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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
 

EPA Regulation of Greenhouse Gas Emissions from New Power Plants

This page discusses EPA's proposed standards for new power plants issued on Sept. 30, 2013. For a discussion of the standards for existing power plants, released on June 2, 2014, click here.

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The U.S. Environmental Protection Agency (EPA) released a new proposal to limit greenhouse gas emissions from new power plants on September 20, 2013. The proposed “Carbon Pollution Standard for New Power Plants” replaces an earlier proposal released by EPA in March 2012. It would establish New Source Performance Standards (NSPS) under the Clean Air Act to limit emissions of carbon dioxide (CO2) from coal- and natural gas-fired power plants. C2ES submitted public comments in response to this proposed rule, which can be found here. Under a June 2013 directive from President Obama, EPA is also developing a proposal to limit carbon emissions from existing power plants.

Why is regulation of greenhouse gas emissions from power plants important?

Electric power generation is responsible for about 40 percent of U.S. emissions of carbon dioxide, the primary greenhouse gas.

Figure 1: 2012 U.S. CO2 Emissions

Source: Energy Information Administration

Since the federal government adopted new vehicle standards in August 2012 to reduce transportation-related emissions, the power sector represents the next opportunity to achieve significant carbon reductions.

Coal and natural gas are used to fuel over two-thirds of U.S. electricity generation, and are responsible for nearly 100 percent of power sector CO2 emissions. As shown in Figure 2, the United States currently obtains 30 percent of its electricity from natural gas. Since 2000, however, natural gas has accounted for over 90 percent of new fossil generation capacity, and most new generation planned for the next few years will be fueled by natural gas.

There are two new U.S. coal plants currently under construction: Southern Company’s Kemper Plant, which will employ carbon capture and storage (CCS) and a combined heat and power (CHP) plant that would likely not be subject to the proposed EPA standard.

Figure 2: 2012 U.S. Electricity Generation

Source: Energy Information Administration

Figure 3: Proposed U.S. Fossil Generation Capacity

Source: Energy Information Administration

How would the standards work?

New Source Performance Standards set limits on emissions based on EPA’s assessment of available technologies. As with many other Clean Air Act programs, EPA establishes a standard for a given category of facility, which state environmental agencies then translate into requirements for individual facilities.

EPA’s proposed "Carbon Pollution Standard for New Power Plants" was developed under Section 111(b) of the Clean Air Act. Section 111(b) calls for a standard that "reflects the degree of emissions limitation achievable through the application of the best system of emissions reduction which (taking into account the cost of achieving such reduction and any non-air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated." The emissions limit must take the form of a standard – in the case of power plants, maximum allowable CO2 emissions per unit of electricity – and may not prescribe a particular technology.

The Act ostensibly requires EPA to review the technological options available and, if appropriate, establish a new standard every eight years. In practice, standards have typically remained unexamined and unchanged for much longer than eight years, often because of resource constraints at EPA.

What does the standard require?

The proposed rules would set separate standards for power plants fueled by natural gas and coal. New, large plants (roughly 100 MW or larger) fueled by natural gas could emit no more than 1,000 pounds of carbon dioxide per megawatt-hour (MWh) of electricity produced, which is achievable with the latest combined cycle technology. Smaller natural gas plants, which tend to be less efficient and operate less frequently, would have to achieve a less stringent rate of 1,100 lbs CO2/MWh. Coal plants would have two compliance options, either of which would require the use of CCS technology. Under one option, coal plants would have to begin using CCS soon after startup to achieve a 12-month average emission rate of 1,100 lbs CO2/MWh. Alternatively, coal plants could begin using CCS within seven years of startup to achieve a seven-year average emission rate of between 1,000 and 1,050 lbs CO2/MWh, with EPA inviting comment as to the final standard within that range. CCS is in use at a commercial-scale power plant in Saskatchewan, Canada, and will be employed at two commercial-scale power projects under construction in Kemper County, Mississippi and in Thompsons, Texas. CCS technology is also in place in several industrial facilities, some of which generate as much carbon dioxide as a commercial-scale power plant.

A handful of states already have greenhouse gas limits in place for electricity generation. California, Oregon, and Washington all have limits of 1,100 lbs CO2/MWh. New York has a stricter limit of 925 lbs CO2/MWh. If finalized, EPA’s proposed standard would supersede the standards in California, Oregon, and Washington, while New York would be able to maintain its stricter standard since the Clean Air Act allows states to go beyond the federal standard.

What are the costs associated with the proposed standards?

