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
How significant a source of emissions is air travel?
Aircraft are a rapidly growing emissions source within the transportation sector, which is second only to the power sector as a source of U.S. carbon dioxide emissions. In 2013, aircraft were responsible for about 3 percent of total U.S. carbon dioxide emissions and nearly 9 percent of carbon dioxide emissions from the U.S. transportation sector. Commercial air travel accounted for most of the aircraft carbon dioxide emissions, with military and general aviation making up the rest.
From 1990 to 2013, U.S. carbon dioxide emissions from domestic commercial flights grew 4 percent. Recent studies estimate that U.S. aircraft emissions will increase substantially in the next 20 years. Moreover, airplanes remain the single largest source of carbon dioxide emissions within the U.S. transportation sector that is not yet subject to greenhouse gas regulations.
U.S. aviation is part of the increasingly interconnected global aviation sector, which makes up about 2 percent of global carbon dioxide emissions but is one of the fastest growing sources. From 1990 to 2010, global aircraft carbon dioxide emissions grew about 40 percent. If global aviation were a country, it would rank as the seventh largest carbon dioxide emitter, and U.S. aircraft emissions are 29 percent of all global aircraft emissions. Absent new policies, global aircraft emissions are projected to triple by 2050.
Figure 1: 2013 U.S. carbon dioxide emission, by sector and transportation source
The transportation sector is responsible for more than one-third of U.S. carbon dioxide emissions. Aircraft are responsible for nearly 9 percent of U.S. transportation sector carbon dioxide emissions.
Source: U.S. Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2013 (Washington, DC: U.S. Environmental Protection Agency, 2015), http://www.epa.gov/climatechange/Downloads/ghgemissions/US-GHG-Inventory-2015-Main-Text.pdf.
What is the status of regulation?
In 2012, the DC District Court ruled that the U.S. Environmental Protection Agency (EPA) is required under the Clean Air Act to determine whether greenhouse gas emissions from aircraft cause or contribute to air pollution, which may reasonably be anticipated to endanger public health or welfare. An endangerment finding would trigger regulation under the Clean Air Act.
On July 25, 2016, EPA issued the final endangerment finding under section 231(a)(2)(A) of the Clean Air Act for aviation emissions. This finalizes the process following the proposed endangerment finding issued on June 10, 2015. The final finding builds on the previous 2009 endangerment finding for light-duty vehicles and found greenhouse gas emissions from aircraft engines used in certain types of aircraft are responsible for contributing to climate change, which threatens public health and welfare.
Covered aircraft are those subject to international carbon dioxide emission standards, subsonic jet aircraft — ranging from smaller jet aircraft such as the Cessna Citation II to larger jet aircraft such as the Boeing 747 — and subsonic turboprop aircraft — e.g., Bombardier Q400. The proposed endangerment finding will receive public comment before a final endangerment finding may be issued.
How does EPA action fit with global action?
Unlike stationary sources, such as power plants, and many mobile sources, such as cars, aircraft frequently travel between jurisdictions with different environmental laws and standards. As such, the United Nations' International Civil Aviation Organization (ICAO) serves as a global forum to develop policies and standards for the global industry, including a comprehensive set of measures to address greenhouse gas emissions.
In 2010, industry’s goal of carbon neutral growth from 2020 onwards was formally adopted by ICAO. Within the sector, the key pathways to reduce emissions are improvements in aircraft technology, improvements in operations and infrastructure, and further use of aviation biofuels.
In addition, ICAO agreed at its 38th Assembly in 2013 to develop a Global Market-Based Mechanism (GMBM) that allows emission reductions occurring outside the aviation sector to be used to meet its goals. At the 39th ICAO Assembly in October 2016, ICAO formally adopted a resolution establishing the GMBM as an offsetting mechanism available to airlines to offset their growth in emissions from 2020 onwards. A Global Market Based Mechanism Task Force is currently working to establish the technical details of what types of offsets will be permittewd in the GMBM, and will conclude their work no later than 2018. ICAO adopted additional measures, including a CO2 standard that will be phased in for new aircraft design to continue improvements in energy efficiency.
Traditionally, both the EPA and the Federal Aviation Administration (FAA) have worked within the ICAO process to establish international emission standards and related requirements for other pollutants. Under this approach, international emission standards are first adopted by ICAO, and EPA subsequently initiates rulemaking under section 231 of the Clean Air Act to establish domestic standards equivalent to international standards where appropriate. Both EPA and FAA expect to take a similar approach in promulgating future domestic aircraft greenhouse gas standards for covered aircraft.
What are the next steps?
The endangerment finding does not create any regulation in of itself and does not prejudge what future EPA standards for aircraft engines will be. Nevertheless, the final endangerment finding triggers EPA’s duty under the CAA to enact emissions standards applicable to GHG emissions from the classes of aircraft engines included in the endangerment finding. EPA can then proceed with developing regulatory standards, including a CO2 standard based from the agreed standard adopted by ICAO in October 2016.
Top: Siemens 2.3 MW Offshore Wind Turbines, courtesy Siemens Press.
Bottom: The ADA-ES 1 MWe pilot unit, courtesy US Department of Energy.
This fall, America’s first offshore wind farm will come online off the coast of Rhode Island, launching a new industry with the potential to create clean energy jobs in manufacturing and in the marine trades, attract private investment to New England, and reduce carbon emissions.
New energy technologies often need both state and federal support to be deployed commercially. Rhode Island has been a leader in supporting offshore wind. In 2010, its legislature authorized a state utility to enter into an offtake agreement for offshore wind power. This year, Massachusetts did the same, and New York announced a new Offshore Wind blueprint.
Rhode Island also brought stakeholders together to create an Oceanic Special Area Management Plan outlining multiple uses for the marine environment. These efforts laid the groundwork for Deepwater Wind to develop the Block Island Wind Farm, a 30 MW, five-turbine project that can provide power for most of Block Island’s 1,051 residents.
Similar state policies could help deploy more carbon capture technology as well. A handful of states have clean energy standards that include carbon capture technology, including Illinois, Massachusetts, Michigan, Ohio and Utah. This year, Montana Gov. Steve Bullock highlighted carbon capture in his state’s Energy Future Blueprint. Other states could follow this model.
Both the Western Governors’ Association and the Southern States Energy Board have issued resolutions supporting carbon capture technology as did the National Association of Regulatory Utility Commissioners.
National policies and early financing support played a role in the success of offshore wind projects in Europe. A report by the Global Carbon Capture and Storage Institute noted that European nations included offshore wind in national energy policies and established feed-in tariffs to provide incentives for deployment.
Multilateral development banks like the European Investment Bank played a leadership role by lending to early offshore wind projects, paving the way for commercial banks to follow. Once these major factors were in place, then technology development, the establishment of standardized contract structures, and maintaining a certain level of deal flow helped drive efficiencies that brought down costs.
