“Now we have standards for carbon pollution[;] for the first time in history, the Clean Power Plan sets those limits.”

-U.S. EPA Administrator, Gina McCarthy

On August 3, 2015, President Obama announced the release of the final “Clean Power Plan,” the first nation-wide program designed to reduce the amount of carbon dioxide (CO2) emitted by the U.S. power sector.  The rule, a key component of the President’s Climate Action Plan, is also referred to as the “Section 111(d) Rule,” for the section of the Clean Air Act cited by the Environmental Protection Agency (EPA) as the authority for it.  Described by EPA itself as “historic” and “unprecedented,”[1] it represents EPA’s most aggressive attempt to use the Clean Air Act to do what at least one EPA Administrator has admitted the statute was not designed to do-regulate greenhouse gases emissions from stationary sources.[2]

EPA’s Clean Power Plan seeks to reduce CO2 emissions from the nation’s existing fleet of fossil fuel-fired power plants.  However, no viable control technology exists for significantly reducing those emission rates.  As a result, the only means currently available for achieving significant reductions in CO2 emissions from existing power plants is to require electric utilities to rely less on coal and more on natural gas, renewable, and other energy resources to generate the electricity they sell.  And that is exactly what the Clean Power Plan is designed to do-force a transformation in the country’s energy mix.  EPA’s rule also assumes coal-fired power plants can become more efficient, and that the public can use energy more efficiently, thus reducing the overall demand for electricity and the CO2 emissions that result.  But the primary driver of the significant emission reductions that EPA expects under the Clean Power Plan is the fundamental shift away from coal and towards lower- or zero-emitting electricity generation.

The Clean Power Plan is highly complex, but it centers around two key components-“emission standards” and “state goals.”  The achievement of either will demonstrate compliance with the rule.  The “emission standards” are based on EPA’s technical analysis of emission reduction opportunities deemed achievable, expressed for each fossil fuel in terms of the amount of CO2 emitted (in pounds) per unit of electricity generated (in megawatt-hours, or “MWh”).  Specifically, EPA analyzed three emission reduction strategies, referred to as “building blocks:” efficiency improvements at coal-fired units, followed by displacement of both coal- and gas-fired generation with renewable energy resources, and then further displacement of coal-fired generation with gas-fired generation.  Applying those “building blocks,” EPA determined that, by 2030, coal-fired units should be required to meet an “emission standard” of 1,305 lb/MWh and gas-fired units should be required to meet an “emission standard” of 771 lb/MWh.[3]

The Clean Power Plan itself does not impose these “emission standards” directly.  Rather, it requires states to develop plans for achieving the “emission standards” and provides several pathways for compliance.  Those pathways rely on “state goals” that reflect the average emission rate that all of the units in the state would meet in the aggregate if they each achieved the “emission standards” individually.  The state goals thus vary from state to state based on each state’s unique energy mix-the goal for states with 100% coal is 1,305 lb/MWh, the goal for states with 100% gas is 771 lb/MWh, and states with some of both are somewhere in between.[4]  EPA also converted its rate-based state goals into mass-based state goals.  The mass-based goals represent the total tons of CO2 that can be emitted by the fossil fuel-fired power plants within a state, regardless of how much electricity is generated in the process.  EPA claims those mass-based goals are equivalent to the rate-based goals.  However, the state mass-based goals are uniformly less stringent (requiring a smaller percentage reduction) than the rate-based goals.

To implement either approach-rate-based or mass-based-each state must assign each power plant a numeric emission limitation.  States following the rate-based approach have three options: (i) require its units to meet the EPA-established “emission standards” (1,305 or 771 lb/MWh, depending on the fuel); (ii) require its units to meet the state’s goal (somewhere between 1,305 or 771 lb/MWh, depending on the state); or (iii) require its units to meet custom-designed emission rates, assuming the state can demonstrate to EPA that the combined effect of those rates will achieve the state’s goal.  States following the mass-based approach must simply ensure that the total mass of CO2 emissions from its units will remain below the state’s goal by requiring each unit to reduce its CO2 emissions on a ton per year basis.  However, because individual units will not be able to achieve any of these standards alone, every state must develop an emissions trading program of some sort, regardless of the compliance pathway chosen.

EPA predicts that the Clean Power Plan will reduce CO2 emissions from the U.S. power sector by 32 percent below a 2005 baseline, or approximately 23 percent below the 2012 baseline that EPA used to develop the program.[5]  Although EPA recognizes that the transformation of the power sector required by the Clean Power Plan will cost billions every year, EPA asserts that the return will be even greater-in billions of dollars of global climate change and human health benefits.  However, the health benefits touted by the President and EPA are based on reductions in particulate matter (PM), even though 99% of the country will already meet EPA’s health-based PM standards by 2020,[6] well before the Clean Power Plan takes effect in 2022. Moreover, the climate benefits EPA cites are tied to an estimate of the “social cost of carbon,” which admits that, “[e]ven if U.S. were to reduce its greenhouse gas emissions to zero, that step would be far from enough to avoid substantial climate change.”[7]  As a result, questions remain as to whether EPA’s Clean Power Plan will have any meaningful effect on the earth’s climate at all.

[1]     EPA Fact Sheet: Overview of the Clean Power Plan, available at  http://www2.epa.gov/cleanpowerplan/clean-power-plan-existing-power-plants.

[2]     Regulating Greenhouse Gas Emissions Under the Clean Air Act, Advanced Notice of Proposed Rulemaking, 73 Fed. Reg. 44354, 44355 (July 30, 2008) (Preface from the EPA Administrator: “[T]he Clean Air Act, an outdated law originally enacted to control regional pollutants that cause direct health effects, is ill-suited for the task of regulating global greenhouse gases. Based on the analysis to date, pursuing this course of action would inevitably result in a very complicated, time-consuming and, likely, convoluted set of regulations.”)

[3]     The emission standards begin to apply in 2022, but phase in over the course of an “interim compliance period.”

[4]     Like the emission standards upon which they are based, the state goals phase in between 2022 and 2030.

[5]     “Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2013,” Report EPA 430-R-15-004, Table 3-5 (Apr. 15 2015), available athttp://epa.gov/climatechange/ghgemissions/usinventoryreport.html.

[6]     See http://www.epa.gov/airquality/particlepollution/2012/2020map.pdf (“EPA Projections Show 99 percent of U.S. Counties With Monitors Would Meet the Annual Fine Particle Health Standard of 12.0 µg/m3 in 2020”).

[7]     See Technical Support Document: Technical Update of the Social Cost of Carbon, at 14 (revised July 2015), available at http://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.