EPA Proposes Clean Energy Incentive Program

By Andrew Childers

June 16 — The Environmental Protection Agency proposed adding new hydropower and geothermal generation to the criteria of projects eligible to receive emissions reductions credits under a voluntary program that would reward states that choose to make early investments in energy efficiency and renewable energy in preparation for the Clean Power Plan.

The EPA June 16 released its proposed design details for states that want to implement the voluntary Clean Energy Incentive Program (RIN:2060-AS84), which provides additional emissions allowances or emission rate credits to states for eligible projects before the Clean Power Plan would take effect in 2022.

The program is intended to reward states that take early action to prepare for the EPA's Clean Power Plan (RIN:2060-AR33), which sets limits on carbon dioxide emissions from the power sector in each state.

The Clean Energy Incentive Program would reward projects with two emissions credits for every megawatt-hour of electricity demand reduced through energy efficiency in low-income communities beginning Sept. 6, 2018, and one credit for each megawatt-hour of zero emissions generation for projects that begin commercial operation after Jan. 1, 2010.

Additionally, the EPA would provide additional matching credits up to the equivalent of 300 million short tons of carbon dioxide emissions reductions to be distributed to states on a prorated basis.

Though the U.S. Supreme Court has stayed the Clean Power Plan until it can be litigated, the EPA said it believes it still has the authority to propose the Clean Energy Incentive Program because it is a voluntary effort and acknowledged the dates in the proposed rule may need to be adjusted depending on how the litigation fares.

EPA ‘Skirting' Stay

Republicans have repeatedly accused the EPA of circumventing the stay by continuing its work on activities related to the Clean Power Plan, including the Clean Energy Incentive Program.

“By choosing to advance the president’s climate agenda despite its pending legal status, EPA is not only skirting the law, it is wasting significant taxpayer dollars while putting American jobs at risk,” Sen. Shelley Moore Capito (R-W.Va.) said in a statement.

Sen. James Inhofe (R-Okla.), chairman of the Senate Environment and Public Works Committee, also called on states to ignore the EPA's incentive program.

However, at least 14 states have asked the EPA for assistance in their voluntary preparations should the Clean Power Plan be upheld. That request included assistance on the Clean Energy Incentive Program.

‘Prudent' to Propose Action Now

“It is prudent to propose this action now in order to assist those states that have decided to move forward and who are contemplating participation in the CEIP, so that they have the requisite tools and information for doing so,” the EPA said.

“While this proposal generally will be helpful to those who are interested in participating in the CEIP, because the CEIP is an optional program, relies on voluntary measures, and will not become available to the states until the stay is lifted, this proposal will not disadvantage any party (including those who have decided to await the resolution of the litigation prior to acting to develop their state plans).”

Though states said they are still reviewing the details of the EPA's proposal, clean energy advocates proposed the incentive program as a necessary tool to drive additional investments in renewable energy and energy efficiency. However, some advocates said even more could be done.

“We are hoping that EPA will extend the program period, expand the resources that are eligible for use, and otherwise provide more encouragement for states to take advantage of the program and enjoy the economic benefits,” Matt Stanberry, vice president of market development for Advanced Energy Economy, said in a statement.

Comments on Proposal

The EPA will accept comments on the proposed incentive program for 60 days after it's published in the Federal Register. Comment can be made at http://www.regulations.gov and should reference Docket ID No. EPA-HQ-OAR-2016-0033.

The EPA also will hold a public hearing on the proposal Aug. 3 in Chicago.

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