When it comes to financing carbon capture, use and storage (CCUS) in the U.S., we have some pieces of the puzzle in place. There is already a basic federal and state regulatory framework for underground storage of CO2, for example.
Still, financing policies are needed to enable investment in carbon capture projects. We should extend and expand commercial deployment incentives like tax credits and open up the use of master limited partnerships and private activity bonds to carbon capture, among other things.
A third lesson to draw from offshore wind is that to create new domestic industries, it helps to take a regional approach. Last year, the U.S. Department of Energy (DOE) announced funding for a multi-state effort for offshore wind in the Northeast to develop a regional supply chain.
DOE is taking a similar approach with CCUS and launched seven Regional Carbon Sequestration Partnerships to characterize CO2 storage potential in the U.S. and to conduct small and large-scale CO2 storage injection tests. Millions of tons of CO2 have already been stored for decades in West Texas as part of enhanced oil recovery operations. The regional partnerships characterized the potential for more CO2 storage in deep oil-, gas-, coal-, and saline-bearing formations as illustrated in the Carbon Storage Atlas. To date, the partnerships have safely and permanently injected more than 10 million metric tons of CO2 in these types of formations.
Investing seriously in carbon capture technology has economic benefits including for electrical workers, boilermakers, the building trades, and steelworkers. A new CO2 commodity industry could be created to reuse CO2 to make other products.
Carbon capture also has environmental benefits, helping us address emissions from industrial plants, which are the source of 21 percent of U.S. greenhouse gas emissions, and from coal and natural gas power plants, which currently supply two-thirds of U.S. electricity.
This fall, as we celebrate the beginning of the new offshore wind industry in the U.S., let’s keep thinking big about what is possible with carbon capture technology. With sufficient financial and policy support, we can create skilled jobs, attract private investment, and lower CO2 emissions.
Q&A: EPA Regulation of Greenhouse Gas Emissions from Existing Power Plants
On August 3, 2015, the U.S. Environmental Protection Agency (EPA) adopted Carbon Pollution Standards for Existing Power Plants, known as the Clean Power Plan.
Adopted pursuant to EPA’s authority under the Clean Air Act, the Clean Power Plan establishes unique emission rate goals and mass equivalents for each state. It is projected to reduce carbon emissions from the power sector 32 percent from 2005 levels by 2030. Individual state targets are based on national uniform “emission performance rate” standards (pounds of CO2 per MWh) and each state’s unique generation mix.
On February 9, 2016, the U.S. Supreme Court issued a stay of the Environmental Protection Agency’s (EPA’s) Clean Power Plan, freezing carbon pollution standards for existing power plants while the rule is under review at the U.S. Court of Appeals for the District of Columbia Circuit.
See more resources and maps at the C2ES Carbon Pollution Standards Resource Page.
Q: Why did EPA develop rules to regulate carbon dioxide?
Under the Supreme Court decision in Massachusetts v. EPA, greenhouse gases meet the definition of air pollutants under the Clean Air Act, meaning they must be regulated if they could be reasonably anticipated to endanger public health or welfare. EPA made this determination in 2009. In June 2013, President Obama directed EPA to work closely with states, power plant operators, and other stakeholders in developing carbon standards for existing power plants, and to finalize the standards by June 2015. EPA released its proposed rule in June 2014 and the final rule in August 2015.
Q: Why do we need to regulate power sector carbon emissions?
The power sector is one of the largest sources of U.S. carbon emissions, which are contributing to global climate change.
Many businesses, cities and states are cutting emissions, increasing renewable energy, and improving energy efficiency. In addition, cheap, abundant natural gas continues to displace coal (which emits twice as much carbon) in the U.S. electricity generation mix. But in the absence of the Clean Power Plan, U.S. emissions are projected to increase slightly as the economy grows, and as natural gas prices rise. Stronger policies are needed to increase energy efficiency, thereby reducing electricity consumption, and to expand the use of low- and no-carbon energy sources. In the absence of the Clean Power Plan, fossil fuels are projected to provide 62 percent of the U.S. fuel mix in 2030 compared with 58 percent under the Clean Power Plan, with most of the reduction coming from higher-emitting coal plants. Therefore, in the absence of the clean power plan, carbon dioxide emissions from the power sector are expected to increase around 2.7 percent (from 2015 levels) to 1,942 million metric tons in 2030, while under the Clean Power Plan carbon dioxide emissions would fall more than 17 percent (from 2015 levels) to 1,559 million metric tons in 2030.
Figure 1: US CO2 Emissions
Figure 2: Projected Electric Power Sector Carbon Dioxide Emissions under Business-as-Usual Scenario
Q: What is in EPA’s Clean Power Plan?
Typically, under the Clean Air Act, EPA sets standards and states implement them. The Clean Power Plan:
- Sets unique emission rates goals and mass equivalents for each state, reflecting the variation in their electricity generation mixes, to be met starting in 2022;
- Provides states significant flexibility in choosing how to meet their targets;
- Provides incentives for early deployment of renewables and efficiency measures benefiting low-income communities;
- Provides tools to assist states choosing to implement market-based approaches; and
- Contains a Federal Implementation Plan that EPA would use in states that do not accept adequate implementation plans.
EPA set interim and 2030 targets for each state based on uniform emission performance rates (application of BSER) and its unique generation mix.
Q: How was each state’s target calculated?
Uniform, national emission performance rates for affected power plants are based on the “best system of emission reduction” (BSER), using three “building blocks” or potential pathways applied regionally to reduce CO2 emissions:
- Make affected fossil fuel power plants more efficient;
- Increase generation from lower-emitting natural gas combined cycle plants; and
- Increase generation from new zero-emitting renewable power sources.
See a map of state targets for a more detailed explanation.
Q: What are the big differences between the proposed and final plans?
States will have more time to submit their implementation plans (they can get extensions to 2018) and two more years (until 2022) to begin phasing in pollution cuts. C2ES and others encouraged allowing states more time so they could take a longer view on planning and investment.
The final plan also proposes a voluntary Clean Energy Incentive Program (CEIP) to encourage early installation of renewable energy projects and energy efficiency programs for low-income communities before the 2022 compliance start date. EPA has invited comments on the CEIP and will address design and implementation details in a future action.
Market-based mechanisms are more explicitly encouraged in the final rule. The proposed federal implementation plan includes an option for states to join an interstate cap-and-trade program. It also outlines how states could participate in emissions credit trading without the creation of interstate compacts.
In calculating individual state targets, EPA had proposed taking into account each states’ energy efficiency potential, but it chose not to do so in the final rules. However, like the proposal, the final plan allows states to use energy efficiency programs for compliance.
