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Environmentalists have long known that when it comes to climate change, coal will be a dealbreaker. The carbon-intensive fossil fuel provides nearly half of the United States' electricity, and is responsible for some 30% of the country's greenhouse gas emissions. That's just due to the coal plants already operating — as the U.S. looks to expand its energy supply to meet rising demand in the future, over 100 coal plants are in various stages of development around the country. If those plants are built without the means to capture and sequester underground the carbon they emit — and it's far from clear that such technology will be commercially viable in the near-term — our ambitious goals to reduce greenhouse gas emissions and avert climate change will be meaningless.

That's why a decision issued on Thursday by the Environmental Protection Agency's (EPA) Environmental Appeals Board is so important. Responding to a lawsuit filed by the Sierra Club over a new coal plant being build on American Indian reservation land in Utah, the board ruled that the EPA has no valid reason to refuse to regulate the CO2 emissions that come from new coal-powered plants. The decision pointed to a May 2007 ruling by the Supreme Court that recognized CO2, the main cause of climate change, is indeed a pollutant under the federal Clean Air Act and therefore needs to be regulated by the EPA. In the months since that landmark decision, the EPA — with the support of the Bush Administration — has doggedly refuse to regulate CO2, much to the dismay of environmentalists. The board's decision will force the EPA to consider CO2 when issuing permits for new power plants, potentially making it — at least in the short-term — all but impossible to certify new coal power plants. That's because the EPA will need to reconfigure its rules on dealing with CO2, which is found in greater concentrations in coal than any other fossil fuel, that force plants in the permitting process to be reevaluated, delaying them for months or longer. "In a nutshell it sends [new plants ]back to the drawing board to address their CO2 emissions," says Bruce Nilles, director of the Sierra Club's National Clean Coal campaign. "In the short term it freezes the coal industry in its tracks." (See TIME's special report on the environment.)

The Sierra Club had originally sued to stop the construction of Deseret Power's Bonanza Generating Station in Vernal, Utah, part of their nationwide campaign to stop new coal. The 110-megawatt plant, which received its EPA permit in July 2007, would have emitted 3.37 million tons of CO2 a year — the equivalent to putting another 660,000 cars on the road. In detail, Thursday's decision means that any new air pollution permits for coal plants will require that Best Available Control Technology (BACT) be used to reduce CO2 emissions, the same criteria currently used for other pollutants, like sulfur dioxide or soot. BACT requires companies involved in power plants to use the best available technology to control pollutants — it's a tool to keep pollution controls up to date as both safety technology and our understanding of pollution impoves. In the past, CO2 wasn't affected by BACT because the EPA didn't recognize it as a pollutant. This decision changes that.

Right now, however, there is no definition of BACT for CO2, and environmentalists estimate it will take six months to a year to figure that out. In the meantime, all other coal plants in the permitting process, or stuck in the courts, will be frozen. Over the longer term, it's possible that new coal plants may be impossible to certify at all until a technology exists to greatly reduce or sequester carbon emissions from coal plants — and currently none has been proven. "The decision says the EPA can't ignore CO2," says Nilles.

That effectively punts the future of coal in America to President-elect Barack Obama's incoming Administration. It's not yet clear how he'll act, but his renewable energy advisor Jason Grumet has said that Obama would be willing to use the EPA to directly regulate CO2 — something President George W. Bush has refused to do. "This lays the groundwork for Obama to move quickly to put in place a regulatory system and begin to achieve CO2 reduction and build that clean, 21st century economy he talks about," says Nilles. Obama's position on coal isn't exactly clear, though he has said that he will work to develop "clean coal" plans that can capture and sequester carbon. What's certain is that the future of coal just got a lot cloudier — and the future of the climate might be a bit brighter.

See pictures of the world's disappearing ice.

See a graphic of the forecasted effects of climate change on the world by 2020.

• Bryan Walsh
• A new decision by the EPA's Environmental Appeal Board means America's new coal plants need to figure out how to get their emissions down — if they're going to go up