the center of the EU’s policy making. However, it did not set up a policy system dedicated to environmental issues until the 1970s, and the full DG Environment was not set up until 1981. The DG Environment was first perceived as a relatively weak DG. However, it has gradually become more assertive through the development of technical and political expertise.

14.2.2 Environmental Action Program

Environmental Action Programs (EAPs)⁴ provide a general framework for the EU’s environment policy. These programs define the most important medium‐ and long‐term goals. They also determine basic strategy with appropriate concrete measures. The EAPs may date back to the UN Conference on the Environment held in 1972. That conference had agreed that a common community environmental policy was essential and the European Commission developed EAPs. The Treaty of Maastricht in 1992 created a contractual basis for EAPs. When the Treaty of Lisbon entered into force, this contractual basis was determined in Article 192(3) of the Treaty on the Functioning of the EU. Under this provision, EAPs are issued on the proposal of the Commission by the European Parliament and the Council in an ordinary legislative procedure, and are thus formal legislative acts.

Seven EAPs have been adopted so far, with durations ranging from three to 10 years: the first EAP (1973–1976), the second (1977–1981), the third (1982–1986), the fourth (1987–1992), the fifth (1993–2000), the sixth (2002–2012) and the seventh (2014–2020).

The first EAP emphasized the need for a comprehensive assessment on impacts of other policies in an effort to avoid damaging activities. In this way, the first EAP already contained many of the ideas behind “sustainable development.” The first EAP devoted most of its attention to water protection and waste. It also contained a sectorial approach, with special reference to agriculture and spatial planning. It also mentioned preparatory activities for emissions control.

The second EAP was a follow‐up to the first one in terms of approach and objective, along with simply a greater range of problems to be dealt with. Nature protection received special attention in the second EAP. The first and second EAPs determined a detailed list of actions to control a broad range of pollution issues. Eleven principles were listed and the priorities for environmental policies remained valid in subsequent action programs.

The third EAP tried to provide an overall strategy for protecting the environment and natural resources in the European Community. It shifted its emphasis from pollution control to pollution prevention. It also broadened the concept of environmental protection, including land use planning and the integration of environmental concerns into other European Community policies.

The fourth EAP gave substance to new obligations for integrating the environmental dimension into other Community policies by emphasizing four areas of activity. The four areas were: (a) effective implementation of existing Community legislation, (b) regulation of all environmental impacts of ‘substances’ and ‘sources’ of pollution, (c) increased public access and (d) dissemination of information and job creation. This was an initial commitment for strategic reorientation of environmental policies in the European Community. “Sustainable development” gradually became a normative reference for environmental policy in the EU from the beginning of the 1990s until now.

Strategic reorientation became visible at the end of the fourth EAP. Then, it was explicitly formulated under the fifth EAP. The general approach and strategy of the fifth EAP differed from previous programs. As indicated by the title, “Towards Sustainability,” the fifth one implied the program related to longer‐term objectives and focused on a more global approach.

The fifth EAP legislation in the late 1990s was impressive, including new complex and holistic framework legislation, such as the Ambient Air Quality Directive and the Water Framework Directive. They formulated an ambitious work program for several decades. Furthermore, policy preparation at the EU level became much more participatory. Policy preparation invited environmental non‐government organizations (NGOs) to play an important role in committees, expert networks and numerous consultation processes. This new movement might be slightly counterbalanced by influential industries that have lobby activities at all levels of the Commission.

The sixth EAP was a decision of the European Parliament adopted by the Council on 22 July 2002. It determined the framework for environmental policy‐making within the EU for the annual periods 2002–2012 and outlined actions that needed to be taken to achieve them. The sixth EAP identified four priority areas: (a) climate change, (b) nature and biodiversity, (c) environment and health and (d) natural resources and wastes. The sixth EAP promoted the full integration of environmental protection requirements into all Community policies and actions. It also provided environmental components of the Community’s strategy for sustainable development.

The objective of the seventh EAP was summarized in the title “Living well, within the limits of our planet.” EU’s environment policy had to steer a course between mankind’s justified desires for well‐being and limits set by the environment. This was underpinned by a vision for 2050 in the following manner:

“In 2050, we live well, within the planet’s ecological limits. Our prosperity and healthy environment stem from innovative circular economy where nothing is wasted and where natural resources are managed sustainably, and biodiversity is protected, valued and restored in ways that enhance our society’s resilience. Our low‐carbon growth has long been decoupled from resource use, setting the pace for a safe and sustainable global society.”

