The Center for Climate and Energy Solutions seeks to inform the design and implementation of federal policies that will significantly reduce greenhouse gas emissions. Drawing from its extensive peer-reviewed published works, in-house policy analyses, and tracking of current legislative proposals, the Center provides research, analysis, and recommendations to policymakers in Congress and the Executive Branch. Read More

Distribution of Allowances under the Clean Power PLan

Distribution of Allowances under the Clean Power Plan

February 2016

Download the Fact Sheet (PDF)

In August 2015, the U.S. Environmental Protection Agency (EPA) finalized the Clean Power Plan for existing power plants. Under the rule, states can implement a mass-based or rate-based compliance plan to reduce greenhouse gas emissions from the power sector. States choosing a mass-based approach must also decide how to allocate emission allowances. This fact sheet provides an overview of how allowances could be distributed under a mass-based approach and the policy objectives achieved by their distribution.


Energy Efficiency under the Clean Power PLan

Energy Efficiency under the Clean Power Plan

February 2016

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Energy efficiency programs are in wide use, whether administered by state governments, city governments, or utilities. Because energy efficiency is often a low-cost means for reducing power sector emissions, the U.S. Environmental Protection Agency (EPA) expects it will be broadly used to comply with the Clean Power Plan, which sets greenhouse gas standards for existing power plants. This fact sheet compares the treatment of energy efficiency under two types of Clean Power Plan compliance approaches: rate-based
or mass-based emission standards.


Market Oversight Under the Clean Power Plan

Market Oversight under the Clean Power Plan

February 2016

Download the Fact Sheet (PDF)

Carbon markets, like other commodities markets, require provisions to ensure that the market functions effectively and is not manipulated by some participants. Regulators conduct oversight to ensure that buyers can procure carbon credits when needed at a price that reflects the cost of reducing emissions and buyers’ risk tolerance. By making sure that buyers only pay a fair and transparent price, regulators help protect consumers from overpaying for cleaner electricity. This fact sheet investigates the options and implications
of potential market oversight provisions that might be useful as states consider implementing the Clean Power Plan.


Tracking Systems in the Clean Power Plan

Tracking Systems in the Clean Power Plan

February 2016

Download the Fact Sheet (PDF)


Tracking systems provide the foundation for a smoothly operating trading market. They are used by market participants to track the use, trading, banking, and retirement of tradable assets. In trading programs under the Clean Power Plan, tracking systems will be used to track emission reduction credits (ERCs) in rate-based programs and allowances in mass-based programs.


Reducing methane emissions from the oil and gas sector

Federal agencies are pursuing regulatory and voluntary steps to reduce methane emissions from the oil and natural gas production system, the largest manmade source of this potent greenhouse gas.

On January 14, 2015, the Environmental Protection Agency (EPA) announced a goal to cut methane emissions from the oil and gas sector by 40–45 percent from 2012 levels by 2025.

As part of achieving this goal, it released proposed regulations on August 18, 2015, for new and modified sources of methane emissions from the oil and natural gas sector. These regulations will be finalized by summer 2016.

Separately, the Department of the Interior (DOI) has proposed regulations to be finalized in 2016 to reduce methane emissions from certain wells.

EPA also plans to work collaboratively with industry and states, including expanding its voluntary Natural Gas Star program, to reduce methane from existing oil and gas operations.

Steps to reduce methane from other sources, such as landfills and coal mines, are also part of President Obama’s Climate Action Plan.

What is methane?

Methane, or CH4, is the main component of natural gas. When combusted as fuel, natural gas produces half as much carbon dioxide emissions as coal, and one-third less than oil (per unit of energy produced). However, natural gas that is released into the atmosphere without being combusted is a potent greenhouse gas.

Why is it important to reduce methane emissions?

Methane is the second biggest driver of climate change. It is much more potent than carbon dioxide (CO2) at increasing the atmosphere’s heat-trapping ability, but it remains in the atmosphere a much shorter time (a little more than a decade compared with hundreds of years for CO2).

