United States: EPA Proposes First Carbon Emissions Limits For Power Plants

On June 2, 2014, the U.S. Environmental Protection Agency announced its Clean Power Plan, which would impose the first federal limits on carbon-dioxide (CO2) emissions from power plants in the United States.1  The proposed rules, which the EPA published pursuant to Section 111(d) of the Clean Air Act, aim to cut CO2 emissions from power plants by approximately 30% by 2030, using 2005 emissions levels as a baseline.2  The Clean Power Plan is a central component of President Obama's Climate Action Plan, which he announced in June 2013.3

The proposed rules set emissions reductions goals for each state.4  The state-specific goals are formulated as rates, which are derived by dividing CO2 emissions from fossil fuel-fired power plants (measured in pounds) by state electricity generation from those plants and other certain low- and zero-emitting power sources (measured in megawatt hours).5  The level of emissions allowed for each state represents the EPA's determination of the reduction each state can achieve using the "best system of emission reduction," or BSER, which takes into consideration  the costs of the reduction, technical feasibility, and other environmental impacts besides air quality.

The proposed rules provide each state with an interim goal that the state must meet over a ten year period from 2020-2029, as well as a final goal that it must meet in 2030 and thereafter.  The fifteen year implementation period (states may plan to achieve their targets more quickly) was created to give states an opportunity to optimize their emissions reduction efforts and afford adequate time to make the infrastructure investments necessary to achieve the required emissions reductions.  The proposed rules also provide for comment a possible alternative five-year phase-in period which would require a lower level of emissions reductions.  If the final version of the rules adopt the five year phase-in period instead of the ten year period, states would be expected to achieve their interim goals from 2020-2024 and their final goals by 2025.  Under that scheme, the EPA envisions that total emissions would be reduced by 23% from 2005 levels by 2025.6

Under the proposed rules, states will have flexibility to determine how best to achieve their required emissions reductions. The EPA envisions that states will use some combination of the four "building blocks" that the EPA has identified as constituting BSER, including:

  • reducing emissions at fossil fuel power plants by increasing efficiency;
  • reducing emissions by substituting power from the highest-emitting fossil fuel power plants with power from lower emitting plants (e.g., natural gas power plants);
  • substituting fossil fuel power with low- and zero- emitting power sources (e.g., nuclear, wind, and solar); and
  • enhancing energy efficiency, thereby reducing demand for power output.

States may use any combination of these building blocks, as well as other technologies and strategies, to achieve the required emissions reductions. 

The proposed rules envisions that states that have already implemented CO2 emissions reductions programs may rely on those programs to help achieve the emissions reductions required by the Clean Power Plan.  That is, progress in emissions reductions made under existing state programs will count towards states emissions reductions requirements.  The proposed rules reference California's Global Warming Solutions Act, Colorado's Clean Air, Clean Jobs Act, and the Regional Greenhouse Gas Initiative (RGGI) as examples.7  The proposed rules allow states to coordinate action using multi-state cooperative regulatory plans including market-based initiatives (e.g., cap and trade), such as RGGI, which is a cooperative effort among Connecticut,  Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce CO2 emissions from the power sector.  RGGI includes a market for trading CO2 allowances. 

States must either submit their plans to the EPA by June 30, 2016 or participate in a two-step process that would extend the deadline to June 30, 2017 and require an interim submission.  Once state plans are submitted, the EPA will review each plan for approval through a notice-and-comment rulemaking process.  Although the EPA's emissions reduction targets do not place specific requirements on individual electric generating units (EGUs), state plans are required to include emissions levels for EGUs.  Therefore, the true impact of the EPA's proposal on specific power plants and businesses may be hard to assess prior to seeing the state plans.  Nonetheless, it is reasonable to expect that the proposed rules will place a financial burden on at least some coal-fired power plants and will impact electricity prices.

The EPA will evaluate state plans based on four general criteria:

  • enforceable measures that reduce emissions from EGUs;
  • projected achievement of the emissions reduction target established by the EPA;
  • quantifiable and verifiable emissions reductions; and
  • a process for biennial reporting on plan implementation. 

The proposed rules are already generating political resistance from Republicans and Democrats hailing from coal-producing regions, who fear lost jobs and rising electricity prices.  Indeed, news sources have reported that Senate Minority Leader Mitch McConnell intends to propose legislation to block the rules this week.  Other opponents could also challenge the rules in court, assuming they are adopted. 

The EPA will accept comments on the proposal for 120 days and will hold four public hearings during the week of July 28.8

Footnotes

1 The proposed rules and EPA fact sheets concerning the Clean Power Plan are available at http://www2.epa.gov/carbon-pollution-standards/clean-power-plan-proposed-rule.

2 The proposed rules are available at http://www2.epa.gov/sites/production/files/2014-05/documents/20140602proposal-cleanpowerplan.pdf.

3 See http://www.whitehouse.gov/sites/default/files/image/president27sclimateactionplan.pdf.

4 Vermont and Washington, DC are not subject to the proposed rules because neither has any fossil fuel-fired power plants.

5 States may choose to achieve an emissions reductions measured in mass of emissions, rather than a rate.  If a state opts for a mass-based limitation, it must demonstrate that the limitation is equivalent to the rate limitation set by the EPA.

6 If the EPA adopts the 10 year phase-in period, total emissions would be reduced 29% by 2025.

7 See http://www.rggi.org/.

8 The hearings will take place in Denver, Atlanta, Pittsburgh, and Washington, DC.  If you are interested in commenting on the proposed rules, contact your Cadwalader attorney and see http://www2.epa.gov/carbon-pollution-standards/how-comment-clean-power-plan-proposed-rule.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.