EPA also changed its methodology for determining incremental renewable energy to better reflect regional technical potential, rather than state-level renewables policies, as in the proposal.
Unlike in the proposed plan, states with nuclear power plants under construction – Georgia, South Carolina, and Tennessee – will be able to count this generation toward compliance instead of having it factored into their targets.
The final rule also takes the interstate nature of the electric system into greater consideration. The proposal calculated state targets by applying building blocks to each state. The final rule uses the characteristics and potential of electric grid interconnections (Eastern, Western and Texas) to determine emission performance rates for units, which are then applied to each state’s unique generation mix to calculate a target.
Q: How can states reduce power sector carbon emissions?
States have wide latitude in designing their strategies to reduce emissions. In most cases, they will rely on a variety of measures. Major options include substituting natural gas for coal; improving energy efficiency; and increasing reliance on renewable energy.
States can implement the Clean Power Plan individually or in cooperation with other states. They also can employ market-based mechanisms, such as averaging or trading, to help power companies identify least-cost emission reductions.
Examples of steps to reduce carbon dioxide emissions in the power sector are illustrated in Figure 3 and Table 1.
Figure 3: Opportunities to reduce carbon dioxide emissions in the power sector
Table 1: Policy options to reduce power sector carbon dioxide emissions
|Power plant performance standard||Each power plant must achieve a set emissions intensity||California, New York, Washington|
|Renewable Portfolio Standard||Utilities must deliver a set percentage of renewable electricity||Colorado, Hawaii, Kansas, Missouri, Nevada, Rhode Island, and others|
|Energy Efficiency Resource Standard||Utilities must cut demand by a set amount by target years||Arizona, Connecticut, Maryland, Minnesota, Texas, and others|
|Decoupling||Reduce utility incentive to deliver more electricity by decoupling revenue and profit||California, Idaho, Massachusetts, Michigan, Oregon, and others|
|Net Metering||Encourage residential solar by paying homeowners to put excess electricity back on grid||Arkansas, Colorado, Georgia, Louisiana, and others|
|Cap & Trade||Issue a declining number of carbon allowances, which must be surrendered in proportion to each plant’s emissions||California, Regional Greenhouse Gas Initiative|
|Carbon Tax||Charge a tax for emitting carbon||British Columbia|
|Grid Operator Carbon Fee||Add a carbon price to grid operator decision over which power plants to run||None currently|
|Appliance Efficiency Standards||Require new appliances sold to meet set electricity consumption standards||California, Florida, New Jersey, and others|
|Commercial & Residential Building Codes||Require new buildings to include electricity saving measures||California, Illinois, Maryland, Mississippi, and others|
Q: How could states use market-based approaches to implement the plan?
Economists consider market-based approaches to be the most efficient way to reduce greenhouse gas emissions.
The Clean Power Plan encourages states to consider using market mechanisms, which could include a cap-and-trade program, a carbon tax, or tradable renewables or efficiency certificates.
EPA intends to set up and administer a program to track trading programs for states that choose to use them. In addition, the Federal Implementation Plan that EPA would employ in states without adequate plans includes market-based programs, which can be used by states as a model for their own plans.
Under EPA’s proposed new Clean Energy Incentive Program, states that act early to cut carbon pollution, either with renewables or energy efficiency, would be rewarded with emission reduction credits (ERCs), which they could use to meet their targets or sell to other emitters.
Q: How can states work together to implement the Clean Power Plan?
States have long collaborated to achieve energy and environmental goals. The successful trading program to reduce sulfur dioxide, which causes acid rain, is an example.
The plan is designed to facilitate interstate compliance strategies, including different forms of trading. The federal implementation plan outlines strategies to determine the equivalence of emission reduction credits in different states. It would also create a national platform that can be used to track the buying, selling, and trading of credits across state lines.
An example of states already working together is the Regional Greenhouse Gas Initiative in the Northeast. A multi-state approach could also be accomplished through another existing authority such as a Regional Transmission Organization (RTO) or Independent System Operator (ISO).
Q: Will states be able to use Canadian hydropower to comply?
Renewable energy from outside of the United States, including Canadian hydropower, can be used for compliance purposes, provided it is incremental and installed after 2012 and meets some other conditions. More than a dozen U.S. states already import a significant amount of Canadian hydropower. According to a C2ES report, importing hydropower from even a modestly sized new Canadian project (250 MW) could help a state bridge the gap between its current carbon emissions rate and its 2030 target.
Q: Will the Clean Power Plan affect the reliability of the electric grid?
In response to concerns raised by EPA’s proposed rule, the final plan includes a “reliability safety valve” temporarily relaxing emission standards on individual electric generating units under extraordinary circumstances where electric system reliability is concerned.
To mitigate reliability issues, states are required to address reliability in their compliance plans. Importantly, the plan gives states up to seven years before interim targets must be met, providing time for state regulators and reliability entities to work with utilities and other key stakeholders.
The plan is also expected to encourage energy efficiency, which helps lower demand growth and improve reliability.
Q: How much will implementing the plan cost?
EPA calculates that savings from increased energy efficiency will outweigh the costs of implementing the plan, reducing household electric bills by about $7 per month by 2030. The agency estimates compliance costs of $5.1 billion to $8.4 billion and total benefits of $34 billion to $54 billion.
Q: How does the plan address nuclear power?
Nuclear provides nearly 20 percent of the nation’s power and is the largest source of carbon-free baseload electricity. Five reactors are now under construction in Tennessee, Georgia and South Carolina and are expected to be online by 2030.
Unlike the proposal, the final rule does not consider existing or new nuclear power for the purposes of setting state targets. Therefore, the five reactors under construction and any new units or upgrades can count toward compliance.
Q: How is natural gas treated in the plan?
Both the proposal and the final plan envision about a third of U.S. electricity coming from natural gas in 2030. However, under the final plan, less new natural gas generation capacity is anticipated.
Natural gas demand was expected to grow more quickly under the earlier compliance date called for in the proposed rule. Proposed incentives for early deployment of renewables may encourage more investment in renewable energy in the short term.
Q: What does this plan mean for coal?
Demand for coal in the U.S. has been decreasing for many years because of the availability of relatively less expensive natural gas to meet baseload power demands and because of other environmental and safety regulations. Even before the Clean Power Plan, very few new coal plants were expected to be constructed. According to EPA’s IPM modeling of the final rule, coal is expected to make up 27 to 28 percent of the electric generation mix in 2030. In the absence of the Clean Power Plan, coal is expected to deliver a little more than 30 percent of U.S. electricity in 2030.
Figure 4: Distribution of Fossil Fuel Power Plants across the Contiguous United States
Q: What does the Supreme Court stay mean for the regulation?
