The U.S. Environmental Protection Agency (EPA) announced rules aimed at cutting carbon emissions from power plants by 30 percent by 2030.
As part of President Obama’s Clean Power Plan proposal, EPA also said it would cut particulates, nitrogen oxides and sulfur dioxide by more than 25 percent below 2005 levels, and decrease electricity bills by 8 percent by increasing energy efficiency and reducing demand on the electricity system.
EPA Administrator Gina McCarthy said in her speech that states can choose such options as modernizing power plants, increasing efficiency, or shifting from burning low-carbon sources to zero-carbon sources such as nuclear, wind and solar.
“States can pick from a portfolio of options to meet regional, state, and community needs – from ones I mentioned, or the many more I didn’t, and in any combination,” she said. “It’s up to states to mix and match to get to their goal.”
States will be given guidelines to develop plans to meet state-specific goals to reduce emissions and given the flexibility to design a program that works for their own situation. States have the option to choose the right mix of diverse generation fuels, energy efficiency and demand-side management to meet the goals and their own needs. There is also the opportunity for states to team with others and create or join multi-state market based programs, McCarthy said.
The plan also proposes a flexible timeline for states to submit their plans to EPA, with plans due in June 2016 with the option to use a two-step process for submitting final plans if more time is needed. States that have already invested in energy efficiency programs will be able to build on these programs.
Craig Moyer, chair of the Land, Environment and Natural Resources Division with law firm Manatt, Phelps and Phillips, said the rule was more balanced than he expected, but that it is based more on politics than climate change.
"Looking at the quantifications of how the benefits and costs are set up, many of the benefits are associated with traditional health-based benefits and with reducing criteria pollutants as opposed to climate change benefits," Moyer said. "Those are notoriously difficult to quantify, but they are also the stated basis for the rule."
Moyer said the one part of the rule that was the most unexpected was the baseline emissions level year of 2005 compared to 1990 or 2012. "There's a chart in the rule that compares emissions levels from fossil fuels in 1990, 2005 and 2012. It shows the highest emissions were in 2005, while 1990 and 2012 were lower," Moyer said. "If they had used either 1990 or 2012, we'd be looking at a much more substantial reduction."
Edison Electric Institute President Tom Kuhn said final rules must be attainable for the power generation industry.
"In any final guidelines, it is imperative that EPA provide the states with achievable targets, emission reduction goals, and compliance deadlines," Kuhn said. "The proposed timeline for states to submit plans to EPA recognizes that ample time is needed to develop and implement new emission reduction programs."
Mike Duncan, president and CEO of the American Coalition for Clean Coal Electricity (ACCCE), blasted the new rules, saying they are costly, will "devastate the economy" and dramatically increase electricity bills.
“If these rules are allowed to go into effect, the administration, for all intents and purposes, is creating America’s next energy crises,” Duncan said. “As we predicted, the administration chose political expediency over practical reality as it unveiled energy standards devoid of commonsense and flexibility. These guidelines represent a complete disregard for our country’s most vital fuel sources, like American coal, which provides nearly 40 percent of America’s power, reliably and affordably.”
The American Public Power Association (APPA) warned that the rule could be problematic in states with restructured electricity markets and utilities with only one baseload generation unit, whether coal or natural gas.
"There are a host of different market and regulatory regimes throughout the country. At the wholesale level, many states are locate dwithin the boundaries of regional transmission organizations," said Joe Nipper, APPA's senior vice president or regulatory affairs and communications. "And many of these states regulate utilities that no longer own generation. States have little regulatory authority over either the rules of these electricity markets or the actions of the for-profit companies that own generating units."
APPa also noted that the U.S. power generation industry has already reduced carbon dioxide emissions by more than 12 percent between 2007 and 2012 without federal rules, and have added new generation sources with lower or no emissions, such as renewables, nuclear or natural gas.
McCarthy said in her speech that any criticism against electricity bills is wrong. “Any small, short-term change in electricity prices would be within normal fluctuations the power sector already deals with,” she said.
Nonpartisan business group Environmental Entrepreneurs (E2) says the new rules will result in more jobs and less carbon.
"This is just the sort of catalyst states need to take clean energy jobs to a new level," said Bob Keefe, executive director. "Anyone who suggests otherwise apparently doesn't believe in American businesses' ability to innovate and lead."
Marty Durbin, president and CEO of America’s Natural Gas Alliance (ANGA), also commented on the announcement.
“Natural gas is already providing significant economic and environmental benefits, and the President has repeatedly recognized the role natural gas will continue to play in our growing economy, strengthening our energy security and reducing emissions,” Durbin said. “As we consider EPA’s proposal with our members and with our power generation customers, we agree the rules should be flexible and fair and we believe they should recognize the ability of natural gas to play an increasing role in the delivery of reliable, safe and clean power.”
The Sacramento Municipal Utility District (SMUD), which adopted a goal of reducing greenhouse gas (GHG) emissions to 10 percent of 1990 levels by 2050, said it welcomed the new rules.
"Proposing and adopting flexible GHG regulations under Section 111(d) aligns with SMUD's vision to empower our customers with solutions and options that increase energy efficiency, protect the environment, reduce the impacts of climate change, and lower the cost to serve our region," said SMUD General Manager and CEO Arlen Orchard.
Several environmental groups, including Earthjustice, Sierra Club and Center for American Progress all hailed the rules as important and “a bold step.”
Moyer also pointed out that the proposal does not cover coal-fired power plants sited on tribal lands, such as the Four Corners and Navajo power plants. He said he suspects there will be a separate rule released specifically for those plants.
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