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5 Things We Found: GHG Regulation of Existing Power Plants

By Blair Beasley

Tuesday, June 3, 2014

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Prior to the release of the U.S. Environmental  Protection Agency’s (EPA) proposal regulating carbon dioxide (CO2) emissions from existing power plants, the Bipartisan Policy Center’s Energy Team released a summary of the top five things to look for in the rulemaking. Now that the proposal is out, we revisit our top five list and fill in the key details.

What’s the level of emission reductions and how are they calculated? The proposed regulation sets state-by-state emission rate standards (CO2/MWh). This requires states to meet their standard, while individual power plants can emit more or less than the target. The EPA set both an interim goal for states for 2020-2029, which is an average emission rate that states must achieve over the period, as well as a final goal for states that must be achieved by 2030. While the goals are emission rate standards, based on the rate of CO2 emitted per MWh, the rule allows states to translate those goals into a mass-based standard, based on total tonnage of CO2 emitted.1

Is there a base year for counting emissions reductions? If so, what is it? The EPA proposes state-specific emission rate limits based on a complex formula that factors in differences in states’ historic generation mix from 2012. The formula includes the potential for efficiency improvements at state’s fossil plants, an increased use of lower-emitting generation sources, the deployment of new zero- and low-emitting generation, and an increased deployment of demand side energy efficiency. These state-by-state reductions are expected to yield national emission reductions equivalent to a 30 percent reduction from 2005 levels by 2030.

How quickly do states and companies have to comply? The proposal calls for states to submit an implementation plan by June 30, 2016. If states need additional time to comply, they can submit an initial plan in 2016 that includes a request for a one-year extension that pushes the deadline to June 30, 2017. In addition, states that opt to work together on multi-state compliance plans have an additional year – until June 30, 2018 – to submit a final plan to the EPA. These states would have to submit a progress report to the EPA by June 30, 2017.

What kind of flexibility is EPA considering to respond to state variation? The EPA’s proposal includes several notable flexibility provisions.

  • Differences in State Power Sectors: The EPA proposes state-specific emission rate limits based, in part, on the differences in states historic generation mix.
  • Differences in State Plans: The proposed rule does not prescribe how states must meet their emission standards. Instead, states can individually, or as groups, author unique implementation plans.
  • Timing of State Plans: State implementation plans are due June 30, 2016. The proposal includes up to two years of extensions for states that request additional time.
  • Timing of Reductions: The EPA phases in the reduction requirements. States must meet an interim compliance goal for 2020-2029 before a final goal must be met in 2030.

Can states work together to find ways to comply?  The proposal allows states to work together on multi-state implementation plans. The proposed rule contemplates how existing collaborations, such as the Regional Greenhouse Gas Initiative, and potential new collaborations could work under the proposal. This includes the potential for states to translate their emission rate standards into mass-based targets, where states as a region would have to comply with a CO2 tonnage limitation. Alternatively, states could agree to a weighted average CO2 emission rate that is equivalent, on average, to the individual state standards.

1 These numbers reflect EPA’s preferred proposal, which the agency calls “Option 1.” EPA also lays out an alternate plan, which it calls “Option 2.” Under Option 2, states must meet less stringent goals on a shorter timeframe. Interim goals must be met for 2020-2024 and a final goal must be met in 2025. EPA is taking comment on Option 2.