Last June, the Environmental Protection Agency (EPA) proposed the first-ever standards to limit carbon dioxide (CO2) pollution from existing power plants, known as the Clean Power Plan. After an extended comment period during which the agency received more than 4 million comments, EPA is expected to finalize the plan this summer. By addressing the single-largest source of U.S. greenhouse gas (GHG) emissions, this plan is one of the most important near-term tools the country can use to help reach its goal of reducing emissions 26-28 percent below 2005 levels by 2025.
Here are 5 key questions to keep in mind as we look forward to the final Clean Power Plan:
1) How much will the plan reduce power sector emissions?
The Clean Power Plan has the opportunity to drive significant CO2 reductions from the power sector. Rather than set emissions limits for individual power plants, the proposed plan sets targets for individual states’ entire power sectors, allowing each state to take advantage of its full range of electricity resources when determining how to reduce emissions. EPA modeling indicates that the proposed plan could reduce national power sector CO2 emissions 30 percent below 2005 levels by 2030.
However, research shows that the standard could reduce emissions further if clean energy is more fully taken into account when establishing state targets. If the final rule goes further than the proposed standard, that would make it easier for the United States to meet the 2025 target while encouraging more states to take advantage of cost-effective energy efficiency and renewable energy opportunities.
2) What options do states have to comply?
The proposed rule gives states flexibility in how they can meet their targets, allowing them to reduce emissions throughout the power sector rather than requiring reductions at individual plants. States can use a range of options including energy efficiency improvements, switching from coal to natural gas, increasing the use of renewable energy, or joining a regional cap-and-trade program like the Regional Greenhouse Gas Initiative. This approach allows states to build on the clean energy policies and resources they already have in place, so that the targets won’t be a heavy lift in many cases. In fact, our analysis of 12 states found that they were already in a good position to meet power sector emissions standards using existing policies and infrastructure.
We expect to see the same flexibility in the final Clean Power Plan, but with additional direction on important details, including: how states should count renewables and energy efficiency toward their emissions-reduction target; how much nuclear and hydropower they can use (if any); how federal and states policies like federal appliance standards and state efficiency targets will interact; and how states can use an emission target based on the carbon-intensity of their electricity fuel mix (rate-based) or on the amount of CO2 from their power sector (mass-based).
The final rule may also contain guidance to help states with the logistical challenges of multi-state cooperation, such as in a regional emissions-trading program. EPA could provide specific details on how compliance would work in these cases, or develop basic standards states could use. We may also see details on compliance options that weren’t explicitly described in the proposal, like the use of combined heat and power at commercial and industrial facilities, adoption and enforcement of state building energy codes, or use of a state-wide carbon tax.
3) How will renewables and energy efficiency factor into the final state targets?
We expect EPA to factor efficiency and renewable energy into the final targets like they did in the proposal. The question is whether EPA has changed the targets to more fully account for these opportunities.
The proposed plan didn’t fully account for the rapidly falling prices of renewable technologies and significant potential for future growth of renewables. NRDC found that EPA’s assumed costs for wind and solar were 46 percent higher than the actual average costs of these technologies. The proposal also underestimated the potential for energy efficiency, the cheapest source of new electricity generation. EPA assumed that states could ramp up annual electricity savings to about 1.5 percent of sales, but many states already have policies on the books that eventually require this level of savings—some have targets of 2 percent or more.
States around the country are finding that these clean energy opportunities have economic benefits, including job creation and lowered energy bills for households and businesses. By strengthening its targets to fully reflect the potential for these resources, EPA can encourage states to harness economic opportunities while reducing GHG emissions.
4) What does this mean for the 2025 target?
A strong, flexible Clean Power Plan is an important part of the 10-point action plan we developed for how the United States can meet its 2025 emissions-reduction target, although details on the timing and stringency of the final rule could have implications on how much it can contribute. We found that the power sector could potentially deliver 40-50 percent of the necessary reductions. Finalizing the plan will add to other recent steps forward by the administration, including proposed fuel economy standards for large trucks, steps to address aircraft emissions, a final rule to reduce emissions of hydrofluorocarbons, and a voluntary plan to reduce emissions and enhance carbon sequestration within agriculture and forestry.
But meeting the 26-28 percent target will ultimately require comprehensive action across the economy. In addition to regulating the power sector, the United States will need to take action across other emissions sources, including setting standards for both new and existing sources of methane emissions and improving industrial energy efficiency.
5) What’s next?
There’s lots of work to do between the time EPA releases the final Clean Power Plan and the start of the compliance period. States will need to submit final implementation plans to EPA no later than two-three years after the rule is finalized, detailing how they will comply—including whether they plan to comply individually or together with other states. EPA will issue a federal implementation plan for states that do not submit their own plans.
Stay tuned as we continue to track these and other actions that can move the United States closer to its 2025 target and a lower-carbon future.