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Five Things to Look for in the Upcoming GHG Regulation of Existing Power Plants

On June 2, the U.S. Environmental Protection Agency (EPA) is expected to propose a new regulation aimed at reducing carbon dioxide (CO2) emissions from existing power plants under Section 111(d) of the Clean Air Act. In preparation, we compiled questions you ought to be looking for:

What’s the level of emission reductions and how are they calculated? The new regulation will limit CO2 emissions from existing power plants. The limitation could be based on the rate of CO2 emitted per MWh of electricity produced or based on the total tonnage of CO2 emitted. The level of reductions required by the EPA, as well as whether the reductions are based on an emission rate or total tonnage, will impact how states and companies comply with the regulation.

Is there a base year for counting emissions reductions? If so, what is it?  CO2 reductions could be set relative to a base year. Since CO2 emissions in the United States have declined in recent years, the base year selected would affect the stringency of the rule. For example, an X% reduction from 2005 emission levels would be less stringent than an X% reduction from 2010 levels.

How quickly do states and companies have to comply? States and power companies have flagged timing as a key issue. Under Section 111(d), states are charged with writing a state implementation plan that complies with the guidelines set by the EPA. Once the EPA regulation is final, President Obama has suggested a 13-month timeframe for states to complete their plans. Some stakeholders have said that states will need additional time to draft their plans, and in some cases, to have their plans approved by state legislatures. Companies have also said they will need flexible timelines for complying with these state plans to take into account the long-term nature of infrastructure investments. The proposed rule may provide insight into the timeline that states and companies will face.

What kind of flexibility is EPA considering to respond to state variation? Stakeholders have expressed interest in seeing a range of flexible options from the EPA. This includes requests that: differences between states are recognized, lowest-cost compliance pathways are available, different policy designs are allowed, and there is a means to recognize early action.

Can states work together to find ways to comply?  Some states are interested in creating multi-state and regional plans to comply with the 111(d) regulation. The proposed rule may offer insights into how states can work together on their implementation plans.

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