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What Does the Clean Power Plan Mean for Meeting U.S. Climate Goals?

On Monday, the Environmental Protection Agency announced its Clean Power Plan, the first time the United States has set standards to limit carbon pollution from existing power plants. The Plan sets emissions reduction goals for individual states; once the goals are finalized next year, states will develop plans to achieve the necessary reductions. EPA’s modeling indicates that the standards will reduce national carbon pollution from power plants by 30 percent below 2005 levels by 2030.

In the Climate Action Plan announced last June, President Obama reaffirmed his commitment to reduce U.S. greenhouse gas emissions by 17 percent below 2005 levels by 2020. Are the reduction goals set forth in the Clean Power Plan enough to meet this target? We started to address this question in an earlier blog, but as we dig deeper into the proposed standards, we want to share our evolving thoughts.

What Do We Know So Far?

EPA estimates that the Clean Power Plan will reduce carbon pollution from power plants by 25 percent below 2005 levels by 2020. Looking at how the rule was put together and the results of EPA modeling, additional opportunities for cost-effective emissions reductions remain available through increased energy efficiency and increased renewable generation. In setting the state-level goals, EPA assumed levels of renewables based on state policies already in place and energy efficiency improvements consistent with policies many states already have on the books.

The changes in generation mix over time in the results provide insight into how the modeling assumes reductions will take place. As expected, coal use is significantly reduced, by about 20% in 2020 and about 25% in 2030 compared to the base forecast for those years. Much of this decrease is made up by increased use of the most efficient natural gas units. The increase in non-hydro renewables is relatively small – about 8% above the base case in 2020, and only 2% above the base case in 2030. In terms of efficiency, the modeling shows a decrease in total generation (v. base case) of 11% by 2030. These patterns suggest that the rules as proposed would result in coal plant retirements by 2020, with natural gas units making up much of the difference.

The modeling does not reflect a significant increase in renewable generation over time. With stronger standards and taking into account the cost decreases in renewable energy, greater contributions from both energy efficiency and renewables are achievable; energy efficiency is almost always the cheapest source of new electricity generation, and renewable energy is increasingly competitive with traditional sources of energy.

What Does This Mean for the 2020 U.S. Target?

A 2013 WRI report found that the United States could hit the 17 percent target, but only if it pursued “go-getter” action across the entire suite of greenhouse gases. Based on early updates of the model used in that report – which are still in progress – the emission reductions needed for the power sector today are somewhat less than the 38 percent below 2005 levels by 2020 from our “go-getter” scenario last year. While the estimated 25 percent reduction would fall short of the goal, the modest contributions to those reductions from additional efficiency gains and more renewable energy suggest that EPA can strengthen the rule to achieve more. Fortunately, there is time to improve upon the initial proposal as EPA takes comments and sets out final standards next June.

The Bottom Line

The U.S. has made good progress in the past few years, reducing its total greenhouse gas emissions by over 9 percent between 2005 and 2012. The Administration’s Climate Action Plan sets a course of action across the economy to reach the 2020 target. Ambitious carbon pollution standards for power plants are an essential piece of this puzzle and will undoubtedly drive major carbon pollution reductions. When these rules are finalized, they will be a central piece of implementing the Climate Action Plan to meet the short-term U.S. climate goal.

Our analysis shows that the U.S. Administration can still meet the goal with full and ambitious implementation of the U.S. Climate Action Plan, including moving ahead on the steps they are taking to limit emissions of powerful greenhouse gases like HFCs and methane and from other major sources of carbon pollution. Meanwhile, the EPA can work with stakeholders to capture all of the cost-effective emissions reductions available in the power sector. Together, these actions can put the U.S. within reach of achieving its 17 percent target, demonstrating its commitment to modernize and decarbonize major sectors of its economy.


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