Clean Power Plan from the EPA: What Does It Mean?

On June 2, the EPA proposed a new Clean Power Plan, in which the agency will apply its authority under the Clean Air Act (CAA) to dramatically reduce greenhouse gas (GHG) emissions from fossil fuel-fired electric generating units (EGUs). EPA calculates that these power plants account for roughly one-third of all domestic GHG emissions in the US. Advocates on opposite sides of this controversial proposal claim this Plan would either become the most important US initiative to address climate change, and/or would crash economies through much of the US heartland by strangling coal-fired electricity production. Let’s hope we end up closer to the optimistic scenario.

EPA’s Plan would actually be directed at states, consistent with most CAA programs, where EPA creates regulatory requirements for states to administer through permits issued to major stationary emissions sources and rules applicable to smaller diffuse sources. Each state will receive a state-specific carbon dioxide (CO₂) emission goal, with some discretion in how to achieve its goal.

What's the Plan?

EPA is proposing state-specific emission-rate-based goals for CO₂ emissions from existing fossil fuel-fired EGUs – also described as “carbon intensity” goals. Each state has broad flexibility to meet its assigned rate by 2030, by lowering the overall carbon intensity of its power sector. State goals are not requirements on individual electric generating units; instead EPA is also proposing guidelines for states to follow in developing plans to achieve their goals. The basic formula for each state goal is a rate: statewide CO₂ emissions from fossil fuel-fired power plants in pounds (lbs) divided by statewide electricity generation from fossil-fuel fired power plants and certain low—or zero—emitting power sources (renewables and nuclear) in megawatt hours (MWh). State—and regional—specific information is plugged into the formula, to calculate the state-specific goal. Each state’s goal is different, based on its unique mix of power sources, and application of standards of performance that reflect emissions limitation achievable by application of the “best system of emission reduction (BSER).”

EPA’s proposed guidelines offer states four “building blocks” to meet their targets:

• Make fossil fuel power plants more efficient.
• Use low-emitting power sources more (e.g., natural gas combined cycle units).
• Use more zero- and low-emitting power sources (e.g., renewables or nuclear).
• Use electricity more efficiently.

EPA then applies existing generation mixes, BSERs, and the building blocks to produce a total emission goal for each state as of 2030. Each state would be required to submit to EPA a state plan consisting of the following components:

• Identification of affected entities
• Description of plan approach and geographic scope
• Identification of state emission performance level
• Demonstration that plan is projected to achieve emission performance level
• Identification of emission standards
• Demonstration that each emission standard is quantifiable, non-duplicative, permanent, verifiable, and enforceable
• Identification of monitoring, reporting, and record-keeping requirements
• Description of state reporting
• Identification of milestones
• Identification of backstop measures
• Certification of hearing on state plan
• Supporting material.

Each plan would be due by June 30, 2016. Once approved, a state would be required to begin implementation of requirements by 2020, and to reach its goal by 2030. EPA projects that full implementation of these plans will reduce annual CO₂ emissions by 26-30% below 2005 levels by 2030. The reductions in fossil fuel use will also lead to significant reductions in emissions of other pollutants, including sulfur dioxide (SO₂), nitrogen oxides (NOx) and fine particulate matter (PM2.5).

EPA predicts compliance costs of approximately $5 billion per year once state plans are being implemented, and net environmental and health benefits of up to $37 billion above those costs. Opponents predict higher costs, lower benefits, and severe reductions in economic activities involving coal-fired EGUs, including mining and transportation.

Self-assessment Checklist

As I noted above, the plan is only a proposal at the moment. It should appear in the Federal Register soon, starting a 120 day formal comment period. EPA plans to finalize the Plan.

Does my organization operate any existing coal-fired electricity generating unit?

• If so, have operations of and emissions from each unit been evaluated?
• If so, have possible changes in equipment, fuel, and/or operations been evaluated, to identify possible reduction in CO₂ emissions?

Does my organization purchase electricity from a utility or other entity that produces that electricity in one or more coal-fired EGUs?

• If so, have I evaluated the costs for such electricity, and how that cost might change if changes in order to comply with EPA’s Clean Power Plan?

Where Do I Go For More Information?

• EPA’s Clean Power Plan Proposed Rule webpage

Jon Elliott authors U.S. Federal Mandatory Greenhouse Gas Emissions Reporting Audit Protocol for STP who also publish the following related guides:

• Greenhouse Gas Auditing of Supply Chains 
• The Complete Guide to Environmental Law
• Federal Air Quality MACT Standards Guides