To realize the vision, priority objectives to be achieved by 2020 have been identified for three areas: (a) natural capital, (b) resource‐efficient, green and competitive low‐carbon economy and (c) environment and health. These achievements are measured by four aspects: (a) implementation, (b) knowledge base, (c) environmental externalities and (d) coherence. They also have spatial dimensions: (a) sustainable cities and (b) international environmental protection.

14.5.1 General Description

The Fish and Wildlife Coordination Act was the first law to protect the environment of the United States (US). It was enacted on 10 March 1934 to protect fish and wildlife when federal actions resulted in control or modification of a natural stream or body of water. The Act provided basic authority for the involvement of the US Fish and Wildlife Service in evaluating impacts on fish and wildlife from proposed water resource development projects.

On 25 June 1947, the Federal Insecticide, Fungicide, and Rodenticide Act was created which was another US federal law that was set up to the basic system of pesticide regulation to protect applicators, consumers, and environment. Later, the Federal Water Pollution Control Act was enacted in 1948 and the Air Pollution Control Act was applied in 1955.

Beginning in the late 1950s and through the 1960s, Congress reacted to increasing public concern about the impact that human activity could have on the environment. A key legislative option to address the concern was the declaration of a national environmental policy¹⁸. Advocates argued that without specific policy, federal agencies were neither able nor inclined to consider environmental impacts of their actions in fulfilling the agency’s mission. The statute that ultimately addressed the issue was the National Environmental Policy Act (NEPA) in 1969¹⁹.

The law was signed by President Nixon on 1 January 1970. NEPA was the first of several major environmental laws passed in the 1970s. It declared a national policy to protect the environment and created a Council on Environmental Quality (CEQ) in the Executive Office of the President. To implement national policy, NEPA required that a detailed statement of environmental impacts should be prepared for all major federal actions significantly affecting the environment. The “detailed statement” would ultimately be referred to as an “Environmental Impact Statement (EIS).”

In 1970, President Richard Nixon proposed an executive reorganization that consolidated many of federal government’s environmental responsibilities under one agency, the new Environmental Protection Agency (EPA). The reorganization proposal was reviewed and passed by the House and Senate²⁰. It was created for the purpose of protecting human health and the environment by writing and enforcing regulations based on laws passed by Congress and began operation on 2 December 1970. The agency was led by its administrator, who was appointed by the President and approved by Congress.

For at least 10 years before NEPA was enacted, Congress debated issues that the act would ultimately address²¹. The act was modeled in the Resources and Conservation Act of 1959. The bill would have established an environmental advisory council in the office of the President, declared national environmental policy and required the preparation of an annual environmental report. In the years, following the introduction of Senator Murray’s bill, similar bills were introduced and hearings were held to discuss the state of the environment and Congress’s potential responses to perceived problems. In 1968, a joint House–Senate colloquium was convened by the chairmen of the Senate Committee on Interior and Insular Affairs and the House Committee on Science and Astronautics to discuss the need for and potential means of implementing national environmental policy. In the colloquium, some members of Congress expressed a continuing concern over federal agency actions affecting the environment²².

The EPA conducts environmental assessment, research and education. It has the responsibility of maintaining and enforcing national standards under a variety of environmental laws, in consultation with state, tribal and local governments. It delegates some permit‐granting, monitoring and enforcement responsibility to US states and federally recognized tribes. EPA enforcement powers include fines, sanctions and other measures. The agency also works with industries and all levels of government in a wide variety of voluntary pollution prevention programs and energy conservation efforts.

The EPA began regulating GHG emissions from mobile and stationary sources of air pollution under the CAA for the first time on 2 January 2011. Standards for mobile sources were established pursuant to Section 202 of the CAA, and GHG emissions from stationary sources were controlled under the authority of Part C of Title I of the Act.

14.5.2 Regional Comparison between PJM and California ISO

After a general description on US environmental protection efforts, this chapter will describe regional differences in terms of pollution prevention, focusing upon the electric power industry as a representative secondary energy, because the United States have environmental regulation policies that are different among regions at the level of states. See Chapter 13 about energy classification. This subsection compares East and West regions for our illustrative purpose. It is easily imagined that our description on regulation differences in the electric power industry is applicable to other industries in the United States.

As discussed by previous research efforts such as Sueyoshi and Goto (2010b, 2012b,e,f,g, 2015b, 2016), US power plants are a major source of air pollution. In particular, in the United States, roughly two‐thirds of all SO₂ and one‐quarter of all NO_x come from electric power generation that relies on burning fossil fuels²³. Coal‐fired power plants account for a large share of these numbers. The power plants are also the largest polluter of toxic mercury and the largest contributor of hazardous air toxics. Although coal‐fired power plants produced approximately 30% of electricity in 2016 in the United States²⁴, they were responsible for over 68% of the carbon dioxide (CO₂) pollution from the electric power sector.

