What Exactly Will the EPA’s Clean Power Plan Do to Regulate Carbon Emissions?

by Bob Shively, Enerdynamics President and Lead Instructor

On June 2, 2014, the EPA released its Clean Power Plan proposal that, if implemented, willsun rising from smog for the first time regulate carbon dioxide (CO2) emissions from existing power plants at the U.S. federal level[1].  The proposal was released after many years of Congress failing to act on greenhouse gas regulations.

Reactions from various interest groups were predictable, ranging from dramatically negative to middle of the road to highly supportive. But most of the articles and opinion columns describe the proposed rule in a vague manner. And only a few make it clear that these are proposed regulations that are subject to comment and discussion before a proposed finalization date of June 2015. In simple terms, let’s look at what EPA is proposing[2].

The EPA proposed rule would do two things:

  1. Create state-by-state carbon emission goals: These goals are defined in terms of pounds of emissions per MWh of output and are based on each state’s historic generation mix. Thus goals for states with higher historic levels of carbon-based generation are set at less stringent levels than those for other states. The table from the EPA website[3] showing each state’s pound/MWh goal is at the end of this blog. If they wish, states are allowed to convert the rate-based goal (pounds of emissions/MWh) into a flat mass-based goal (pounds of emissions).
  2. Define a process for each state to develop plans to achieve the goals: Rather than defining power plant specific regulations or mandating how states must achieve their goals, the EPA proposed process is designed to be flexible to allow each state to develop its own program. States may develop their own individual plans or may work together to develop regional multi-state plans.

Plans are due June 2016, but some final plans can be delayed until June 2018. Although final goals are expected to be achieved by 2030, the plans must include interim goals for 2020-2029.  Plans should be designed to utilize the “best system of emission reductions” using a portfolio approach of multiple strategies. EPA expects that strategies will include four “building blocks.” These are improving operations at existing fossil power plants by improving power plant efficiency, increasing dispatch of lower emitting fossil units such as combined-cycle gas turbines, increasing dispatch of renewables and nuclear power, and use of demand-side energy efficiency programs that reduce the overall need for generation.

States may also utilize programs such as carbon trading mechanisms that allow regions to work across state lines to achieve shared reductions. Lastly, if states fail to submit a plan that is approved by EPA, then EPA can develop its own plan for those states.

Since this article is focused on what the rule says, we will save the topic of impacts of the proposed rules for a later date. Furthermore, no one can really say what the impacts will be since we don’t know how the market will respond. Nor do we know how the rule may be modified before it is finalized.

History tells us that costs of implementation will be real but will be a lot lower than the worst-case scenarios. Indeed, in the first 15 years of SO2 and NOx regulation under the Clean Air Act, inflation-adjusted electric rates fell by about 18% while SO2 emissions fell by over 30% and NOx emissions fell by over 40%. Some believe that carbon regulation is different since there is no market-ready emissions control technology that can be added to coal units, but I would caution against thinking that the electric industry cannot figure out how to reduce carbon emissions without bankrupting customers.

EPA State Goals:

State
2012
Emissions
(million metric tons)
2012 Energy Output
(TWh)
2012 Emission Rate
(Fossil, Renewable,
and 6% Nuclear)  (lbs/MWh)
2030 State Goal (lbs/MWh)
Alabama
68.56
104.64
1,444
1,059
Alaska
1.96
3.20
1,351
1,003
Arizona
36.71
55.69
1,453
702
Arkansas
36.23
48.70
1,640
910
California
43.73
138.04
698
537
Colorado
38.45
49.45
1,714
1,108
Connecticut
6.04
17.40
765
540
Delaware
4.36
7.79
1,234
841
Florida
107.60
197.60
1,200
740
Georgia
57.02
83.80
1,500
834
Hawaii
4.73
6.77
1,540
1,306
Idaho
0.64
4.15
339
228
Illinois
87.19
101.44
1,895
1,271
Indiana
91.78
105.23
1,923
1,531
Iowa
34.67
49.26
1,552
1,301
Kansas
31.16
35.41
1,940
1,499
Kentucky
82.89
84.69
2,158
1,763
Louisiana
44.52
66.97
1,466
883
Maine
1.63
8.21
437
378
Maryland
18.30
21.57
1,870
1,187
Massachusetts
11.91
28.40
925
576
Michigan
63.38
82.40
1,696
1,161
Minnesota
25.42
38.13
1,470
873
Mississippi
23.50
45.86
1,130
692
Missouri
70.93
79.64
1,963
1,544
Montana
16.26
15.97
2,245
1,771
Nebraska
24.64
27.04
2,009
1,479
Nevada
14.05
31.36
988
647
New Hampshire
4.21
10.26
905
486
New Jersey
11.83
27.98
932
531
New Mexico
15.73
21.87
1,586
1,048
New York
31.58
70.85
983
549
North Carolina
53.13
71.17
1,646
992
North Dakota
30.27
33.47
1,994
1,783
Ohio
92.86
110.65
1,850
1,338
Oklahoma
47.86
76.07
1,387
895
Oregon
6.96
21.40
717
372
Pennsylvania
105.83
151.46
1,540
1,052
Rhode Island
3.39
8.24
907
782
South Carolina
32.57
45.23
1,587
772
South Dakota
3.02
5.86
1,135
741
Tennessee
37.41
43.33
1,903
1,163
Texas
223.15
378.96
1,298
791
Utah
27.96
34.00
1,813
1,322
Virginia
24.83
42.20
1,297
810
Washington
6.68
19.30
763
215
West Virginia
65.61
71.64
2,019
1,620
Wisconsin
38.39
46.33
1,827
1,203
Wyoming
45.36
47.28
2,115
1,714

References:

[1] Some states including California and the Regional Greenhouse Gas Initiative (RGGI) states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont already regulate CO2 emissions at the state level, and other states have implemented policies such as Colorado’s Clean-Air Clean Jobs Act to reduce emissions through state energy policies.

[2] To read details of the proposed rule, see the EPA document Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units available at http://www2.epa.gov/sites/production/files/2014-05/documents/20140602proposal-cleanpowerplan.pdf

[3] Available at http://www2.epa.gov/carbon-pollution-standards/where-you-live

About Enerdynamics

Enerdynamics was formed in 1995 to meet the growing demand for timely, dynamic and effective business training in the gas and electric industries. Our comprehensive education programs are focused on teaching you and your employees the business of energy. And because we have a firm grasp of what's happening in our industry on both a national and international scale, we can help you make sense of a world that often makes no sense at all.
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One Response to What Exactly Will the EPA’s Clean Power Plan Do to Regulate Carbon Emissions?

  1. Pingback: Key Trends in the Electric Industry in 2016, Part I | Enerdynamics

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