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August 21, 2015
On August 3, President Barack Obama announced the release of the Environmental Protection Agency's long awaited Clean Power Plan, which, under the authority of the Clean Air Act's Section 111(d), regulates carbon dioxide (CO2) pollution from existing power plants. This announcement represents the first time the United States has placed limits on greenhouse gas (GHG) emissions from power plants, the nation's largest source of emissions (accounting for about one-third of the U.S. total). As President Obama outlined the details of this historic rule, he stated, "We're the first generation to feel the impact of climate change and we're the last generation that can do something about it. We only get one home. We only get one planet. There's no plan B."
The Clean Power Plan had been in gestation for several years. In 2007, the Supreme Court ruled in Massachusetts v. EPA that the EPA has the authority and the responsibility to regulate carbon emissions under the Clean Air Act. Six years later, on June 5, 2013, President Obama announced his Climate Action Plan, which, among other prominent initiatives, included a Presidential Memorandum directing the EPA to work “expeditiously to complete carbon pollution standards for both new and existing power plants.” Almost one year later, on June 2, 2014, the EPA proposed the draft Clean Power Plan, which provided individualized 2030 emissions reduction targets for all 50 states, cumulatively resulting in a projected 30 percent decrease in power sector emissions from 2005 levels by 2030. Now, 14 months and 4.3 million public comments later, the EPA has released the final Clean Power Plan.
The final Clean Power Plan calls for a 32 percent reduction in power sector emissions from 2005 levels by 2030, equivalent to 870 million short tons of CO2 or the annual emissions resulting from the powering of 95 percent of U.S. homes. The cuts in CO2 emissions will also reduce emissions of harmful co-pollutants; by 2030, emissions of sulfur dioxide will be 90 percent lower and emissions of nitrous oxides will be 72 percent lower, compared to 2005 levels. The EPA projects that in 2030, the final rule will have led to net benefits of $26 - 45 billion, avoided 3,600 premature deaths and 90,000 asthma attacks in children, and reduced the average American’s yearly electricity bill by $84.
While the finalized rule is similar to the proposed rule, there are a number of key differences. The final goal is more aggressive than the proposed goal of 30 percent reductions, and cuts 70 million more tons of carbon. In order to achieve this goal, the EPA created interim and final carbon emission performance rates for fossil fuel steam units (e.g. coal power plants) and for natural gas combined cycle units. To develop the emission performance standards, EPA identified the “best system of emissions reductions” (BSER) for carbon pollution from power plants. The BSER for the Clean Power Plan are divided into three “building blocks,” which represent the most effective existing strategies that can be used to reduce emissions from power plants:
Building Block 1 - improving the efficiency of existing coal-fired power plants by 2.1 to 4.3 percent (down from the 6 percent assumed improvement in the proposed rule).
Building Block 2 - substituting low-emissions natural gas electricity generation for high-emissions coal-fired power plants. The final rule assumes natural gas plants can run at 75 percent of the "net summer capacity," a metric based on how much power a plant has historically produced. The proposed rule called for natural gas units to run at 70 percent of the "nameplate capacity," or how much power the power plant was designed to produce. The two measures lead to the same result, but EPA agreed with commenters that "net summer capacity is a more meaningful and reliable metric than nameplate capacity."
Building Block 3 - substituting zero-emissions renewable electricity generation for high-emissions coal-fired power plants. The final Clean Power Plan does not include existing or under-construction nuclear power or existing utility-scale renewable energy generation as the proposed rule did, and assumes there will be greater use of renewable energy than the proposed rule.
The proposed rule had a fourth building block - utilizing demand-side energy efficiency - which was removed in the final Clean Power Plan. Pundits believe this was done to increase the legality of the rule, as the EPA has little legal authority to regulate a state’s energy economy outside of power plants. Despite its removal as a building block, energy efficiency is still incorporated into the final rule, through the Clean Energy Incentive Program. This program will grant emissions credits to states that invest in solar or wind power or that develop energy efficiency projects for low-income communities. States can also comply with the Clean Power Plan using energy efficiency.
To provide states with maximum flexibility in their compliance, EPA created reduction goals in three different formats, allowing each state to choose which format best suits its needs. The three formats are:
The proposed rule only included rate-based goals, and the other two were developed at the request of states. Mass-based goals are generally easier to plan and implement, and make more sense for states participating in multi-state cap-and-trade programs. Rate-based goals, however, give states enjoying strong economic growth more flexibility. In any case, the EPA says the reductions in carbon emissions will be substantially the same. Once states choose a mass or rate-based goal, they have to develop a compliance strategy.
The final rule also allows states to select one of two types of implementation plans, a feature that the proposed rule did not include.
No matter which type of plan a state selects, the state has the flexibility and autonomy to choose which emissions reductions strategies are best suited to the energy, environmental and economic needs of the state. Additionally, if states choose to do so, the plan allows for them to work with other states using multi-state approaches such as emissions trading through a cap-and-trade program, like the Northeast’s Regional Greenhouse Gas Initiative (RGGI).
States are required to submit a final plan, or an initial submittal with an extension request (up to two years extension is possible), by September 6, 2016. If a state fails to submit a compliance plan, the EPA will implement its own federal implementation plan. States refusing or failing to submit an implementation plan may be penalized, because the federal plan will likely lack the flexibility to address the state's specific needs.
Even as a proposed rule, the Clean Power Plan was taken to court by Murray Energy Corporation, the largest underground coal mining company in the United States, in partnership with 14 U.S. states. The case was dismissed (the court declined to rule on a regulation that had not yet been finalized), but soon after the final rule was announced, 15 state attorneys general filed a petition in the District of Columbia Circuit Court of Appeals to put an emergency stop on the Clean Power Plan. Murray Energy Corporation has said it "will proceed with five lawsuits challenging the Obama Administration's flagrantly unlawful Clean Power Plan."
A different group of 15 state attorneys general, accompanied by New York City and the District of Columbia, have released a statement in support for the Clean Power Plan, saying they oppose legal action against it.
Author: Ori Gutin
Top-Rated Climate Nonprofit – 4-Star Charity