In North America, there are Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs). PJM Interconnection, which is the most well‐known among them, operates a wholesale electricity market in the north‐east part of the United States. The organization manages a high‐voltage electricity grid network to ensure reliability for more than 60 million people in all or parts of 13 states (Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia) and the District of Columbia. PJM’s utility members, more than 750, include power generators, transmission owners and electricity distributors. The headquarters is located at Valley Forge, Pennsylvania. While PJM began in 1927 as a power pool, today the organization operates the region’s power grid and wholesale electricity market as a RTO.

PJM’s function, as a federally regulated RTO, is to act independently in managing the region’s transmission system and the wholesale electricity market. PJM ensures the reliability of the largest centrally dispatched grid in North America. The voltage in PJM’s transmission grid is monitored 24 hours a day and seven days a week in order to keep electricity supply and demand in balance by directing power generators as to how much energy needs to be produced. The company dispatches about 185,600 MW (megawatt) of generating capacity over 62,591 miles of transmission lines. In addition, PJM has system operators that conduct dispatch operations and monitor the status of each grid, using telemetered data from virtually 74,000 points across the whole grid system.

California ISO was established in 1996 to support the electric power industry. California ISO manages the flow of electricity across 80% of California’s power grid and serves a population of nearly 30 million people. The company was formed under the direction of FERC to operate a robust and reliable power system that balances between high transmission reliability and low cost. The company is now a key player in working with the state of California to achieve its clean energy goals. As an objective grid operator, California ISO ensures open access to its wholesale power market that is designed to diversify resources and improve operational efficiency. The organization gives equal access to approximately 25,865 circuit‐miles of power lines and reduces barriers to diverse resources which compete to bring power to customers. The organization operates independently to manage the power grid traffic and to ensure an amount of electricity that is safely and reliably delivered to utilities and consumers.

14.5.3 Federal Regulation on PJM and California ISO

The two organizations are regulated by EPA. Under the CAA, there are three major environmental requirements:²⁵ (a) Mercury and Air Toxics Standards (MATS), (b) Reciprocating Internal Combustion Engines and National Emission Standards for Hazardous Air Pollutants (RICE NESHAP) and (c) Greenhouse Gas Tailoring Rule (GGTR). Besides the federal requirements, PJM and California ISO are also bound by different state and regional air quality regulations.

As the first requirement, MATS applies the CAA Maximum Achievable Control Technology (MACT) requirement to new or modified sources of emissions regarding mercury, arsenic, acid gas, nickel, selenium and cyanide. Emissions standards set under MATS indicate federal air pollution limits that individual facilities must meet by a set date. The EPA must set emission standards for existing sources in an appropriate category that are at least as stringent as the emission reductions achieved by the average of the top 12% best controlled sources. These rules set technology‐based emission limitation standards for mercury and other toxic air pollutants, reflecting levels achieved by the best‐performing sources currently in operation. Thus, the rules set standards for all hazardous air pollutants (HAPs)²⁶ emitted by coal‐ and oil‐fired electric generating units (EGUs) with a capacity of 25 MW or greater.

Regarding the second requirement, RICE NESHAP sets rules for regulating owners and operators of RICE, including stationary electrical generation facilities, and applies it for reducing emissions of toxic air pollutants such as formaldehyde, acetaldehyde, methanol, CO₂, NO_x, volatile organic compounds and other particulates²⁷. It is implemented in February 2010 and issued by the EPA. The standard applies to existing equipment for non‐emergency applications and does not apply to equipment used only in emergency applications. As a minimum, the affected stationary diesel engines must comply with CO₂ emission limits or must be fitted with emission control equipment, such as diesel oxidation catalysts, to reduce CO₂ emissions by 70%. The regulation includes a number of other provisions, including work practices for engine operators. While the regulation does not mandate the emission control technology, the EPA has designed the standards based on the capabilities of the diesel oxidation catalyst (DOC)²⁸.

Finally, the GGTR was issued in May 2010 to regulate CO₂ and other GHG emissions under the existing framework of New Source Review and Prevention of Significant Deterioration. Thus, the EPA provides guidance on new or modified units to install or implement the best available control technology (BACT), which gives a way to state environmental regulators that determine BACT on a project by project basis. This rule is policy aimed at shielding small polluters from strict requirements permitted by the CAA²⁹.

14.5.4 Local Regulation on PJM

The PJM not only follows federal regulations but also follows state and regional regulations. Notably, New Jersey, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont have separate state regulation requirements. Similarly, the Cross State Air Pollution Rule (CSAPR) regulates the region encompassing PJM.