The Supreme Court granted a stay in response to a legal challenge from some states, utilities and coal companies, who argued that EPA’s regulation was burdensome. Other states and utilities are participating in the legal challenge by supporting EPA. The court’s decision does not address the merits of the challenge but puts implementation of the rule on hold while a lower court decides the merits of the challenge. There’s no telling how it will play out, but the high court is likely to wind up deciding the case.
Whether or not the Court ultimately upholds this particular rule, the legal requirement to cut carbon emissions will remain, and states need to figure out the most cost-effective ways to do that. It’s important to note that a number of states challenging the rule in court are simultaneously working on their implementation plans. Some states may suspend their planning efforts but others will press on with preparations. If the plan is ultimately upheld, the implementation timeline may have to be extended.
The Environmental Protection Agency’s authority to regulate greenhouse gases is settled. The issue is whether EPA’s particular approach is appropriate.
Regardless of the ultimate legal outcome, the broader trends at play favor continued momentum toward stronger climate action.
Q: What is the timetable for implementing the plan?
Before the stay was issued, states had until September 2016 to either submit a plan or request an extension. All final plans were due by September 2018. EPA would approve or disapprove a final plan within a year.
The Clean Energy Incentive Program was to begin on January 1, 2020. States that had expressed their interest in participating in this program in their final plans were eligible. This program was to run throughout 2020 and 2021.
On January 1, 2022, states were to begin complying by meeting their interim targets. On January 30, 2030, states must meet their final CO2 reduction goals.
During the period of the stay, no deadlines are binding, and they may be extended when the legal challenge is resolved.
Q: What happens to states that fail to comply?
States were given up to three years to write implementation plans, applying their knowledge of their utilities and the programs that have worked in the past.
Under the Clean Air Act, any state that would fail to submit a plan or get EPA approval for its plan would be subject to a federal implementation plan. The current proposals for the federal implementation plan would use flexible, market-based solutions for compliance.
September 14, 2016
Contact: Laura Rehrmann, email@example.com, 703-516-0621
Analysis: Clean Power Plan will reduce emissions at minimal cost to consumers
WASHINGTON – The Clean Power Plan will drive down power sector emissions at little to no cost to consumers, according to a Center for Climate and Energy Solutions analysis of recent modeling studies.
C2ES examined five recent economic modeling studies that project the likely impacts of the Clean Power Plan on carbon emissions, the U.S. power mix, and electricity prices.
Among the key insights:
- The Clean Power Plan reduces total power sector emissions compared to business-as-usual scenarios in every study.
Market forces alone, such as lower costs for renewables and natural gas-fired generation, do not achieve the same reductions, even with federal tax credit extensions for wind and solar. On average, the scenarios project total emissions in 2030 under the Clean Power Plan will be 18 percent lower than what they’d be under a business-as-usual scenario.
- Renewables increase and coal decreases compared to business-as-usual generation levels across all five studies.
In each study, power sector emissions decline under the Clean Power Plan because of changes in the electricity generation mix, including an increase in renewables and a decrease in coal. The models are less consistent on the impact on natural gas and nuclear generation, though they suggest that these technologies will benefit from Clean Power Plan implementation. In all studies, the diversity of power generation is maintained.
- The Clean Power Plan will have minimal impact on U.S. national average retail electricity rates.
Two of the five studies examined the likely impact on rates. In most scenarios, rate changes range from a 2 percent decrease to a 5 percent increase, depending on how the Clean Power Plan is implemented in each state. A 5 percent increase translates to $4.65 per month, or about 15 cents a day, for the average household.
“Our energy mix is diversifying, which benefits the environment and the economy, and the Clean Power Plan can accelerate this trend,” said C2ES President Bob Perciasepe. “Even as the Clean Power Plan makes its way through the courts, many states are considering ways to implement it. They see this as an opportunity, not a threat – a chance to modernize their economies and energy infrastructure.”
The models were released this spring and summer by MJ Bradley & Associates, the U.S. Energy Information Administration, Bipartisan Policy Center, Center for Strategic and International Studies and Rhodium Group, and the Nicholas Institute for Environmental Policy Solutions. They take into account the extension by Congress of solar investment and wind production tax credits and the latest projections for natural gas prices.
Read the C2ES brief: Insights from a Comparative Analysis of Clean Power Plan Modeling
About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonpartisan, nonprofit organization working to forge practical solutions to climate change. Our mission is to advance strong policy and action to reduce greenhouse gas emissions, promote clean energy, and strengthen resilience to climate impacts. Learn more at www.c2es.org.
Insights from a Comparative Analysis
By Charles Fiertz and Ashley Lawson
An updated context, including falling natural gas prices and the extension of federal tax credits, have prompted new modeling of the likely impacts of the Clean Power Plan. Five studies have recently been released analyzing the projected effects of the Clean Power Plan on outcomes including carbon dioxide emissions, the electricity generation mix, and electricity prices. These studies have also examined the probable impacts of different policy choices available to states in implementing the Clean Power Plan. This brief undertakes a comparative analysis of these studies, identifying results that are common across multiple studies and summarizing a few additional analyses of specific policy decisions.
In the year since the Clean Power Plan was finalized, natural gas prices have dropped and federal tax incentives for renewables have been extended. Both developments make it cheaper to generate lower- emitting electricity.
C2ES compared five economic modeling studies released this spring and summer to get an updated look at the Clean Power Plan’s expected impact on carbon emissions, the U.S. power mix, and electricity prices. Each study included several scenarios and made slightly different assumptions, so we focused on observations found in multiple studies. Three key findings were:
1. The Clean Power Plan reduces total power sector emissions compared to business-as-usual scenarios in every study.
Market forces alone, such as lower costs for renewables and natural gas-fired generation, do not achieve the same reductions, even with federal tax credit extensions for wind and solar. On average, the scenarios project total emissions in 2030 will be 18 percent lower with the Clean Power Plan than what they’d be in a business-as-usual scenario.
2. Renewable energy increases and coal decreases compared to business-as-usual generation levels across all five studies.
In each study, power sector emissions decline under the Clean Power Plan because of changes in the electricity generation mix. The models are clear that the Clean Power Plan will cause an increase in renewables and a decrease in coal. The models are less clear on the impact the rule will have on natural gas and nuclear generation, though they suggest that these technologies will benefit from Clean Power Plan implementation. In all studies, the diversity of power generation is maintained.
