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Harvard Policy Initiative Makes the Case for End-Use Energy Efficiency in EPA's Upcoming Rule on Existing Power Plants


By Kate Konschnik and Ari Peskoe

Harvard Law School’s Environmental Policy Initiative has published a paper that argues for inclusion of end-use energy efficiency (EE) in EPA’s upcoming proposal to curb GHG emissions from existing power plants.  The paper, entitled “Efficiency Rules,” concludes that EE can play two roles in EPA’s power plant rule.  First, EPA should set the stringency of its GHG emission guidelines based in part on EE’s ability to save energy.  Second, States should be allowed to establish or build on their existing EE programs to implement the GHG standard.  

The EPA is poised to release its power plant proposal in June, based on an ambitious schedule laid out by President Obama and described in his Climate Action Plan.

Under Section 111 of the Clean Air Act, EPA sets emission standards for a category – such as power plants or cement kilns – of newly constructed sources of pollution.  If pollution from these new sources is not already addressed by two other Clean Air Act programs, EPA must also issue emission guidelines for existing sources. Each State then submits a plan to EPA for ensuring that existing sources within its borders comply.  Due to the relatively small number of pollutants covered by Section 111(d), which applies to existing sources, EPA has triggered this authority infrequently.  With such limited precedent, some commentators have argued that EPA’s toolbox for limiting GHG emissions from existing power plants is confined to measures that can be implemented at a plant, such as installation of pollution control technology or more efficient equipment.

But in our paper, Kate and I argue that the Clean Air Act authorizes EPA to consider emission reduction strategies throughout the power sector, including at the point of consumption.  EE meets all of the Clean Air Act’s qualifications for consideration: it is cost-effective, low risk, and environmentally friendly.  These factors make EE a popular choice; in fact, EE may be one of an ever shrinking list of issues that Congress can agree on.   

What’s more, States are ready to lead on EE.  Indeed, State and utility-run EE programs date back to the 1970s, and in 2013 States and utilities spent nearly $6 billion on EE programs.  EE program results are relied on by regulators, utilities, firms that contract with energy service companies, and grid operators.  The energy savings generated by EE are used to enforce States’ efficiency mandates, set utilities’ rates and compensation in energy service contracts, and ensure the reliability of the PJM and ISO-NE grids, both of which allow EE projects to participate in capacity markets.  This robust experience illustrates that EPA and States can rely on EE to generate measureable emission reductions.

Once EE is endorsed by EPA as a strategy for reducing emissions, it must also drive the stringency of EPA’s emission standard.  The Clean Air Act mandates that EPA’s GHG emission standard be based on an achievable level of reductions.  In making that determination, EPA must include energy savings that are achievable through EE.  After EPA sets the standard, States could include EE programs in their plans for meeting EPA’s GHG rule.     

EPA’s upcoming rule could lead to substantial GHG reductions from the power sector.  To realize the rule’s full potential, EPA must consider the best emission reduction strategies, including EE.

Photo Credit: EPA Power Plant Regulation/shutterstock

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