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What to Watch as EPA Releases Greenhouse Gas Requirements for the Power Sector

The U.S. Environmental Protection Agency (EPA) is expected to propose greenhouse gas emissions standards for new power plants soon. This represents an important step forward in reducing U.S. emissions, as the power sector has some of the largest opportunities for reducing greenhouse gas emissions. These standards are important because the power sector accounts for one-third of total U.S. greenhouse gas emissions. And according to our analysis, this is an essential area if the Obama Administration will be able to achieve its commitment of lowering emissions by 17 percent below 2005 levels by 2020. These standards are required under a settlement agreement EPA entered into in December 2010; their release will be an important step for the EPA in meeting its obligations under the Clean Air Act.

The forthcoming power plant requirements come on the heels of other significant actions the administration has taken to reduce emissions, including the new fuel economy standards for cars and trucks late last year. The vehicle standards are notable not only for the degree to which they can reduce carbon pollution and save customers money, but also for the amount of industry support they have enjoyed.

Will EPA be able to bring the kind of ambition to the power plant requirements that it brought to cars and trucks?

New plant standards represent a critical first step for the power sector. More than a quarter of the nation’s fossil fuel-based generation capacity is more than 40 years old, and many of these plants are approaching retirement. Any new plants will likely be standing in 2050, and beyond. These regulations provide the opportunity to make sure that these plants are designed to best protect people’s health and the environment.

The Clean Air Act requires EPA to simultaneously establish standards for new and modified units (this falls under Section 111(b)). One of the challenges EPA faces is how to set standards for units that are being modified, where there are fewer opportunities for reductions than there are during the construction of a new plant.

Moving forward, it will be important to see how the EPA addresses GHG emissions for existing power plants (units that are not considered “modified” are regulated as existing units under Section 111(d) of the Clean Air Act). The existing fleet of power plants presents significant opportunities to improve overall efficiency and reduce greenhouse gas emissions. Carefully crafted regulations can capture these opportunities and do so at low cost by providing generators with flexibility in how they comply.

The context matters. Clearly, the politics around climate change have become more challenging in recent years. But, despite the shifts in Washington, the fact is that climate change impacts, including links to more frequent extreme weather events, are becoming increasingly evident. A new report from the IPCC released last November offers new and compelling evidence linking certain extreme weather events and climate change. This is notable as the price tag for extreme weather events is already quite high. Last year, for example, there were 14 separate weather and climate related disasters in the United States that each caused more than $1 billion dollars in damages. So, when the regulations do come out and the discussion turns to that of cost, let us also consider the cost of inaction, which have been estimated to be 20% of GDP or more.

With this background in mind, it is important for the Obama administration to move forward with real, if still modest steps to reduce emissions. While there is a long road to get the U.S. on a safer emissions pathway, these actions demonstrate the EPA is serious about its obligation to rein in emissions, and protect people and our planet.

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