Obama’s Climate Action Plan Gives States Flexibility on Carbon-Cutting Measures

The U.S. Environmental Protection Agency on Monday unveiled a proposal to sharply reduce carbon emissions from power plants, one that provides states with flexibility to devise their own approach to meeting the regulation.

The standards would require an overall average nationwide reduction of 30 percent by 2030 from 2005 emission levels, equivalent to taking 150 million cars off the nation’s roadways – nearly two thirds of the U.S. passenger vehicle fleet.

EPA proposed the rule under President Obama’s Climate Action Plan, announced in June 2013, and will accept public comments over the coming months, with a final rule expected in June 2015. The proposal has generated fierce criticism among industry and leaders in a number of fossil-fuel-producing states, but has also drawn praise from some major corporations and officials in the Northeast and elsewhere who are implementing aggressive carbon-reduction policies.

Earlier this week, a coalition of 176 companies, including Unilever and Mars, Inc., sent letters backing the proposal to President Obama and congressional leaders. A majority of Americans – some 70 percent – support carbon regulations for power plants, including those living in coal-producing states, according to a Washington Post-ABC News poll, which also found that most people are willing to pay higher energy prices to support those limits. The rule drew praise from the American Academy of Pediatrics, whose president, James M. Perrin, said in a statement that the bulk of the health-related impacts of climate change affect small children, with some 80 percent of illnesses occurring in children under the age of five.

Under EPA’s proposal, states are assigned different emission-reduction targets and given substantial room to devise policies to meet them, both within their borders and through multi-state collaborations. The targets are based on the unique mix of emissions and energy-generating sources within a state, and potential opportunities for reductions through increases in energy efficiency and renewable-energy output. EPA used a formula to determine each state-specific target, which factors in carbon emissions from fossil-fuel plants, plus total electricity generation from such plants and from certain low- or zero-emission sources. A fact sheet about EPA’s Clean Power Plan and the basic formula that it used to determine state targets is available here.

The proposed rule covers 1,000 fossil fuel plants with 3,000 units nationwide. Collectively, they are the largest source of domestic greenhouse-gas emissions, contributing roughly one-third of overall carbon pollution.

EPA expects the plan to produce as much as $93 billion in public health and climate-related benefits by 2030, compared with costs of up to $8.8 billion.

The reductions in soot and smog alone are projected to yield up to $7 in health benefits per family for every $1 investment. By 2030, those cuts will avoid a projected 6,600 in premature deaths and dramatically lower the rate of emergency-room visits for asthma, heart attacks and other illnesses associated with exposure to particle pollution and ozone, according to EPA’s analysis.

Some officials in the Northeast praised the proposal’s emphasis on flexibility, which they say will enable states to tailor their approaches to take advantage of market forces and spur entrepreneurial activity.

“Here’s an opportunity to seize huge opportunities on the innovation front, on the job growth front, on developing new technologies that will be carbon-free ultimately, and we hope this rule will get us there,” said Massachusetts Environment Commissioner David Cash, in an interview with E&E TV on June 2.

In recent years, Massachusetts and a number of states in the Northeast have enacted laws requiring sector-wide cuts in carbon emissions and promoting the use of renewable energy, and the EPA proposal is expected to intensify those efforts. Massachusetts’ 2008 Global Warming Solutions Act, for example, calls for a 20-percent cut in carbon emissions from 1990 levels by 2020, and an 80-percent reduction by 2050.

Along with eight other states running from Maine south to Maryland, Massachusetts participates in the multi-state cap-and-trade program known as the Regional Greenhouse Gas Initiative (RGGI), which has been curbing carbon emissions from large power plants since 2008.[i] In a recent program review and updated model rule released last year, RGGI lowered its regional emissions cap by 45 percent for 2014, and it will continue to decline by 2.5 percent annually between 2015 and 2020. The dramatically lower cap reflects the current power-plant emissions level, which has declined in recent years due to a sluggish economy and increases in renewable energy output and energy efficiency programs.

