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Upcoming proposed Environmental Protection Agency regulations that would curb carbon dioxide emissions from existing power plants and might allow facilities to go beyond the fence line to make emissions reductions was the top Energy and Climate Report story for the week ending May 23. Other top stories covered EPA emission data on methane, how the agency's carbon rule could effect electricity markets, the division the proposed rule is having on the utility industry, and how companies are feeling the costs of climate change.
1. Obama Considering Power Plant Rule That Would Test Reach of Clean Air Act
According to this story, the Obama administration is considering rules to cut carbon dioxide emissions from power plants that would reach beyond the plants themselves—an unusual approach that could run afoul of pollution control laws.
People familiar with the discussions say the administration is seeking steep reductions, as much as 25 percent, and allowing plants to meet them by controlling sources other than smokestacks—by expanding use of renewable energy, improving the efficiency of the grid or encouraging customers to use less power.
There is disagreement even within the administration about what's allowable under the Clean Air Act. Some administration attorneys are warning that the government could lose a legal challenge if it seeks to regulate beyond a plant's smokestack, the individuals close to the discussions, who spoke on the condition of anonymity, told Bloomberg.
©2014 Bloomberg L.P. All rights reserved. Used with permission.
2. EPA Official Says Better Understanding Needed of Recent Methane Emissions Data
The EPA needs a better understanding of “top-down” data on methane emissions from the oil and natural gas industry before the agency can determine whether it needs to alter its estimates of national methane emissions, according to remarks by an agency official covered in this story.
Paul Gunning, director of the Climate Change Division in the EPA's Office of Air and Radiation, said the agency faces a “significant challenge” in assessing how external studies measuring methane emissions can be used to inform the agency's greenhouse gas inventory estimates.
Gunning, speaking during an Environmental Law Institute webinar on methane leakage, said the agency is committed to making continuous improvements to its greenhouse gas inventory.
The White House in March announced a national strategy to cut U.S. methane emissions that will include limits on coal mines operating on public lands and on new landfills. As part of that strategy, the EPA will study whether to promulgate regulations on methane emissions from the oil and gas sector.
3. Electricity Market Structures Could Hamper Power Plant Rule, Association's Report Says
Regional variations in electricity markets will make state-by-state regulation of carbon dioxide emissions from existing power plants inherently less efficient than a national program, a power plant trade group said in a report covered in this story.
Carbon dioxide emissions reductions from existing power plants will be less efficient and more costly as a result, according to the report, Markets Matter: Expect a Bumpy Ride on the Road to Reduced CO2 Emissions, commissioned by the American Public Power Association.
Setting a uniform, national price on carbon dioxide emissions would provide the greatest and most cost-effective reductions, but the EPA pending new source performance standards for carbon dioxide from existing power plants would require each state to craft its own plan to curb emissions, the report said.
“We have a patchwork of electricity market constructs across the country. What happens when we start going in with CO2 emissions reductions guidelines that are also a patchwork?” Cliff Hamal, managing director of Navigant Economics, who prepared the report for the American Public Power Association, said.
4. Utility Greenhouse Gas Rule Divides Industry as Companies See Uneven Impacts of Limits
As detailed in this story, the Obama administration's proposed rule to cut carbon dioxide from existing power plants is gaining acceptance from an unlikely quarter—power companies—and splitting the energy industry's normally unified opposition to new emission limits.
The proposed regulations, set for release on June 2, would mandate deep cuts in greenhouse gas pollution while allowing smokestack emissions to be offset with enhancements elsewhere in the system, according to people familiar with the plan.
Power company executives, while cautioning that they aren't privy to the plan's details, greet the EPA's promise of a flexible approach with sentiments ranging from eager endorsement to grudging acceptance.
“Our goal is to work with EPA to make sure the rule works,” said Joe Dominguez, senior vice president of Exelon Corp. “There needs to be a pathway towards meaningful reductions.”
That view isn't shared by lobbyists for coal producers such as Peabody Energy Corp., who call the EPA plan the latest salvo in a “war on coal” that would result in lost jobs and less reliable energy.
©2014 Bloomberg L.P. All rights reserved. Used with permission.
5. U.S. Companies Increasingly Feel Risks, Costs of Climate Change, Report Says
Major public companies in the U.S. are increasingly feeling physical disruptions and cost impacts associated with more frequent extreme weather events, drought and other effects of climate change, according to the Carbon Disclosure Project.
Physical climate risks cited by companies on the Standard & Poor's 500 Index are becoming more urgent, with almost half of those risks already occurring or expected to occur within the next five years, CDP said in a report released May 16.
Two years ago, only about one-quarter of companies' reported physical climate risks fell within a five-year time frame.
Climate risks also are considered more likely to occur. In 2013, 50 percent of the physical risks disclosed by companies were considered more likely than not to occur or virtually certain to occur, up from 34 percent in 2011.
Together, the increase in perceived urgency and likelihood of climate risks show that “corporate America is, in a very strong way, understanding climate change,” Zoe Tcholak-Antitch, a spokeswoman for CDP North America, told Bloomberg BNA.
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