The Regional Greenhouse Gas Initiative (RGGI) is the nation’s first mandatory cap and trade program for GHG emissions. RGGI involves nine states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. The RGGI cap and trade system applies only to carbon dioxide emissions from electric power plants with capacities to generate 25 MW or more – approximately 168 facilities. The RGGI emissions cap took effect on 1 January 2009, based on an agreement signed by RGGI governors in 2005³⁰. New Jersey was an initiation member of RGGI, but it withdrew from RGGI due to the Governor’s decision, who said the program was not effective in reducing GHGs and the whole system was not working as intended.

The CSAPR was finalized by the EPA under a provision of the CAA to reduce transported pollution. CSAPR defined upwind state obligations to reduce pollution significantly contributing to downwind non‐attainment and maintenance areas based on the magnitude of a state’s contribution, cost of controlling pollution from various sources and air quality impact of reductions. The intent of CSAPR is to reduce emissions of SO₂ and NO_x from power plants in the eastern half of the United States. This rule seeks to reduce air pollution that damages the ozone and results in the emission of fine particles, and put in place a framework to address pollution that affects air quality in downwind states. The EPA anticipates improved efficiency at existing sources, improved performance of pollution control equipment, a load shift to existing cleaner units, the use of lower sulfur coal and a switch among fuel mixes³¹.

14.5.5 Local Regulation on California ISO

The California ISO is regulated by two different organizations. The first is the Federal Energy Regulatory Commission (FERC) which is an independent federal agency that regulates the interstate transmission of electricity, natural gas and oil. It is also regulated by the California Public Utilities Commission (CPUC), which regulates investor‐owned utilities that operate in the ISO balancing authority area. The two organizations provide guidance not only on rates but also on monitoring GHG emissions produced from the operation of utility facilities³².

The FERC is the leading agency under the California Environmental Quality Act (CEQA) that requires state and local agencies to identify the significant environmental impacts of their actions and to avoid or mitigate those impacts, for all thermal power plants (50 MW or more) that are proposed for construction and operation in the state. The Energy Commission’s licensing process is the equivalent of the CEQA environmental impact report process, which is certified as an equivalent regulatory program. The FERC responsibilities that directly affect California ISO are its approval of rates for wholesale power and transmission in interstate commerce for jurisdictional utilities, power marketers, power pools, power exchanges and independent system operators; review of rates set by the federal power marketing administrations; and certification of qualifying small power production and cogeneration facilities. However, the FERC’s main responsibility is to determine whether new and ongoing projects have a significant adverse environmental impact resulting from GHG emissions, and if needed, to mitigate those impacts³³.

Secondary to the FERC, the CPUC regulates investor‐owned electric and natural gas utilities operating in California. The CPUC is guided by California’s Air Resources Board (CARB), the “clean air agency” in the government of California. California is the only state that is permitted to have such a regulatory agency, as it was the only state to have one before the federal CAA. As with any other air‐quality institution, the goals of the CARB include maintaining healthy air quality, protecting the public from exposure to toxic air contaminants and providing innovative approaches for complying with air pollution rules and regulations. The CPUC, through its oversight over these utilities, plays a key role in improving California’s energy‐related initiatives designed to benefit consumers, the environment and the economy. Under the CARB, California ISO must follow the California Global Warming Solutions Act of 2006, which is a comprehensive and multi‐year program to reduce GHG emission levels, by 2020, to the same levels as those experienced in 1990. Among the reduction programs, the CARB notably implements measures to reduce sulfur hexafluoride emission. This is a very potent GHG, with a global warming potential that is approximately 23,000 times more powerful than CO₂. The CARB staff has included the reduction of sulfur hexafluoride from gas insulated switchgear as a possible emission reduction measure within its plan³⁴.

Table 14.1 summarizes different air quality requirements on PJM and California ISO. The PJM follows air quality policies as mandated by EPA as well as RGGI that put a cap on carbon dioxide emissions produced by power generation. Since PJM primarily uses coal for electricity generation, this cap has a negative impact on electricity generation, which helps to promote power plants to use newer equipment and processes to generate electricity. In addition, PJM has policies like the CSAPR that monitors and regulates air pollution produced from electricity generation and transferred from state to state.

Meanwhile, the California ISO follows policies set forth by the EPA as well as the CEQA that monitors the impact of new and ongoing projects, particularly thermal electricity generation of 50 MW or more. In addition, the California ISO has an ongoing goal to reach 1990 GHG emission levels by the year 2020 as well as monitoring and regulating sulfur hexafluoride.