EPA’s plan encourages multi-state collaborations like RGGI to meet individual state goals. “We are pleased to see the federal proposal recognize the value of a regional approach,” said Maryland Gov. Martin O’Malley in a statement, thanking President Obama for his “bold leadership.”

Below is information on the proposed carbon-reduction targets set by EPA by 2030 for each state in CSG’s Eastern Regional Conference, with comparative data showing a state’s carbon-emissions rate in 2012 for plants covered by the rule. EPA also introduced for public comment an alternative set of less- stringent reduction goals that include a shorter implementation period. A chart detailing the alternate goals also appears below.

In addition, we have included a brief discussion of the methodology EPA uses to calculate its emissions rates.

Proposed State Carbon-Reduction Goals[ii]

Expected Reductions: 30 percent below 2005 levels by 2030

In adjusted output-weighted average pounds of CO2 per net MWh from all affected fossil-fuel-fired electric-utility generating units (EGUs)

Note: EPA has not calculated goals for Vermont because current information shows that it does not have affected electric-utility generating units (EGUs).

Alternate State Goals[iv]

Expected Reductions: 23 percent below 2005 levels by 2025

In adjusted output-weighted average pounds of CO2 per net[v] MWh from all affected fossil-fuel-fired electric-utility generating units (EGUs)

Calculating Emission Rates

As noted above, EPA’s proposed and alternate emissions-reduction goals utilize an output-weighted average emissions rate for multiple types of affected power plants in a given state, which takes into account opportunities to reduce carbon-dioxide (CO₂) emissions by shifting generation from plants with higher CO₂  emission rates, such as coal-fired plants, to those with lower CO₂ emission rates, such as natural-gas-combined-cycle units. In its proposed rule, EPA notes that shifting generation among EGUs offers opportunities to achieve large amounts of CO₂ emission reductions at reasonable costs.  In addition, EPA adjusted the output-weighted-average emission rates to take into account expected reductions due to increases in low- and zero-carbon generating capacity and demand-side energy efficiency.

In the rule, EPA explains that as states ramp up electricity production from clean-energy sources, that generation will likely replace output from fossil-fuel plants and lead to reductions in the quantity of power required from those plants. EPA notes that as a result, overall carbon emissions from a plant will fall, due to lesser generation – but not by reducing the amount of carbon generated per unit of energy produced. In its calculations, EPA devised its emission rate goals in a way that is intended to account for these generation quantity-reducing measures.”[vi]

— By Rona Cohen

Additional Information:

EPA Fact Sheet: The Role of States: States Decide How they Will Cut Carbon Pollution

EPA Fact Sheet: By the Numbers: Cutting Carbon Pollution from Power Plants

EPA Fact Sheet: Flexible Approach to Cutting Carbon Pollution

[i] Pennsylvania began as an observer to RGGI and has not become a full member.  New Jersey was an original member of the program, but Gov. Chris Christie announced in 2011 that he was withdrawing his state, and next month he is expected to submit an official proposal to repeal regulations tied to the program.

[ii] ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 60. “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units,” June 2, 2014, pp. 346-349. Available at:  http://www2.epa.gov/sites/production/files/2014-05/documents/20140602proposal-cleanpowerplan.pdf

[iii] Source: U.S. EPA. Available at http://cleanpowerplanmaps.epa.gov/CleanPowerPlan/

[iv] Ibid., pp. 365-367.

[v] “Net” energy output refers to energy output encompassing net MWh of generation measured at the point of delivery to the transmission grid rather than gross MWh of generation measured at the EGU’s generator. EPA explains that “the difference between net and gross generation is the electricity used at a plant to operate auxiliary equipment such as fans, pumps, motors, and pollution control devices. Because improvements in the efficiency of these devices represent opportunities to reduce carbon intensity at existing affected EGUs that would not be captured in measurements of emissions per gross MWh, we are proposing goals expressed in terms of net generation.” Ibid., pp. 343-344.

[vi] Ibid., p. 342.