On August 31, 2018, the Environmental Protection Agency ("EPA") proposed the Affordable Clean Energy ("ACE") rule to replace the Obama Administration's Clean Power Plan ("CPP"). Both rules set out guidelines for greenhouse gas emissions from existing electric generating units ("EGUs") based on authority provided by Section 111(d) of the Clean Air Act. The similarities between ACE and CPP end there. 

A Jones Day White Paper explores, in detail, the new aspects of ACE that are likely to draw significant public comment. Those aspects include, but are not limited to: (i) relying solely on heat rate improvements to achieve reductions, rather than a combination of heat rate improvements, increased gas-fired generation, and increased renewables; (ii) allowing states to select the appropriate reductions for coal-fired EGUs from a menu of available techniques, rather than assigning hard-and-fast limits that each state must achieve for all of its EGU emissions, combined; (iii) proposing rate-based limits (pounds per megawatt-hour), instead of mass-based limits (tons per year), for coal-fired units, thereby making emissions trading less likely as a means of compliance with ACE; (iv) excluding existing gas-fired power plants from regulation under ACE; and (v) making considerable revisions to New Source Review permitting of EGUs to facilitate the energy-efficiency upgrades needed for ACE compliance.

A 60-day public comment period on the ACE proposal ends on October 30, 2018. The next step, once comments are submitted, is to continue engaging EPA during its review of public comments and to think beyond the proposal toward a comprehensive plan for compliance with a final ACE rule.

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