Reducing Carbon Emissions from Power Plants Goes National (but stays local)
On June 2, 2014, EPA, under President Obamaâ€™s Climate Action Plan, released the long-awaited draft greenhouse gas (GHG) rule for existing power plants across the nation. Officially called â€śThe Clean Power Plan,â€ť the proposed rule establishes state-by-state 2030 GHG goals (except for Vermont, which doesnâ€™t have any fossil-fuel-fired power plants). The three most important questions about how EPA would handle the regulation were 1) what the baseline year would be, 2) how deep the reductions would cut, and 3) what alternatives would be counted toward that reduction. In sum, the proposed regulations call for carbon emissions cuts from the power sector of 30 percent below 2005 levels by no later than 2030 and virtually all existing state programs to reduce GHG should be able to be counted toward the reductions.
The program is to be administered under EPAâ€™s authority under Section 111 (d) of the Clean Air Act (CAA). Accordingly, EPA is not proposing emissions rate goals or guidelines for the four affected sources located in Indian country at this time, but rather has committed to working with those Tribes and sources in the future. This action is a continuation of the Obama Administrationâ€™s pledge to use executive powers under existing CAA authority to implement his Executive Branch Climate Action Plan. Combining a state-by-state approach with a broader â€śoutside the fence lineâ€ť view of GHG reductions, U.S. EPA has attempted to craft a reduction scheme which flexibly addresses the wide variety of emission profiles in the nationâ€™s largest source of GHG emissions, its power sector, but inevitably requires reduction from coal burning power plants. The four main reduction components to the plan are:
- Reducing the carbon intensity of generation at individually affected EGUs (Existing Generation Units) through heat rate improvements. [On-site efficiency improvements]
- Reducing emissions from the most carbon-intensive affected EGUs in the amount that results from substituting generation at those EGUs with generation from less carbon-intensive affected EGUs (including Natural Gas units under construction). [Grid management]
- Reducing emissions from affected EGUs in the amount that results from substituting generation at those EGUs with expanded low- or zero-carbon generation. [Increased renewables and nuclear]
- Reducing emissions from affected EGUs in the amount that results from the use of demand-side energy efficiency that reduces the amount of generation required. [Increased energy efficiency, or reduction in electricity demand]
One of the main questions leading up to this release was, â€śWhat would the federal government do with existing state GHG programs?â€ť Turns out they listened to the hundreds of stakeholders who commented as demonstrated by the following excerpt from the published rule.
â€śEPA . . . heard from a wide range of stakeholders that the EPA should authorize state plans to include a portfolio of actions… Plans that do directly assure that affected EGUs achieve all of the required emission reductions (such as the mass-based programs being implemented in California and the RGGI states) would also be approvable provided that they meet other key requirements, such as achieving the required emission reductions over the appropriate timeframes.â€ť
So the bottom line is that EPA will let California, and the Northeastâ€™s RGGI program, submit existing Cap and Trade Programs as part of their statewide or multi-state strategies. Each state will have to put together a plan similar to what has been historically done for traditional air pollution cleanupâ€”think smog plans. These plans must then be approved by EPA. The proposal established June 2016 for submission of the plans (disregarding any successful legal challenges), with a 15 year implementation timeframe.
The statewide goal of a 30% reduction is from a 2005 baseline. To put some perspective around that number for a state like California, see below (all units in lbs CO2/MWhr):
- EPA Proposed 2030 Standard for California: 537
- California Grid Average in 2005: ~750
- California Projected Grid Average in 2020: ~506
With each California utility already subject to the AB 32 Cap-and-Trade Program, Californiaâ€™s Renewable Portfolio Standard (RPS), energy efficiency mandates, and other GHG reduction programs, it can be anticipated that a state-submitted plan will be a very complex compilation of existing programs to demonstrate California already has the programs in place to achieve the required reductions. Â EPA provided the following bullets showing the range of other activities around the country that will be able to be used to cut carbon pollution under this proposal.
- 47 states with utilities that run demand?side energy efficiency programs
- 38 states with renewable portfolio standards or goals
- 10 states with market?based greenhouse gas emissions programs
- 27 states with energy efficiency standards or goals
A 120 day comment period began upon publication in the Federal Register, as requested by Congress. EPA will also hold public workshops on the proposal throughout the country in the near future.
- July 29, 2014 â€“ Public hearing will be held in Atlanta, Georgia and Denver, Colorado
- July 30, 2014 â€“ Public hearing will be held in Washington, D.C.
- July 31, 2014 â€“ Public hearing will be held in Pittsburgh, Pennsylvania
- June 1, 2015 â€“ EPA will finalize rule
Therefore, this proposal is really just a milepost in a long regulatory process. So let the debate continue.
Jon Costantino is a senior adviser at Manatt, Phelps & Phillips, LLP in the Sacramento Government practice group. He manages complex political and regulatory issues for clients in the areas ofÂ climate change, clean energy and environmental issues and previously served as Climate Change Planning Manager within the Office of Climate Change at the California Air Resources Board. Mr. Costantino can be reached at (916) 552-2365 or firstname.lastname@example.org.
This column is part of a series of articles by law firm Manatt, Phelps & Phillips, LLPâ€™s Energy, Environment & Natural Resources practice. Earlier columns in the fourth edition of this series discussed Nanomaterial Safety Research Plans, the Obama Administrationâ€™s Plans to Reduce Methane Emissions, US Ban on Oil Exports and Environmental Risks in Buying Contaminated Properties.
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