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10 Key Questions for Assessing EPA's Proposed Carbon Rules Under Section 111(d) of the Clean Air Act

Obama Administration EPA Rule Announcement

Whether one believes or denies global warming is being caused by humans, today will be remembered as the day the U.S. set an actionable framework by executive fiat for reducing harmful carbon emissions from existing power plants running on fossil fuels. 

What Environmental Protection Agency Administrator (EPA) Gina McCarthy unveils in establishing limits on CO2 pollution with draft amendments to Section 111(d) of the Clean Air Act could be a huge boost to providers of clean energy solutions. Or it could mire the states deploying them in costly litigation that detracts from America’s commitment to mitigating risks of climate change.

The legal risks multiply in step with the overall ambitiousness of EPA’s draft rules. But so too do the risks of waiting to mitigate global warming.

So much has been written about today’s long-awaited action that there is sure to be a flurry of claims and counterclaims clouding the cost-effective solutions that can come from it. To help you navigate through the noise, I’ve cast a wide net; below you’ll find a brief checklist for gauging the potential of 111(d) draft rules.

I’ve drawn from papers and interviews from analysts such as Nathan Richardson at Resources for the Future, Megan Ceronsky at the Environmental Defense Fund and other experts at Advanced Energy Economy, Natural Resources Defense Council and the Nicholas Institute for Environmental Policy Solutions at Duke University. 

Will the sun set on coal-fired power plants if draft carbon rules from the U.S. EPA survive legal challenges?  CREDIT: EDF.org

Remember that the EPA cannot mandate how utilities achieve the proposed emissions reductions. It is only setting guidelines for what states must do. That said, if the EPA does not like what it sees over the next two years before President Obama leaves the White House, it can send state regulators back to their drawing boards. If it ends up rejecting efforts by a state it can try to dictate what must be done.  That could open the door to a carbon tax. If that happens, batten down the hatches.

Comments are welcome.  Let the debate begin — after you read EPA’s proposed rules.

1.       How will targeted emissions cuts be expressed? Might it be in tons of carbon or as a rate of tons of carbon emissions per megawatt-hour of electricity generated?

EPA could establish a target any number of ways. Whichever means it chooses, the target will be instrumental in plowing a path toward President Obama’s pledge of reducing carbon emissions 17% from 2005 levels by 2020 he made at the 2009 round of global warming talks in Copenhagen. Early reports in major newspapers had the EPA aiming for a 30% reduction by 2030.

2.       What is the baseline for carbon emissions?

Obama’s pledge in Copenhagen using 2005 as the baseline would arguably be consistent. But that gives short-shrift to states and utilities operating in states that have been hard at work reducing emissions dating back to the 1990s. Of course, a more recent date would help the laggards, notably those dependent on burning coal. Early news reports indicated the EPA would stick with the President’s 2005 baseline.

3.       What is the timetable for achieving emissions targets?

At this point, the timeline toward the 2020 Copenhagen date seems unrealistic, unless it’s an interim goal. The fundamental changes needed in the nation’s electric generation mix all but demand a 15-20 year window if the draft rules are to hold up under any reasonable test of what’s achievable without significantly boosting electricity prices.

4.       What tools can utilities and states deploy to reach the reductions?

Mandating a technology is too restrictive given the variety of existing mix of generating technologies. A fixed emission target might seem logical and better than specifying qualifying technologies. But that would likely fail just about any test for cost-effectiveness.  So that leaves markets for greenhouse gas emissions credits such as those that exist in California and the Regional Greenhouse Gas Initiative in the Northeast.

5.       Will EPA group coal-fired and natural gas-fired power plants into the same emissions source category? And will it authorize trading any emissions credits between the two?

If coal and gas power plants are considered to be in the same source category, then one might assume they could trade emissions with each other. Many analysts assert such trading is probably the lowest-cost emissions-reducing opportunity available to the U.S. Here is just one place where the lobbying clout of coal producers and utilities heavily dependent on coal could influence the outcome. How the EPA proposes handling this could be the most far-reaching element of the draft rules.

6.       How much of a role can energy efficiency play?

Study upon study demonstrates the cheapest way to reduce emissions is to cut back –as soon as practical — on consumption. This could be a huge opening for energy efficiency throughout the economy involving all users. And this begs how much of a role demand-response programs should be credited with.

7.       How much ‘credit’ will states earn for having renewable energy requirements in place?

The 27 states and the District of Columbia which have requirements for a specific amount of electricity from renewable or alternative electric generating systems sold by a certain date surely will seek credit for their programs. What the seven states with voluntary targets can earn remains to be seen. As for the remaining 12 states that have taken no formal action, perhaps this will motivate them in that direction.

8.       How might EPA’s announcement breathe new life into — and create new — regional markets for greenhouse gas emissions credits?

Much has been learned from the experiences in California under its Global Warming Solutions Act and in the nine Northeast states comprising the Regional Greenhouse Gas Initiative (RGGI). The proposed carbon rules could be the shot-in-the-arm that RGGI could use. But RGGI’s pitfalls illustrate how difficult, and volatile, such as market can be across state borders. New Jersey was a member of RGGI until Gov. Chris Christie orders it to pull out.

