On August 3, 2015, President Obama announced the finalization of the long-awaited Clean Power Plan, a policy primarily intended to further the commitment to combatting global warming. The Plan focuses on the electric power generating sector of the nation’s economy, which is responsible for approximately 31% of U.S. greenhouse gas emissions (primarily carbon dioxide, fluorinated gases, and nitrous oxide). The Plan intends to reduce greenhouse gas emissions by 2030 to levels below those generated in 2005. (Washington Post ).
A fact sheet provided by U.S. EPA to accompany the President’s announcement (Overview) indicates that the new rules call for the States to develop individual plans aimed at reducing levels of greenhouse gases from power generation for existing sources while EPA develops the standards for new sources. States will have to work under individual greenhouse emissions limits or budgets and will have incentives to encourage renewable sources such as wind, solar and nuclear. States must submit a final plan, or alternatively, an initial submission with an extension request, by September 6, 2016. Those States receiving extensions must submit final plans no later than September 6, 2018. Thereafter, the rule allows 15 years for full implementation of all reduction measures.
States may choose either source-specific requirements to require all of effected power plants to meet emissions performance rates or State-specific rate-based or mass-based goals. Alternatively, State plans can include a mixture of measures to include renewable energy standards and programs to improve residential energy efficiency. In addition, States may work together in a cooperative or multi-state approach including emissions trading. While most of the attention to the Plan has focused on the perceived ‘War on Coal’, the Plan seeks to limit greenhouse emissions from power plants regardless of fuel source. So, even though plants fueled by natural gas produce less greenhouse emissions, those will also be counted in overall State caps or limits.
Reaction from opponents was quick. Several States have indicated they will directly oppose the regulations in court challenges and, yesterday, sixteen State Attorneys General sent a letter to EPA Administrator Gina McCarthy requesting that she suspend the rules while a court challenge proceeds. (Salt Lake Tribune). The States will no doubt be joined in this effort by affected industry groups. Legal challenges will not be ripe until the rule becomes final with publication in the Federal Register, although that is expected to occur soon.
While legal challenges will play out over the next several years, leaders in Congress are already moving in a variety of directions to thwart or limit the effectiveness of the rules. (The Hill). These actions are expected to take the form of both legislation to undo or limit the scope of regulations and efforts to limit appropriations necessary to implement the Plan.
To the extent that opponents view this simply as a war on coal, they may be missing the scope of the Plan and ignoring things that have already happened. It seems clear that the combined effects of cheap natural gas and the EPA mercury regulation affecting the power industry have already substantially reduced the use of coal. With respect to the mercury rule, although the Supreme Court invalidated it earlier this summer (Michigan v. EPA), the rule had not been stayed during the course of the litigation, and many power producers took significant steps to meet its requirements in the interim. As a consequence, many noted that the actual effects of the mercury rule and related efforts, by prompting closure of some older coal-fired plants, the conversion of others to natural gas, and the on-going planning for new plants, mean that the effort to reduce significantly the emissions from coal-fired power generation is already well underway. (See, for example Forbes – James Conca and comments from various utilities to BNA last April). If so, these most recent rules, while important for a variety of reasons, may prove to be significant on the issue of burning coal for power production primarily because they continue a process that has already begun.
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