3. The Clean Power Plan will have minimal impact on U.S. national average retail electricity rates.
Two of the five studies examined the plan’s likely impact on rates. In most scenarios, rate changes range from a 2 percent decrease to a 5 percent increase, depending on how the Clean Power Plan is implemented in each state. A 5 percent increase translates to $4.65 per month, or about 15 cents a day, for the average household.
|The chart shows the projected CO2 emissions in 2030 from the studies we examined for three scenarios: business as usual (BAU), mass-based Clean Power Plan implementation, and rate-based Clean Power Plan implementation. One studied modeled a mixed, or “patchwork” implementation scenario. The five studies are: MJ Bradley & Associates (MJB), U.S. Energy Information Administration (EIA), Bipartisan Policy Center (BPC), Center for Strategic and International Studies partnering with Rhodium Group (CSIS/Rhg), and the Nicholas Institute for Environmental Policy Solutions, Duke University.|
Another key finding is that cumulative carbon dioxide emissions are very similar under rate-based and mass-based compliance plans (See Figure 1). In other words, the choice of implementation approach doesn’t seem to affect the overall reductions — at least, not when every state makes the same choice.
The Clean Power Plan gives each state an emissions target and leaves it up to the state to determine the best path forward. This gives states maximum choice, even though it could lead to fewer reductions than a comprehensive national approach.
Many states are weighing whether to use a mass-based approach, similar to what California and the nine Northeast states in the Regional Greenhouse Gas Initiative use that limits the total amount of carbon emissions, or a rate-based approach that limits emissions per unit of electricity produced.
What’s clear from the models is that if states choose to go different directions, a patchwork of mass- and rate-based implementation, emissions are likely higher than if they all choose a similar path.
From these studies, we can be confident the Clean Power Plan will reduce power sector emissions compared with business as usual. Now it’s up to states to choose how they will implement the plan to best serve the needs of consumers and reduce the emissions that are causing damaging and costly climate impacts to our communities.
Achieving the United States' Intended Nationally Determined Contribution
Last updated: September 2016
More than 180 nations representing more than 95 percent of global greenhouse gas emissions offered “intended nationally determined contributions” (INDCs) to the Paris Agreement reached in December 2015. The United States’ INDC is an economy-wide target to reduce net greenhouse gas emissions 26 to 28 percent below 2005 levels by 2025. Available analyses suggest that the United States could reduce emissions by more than 22 percent with policies either already in place or soon anticipated. Options for achieving further reductions to meet the 2025 target may include additional policies, technological advances, and stronger action by cities and companies. Concerted efforts across multiple fronts could reasonably produce the reductions needed to meet the goal. Specifically, this paper looks at the progress that has been achieved since 2005, the effect existing and proposed policies will have by 2025 as well plausible steps to fill the gap.
The transportation sector is one of the largest sources of U.S. carbon dioxide emissions. Cars and light-duty trucks are responsible for 60 percent of transportation emissions. Medium- and heavy-duty vehicles, which include tractor-trailers, large pickups and vans, delivery trucks, buses, and garbage trucks, produce 23 percent of transportation emissions.
The federal government has regulated the fuel economy of cars and light-duty trucks for decades, with the latest rules in 2012 dramatically increasing fuel economy and decreasing greenhouse gas emissions. A 2010 rule raised the average fuel economy of new passenger vehicles to 34.1 miles per gallon (mpg) for model year 2016, a nearly 15 percent increase from 2011. A second rule, finalized in 2012, will raise average fuel economy to up to 54.5 mpg for model year 2025, for a combined increase of more than 90 percent over 2011 levels. The standards also will reduce the carbon intensity of these vehicles by 40 percent from 2012 to 2025.
The standards were adopted by the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) with the cooperation of major automakers and the state of California. Together, the standards represent the largest step taken by the federal government directed at climate change.
Other benefits include improving U.S. energy security and saving drivers money. The car rule for model years 2017 to 2025 is projected to cut annual U.S. oil imports by an additional 6 percent by 2025 from what would happen otherwise, or 400,000 barrels per day. When combined with the rule for model years 2012 to 2016, U.S. oil imports are expected to decline by more than 2 million barrels per day by 2025, equivalent to one-half of the oil the U.S. imports from OPEC countries each day, according to EPA.
Higher vehicle costs for fuel efficiency improvements will be far outweighed by fuel savings, with the average driver saving about $8,000 net over the lifetime of a model year 2025 car compared to a model year 2010 car.
Fuel economy and greenhouse gas standards were first established for medium- and heavy-duty vehicles in 2011. These standards are projected to save a combined $50 billion in fuel costs, 530 million barrels of oil, and 270 million metric tons of carbon emissions over the lifetime of vehicles for model years 2014 to 2018. EPA and the Department of Transportation proposed new rules in June 2015 for model years after 2018.
Figure 1: 2013 U.S. carbon dioxide emission, by sector and transportation source
The transportation sector is responsible for more than one-third of U.S. carbon dioxide emissions. Light-duty vehicles account for almost two-thirds of transportation sector emissions; medium- and heavy-duty vehicles account for almost a quarter.
Source: U.S. Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2013 (Washington, DC: U.S. Environmental Protection Agency, 2015), http://www.epa.gov/climatechange/Downloads/ghgemissions/US-GHG-Inventory-2015-Main-Text.pdf.
The federal government has regulated fuel economy through standards for cars and light-duty trucks for decades. The 1973 Arab oil embargo prompted Congress to pass legislation in 1975 that introduced Corporate Average Fuel Economy (CAFE) standards for new passenger vehicles only. The purpose was to improve the fuel economy of the passenger vehicle fleet to reduce oil imports.
NHTSA, an agency within the U.S. Department of Transportation (DOT), administered the original CAFE program while EPA was responsible for establishing the testing and evaluation protocol for assessing compliance and calculating the fuel economy for each manufacturer. These responsibilities are the same today.
CAFE is the sales-weighted average fuel economy (in mpg) of the passenger cars or light-duty trucks for a manufacturer's fleet. See Calculating Light-Duty Vehicle CAFE Then and Now below for details of how EPA determines compliance. NHTSA fines manufacturers that are out of compliance. NHTSA has so far collected almost $819 million in fines over the life of the CAFE program.
Since 1975, a number of changes have been made to the standards. Figure 1 provides an annotated history of the U.S. CAFE standards. A number of other countries have also instituted fuel economy standards, with most establishing more aggressive targets than the United States. See here for more details.
FIGURE 1: Fuel economy standard for passenger vehicles from MY1978-2025.
1. 1978-1985: Congress sets car standard (1978-1985)
6. Bush Admin issues new truck targets (2005-2007)
Under the federal Clean Air Act, California is the only state with the ability to set air emission standards for motor vehicles, as long as these standards are as stringent as the federal standards and the state receives a waiver from EPA. Once California receives an EPA waiver, other states can adopt California's standards.
In 2002, California enacted the Clean Cars Law (AB 1493) to set vehicle emissions standards for greenhouse gases. In April 2007, the Supreme Court ruled that EPA has the authority to regulate greenhouse gas emissions from the transportation sector under the Clean Air Act. In December 2007, a judge threw out a lawsuit by automakers attempting to block California from implementing AB 1493. The intersection of fuel economy standards and greenhouse gas emission standards was beginning to become clear (see here for more on California vehicle standards).