9.       How many of these variables will closely track what California is already doing?

Environmental advocates are quick to point to the progress California has made facing all the challenges posed by these draft rules. But what is often left unsaid is the role of the state’s high electricity prices. They alone are motivating governments, businesses and residential consumers to adapt because the economic consequences are crystal clear. Not so elsewhere.  Take Virginia, which has neither competitive electricity markets nor end-user incentives for renewables nor energy efficiency. With some of the lowest rates in the country without cheap hydro-electric plants, Virginia might see significant rate increases – unless it enables markets for the services and products to help users better manage their usage.

10.   What legal grounds will emerge for states and/or the coal and utility industries to challenge the draft rules?

We certainly won’t know this right away, but prepare yourself for a lot of claims. Some claims won’t stand up in court after the Supreme Court upheld by a 5-4 vote in 2007 the EPA’s power to regulate carbon dioxide as a dangerous pollutant. (Don’t forget that the Clean Air Act refers to carbon dioxide’s effects on “weather” and “climate” in the definition of “air pollutant.”) The better question may be: what are the limits in the flexibility states should have? That is perhaps the biggest unknown. I could not find where any such principal has been tested in court. If you have, please do chime in.

Jim Pierobon's picture

Thank Jim for the Post!

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Recent Comments

Rick Engebretson's picture
Rick Engebretson on June 2, 2014

If California wants to cook itself with solar collectors, I can’t stop them. If Texas wants to blow dry itself into desert, same. Physics exists despite politics.

But watching profoundly increased forest growth rates in Minnesota and anywhere else there is water, replacing a percentage of coal with wood might be the most imminent energy stampede resulting from this necessary EPA intervention. I busted a gut last week, and just talked with another old guy who is “retiring” because he ran out of cartilage in his knees. The question for me is, do we move to “industrial forestry” or do we try to sustainably develop newly available biomass?

My concern is that the same armchair (non)experts will devise factory forests. They talk a good talk, but invariably push us backwards, then blame it on “climate change.”

John Miller's picture
John Miller on June 2, 2014

Additional questions to consider:

11)  Since Coal Power is not evenly distributed across the U.S. does the new regulation unfairly penalize those States that have greatest Coal Power capacity vs. those States that rely on power imports; possibly from those same high Coal Power generation States?

12)  Who will be responsible to install new lower carbon power capacity if the new regulation bankrupts Power Companies that have large percentages of Coal Power in their power generation portfolios?

13)  What is the probability that Nuclear Power will play any significant role in aggressively reducing carbon emissions by 2030 since the process to approve new nuclear facilities’ permits normally takes 10-15 years?

14)  The most probable solution to reducing U.S. Power Sector carbon emissions is likely to be fuels switching from coal-to-natural gas.  What will happen when U.S. natural gas (NG) consumption exceeds production as a result of fuels switching, which requires increasing future NG imports?  (Re. a past TEC Post)

15)  Who will be held accountable when U.S. power costs increase substantially as a result of reducing Coal Power and World carbon emissions still increase at alarming levels?  (Re. another past TEC Post)  

Jim Pierobon's picture
Jim Pierobon on June 3, 2014

John,

These are all excellent questions the answers to which will contribute to the success or failure of EPA’s proposed rules, especially since it will likely require a Democratic president from 2017 – 2020 to defend them.

The most important question of yours is #15: World carbon emissions are bound to increase regardless of what the U.S. does, at least for the foreseeable future. Which begs this question: How much will Germany’s, and the United States’ leadership, serve as an example to follow?

 

Jim Pierobon's picture
Jim Pierobon on June 3, 2014

Rick,

Where do you think biomass can make the biggest difference? Among the states I would watch is Virginia, where the Northern Virginia Electric Cooperative is quick to brag about its biomass plant.

 

Rick Engebretson's picture
Rick Engebretson on June 3, 2014

Jim, I think this is an important global technology solution.

First, the American Lung Association that promotes this coal action is the same group that pushed ethanol in gasoline. While arguments about ethanol and energy and corn farming are certainly appropriate, America indeed has remarkably clean air and great fuel efficiency despite growth in cars. Similarly, I think most expect coal to be a global fuel for decades to come, so adding a similar biofuel oxygenate to coal can show similar benefits. We breathe air “Made in China.” So I think this is a very clever American technology global leadership move.

All the accounting for CO2 emissions cuts, better combustion efficiency, and all the rest, are beyond me. The University of North Dakota, Grand Forks, has been doing this for decades so please refer to them. Certainly Virginia has outstanding references, too.

Second, we must include new CO2 levels in plant growth rate possibilities. The Virginia of Thomas Jefferson would definitely appreciate all these interacting scientific variables.

All I really know for sure is we have a lot of forest in the world to manage better. My fiber optic advocacy days started out nobody believing me, and ended by running like crazy to try hop on the moving train. Big changes can sneak up on the inattentive.

Geoff Sherrington's picture
Geoff Sherrington on June 5, 2014

There is only one question. It is –

DO GREENHOUSE GASES SIGNIFICANTLY MODIFY THE CLIMATE?

On hard scientific eveidence, te answer is unknown.

I cannot understand why you run with 10 questins that are irrelevant when this only question remains in so much doubt. It is profoundly ani-Science and an insult to rigorous Science to take this path of 10.

Give me the scientific evidence, if you can, for choosing this path of 10.

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