Averaged over a 100-year time frame, the warming potential of methane is about 21 times stronger than that of CO2. However, in a 20-year time frame, it is 72 times more potent. (The most recent report by the Intergovernmental Panel on Climate Change raises estimates of the global warming potential of methane to 34 times stronger than CO2 for the 100-year time frame, and 86 times stronger for the 20-year time frame. However, the earlier estimates are still used to maintain comparability among U.S. greenhouse gas inventory reports.)

Because methane is potent and short-lived, reducing methane emissions can have a more immediate benefit, and is especially important at a time of growing U.S. oil and natural gas production.

What are the primary sources of methane emissions in the United States?

Natural gas and petroleum systems are the largest emitters of methane in the U.S., according to EPA estimates. These emissions come from intentional and unintentional releases.

Agriculture, solid waste landfills, and coal mines are also major sources and are addressed by other EPA programs.

Figure 1: 2012 U.S. Methane Emissions, By Source

In 2012, U.S. methane emissions totaled 567 million metric tons of carbon dioxide equivalent.

Source: U.S. Environmental Protection Agency, “Draft Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012” (Washington, DC: U.S. Environmental Protection Agency, 2014), http://www.epa.gov/climatechange/ghgemissions/usinventoryreport.html.

How much methane is released in oil and natural gas production and how will this announcement improve the accuracy of measurements?

Methane is released unintentionally and intentionally from oil and gas systems. According to EPA, natural gas and petroleum systems were responsible for 29 percent of methane emissions in 2012. The rate of methane emissions from the sector has decreased in recent years, even as natural gas production has surged.

However, independent studies estimate a wide range of leak rates from natural gas production, from 0.71 to 7.9 percent. More comprehensive studies are needed for accurate results.

EPA has committed to examining options for applying remote sensing and other technologies to improve methane emissions data accuracy and transparency, and strengthening reporting requirements for methane in its Greenhouse Gas Reporting Program.

Why is methane intentionally released?

In the production process, small amounts of methane can leak unintentionally. In addition, methane may be intentionally released or vented to the atmosphere for safety reasons at the wellhead or to reduce pressure from equipment or pipelines.

How does EPA propose to address methane emissions from oil and natural gas production?

EPA proposed a rule in August 2015 under Section 111(b) of the Clean Air Act. It would require operators of new oil and gas wells to find and repair leaks, capture natural gas from the completion of hydraulically fractured oil wells, limit emissions from new and modified pneumatic pumps, and limit emissions from several types of equipment used at natural gas transmission compressor stations, including compressors and pneumatic controllers. EPA estimates that this proposal would prevent the emission of 340,000 to 400,000 short tons of methane in 2025, which is the equivalent of 7.7 million to 9 million metric tons of carbon dioxide. A final rule is expected in 2016.

EPA already regulates Volatile Organic Compounds (VOCs, which are ozone-forming pollutants) from new oil and gas production sources, which has the side benefit of also reducing methane.

In addition, on January 22, 2016, the Department of the Interior proposed a Methane Waste and Reduction Rule to reduce methane emissions from all wells on lands managed by the Bureau of Land Management and Indian lands. The proposal from DOI will update rules and require oil and gas producers to reduce methane emissions from operations. It proposes the first-ever limits for flaring of natural gas as well as increased disclosure requirements. The proposal would prohibit venting except in specified circumstances, require pre-drill planning for leak reduction, and increased use of leak-detection technology

What entities will be covered by the regulations?

The proposed rule would cover new and modified oil and gas production sources, and natural gas processing and transmission sources. Specifically, EPA notes it will look to reduce emissions from five specific sources:

  • oil well completions
  • pneumatic pumps and leaks from well sites
  • gathering and boosting stations
  • compressor stations.

In developing new standards, EPA says it will focus on in-use technologies, current industry practices, emerging innovations and streamlined and flexible regulatory approaches to ensure that emissions reductions can be achieved as oil and gas production and operations continue to grow.

The DOI proposal would affect all oil and gas wells on federally owned onshore lands, amounting to 100,000 wells responsible for 5 percent of US oil supply and 11 percent of gas supply.

How would the EPA’s proposed methane actions complement existing regulation?