Back in December 2005, California had applied for an EPA waiver to implement its greenhouse gas standards. In March 2008, EPA denied California's waiver request. Upon taking office in January 2009, President Barack Obama ordered EPA to reconsider that denial.
In June 2009, EPA granted a waiver allowing California to regulate greenhouse gas emissions from vehicles within the state beginning with model year 2009. On September 15, 2009, EPA and NHTSA issued a joint proposal to establish new vehicle standards for fuel economy and greenhouse gas emissions for model years 2012 to 2016, which were finalized on April 1, 2010. The joint proposal reflected an agreement among EPA, NHTSA, California, and most major automakers. California promptly agreed to adopt the federal standards in lieu of its own separate standard; and did so again with the latest standards covering model years 2017 to 2025.
The latest passenger vehicle standards, finalized in August 2012, cover passenger cars, light-duty trucks, and medium-duty passenger vehicles, from model year 2017 to 2025. The standards build off those set in April 2010 for model years 2012 to 2016. The standards are based on the vehicle's footprint, which is a measure of vehicle size (see Calculating Light-Duty Vehicle CAFE Then and Now).
Because NHTSA cannot set standards beyond model year 2021 due to statutory obligations and because of the rules' long time frame, a mid-term evaluation is included in the rule. Thus, standards for model years 2022 through 2025 are considered "augural" by NHTSA. The comprehensive evaluation by both EPA and NHTSA will allow for any compliance changes if necessary for the later years covered by the rule.
As seen in Table 1, the greenhouse gas standard from EPA requires vehicles to meet a target of 163 grams of carbon dioxide equivalent (CO2e) per mile in model year 2025, equivalent to 54.5 mpg if the automotive industry meets the target through only fuel economy improvements.
TABLE 1: Projected Emissions Targets under the Greenhouse Gas Standards (g CO2e/mi)
Combined Cars & Light Trucks
Combined Cars & Light Trucks
As seen in Table 2, the fuel economy standard from NHTSA requires vehicles to meet an estimated combined average of up to 48.7 mpg in 2025. This estimate is lower than the mpg-equivalent of the EPA target for 2025 mentioned above (54.5 mpg) , because it assumes that manufacturers will take advantage of flexibility available under the law designed to reduce the cost of compliance. See Light-Duty Vehicle Program Flexibilities for more information.
TABLE 2: Projected Fuel Economy Standard (mpg).
Combined Cars & Trucks
Combined Cars & Trucks
This table is based on CAFE certification data from model year 2010, a car-truck sales split from the Energy Information Administration's Annual Energy Outlook for 2012, and future sales forecasts by JD Powers.
Medium- and heavy-duty trucks make up only 5 percent of vehicles on the road but account for about a fifth of U.S transportation emissions. This category includes tractor-trailers, large pickups and vans, delivery trucks, buses, and garbage trucks.
The earlier standards, for model years 2014 to 2018, are cumulatively projected to save a combined $50 billion in fuel costs, 530 million barrels of oil, and 270 million metric tons of carbon emissions over the lifetime of the heavy-duty vehicles.
EPA estimates the new phase 2 standards for model years 2021-2027 will cut greenhouse gas emissions 25 percent from the final Phase 1 emissions standards, reducing greenhouse gas emissions by about 1.1 billion metric tons. EPA estimates the rules will also reduce oil consumption by nearly 2 billion barrels, and lower fuel expenditures by $170 billion over the life of vehicles sold under this standard.
In model year 2027, the buyer of a new vehicle would recoup the extra cost of technology used to achieve the standard within:
• 2 years for tractor/trailer combos
• 3 years for pick-ups and vans
• 4 years for vocational vehicles
EPA’s proposed Phase 2 standards would be phased in from model years 2021 to 2027, though proposed standards for some categories of box trailers begin in model year 2018. All proposed CO2 and petroleum use reductions are relative to the final Phase 1 standards, which are being implemented through 2017, with the exception of trailers, which had not previously been regulated. Notably, Phase 2 standards use different methodologies and test procedures, and should not be construed as directly comparable to Phase 1 standards. Trailer emissions can be reduced with the following technologies:
• Aerodynamic Technologies (different standards apply to Box and Non-Box Trailers)
• Tire Rolling Resistance
• Tire Pressure Systems
• Weight Reduction
Table 3 defines the breakdown for medium- and heavy-duty vehicles by weight.
TABLE 3: Vehicle class breakdown for medium- and heavy-duty vehicles
Gross Vehicle Weight Rating (lb)
8,501 – 10,000
10,001 – 14,000
14,001 – 16,000
16,001 – 19,500
19,501 – 26,000
26,001 – 33,000
The proposed standards described below represent Alternative 3 of the proposed standards, which would take effect in 2021 and would provide a full 10 years of lead time. Standards are divided into four segments.
- Combination Tractors, which are responsible for almost two-thirds of fuel consumption from medium- and heavy-duty trucks, would achieve a 24 percent reduction in fuel consumption by model year 2027.
- Trailers Pulled by Combination Tractors, which were not included under Phase 1 standards, would achieve a 9 percent reduction in fuel consumption by model year 2027.
- Heavy-Duty Pickup Trucks and Vans would have to improve fuel economy by 16 percent by model year 2027. The standards rely on a "work" factor, which considers the vehicle's cargo capacity, towing capabilities, and whether it has 4-wheel drive. Similar to the light-duty standards, the standards are based on the manufacturer's sales mix.
- Vocational Vehicles (delivery trucks, buses, garbage trucks) would achieve a 24 percent reduction in fuel consumption by model year 2027.
