Earlier this summer, President Obama released the final version of his Clean Power Plan. As states challenge and defend its legality, stakeholders continue to argue the benefits, costs, and the best way to implement the rule. The proposed rules will require stationary power sources, such as power plants, to reduce greenhouse gas emissions by 32 percent by 2030 from 2005 levels. The plan measures reductions by lowering the pounds of carbon dioxide (CO2) per megawatt hour (lbs/MWh) of electricity generated. Each state has a specific emissions reduction goal as denoted in the map below.
The proposed rule allows states to use three building blocks to reach the goal. The three blocks are: 1) increase power plant efficiency, 2) switch out dirty power sources for cleaner ones, and 3) deploy carbon free power plants. Using these guidelines, states don’t have to formulate and submit their plans until 2018 (at the latest, using an extension) and initiate emissions reductions until 2022. If states fail to submit a plan, the EPA will implement a federal plan which will be less tailored to states’ specific needs.
There are many differences between the proposed and final versions of the EPA’s rule, but one thing remains clear, there are a variety of options outside of the three building blocks which can be utilized to reduce emissions in the power generation sector. In May, an overview of the options was published in a report by the National Association of Clean Air Agencies (NACCA).
The technologies and policy programs not covered by the building blocks include: optimize grid operations, encourage clean distributed generation, revise capacity market practices, improve utility resource planning, adopt cap and invest systems such as the Regional Greenhouse Gas Initiative (RGGI), tax carbon dioxide emissions, and adopt environmental dispatch. While it was removed as a building block in the final version, demand-side energy efficiency will remain an important part to compliance. This method of emissions reduction was removed from the building blocks due to concerns that it might be a point of weakness for legal attacks to exploit. Completely reconfiguring the electric generation sector can be a daunting task and states will avoid it if they can. If they cannot, they will want to utilize all of their options. Also, some of these other technology and policy options are either too expensive for most states to tackle on their own or they require multistate cooperation.
Some of the costs associated with grid infrastructure modernization and similar technologies, may be covered by the federal government. In April, President Obama called for an overhaul of the energy infrastructure using recommendations from the U.S. Department of Energy’s first Quadrennial Energy Review. The report outlines key energy infrastructure, such as natural gas pipelines and transmission lines are horrendously obsolete. The price tag for updating these outdated projects is in the ballpark of $15 to $19 billion. It is now up to Congress to determine the program’s benefits and allocate funding. This initiative could increase grid efficiency, security, and reliability.
To reduce the price of cutting emissions, some states may find that working together through cooperative agreements may be better than going it alone. Organizing multi-state cooperative agreements can be complex and time consuming, which is why the EPA allows states to request an extension of up to two years should they take this route. To help ease the potential frustration, the National Association of Regulatory Utility Commissioners (NARUC) and the Eastern Interconnection State’s Planning Council (EISPC) released a multi-state coordination resources guide. Possible multi-state plans could materialize if states with large amounts of renewable energy generation band together with states without renewable energy for a more efficient way of reducing emissions while overhauling the power sector. Groups have pointed to RGGI as a model guide for a multi-state cap and trade plan, which could be adopted in other regions of the United States. RGGI has been successful in the Northeastern United States; raising over $2 billion in carbon auctions for clean energy investment, reducing regional emissions by 15 percent while regional economies grew 8 percent.
The rule faces many legal challenges and Congressional opposition, yet 49 states are currently working on plans to comply with the proposed rules. Despite the “just say no” plan raised by Senate Majority Leader, Mitch McConnell, his home state of Kentucky is forming a compliance plan. Oklahoma is the only state not working on a plan because Governor Fallin did not want to spend time and resources on a regulation which may (or may not) be overturned in court.
The compliance options mentioned in this article were left out of the CPP final rule not by mistake, but out of legal precaution. The EPA wants states to use every option available to reduce GHGs; however, the EPA cannot include them in the rule or require states to utilize them because the agency does not have the jurisdictional authority. Instead many of these options are accepted for compliance but not required by the rule.
Image courtesy Wikimedia Commons.