UPDATE – US: EPA, Obama unveil carbon reduction plan

The Environmental Protection Agency (EPA) and President Barack Obama unveiled the final rule for existing power sources on Monday with tweaks that offered states additional time and flexibility to comply with the carbon reduction rules.

The so-called Clean Power Plan would reduce overall carbon power emissions by 32% from 2005 levels by 2030, a slight increase for the draft proposal of 30% by 2030. The finalised rule also include several tweaks to appease state officials and power plant operators.

Obama said the US and the world can not wait to act on climate change and must take action to protect the world from the impacts of carbon emissions.

“[The Clean Power Plan] is the single most important step America has taken on the global problem of climate change,” Obama said. “We can do more to slow and maybe eventually stop the impact of carbon pollution. This is the right thing to do.”

As expected, the rule will not go into effect until 2022, giving states additional time to develop and phase in emission reductions. The rule would require a state to submit a proposed plan by September 2016 and extensions could push that requirement back until 2018.

Any state that fails to submit a plan would have to use a federally mandated plan.

Along with pushing back the time line, the finalised rules also modified the methodology for calculating state targets after receiving feedback from state officials who said the EPA’s initial calculations underestimated previous emission reductions.

An appendix outlined some of the state mass-based goals, but the EPA said the goals were still under agency review. Analysts have previously said the Clean Power Plan could give states an incentive to join RGGI or the California carbon programme, and the finalised rules did not produce anything that would prevent that from happening.

California Air Resources Board Chair Mary Nichols said California would act quickly to enact the carbon reduction programmes.

“The Clean Power Plan supports successful state programmes like those California has put in place,” Nichols said. “We will move quickly to implement it and urge other states to do the same.”

More flexibility

The EPA also gave states the flexibility to comply with the new rules by allowing states to take parallel approaches without the need for interstate agreements, according to a release about the new rules.

Depending on the regulation, parallel approaches could allow states that are discussing informal multi-state programmes to create regional programmes but would avoid a previous requirement of blending their emission rates.

Several states in the Midwest and the South have discussed programmes that would allow a compliance entity to use allowances from one state in a second state’s programme.

Supporters say this option would reduce emissions at the lowest cost while allowing states to keep autonomy.

The finalised Clean Power Plan would also establish a clean energy incentive programme that would drive additional early development of renewables and energy efficiency programmes.

The programme would allow renewable electricity generation from 2020 and 2021 to earn emission reduction credits.

It would also offer double credits for low-income energy efficiency projects that also occur in 2020 and 2021.

EPA officials also included a reliability safety value that would allow states the ability to keep adequate power on the grid.

The measure would allow a state to redesign its programme or exclude emissions if an emergency caused it to go off track.

Challenges

Numerous political and trade associations voiced their displeasure with the EPA’s finalised rule on Monday.

The US Chamber of Commerce CEO Thomas Donohue said the rule still has some fundamental legal flaws and imposes the same unbearable costs as the original proposal.

“The significant changes to the rule’s underlying assumptions and technical building blocks were barely even contemplated by EPA in the proposed rule, let alone accompanied by the analysis, input, and consultation necessary for a regulation of such unprecedented magnitude,” Donohue said in a release.

The American Natural Gas Alliance said the plan ignored market realities and the ability of natural gas to reduce emissions.

Obama dismissed criticism of the EPA’s plan during his remarks, saying the world can not delay any action on this topic.

Lawyers expect the rule to be challenged in court while Republicans will look to limit the EPA’s authority in Congress.
dan.mcgraw@icis.com