Questions Likely to Remain for States Even After Clean Power Plan Is Finalized

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By Andrew Childers

April 8 — Driven by White House deadlines and a desire to provide states with sufficient flexibility, the Environmental Protection Agency may leave many outstanding questions unresolved in its final Clean Power Plan, participants said during an April 8 Environmental and Energy Study Institute forum.

Significant details about how states are to implement the proposed carbon dioxide emissions rates for existing power plants such as converting rate-based targets into mass figures for emissions trading or how to determine emissions reductions that can be credited to energy efficiency programs may not be spelled out in the kind of detail state regulators may prefer, panelists said.

“There will be plenty of questions after EPA issues the final rule,” Kenneth Colburn, senior associate at the Regulatory Assistance Project, said.

The proposed Clean Power Plan (RIN 2060-AR33), expected to be finalized this summer, would establish unique carbon dioxide emissions rates for the power sector in each state.

The EPA rule would be implemented by states, which would determine how best to achieve the emissions targets using four “building blocks” to achieve reductions: heat rate improvements at power plants, shifting dispatch from coal to natural gas, investment in renewable or nuclear generation and energy efficiency programs.

Energy Efficiency, Renewable Energy Blocks 

The energy efficiency and renewable energy blocks, in particular, could be problematic for states.

States have asked the EPA how to clarify which state receives credit for those emissions reductions from new renewable generation—the generating state or the state where that electricity is consumed.

Additionally, the EPA hasn't yet offered a framework for how states can quantify carbon dioxide emissions reductions from energy efficiency programs, though modeling used to calculate vehicle emissions reductions for air quality standards could provide a model, Colburn said.

Those uncertainties could drive states to more familiar solutions, Colburn said.

“ ‘I know how to solve this problem. I’ll just permit another gas plant.' And that’s the dash to gas,” he said.

States Lack Details 

The proposed Clean Power Plan may actually give states too much flexibility, Colburn said, leaving regulators unsure which emissions reductions strategies would be most effective and most defensible.

“It may be EPA has given too much flexibility because the states are saying, ‘What do you want us to do?' and EPA is saying, ‘Whatever you think is best,' ” Colburn said.

However, that lack of detail also could give states the opportunity to explore cost-effective emissions reductions outside of the four outlined by the EPA, he said.

Several Options Available to States 

Colburn said states could achieve significant carbon dioxide emissions reductions through a host of measures such as reducing resistance along transmission lines, optimizing grid operations, improving the efficiency of water treatment or distributed generation programs. States also could consider carbon taxes, he suggested.

“There isn’t just rate-based approaches and mass-based approaches; there’s also price-based approaches,” Colburn said.

Both Colburn and Michael Burger, executive director of the Sabin Center for Climate Change Law at Columbia Law School, said that states that choose not to develop their own compliance plans could be placing themselves at a competitive disadvantage.

A plan developed by the EPA would likely be more restrictive and more expensive than one developed by the state, they said.

McConnell Urged Boycott 

Senate Majority Leader Mitch McConnell (R-Ky.) in a March 19 letter to the National Governors Association urged states to boycott complying with the rule, a strategy dubbed “just say no.” That would force the EPA to develop its own compliance plans for states.

Colburn said power markets are already preparing for the Clean Power Plan and building carbon dioxide regulation into their long-term planning.

He also cautioned that industry concerns that the EPA rules will jeopardize grid reliability, also raised in the agency's mercury and air toxics standards for power plants, have rarely been borne out by experience. However, the EPA could include a regulatory safety valve in the final rule allowing states to opt out of compliance if it would jeopardize grid reliability.

“I would suggest the history of reliability concerns at this stage of the game being ultimately manifest in reality is pretty thin. MATS was the end of life as we know it too and then it turned out to be a nothing-burger,” Colburn said.

States Seeking to Overturn Rule 

Some states have already joined lawsuits seeking to overturn the proposed rule before it is finalized. The U.S. Court of Appeals for the District of Columbia Circuit will hear oral argument April 16 in a coal company's lawsuit challenging the EPA's authority to even propose the Clean Power Plan.

Even if states manage to derail the proposed Clean Power Plan through boycotts or lawsuits, the EPA will return with another rule in the future, Burger said.

“Climate change is not going away,” he said. “The Supreme Court has said the EPA has the authority to regulate under the Clean Air Act.”

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