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Interstate Trading Likely Most Cost-Effective Carbon-Reduction Strategy, McCarthy Says

Wednesday, June 4, 2014

By Andrew Childers  

June 3 --Interstate emissions trading programs are likely to provide the most cost-effective carbon dioxide reductions under power plant standards proposed by the Environmental Protection Agency, Administrator Gina McCarthy said June 3.

“Clearly it's much more cost effective with other states,” she told Bloomberg reporters and editors. “So it would not surprise me if states took a close look at whether they can marry with others, whether it's a cap-and-trade program or other mechanism, I don't know.”

The EPA proposed the first carbon dioxide emissions standards for the existing fleet of power plants June 2 (RIN 2060-AR33). The proposal, issued under Section 111(d) of the Clean Air Act, would establish carbon dioxide emissions rates for each state .

The EPA evaluated the emissions reductions that could be achieved solely through mandating improvements to power plants themselves but found that would be too costly for the modest emissions reductions achieved, McCarthy said.

McCarthy Clarifies Targets

While the administration has publicly touted its goal of reducing carbon dioxide emissions from existing power plants by 30 percent from 2005 levels by 2030, McCarthy stressed that the EPA is proposing to set an emissions rate target for each state, rather than specifying the amount emissions should be reduced by. McCarthy said setting an emissions-rate standard would keep the existing-plant proposal consistent with rules the agency has proposed to regulate carbon dioxide from new, modified and reconstructed power plants.

“We were trying to figure out a way to make this understandable in a climate context,” she said. “And that is how the international world thinks about it and how we domestically report on the basis of our greenhouse gas reductions. We do the inventory. This is how we talk in that world.”

President Barack Obama ordered the EPA to regulate carbon dioxide emissions from power plants as part of a climate action plan announced in 2013. The emissions standards for existing power plants are expected to be a centerpiece as the U.S. prepares to negotiate a global climate accord in 2015 .

However, McCarthy said the proposal by itself won't be sufficient to achieve the president's climate change goals. Instead, it needs to be viewed as part of Obama's climate action plan, which also includes resiliency efforts, international negotiations and new carbon pollution standards for vehicles.

“This is not a climate bill. This is not a climate rule,” McCarthy said. “It is a carbon pollution standard, and I was not going to lose sight of the fact that I need to apply this rule in the way that Congress authorized me to do and gave me the responsibility to. So that's why I didn't shoot for a 30 percent reduction. Had I wanted a reduction, it probably would have been bigger than that--right? Make everybody happy. That's not what happened.”

EPA Open to Revisions

Although the agency has characterized its outreach effort on the proposed rule as unprecedented, McCarthy said she wouldn't be surprised if the EPA revises the rule before it is finalized in response to public comments. She said the EPA is open to discussing whether the emissions rates it has proposed for states are reasonable and whether further revisions to the rule would be necessary.

“I wanted maximum flexibility so that states would actually know that they are going to be in the driver's seat in terms of where they want to reach for these reductions,” she said. “So they'd better make sure that they're reasonable and achievable. So I expect every state will come back and provide us changes, comments, questions, concerns. And that's what we're going to be doing. And it's going to be a very busy year for us.”

States would have until June 30, 2016, to submit their plans to the EPA for implementing the proposed rule by 2030.

States that have already taken steps to reduce carbon dioxide emissions said the EPA's proposal draws on their efforts .

 

To contact the reporter on this story: Andrew Childers in Washington at achilders@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

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