On June 18, 2014, EPA proposed carbon dioxide emission standards for existing power plants, also known as the Clean Power Plan, implementing its authority under section 111(d) of the Clean Air Act. More information on the proposed rule can be found here. On December 1, 2014, C2ES submitted formal comments to EPA in response to the proposed rule. The comments are summarized below.
General Comments
Market-based mechanisms should be used to reduce carbon emissions: A nationwide, comprehensive, market-based program to reduce carbon emissions would be more effective and less costly than a state-by-state, sector-by-sector approach. Given the urgency of the need for climate policy action, and since such a program would require legislation that is unlikely in the near-term, EPA is appropriately using its authority under the Clean Air Act to reduce emissions from the power sector.
The Clean Power Plan is a stepping-stone to a comprehensive, national program: In finalizing the Clean Power Plan, EPA should do what it can to move individual actions toward a broader, nationwide program. This would include provisions that enable carbon-cutting technology deployment and policy consistency and compatibility across state lines.
State flexibility in the Clean Power Plan is critical: Since each state faces unique challenges when addressing its power sector, EPA has appropriately included several important flexibility elements in the proposal. States all have customized targets based on potential, and are authorized to work together or comply alone, pursue a rate- or mass-based standard, and drive emission reductions using any number of established or novel policy tools.
EPA-defined model provisions could encourage interstate consistency: Model provisions for topics such as how to use a carbon fee for compliance or what measurement, recording, and verification (MR&V) protocols to use to track efficiency measures could help states meet the deadline for their plans and could promote consistency across states.
Energy Generation
Renewable energy projections should be based on a state’s market potential: Basing renewable generation projections, used in building block two of the Best System of Emission Reduction (BSER) determination, on regional benchmarks of Renewable Portfolio Standards (RPS) leads to inconsistent and inequitable results. This projection should instead be based on the potential market penetration of renewable generation in each state.
Unaffected generators should be able to opt-in: Generators not covered in the proposal, such as those under 25 megawatts or not connected to the electricity grid, should be allowed to opt-in such that their emission reductions can be credited.
Assuming a phase-in from coal to natural gas could increase state flexibility: The interim compliance targets, generally driven by a projected sudden shift from coal to gas, are so stringent that they could force some states to invest in new natural gas capacity to replace retired coal. EPA should consider softening these interim targets, coupled with a strengthening of final targets, to ensure states have adequate time to invest in long-term solutions like renewable generation.
Support for nuclear generation should be strengthened: EPA should consider factoring 100 percent of existing nuclear generation in its target and compliance calculations to ensure states are strongly encouraged to maintain their existing fleets. EPA should also explore means to increase credit for nuclear units currently under construction to recognize the investment and foresight of the relevant states.
A single year should not be used as the hydropower generation baseline: States that rely heavily on hydropower can experience significant year-to-year variability in fossil generation to balance the variability in water resource availability. EPA should consider a multi-year baseline to more realistically account for each state’s current reliance on fossil generation.
Energy Efficiency
States should be encouraged to improve energy efficiency regardless of when or where the emission cuts take place: EPA should ensure states are able to give equal credit to any efficiency or conservation measure that reduces electricity demand in the compliance period, regardless of when the measure was enacted and even if it leads to a reduction in electricity imports in addition to a reduction in domestic generation.
New load that cuts economy-wide emissions should not be discouraged: As proposed, the Clean Power Plan would discourage many states from adding new load that actually cuts carbon emissions on a system-wide basis. For example, electric vehicles add to power plant emissions but more than offset this increase with a decrease in gasoline emissions. EPA should adjust the proposal to ensure such loads are not discouraged.
All types of demand reduction should be recognized: Assuming appropriate MR&V protocols are used, states should be able to recognize and reward credit for all demand reduction driven by efficiency policies or investments. For example, if a water utility reduces its electricity demand by reducing the demand for water (thereby reducing demand for pumping and treatment), this reduction should be creditable as part of the state’s implementation of the Plan.