United States: EPA's Clean Power Plan Presents Challenges, Opportunities For Manufacturers

While much of the focus on the United States Environmental Protection Agency's ("EPA") Clean Power Plan ("CPP") relates to its impact on utilities and other energy providers, manufacturers and other large electricity consumers are understandably concerned about the CPP's impact on their electricity bill. While these large consumers could see substantially higher electric rates as a result of the CPP's implementation (assuming it survives judicial review), they may also be required and/or incentivized to help offset these costs by implementing demand-side energy efficiency ("EE") measures. Although the final CPP places less emphasis on demand-side EE than the original proposed rule from 2014, the final plan still anticipates meeting its ultimate carbon emission reduction goals by using a healthy dose of demand-side EE. Whether this demand-side EE will be regulatorily required or merely incentivized depends primarily on the state in which you operate, meaning manufacturers and other energy consumers have strong incentives to get involved in the state-level CPP conversations going on across the country right now.

Demand-Side EE Under the CPP: An Overview

In 2014, EPA proposed that demand-side EE would be one of four "building blocks" utilized to establish the CPP's carbon reduction goals, along with a shift from coal to natural gas electricity generating units, increasing fossil fuel plant efficiency, and expanding zero-emission power sources, such as renewables. This "building block" status was removed in the final CPP, perhaps in an attempt to make the CPP more legally defensible (discussed more here). Instead, the final CPP relies on demand-side EE in two ways: (1) by encouraging states to adopt demand-side EE as a path to compliance with mandated state carbon emission reduction goals, which may result in mandated EE measures; and (2) by incentivizing demand-side EE in both the proposed federal plan for implementing the CPP in states that do not adopt a state plan, and in the proposed model trading program rules EPA proposed as presumptively approvable state plans. These potential requirements and incentives may be present under both mass-based programs (those that give the state an overall carbon emission "budget" that cannot be exceeded) and rate-based programs (which impose carbon emission rate limits on electricity generating units on a per-megawatt hour basis).

Potential Regulatory Requirements

EPA abandoned demand-side EE as a building block for establishing the final CPP carbon emission reduction requirements, and the agency is not imposing EE measures as a regulatory requirement for those states that are ultimately subject to a federal plan. Accordingly, the most likely scenario for mandated demand-side EE measures is a state's adoption of a plan (either mass-based or rate-based) that includes such measures as an element of meeting the state's required carbon emission reduction goals. Among other requirements, these mandates could take the form of permit limits, required participation in state-sponsored EE programs, or by including energy consumers in a state trading program (e.g., by requiring them to pay for "allowances" to cover all of their carbon emissions). If and how these measures are implemented depends on whether a given state adopts a state plan, and if so, how the state chooses to reach its mandated carbon emission reduction goals. This is where the opportunity lies for manufacturers—as a key stakeholder in the CPP debate, manufacturers need to analyze the costs and benefits of a state plan versus the federal plan and make sure their state understands those costs and benefits when choosing a compliance pathway. Manufacturers also need to get a seat at the table if and when their state designs a state plan (which is already starting in many states), because this is the likeliest source of significant, mandated demand-side EE measures on manufacturers and other industries.

Potential Regulatory Incentives

The available demand-side EE incentives will vary depending on whether a given state adopts a state plan or chooses to be subject to the federal plan. State plans are allowed to include various types of incentives for EE measures, including the issuance of emissions allowances (under a mass-based plan) or emission rate credits (under a rate-based plan). In the rate-based state plan context, these credits can be issued for EE measures that were implemented after 2012, so long as those measures are still generating electricity savings in 2022 and beyond. These emissions allowances and emission rate credits are valuable because they can be sold to electric utilities (or others) to help those utilities meet their own compliance obligations, helping to offset the cost of the EE measures used to generate them. This offset is in addition to the savings on electricity costs already generated by implementing the EE measures (discussed in more detail here).

The EPA has also proposed to create a "Clean Energy Incentive Program" ("CEIP") that includes, among other incentives, the opportunity under either a state plan (if a state opts into the CEIP) or the federal plan to obtain emission allowances or emission rate credits for demand-side EE projects implemented in low-income neighborhoods. The projects must comply with various other criteria, but if they qualify they will receive two allowances or credits for every megawatt hour the EE project saves in 2020 or 2021. This program is intended to encourage early action by states and affected sources to meet the carbon reduction goals that will be phased in beginning in 2022, which is why EPA is offering a "double benefit" for qualifying projects. EPA has indicated it intends to release additional details about the CEIP in a subsequent action, which should at minimum provide more clarity regarding how the project will be implemented.

Given the CPP's potentially heavy impact on the cost of electricity for manufacturers and other large energy consumers, these entities need to consider both the potential requirements and the potential incentives that EPA's final CPP, proposed federal plan, and model trading program rules create, and identify the best combination for their business. Manufacturers should then evaluate their role in their state's CPP implementation process and determine how active they need or want to be in that process. While many of the CPP's actual carbon emission reduction deadlines are a ways off, the methods that states will use to meet the CPP deadlines are being established now, and manufacturers should consider joining the conversation. Manufacturers may also wish to follow the judicial challenges to the CPP that are sure to come, as these will obviously impact if and when compliance will be required. Challenges to the final CPP may be filed once it is published in the Federal Register, which according to the Office of the Federal Register is expected to occur on October 23, 2015.

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.

In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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.


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.


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.


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.


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.


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.


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.