The actions would work with EPA’s new source performance standards (NSPS) and hazardous air pollutant regulations, finalized in 2012. They already apply to oil and gas production and gas processing, transmission, and storage facilities, and the rule proposed in August 2015 would apply them directly to methane as well.

While primarily aimed at reducing smog-forming and toxic air pollutants, known as volatile organic compounds (VOCs), the NSPS rules also had the indirect effect of reducing methane emissions. They include the requirement to use "green completions" at natural gas wells to limit emissions from hydraulic fracturing, a rapidly growing means of drilling and production. In a “green completion,” special equipment separates hydrocarbons from the used hydraulic fracturing fluid, or flowback, that comes back up from the well as it is being prepared for production. This step allows for the collection (and sale or use) of methane that may be mixed with the flowback and would otherwise be released to the atmosphere. Because the same technologies in place to reduce VOC emissions would also be used to reduce methane, no additional steps would be necessary to reduce methane.

In its January 2015 announcement, EPA said it will develop new guidelines to assist states in reducing VOCs from existing oil and gas systems in areas that do not meet the ozone health standard and in states in the Ozone Transport Region. Like the earlier NSPS, these guidelines will also reduce methane emissions.

The proposed regulation of August 2015 will extend emission reductions further downstream from the 2012 rules and cover certain equipment used in the natural gas transmission sector in addition to equipment covered by regulation in 2012.

What other non-regulatory steps has the administration announced it will take?

The president will request $15 million for the Department of Energy (DOE) to develop and demonstrate more cost-effective technologies to detect and reduce losses from natural gas transmission and distribution systems, including leak repairs, and developing next-generation compressors. The president’s budget will also propose $10 million to launch a program at DOE to enhance the quantification of emissions from natural gas infrastructure for inclusion in the national Greenhouse Gas Inventory in coordination with EPA. Congress must appropriate funding for these programs for them to be implemented. DOE will also be responsible for other recommendations to reduce emissions from the natural gas system.

Bob Perciasepe's statement on C2ES ranking among top think tanks

Statement of Bob Perciasepe
President, Center for Climate and Energy Solutions

January 28, 2016
The Center for Climate and Energy Solutions (C2ES) is honored to be recognized once again as one of the world’s leading think tanks.
We learned today that we ranked fifth among environment policy think tanks in the 2015 University of Pennsylvania’s Global Go To Think Tank Index, based on a worldwide survey of more than 4,600 scholars, public and private donors, policymakers, and journalists from 143 countries.
C2ES’s consistently high ranking is a tribute to our unique ability to bring together diverse stakeholders – business leaders, city and state officials, federal policymakers, and international climate negotiators – to achieve practical, commonsense solutions to our climate and energy challenges.
I congratulate and thank our outstanding staff, partners, and supporters who have helped C2ES achieve and maintain our success through the years.

Contact Laura Rehrmann at rehrmannl@c2es.org

About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address the challenges of energy and climate change. Learn more at www.c2es.org.

Rate-Based Compliance Under the Clean Power Plan

Rate-Based Compliance Under the Clean Power Plan

January 2016

Download the Fact Sheet (PDF)

The Clean Power Plan gives states the option to comply via either a rate-based or a mass-based approach. Ten states currently operate mass-based greenhouse gas reduction programs, and many more participate in mass-based programs to reduce other pollutants (e.g., sulfur dioxide) that are administered by the U.S. Environmental Protection Agency.

Nations need to agree to reduce aviation emissions

Image courtesy International Civil Aviation Organization (ICAO)

The new Paris Agreement provides a broad global framework to strengthen efforts to address climate change. Now, governments are working toward another agreement on a critical issue Paris doesn’t directly address – reducing greenhouse gas emissions from aviation.

The Paris Agreement, negotiated under the United Nations Framework Convention on Climate Change (UNFCCC), ties together national efforts pledged by more than 180 countries to limit or reduce their own emissions. However, international aviation is inherently a cross-border activity, and a global approach to reducing emissions from aviation is being negotiated separately under the International Civil Aviation Organization (ICAO). A new sector-wide agreement is expected this October.