TABLE 4: Fuel Consumption Standards for Tractor-Trailers for Phase 1, Model Years 2014-2018
2014–2016 Model Year Gallons of Fuel per 1,000 Ton-Mile
2017 Model Year and Later Gallons of Fuel per 1,000 Ton-Mile
TABLE 5: Fuel Consumption Standards for Combination Tractors for Phase 2, Model Years 2021-2027
2021 Model Year Gallons of Fuel per 1,000 Ton-Mile
2024 Model Year Gallons of Fuel per 1,000 Ton-Mile
2027 Model Year Gallons of Fuel per 1,000 Ton-Mile
TABLE 6: Fuel Consumption Standards for Vocational Vehicles for Phase 1, Model Years 2014-2018
Light Heavy-Duty Class 2b-5
Medium Heavy-Duty Class 6-7
Heavy Heavy-Duty Class 8
Fuel Consumption Mandatory Standards (gallons per 1,000 ton-miles) Effective for Model Years 2017 and later
Fuel Consumption Standard
Effective for Model Years 2016
Fuel Consumption Standard
Fuel Consumption Voluntary Standards (gallons per 1,000 ton-miles) Effective for Model Years 2013 to 2015
Fuel Consumption Standard
TABLE 7: Fuel Consumption Standards for Vocational Vehicles, for Phase 2, Model Years 2021-2027
Light Heavy-Duty Class 2b-5 (CI/SI)
Medium Heavy-Duty Class 6-7 (CI/SI)
Heavy Heavy-Duty Class 8 (CI)
Fuel Consumption Standards (gallons per 1,000 ton-miles) for Model Year 2021
29.1 / 36
18.5 / 22.8
19.4 / 24.1
30 / 37
18.7 / 23.1
19.6 / 24.3
31.2 / 38.6
18.3 / 22.6
18.6 / 23
Fuel Consumption Standards (gallons per 1,000 ton-miles) for Model Year 2021
27.9 / 35.1
17.6 / 22.2
18.7 / 12.4
28.7 / 36.1
17.8 / 22.4
18.9 / 23.6
29.9 / 37.6
17.5 / 22.1
17.9 / 22.4
Fuel Consumption Standards (gallons per 1,000 ton-miles) for Model Year 2027
26.7 / 33.6
16.9 / 21.3
17.9 / 22.1
27.5 / 34.7
17.1 / 21.5
18 / 22.3
28.7 / 36.1
16.7 / 21
17.1 / 21.2
NHTSA and EPA designed the standards based on the kind of work the vehicles undertake. Heavy-duty pickup trucks and vans must meet a standard specified similarly to passenger vehicles, gallons of fuel per mile and grams of CO2e per mile. The other two categories must meet a standard based on the amount of weight being hauled (fuel consumed or grams of CO2e emitted per ton of freight hauled a defined distance). Vocational vehicles are separated by two classes of engine: Compression-Ignition (CI) and Small-Spark Ignition (SI).
U.S. fuel economy and greenhouse gas standards exist because individual drivers tend to value savings from fuel economy much less than society as a whole, which leads to more oil consumption than would occur if societal benefits were taken into account. The benefits to society of higher fuel economy include, but are not limited to, reduced impacts on global climate, improved energy security, and overall consumer savings. But those benefits are not top of mind when a consumer buys a car.
In addition, when making purchasing decisions, most people assume a dollar today is worth more than a dollar in the future since the dollar today can be invested and grow in value over time. The value people assign to a dollar in the future compared to a dollar today is known as the discount rate, or the interest rate they would expect on a dollar invested today. For example, a discount rate of 20 percent means consumers assume they will make 20 percent interest annually on money invested today, which is unlikely. Thus, the higher the discount rate a consumer uses, the more likely a consumer is to invest that money instead of spending it on a product.
David Greene from Oak Ridge National Laboratory found that the value consumers place on fuel economy savings for cars varies widely, but empirical research reveals a discount rate between 4 and 40 percent. The discount rate that society puts on fuel savings is much closer to 4 percent, meaning consumers often substantially undervalue fuel economy.
Each automaker's fleet-wide average fuel economy consists of three potential fleets: domestic passenger cars, imported passenger cars, and light-duty trucks. (The split between domestic and imported cars exists to support domestic automobile production.) With its focus on fuel efficiency, the standard must capture the fuel economy of each vehicle traveling the same number of miles. The harmonic mean of the fleet accomplishes this task (versus the simpler arithmetic mean). That is, instead of dividing the sum of the fuel economy rates in mpg for each vehicle by the total number of vehicles (the arithmetic mean), the reciprocal of the arithmetic mean is used as follows:
Where Production is the number of vehicles produced for sale for each model and TARGET is the fuel economy target for the vehicle.
Before 2008, the target fuel economy was the same for all vehicles. In 2008, NHTSA changed the target to a bottom-up one based on attributes of each vehicle instead of a top-down uniform target across an entire automaker's fleet. The vehicle footprint target for light-duty trucks through model year 2016 and for automobiles through model year 2025 is determined as follows:
where FOOTPRINT is the product of the vehicle's wheelbase and average track width in square feet, a and b are high and low fuel economy targets that increase from 2012 to 2025 and are constant for all vehicles, and c and d are adjustment factors. Parameter c is measured in gallons per mile per foot-squared, and parameter d is measured in gallons per mile.
For light-duty trucks beginning in model year 2017, an additional variation of the TARGET calculation is considered. This additional variation establishes a "floor" term, which prevents any footprint target from declining between model years. The definitions of parameters a, b, c, and d correspond to e, f, g, h, accordingly. However, the values of these parameters are different.
The idea behind an attribute-based standard is that the level of difficulty of meeting the standards is the same for smaller and larger vehicles. A uniform standard, on the other hand, is easier to meet for smaller vehicles (i.e., those with a smaller footprint) than for larger vehicles.
The EPA and NHTSA programs have a number of features to make compliance for manufacturers more cost-effective, while also encouraging technological innovation like plug-in electric vehicles. Since there are two programs to comply with, the details of both programs are stipulated below.
- Credit Trading System: Both programs include a credit system allowing manufacturers to carry efficiency and greenhouse gas credits forward by up to five years and backward up to three years to achieve compliance and avoid fines. Manufacturers can also transfer credits between cars and trucks of their fleet and trade credits with other manufacturers. Additionally, CO2 credits generated for EPA compliance from model year 2010 to 2016 can be carried forward as far as model year 2021.
- Air Conditioning Improvements: Both programs allow manufacturers to use air conditioning (A/C) system efficiency improvements toward compliance. For the NHTSA program, credits will depend on fuel consumption reductions. The EPA program allows credits for reductions in fuel use and refrigerant leakage, as well as the use of alternative refrigerants with lower global warming potential.
- Off-Cycle Credits: Current test procedures do not capture all fuel efficiency and greenhouse gas improvements available. Technologies that qualify for additional credit might include solar panels on hybrid vehicles, active aerodynamics, or adaptive cruise control. In addition, manufacturers can apply for credit for newer technologies not yet considered if they can provide sufficient data to EPA.
- Zero Emission, Plug-in Hybrid, and Compressed Natural Gas Vehicle Incentives: To encourage plug-in electric vehicles, fuel cell vehicles, and compressed natural gas (CNG) vehicles, EPA has included a credit multiplier in the rule for model years 2017 to 2021. In the compliance calculation for GHG Emissions, all-electric and fuel cell vehicles count as two vehicles beginning with model year 2017 and phasing down to 1.7 by model year 2021. Plug-in hybrid electric vehicles begin with a multiplier of 1.6 in model year 2017 and phase down to a value of 1.3 by model year 2021. Electric and fuel cell vehicles sold during this period will count as emitting 0 grams of CO2e per mile. There is no multiplier for model years 2021 to 2025 and EPA limits the zero-grams credit based on vehicle sales during this period. The cap for model years 2021 to 2025 is 600,000 for companies that sell 300,000 of these vehicles from model year 2019 to 2021 and at 200,000 otherwise. Beyond that number, manufacturers of electric and fuel cell vehicles will need to account for their upstream emissions (i.e., electricity generation or hydrogen production) using accounting methodologies defined in the rule.
