Background and Process
This week EPA proposed a rule to regulate greenhouse gases from existing coal power plants under section 111(d) of the Clean Air Act. EPA estimates the regulation will reduce national carbon dioxide emission levels by up to 30% by 2030. With the proposal’s release, the public now has 120 days to file comments, before the rule is finalized on June 1, 2015, with no approval by Congress required.
Under the rule, state governments will submit their emission reduction plans for approval by EPA. The rule gives the states the flexibility to choose from a menu of policy options under four “building blocks” to meet their state-specific reduction goal: (1) reducing the carbon intensity of their existing power plants through heat-rate improvements; (2) substituting generation at the power plants with less carbon intensive power generators, like natural-gas combined-cycle plants, and increasing capacity factors for existing gas plants; (3) replacing carbon-intensive generation with renewable or nuclear power generators; and (4) lowering the amount carbon-intensive generation by demand-side measures including a range of energy efficiency options, might include demand response and distributed energy generation. EPA will give the states up to June of 2018 to finalize their plans and has stressed that these plans should include cost-effective, reliable, and feasible solutions to reducing emissions on our nation’s power grid. In addition, EPA offered that states could combine efforts in a regional approach that could maximize their resources and benefits.
The heart of this draft rule is in the methodology the EPA used to calculate emission reduction goals for each state. Rather than picking a uniform emission reduction goal for each state to meet, the EPA calculated state-specific emission reduction targets, depending on the emission profile of their existing fleet of power plants.
Clean Energy Impact
In this draft, the EPA asks specifically for input in a variety of areas, including in clean energy technologies. The proposal is ambitious, yet there is room for improvement. Key points for clean energy advocates are:
- EPA seems conservative in estimating the impact demand-side resources (1.5%) could have on reducing overall emissions; there is an opportunity to ensure state methodologies can fully value these distributed energy resources.
- There is the prospect for grid-scale renewable energy resources to create a larger footprint than even anticipated in meeting these goals.
- The full value of distributed and grid scale energy storage to increase grid and power plant efficiencies while enabling cleaner resources may not be fully represented in the rule.
- The rule’s description of demand-side resources available for state plans is very broad and general and calls out for data about the cost-effectiveness of reducing carbon emissions from distributed energy resources, whether they be specific methods of load reduction, distributed generation resources, or demand resource technologies.
- While coal will remain the largest power source in the nation, there is opportunity for low- and zero-emission resources to enable the goals to be met faster than anticipated.
Bottom Line
While the draft rule in its current form would already go a long way to drive the deployment of clean energy technologies, we see the next 120 days as a critical time for industry stakeholders to ensure that EPA understands their technology’s deployment and emission reduction potential over the next 10-20 years. Now is the time to engage with EPA; the agency wants and needs input to refine consistent, credible methodologies and solutions that can help states meet these targets. Operational and emissions data will be important to build the record for clean energy technologies and methodologies. The final rule will affect the generation mix in the U.S. for the next 15 years; if a technology is not included and counted in the framework, it may lose its place in that mix.