Emissions from the aviation sector comprised 2 percent of global emissions in 2013, but that share is set to expand rapidly by 2050 without policy interventions. In 2010, the aviation industry carried 2.4 billion passengers and 40 million metric tons of goods. By 2050, that could grow to 16 billion passengers and 400 million metric tons of goods.

If global aviation were a country, it would rank as the seventh largest carbon dioxide emitter. So reducing emissions from aviation is critical to meeting the global goal of limiting average temperature rise below 2 degrees Celsius.

ICAO was established in 1947 to regulate civil aviation by establishing common standards on safety, pollution, technology, and other important issues. In 2010, governments adopted a goal put forward by the airline industry to achieve carbon neutrality from 2020 onwards – known as CNG2020. This means that, from 2020 onwards, net carbon emissions from international aviation would remain constant.

Negotiations are moving toward an agreement on how to achieve this target. The key challenge will be allocating obligations to individual countries. The Chicago Convention, which established ICAO, is based on the principle of uniform application (e.g., all nations must meet the same standards), which is in contrast to the concept of common but differentiated responsibilities familiar to those involved in the UNFCCC. It will be a challenge for negotiators to find a workable compromise that apportions obligations in a manner deemed fair by all nations.

To meet the CNG2020 goal, a number of policy options are available. Technology improvements in aircraft and engine design, operational efficiency gains, and investments in new infrastructure will all reduce emissions. Additionally, the development and possible use of biofuels would drive down emissions by reducing the jet fuels burned by aircraft.

However, in the face of continued aviation sector growth, industry believes that emission reductions occurring outside the sector must also be available to count toward the goal. At the 38th ICAO Assembly in 2013, member states agreed to develop a global market-based mechanism, allowing for offsetting aviation sector emissions. A task force has been deliberating the rules and eligibility criteria that would underpin this mechanism, and it is hoped that these rules will be adopted at the October ICAO Assembly and take effect from 2020.

2016 is an opportunity to continue the momentum of international cooperation on climate change, with aviation becoming the first sector to sign a binding international agreement to reduce its emissions. 

Comments of the Center for Climate and Energy Solutions on Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units; Proposed Rule

Comments of the Center for Climate and Energy Solutions on Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units; Proposed Rule

United States Environmental Protection Agency

(80 Fed. Reg. No. 205 (October 23, 2015))

Docket ID No. EPA–HQ–OAR–2015–0199; FRL 9930–67– OAR

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This document constitutes the comments of the Center for Climate and Energy Solutions (C2ES) on the proposed federal plan requirements for greenhouse gas (GHG) emissions from electric utility generating units under the Clean Power Plan, proposed by the U.S. Environmental Protection Agency (EPA) and published in the Federal Register on October 23, 2015. C2ES is an independent, nonprofit, nonpartisan organization dedicated to advancing practical and effective policies and actions to address our global climate change and energy challenges. As such, the views expressed here are those of C2ES alone and do not necessarily reflect the views of members of the C2ES Business Environmental Leadership Council (BELC). In addition, the comments made in this document pertain to existing sources in the specific sector addressed by the Proposal and may not be appropriate for other industrial sectors or for new electric utility generating units.

Overarching Comments

C2ES believes a nationwide, economy-wide market based policy would be the most efficient and effective way to reduce GHG emissions by harnessing market forces to spur clean energy innovation, development and deployment. However, enactment of federal legislation that would establish a comprehensive market-based policy to reduce GHG emissions is not likely in the near-term. Given the urgency of addressing the rising risks that climate change poses to U.S. economic, environmental, and security interests, and the inability of Congress to establish our preferred approach of a nationwide price on carbon, C2ES believes EPA, as it implements the Clean Power Plan, should rely upon market-based approaches. Acting now will provide environmental benefits now and in the future, economic growth, and the opportunity for US companies to lead development of innovative technologies for which global demand is rapidly increasing.

The proposed federal plan requirements are an important component of the Clean Power Plan as they establish a framework for what may constitute a federal implementation plan in the event a state does not submit an adequate state implementation plan. The requirements are important as they may also serve as model rules offering guidance to states on possible provisions of an adequate state implementation plan.

C2ES supports the proposed federal plan requirements based on several key characteristics of the proposal.

