Virginia, USA -- In a history-making move for clean energy, the Obama administration today, for the first time, proposed a rule to restrict carbon dioxide on existing power plants.
The Environmental Protection Agency (EPA) announced the proposal amid strong praise from several clean energy groups and, not surprisingly, criticism from coal supporters. The rule calls for reducing carbon 30 percent by 2030 over 2005 levels.
While the proposal is complex, the bottom line is simple. Generators that emit high levels of carbon will find themselves in a less favorable position in the electricity marketplace. Those that emit little or no carbon — like renewable energy — gain a new level of value.
“By leveraging cleaner energy sources and cutting energy waste, this plan will clean the air we breathe while helping slow climate change so we can leave a safe and healthy future for our kids,” said Gina McCarthy, EPA administrator, in releasing the draft rule.
The implications are both global and local. The proposal signals to the world stage that the U.S. is serious about decarbonizing its high tech economy. Power plants produce about one-third of the nation’s carbon emissions.
Once the rule becomes final — expected in about a year — state regulators begin a new approach to planning energy portfolios, this time with carbon restrictions in mind. A few states already have mandatory carbon targets, but for most states such requirements would be a first.
Select soundbites from EPA Administrator Gina McCarthy's annoucment about the new carbon regulations.
How It Works
The EPA rule opens the door for more clean energy because it allows states flexibility in how they meet the standard.
Rather than requiring that power plants install pollution controls at the smoke stack — the typical approach — the EPA will allow a state to create reductions by making changes in its entire power portfolio. This ‘outside-the-fence’ strategy allows states to look across their electric resources to find best places to reduce carbon. For example, they can reduce overall carbon emissions by making clean energy a larger part of their mix or by reducing demand through energy efficiency.
“It gives states the flexibility to chart their own customized path. There is no one-size-fits-all solution. Each state is different so each state’s path can be different,” McCarthy said.
The EPA offered four ‘building blocks’ to achieve carbon reductions, but the states are not required to follow the guidelines. The building blocks are based on actions the EPA found already underway in many states. They are:
States will detail how they will meet the air standard in what are known as state implementation plans, or SIPs. These plans are not new turf for the states. As the Environmental Defense Fund pointed out, states have been creating SIPs for many years to reduce other pollutants regulated by the EPA, among them ozone, particulate matter, carbon monoxide, nitrogen oxides, sulfur dioxide, lead, fluoride and sulfuric acid mist.
Once the states finalize their plans, they submit them to the EPA for review. State plans are due June 30, 2016, although the EPA will allow state extensions to June 30, 2018 under certain circumstances.
The EPA will evaluate the plans to see if they are “equivalent” to what the state could achieve if it followed the agency’s recommendations, known as ‘the best system of emission reduction.'
Cap & Trade Option
States also can meet the requirement by participating in carbon cap and trade programs, such the Northeast’s Regional Greenhouse Gas Initiative, or RGGI. Supporters of RGGI hope to see more states, beyond its current nine members, join the program as a result of the new standard.
Carbon emissions have dropped 29 percent percent in the RGGI states since the program began about five years ago. At the same time, electricity prices have dropped 8 percent across the region, according to a report by Environmental Northeast. What changed in the Northeast? It built more natural gas-fired generation, decreased power production from coal and oil plants, and invested more in renewables and energy efficiency.
Indeed, much of the thinking behind the proposed rule stems from work in New England, according to the Conservation Law Foundation. The organization traced the EPA action back seven years to the U.S. Supreme Court decision, Massachusetts vs. EPA, which supported the idea of regulating carbon through the Clean Air Act.
“This national effort flows from, and builds upon, initiatives by the New England states to address global climate change pollution,” said John Kassel, CLF president.
It is not surprising that New England thinking would play into the EPA rule, given that Gina McCarthy held several government positions in the region before becoming head of the EPA.