Incentive Fund Recognizes More Reductions in Plant Emissions Feasible, McCabe Says

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By Andrew Childers

Feb. 5 — Every state will be allocated a portion of President Barack Obama's requested $4 billion fund to incentivize additional state action to curb carbon dioxide emissions from power plants, a senior Environmental Protection Agency official said Feb. 5.

The $4 billion incentive fund, included in the president's budget request, reflects the administration's recognition that even greater carbon dioxide emissions reductions from the power sector could be achieved beyond those proposed in the EPA's Clean Power Plan, Janet McCabe, the EPA's acting assistant administrator for air and radiation, told the National Association of State Energy Officials.

“This is a little bit extra incentive for people to think about doing that,” McCabe said.

Rather than a first-come, first-served approach, McCabe said the funds would be apportioned to every state, provided they undertake measures to accelerate or exceed the carbon dioxide emissions reductions stipulated by the Clean Power Plan.

“It’s a lot of money, but the idea is every state will have an opportunity to seek funds from that fund,” she said.

The EPA’s proposed rule, known as the Clean Power Plan (RIN 2060-AR33), would establish unique carbon dioxide emissions rates for the power sector in each state. The rule, which is expected to be finalized this summer, would be implemented by state officials who would determine how best to achieve the emissions targets.

The incentive fund in Obama's budget request would reward states that took steps to exceed those targets.

Concerns Raised With Targets 

McCabe said the EPA is still reviewing the comments on the proposed rule, but the most common concern raised with the Clean Power Plan is with interim emissions targets that require some states to achieve the bulk of their emissions reductions by 2020 rather than the final 2030 deadline.

The proposed Clean Power Plan sets an interim emissions rate target that states much achieve between 2020 and 2029, with a final target to be achieved by 2030. States have repeatedly argued that many of the EPA's proposed interim targets are unrealistic.

McCabe said the interim targets are one of the key issues the EPA will have to address in its final rule.

“I haven’t worked on a single rule at EPA or before my time at EPA that didn’t get significantly better as a result of this back and forth,” she said.

Agency Looking at Other Issues 

In addition to concerns with the interim targets, McCabe said the agency is also addressing issues raised with reliability concerns, the viability of states developing regional compliance plans and how compliance is measured and verified.

The EPA plans to hold a Feb. 24 webinar to meet with states to begin discussing compliance measures.

“We want to be as ready as possible with the kinds of tools and resources states need so they can get ready to go as soon as they want to,” McCabe said.

States Study Compliance 

Many states have already started modeling their compliance strategies to identify opportunities to expand energy efficiency or regional cooperation. The EPA in its proposal identifies improving the efficiency of existing power plants, increasing use of existing natural gas generating capacity, new renewable energy investments and energy efficiency as four “building blocks” states can use to develop their compliance plans.

Though the proposed rule allows states to pursue regional compliance plans, Tom Eckman, power planning director for the Northwest Power and Conservation Council, said the EPA still needs to clarify how states will be credited for their efforts.

For example, in the Northwest, population centers such as Seattle and Portland, Ore., are heavily reliant on electricity generated out of state. The EPA needs to clarify how an energy efficiency program that reduces demand in those regions would be credited between the states.

“Where is the emission reduction?” Eckman said. “A regional fenceline solution assumes we’re going to talk about grid-level reductions.”

Regional Approaches Examined 

Christopher van Atten, senior vice president at M.J. Bradley and Associates, said modeling shows that regional approaches can produce the most cost-effective emissions reductions. However, that collaboration introduces more political and logistical challenges for states, he said.

Ken Colburn, senior associate at the Regulatory Assistance Project, predicted many states will pursue expanded use of gas-fired generation rather than energy efficiency programs because it's more familiar and less complicated than calculating emissions reductions from compliance measures.

“Efficiency is operating at a disadvantage out of the gate,” he said.

However, energy efficiency programs are often more cost-effective, Colburn said.

To contact the reporter on this story: Andrew Childers in Washington at

To contact the editor responsible for this story: Larry Pearl at