  • Market-based mechanisms to reduce carbon emissions are encouraged: The proposed federal plan requirements are market based and offer two market approaches, rate-based and mass-based trading. The inclusion of these market approaches in the proposal guides and facilitates the use of market-based policies by states. Moreover, the proposal retains flexibility for states to create markets that are responsive to specific state needs as well enact ancillary policies to achieve additional policy objectives.
  • The Clean Power Plan could serve as a stepping-stone to a comprehensive, national program: In offering the proposed federal plan requirements as model rules, EPA is moving individual state actions toward a broader, nationwide program. The proposal could facilitate the development of market-based policies in more states and could thereby provide additional experience, learning opportunities, and frameworks necessary to ultimately develop a successful national program.
  • EPA-defined model provisions encourage interstate consistency: Model provisions for topics such as tracking systems and what evaluation, measurement, and verification (EM&V) protocols to use to track efficiency measures will help states meet the deadline for their plans and could promote consistency across states. Such consistency could facilitate interoperability and the creation of a large, liquid market that reduces compliance costs for all participants.


EPA has invited comment on whether to finalize a single approach (i.e., either a mass? or rate?based approach) for a federal plan. While choosing a single approach that creates a large, liquid market would reduce compliance costs for all participants and a mass-based approach would likely be administratively simpler to implement, states should be allowed to maintain the flexibility to implement rate-based programs as under the final rule establishing the Clean Power Plan. If a federal implementation plan is necessary for a state, EPA should maintain the flexibility to implement either approach as warranted by the specific circumstances of that state.

Tracking Systems

C2ES believes states should have the flexibility to use existing systems or a new, EPA-administered tracking system. However, it would be in the best interest of the state and market if the tracking system were interoperable with the national market. Interoperability of tracking systems allow the credible and transparent tracking of assets across state lines, thereby facilitating a larger market which reduces compliance costs for all participants. Existing tracking systems provide insights for the Clean Power Plan. Please see the attached C2ES brief on tracking for more information.


The allocation of allowances in a mass-based program is a significant policy decision. Allowances represent a significant source of value and can be used to compensate firms or individuals affected by climate change policy or to raise funds for other socially desirable policy objectives. The basic allocation decision involves whether to freely allocate or auction some or all emission allowances. And further, if freely allocated, to whom and how to distribute, and if to auction allowances, the type of auction and how to distribute the revenues. Please see the attached C2ES brief on allocation policies for more information.

Market Oversight

Carbon markets, like other commoditites markets, require provisions to ensure that the market functions effectively, is efficient and liquid, and is not manipulated by some participants.  A carbon market can best achieve its environmnental aim if it is well designed and functions efficiently from the beginning.  A well-designed policy should include effective means to prevent excessively high prices, extreme volatility, and market manipulation – the action by an individual or small group of individuals to alter the price of a good for their own advantage – which is best achieved through effective policy and market design.

Statement of Bob Perciasepe on the 2016 State of the Union Address

Statement of Bob Perciasepe
President, Center for Climate and Energy Solutions

January 12, 2016

On the State of the Union address:

President Obama is right when he says we have a huge opportunity to accelerate our efforts to transition to a clean energy future.

We saw unprecedented momentum last year with the completion of the Clean Power Plan and a landmark global agreement in Paris. Our job now is to build on this foundation going forward.

At home, many states are working hard on strategies to implement the Clean Power Plan, and we’re encouraged to see so many of them exploring efficient market-based approaches. Internationally, we must flesh out the details of the Paris agreement to ensure that countries are held accountable and ramp up their efforts over time. On both fronts, strong leadership from business will be critical.

Americans increasingly understand both the risks and the opportunities presented by climate change. The investments and innovation that help us generate clean power and protect our communities from extreme weather and other climate impacts also help build a more sustainable economy. 

C2ES is committed to continue working with policymakers, business leaders and other stakeholders to forge common ground and commonsense climate solutions.


Contact: Laura Rehrmann, rehrmannl@c2es.org or 703-516-0621

About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address the challenges of energy and climate change. Learn more at www.c2es.org.

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