EPA has also included credit multipliers for CNG equivalent to plug-in hybrid electric vehicles: 1.6 in model year 2017 and a phase down to 1.3 by model year 2021. Unlike electric and fuel cell vehicles, GHG emissions from CNG vehicles will be measured by EPA.
In contrast, NHTSA does not believe it has the legal authority to offer credit multipliers. Existing legal authority does allow NHTSA to incentivize alternative fuels, like natural gas, however, by dividing vehicle fuel economy by 0.15; in other words, an electric, fuel cell, or CNG vehicle that has a fuel economy of 15 mpg-equivalent will be treated as a 100 mpg-equivalent vehicle.
- Truck Hybridization: Both programs offer incentives to add battery-electric hybrid support to full-size trucks. Mild hybrid pickup trucks (15-65 percent of braking energy is recaptured) would be eligible for a per vehicle credit of 10 grams of CO2e per mile during model years 2017 to 2025 so long as the technology is incorporated into 20 percent or more of the company's model year 2017 full-size pickup production, ramping up to at least 80 percent by model year 2021. Strong hybrid pickup trucks (at least 65 percent of braking energy is recaptured) would be eligible for a credit of 20 grams of CO2e per mile per vehicle during model years 2017 to 2025 as long as the technology is used in at least 10 percent of the company's full-size pickup trucks.
- Transportation Sector Emissions Overview
- Comparison of Actual and Projected Fuel Economy for New Passenger Vehicles
- EPA Office of Transportation and Air Quality Regulations and Standards
- NHTSA CAFE Program
- Greene, D. (2010, February 9-10). Why the Market for New Passenger Cars Generally Undervalues Fuel Economy. Retrieved August 5, 2011, from International Transport Forum.
Statement of Bob Perciasepe
President, Center for Climate and Energy Solutions
August 16, 2016
On the U.S. Environmental Protection Agency and U.S. Department of Transportation finalizing new standards to reduce carbon emissions from tractor-trailers and other long-haul trucks:
The new standards announced today will ensure that America’s trucks keep pace with our cars in the race to cut fuel use and carbon emissions.
Transportation is now the largest source of greenhouse gas emissions in the United States, with a fifth of that coming from medium- and heavy-duty vehicles. Trucks meeting the new standards will consume nearly 2 billion fewer barrels of oil, saving $170 billion in fuel costs and cutting carbon emissions by a billion tons.
As the U.S. power sector continues to rely less on fossil fuels, it’s critical that we make stronger progress on transportation emissions to help meet the goal the United States pledged in the Paris Agreement.
Tighter standards are already reducing emissions from new cars and SUVs. Today’s action for trucks and trailers ensures that the latest fuel-saving technology will help efficiently power the next generation of American trucks.
To speak to a C2ES expert, contact Laura Rehrmann at firstname.lastname@example.org
About C2ES: The Center for Climate and Energy Solutions is an independent, nonpartisan, nonprofit organization advancing strong policy and action to address climate change. Learn more at www.c2es.org.
A year after the Clean Power Plan was finalized, on August 3, 2015, it is already having a tangible impact on how states are thinking about carbon emissions from power plants - and even other sources - and are working to confront the climate challenge.
Before the Supreme Court temporarily halted the plan in February, most states had launched the required public stakeholder outreach.
As we’ve learned from our engagement with states through the C2ES Solutions Forum, even after the stay, many of those conversations have continued, and they’ll affect how states approach climate change regardless of the outcome of the Clean Power Plan’s judicial review.
A few states, like West Virginia, have stopped all Clean Power Plan conversations. Others, like Washington and California, are moving forward to reduce emissions beyond what the Clean Power Plan would require.
The vast majority, including states as diverse as Virginia and Wyoming, fall somewhere in the middle – thinking about, discussing, or working on potential implementation options.
Many states, like South Carolina, are talking about cleaner power because of the forces already affecting the sector today. Consider:
- Between 2005 and 2015, U.S. power sector emissions fell 20 percent as a result of a shift from coal to natural gas, increased renewable energy, and level electricity demand.
- Last year, nearly two-thirds of new electric capacity added to the grid was renewables.
- Some states are grappling with how to help the No. 1 source of zero-emission power, nuclear, remain competitive in a changing marketplace.
- Utility regulators are trying to determine how to integrate rooftop solar panels, which are surging in popularity, into the system.
For most programs under the Clean Air Act, the Environmental Protection Agency (EPA) sets emission targets, and the states determine how to reach them. The Clean Power Plan is no different. But as states began thinking through how to develop an implementation plan, they found themselves having new and different conversations with new and different colleagues.
For some state environmental officials, Clean Power Plan outreach was the first time they had spoken with their public utility regulators about electric reliability and with other stakeholders about the effects of electricity rates and energy efficiency programs on low-income communities.
State energy offices, city governments, state legislatures, utilities, clean power providers, and energy users of all kinds have been brought into the discussions, deepening relationships and broadening understanding. For example, Arizona started a robust public input process, including everyone from utilities to civic groups, that is continuing after the stay with three more meetings in 2016.
The energy sector is changing rapidly, and the Clean Air Act requires action to bend the curve toward even lower emissions. These stakeholders will have to work together to reduce greenhouse gas emissions in a meaningful and economically efficient way, and these new relationships will help make that happen.
The Clean Power Plan also prompted some states to examine potential implementation pathways. They often found they could reduce emissions with less expense and policy push than they had assumed. Most modeling efforts (see the Rhodium Group, MJ Bradley and Associates, and the Bipartisan Policy Center) have found even lower compliance costs when regional or national cooperation (e.g. interstate trading) is factored in, with some costs approaching zero.
States have also been learning from one another. Over the past 18 months, C2ES has helped convene stakeholders in conversations across the country to look at common themes and examine how market-based strategies can help states create plans that businesses can support and cities can help implement.
Through the Clean Power Plan process, business leaders and state and city officials across the country have learned about the opportunities and challenges of reducing greenhouse gas emissions.
Continuing to analyze options, do modeling and conduct stakeholder outreach, even if it falls short of writing a state plan, will have tremendous value as states consider their energy futures and when judicial review of the Clean Power Plan is complete. Evolving toward a cleaner energy system has both environmental and economic benefits, so we encourage states to continue exploring pragmatic, common-sense approaches to reach that goal.