EPA expects this standard to have negligible costs through 2022 (the intended time horizon of the standard), since very few new coal plants are planned, even without the proposed standard, and since developers of new natural gas plants should see minimal, if any, additional costs.

If a developer chooses to build a new coal plant, the proposed standards could add considerable costs to the project because it will have to employ CCS technology. Since CCS technology is so new, especially for power plant applications, its costs are still high. However, as with any new technology, costs will come down as developers gain experience and new innovations are made.

What effect is this proposal expected to have on carbon dioxide emissions?

In the near future, the proposed standard is expected to have very little impact on emissions because so few new coal plants would likely be built even without the standard. Nearly all new fossil-fuel power plants in the planning stages will be fueled by natural gas, using generation technology that should be able to comply with EPA’s proposed standards without any alterations. Power plant developers already have strong incentive to use the most efficient technology to maximize the amount of electricity that can be generated from each unit of fuel.

If a developer chooses to build a new coal plant, the requirement that the plant install CCS technology within seven years will drastically reduce its emissions. Increased deployment of CCS technology at power plants will very likely drive CCS costs down and make it a more viable option at other new coal plants. Through experience and innovation, CCS costs may come down enough to be viable on new natural gas power plants, or as retrofits on existing coal plants, to reduce carbon dioxide emissions from the power sector even further.

How is this different from the standard EPA proposed in 2012?

EPA’s first proposal for limiting carbon emissions from new power plants was released on March 27, 2012. Under that proposal, all new power plants would have been subject to a uniform standard: 1,000 lbs CO2/MWh. Under this standard, new coal plants would have been possible only if CCS technology were employed to capture an average of about 50 percent of CO2 emissions over 30 years. However, EPA viewed combined cycle natural gas plants as the primary compliance pathway because it did not project a demand for any new coal plants in the near future regardless.

Many of the public comments received by EPA on its initial proposal objected to the unprecedented use of a single standard for both coal- and natural gas-fired plants. EPA has responded in its new proposal by including a separate standard for each fuel. However, since CCS would still be required for new coal plants, the net effect of the new proposal would be similar.

What can power plants do to reduce emissions?

New natural gas plants can reach the proposed CO2 standard by employing the most efficient generation technology. In older steam turbine plants, natural gas is combusted to heat water, which creates steam to turn a turbine and generate electricity. These plants have thermal efficiencies of 30-35 percent, meaning about one third of the chemical energy stored in natural gas is converted to electricity. In contrast, new combined cycle combustion turbines more effectively take advantage of the energy in natural gas to operate with a thermal efficiency above 60 percent.

New coal plants, on the other hand, cannot achieve the proposed standard through efficiency alone. The most efficient type of coal plants, using ultra-supercritical boilers or integrated gasification combined cycle technology, can currently achieve a CO2 emission rate of around 1,700 lbs/MWh. Thus new coal plants can only meet the standard through the use of CCS, which traps CO2 exiting the plant, transports it, and injects it into an underground geological formation for permanent storage. New plants can either begin using CCS soon after startup, or begin using it later to reach a seven-year average emission rate between 1,000 and 1,050 lbs CO2/MWh, which would require the capture of about 40 percent of CO2 emissions. EPA is inviting comment on the appropriate point within this range to set the standard.

If new coal plants must use carbon capture and storage technology, what will that mean for the future of coal? How far along is CCS technology?

Even if EPA were not moving forward with this standard, very few new coal plants would likely be built, in large part because of the availability of affordable natural gas. The Energy Information Administration lists only four potential coal plants between now and 2018, compared with more than 200 expected natural gas plants.

Today, there are 13 active commercial-scale CCS projects at industrial plants around the world (eight of them in the United States). The world’s first commercial-scale CCS power plant – the Boundary Dam Power Station in Saskatchewan, Canada – has been in operation since late 2014. Two additional commercial-scale power plants with CCS are under construction. Southen Company's Kempter County Energy Facility in Mississippi is expected to come online in late 2015 or early 2016, while NRG Energy's Petra Nove project in Texas is expected to come online in 2017. All three projects are coal-fired. 

Approximately 50 additional commercial-scale CCS projects in the power and industrial sectors are in various stages of development around the world. Learn more about the status of CCS technology here.

How would existing state policies, such as the Regional Greenhouse Gas Initiative, be affected?

The proposed standard for new power plants would likely be layered on top of existing state programs. For example, a new plant operating in the Regional Greenhouse Gas Initiative (RGGI) territory would have to achieve the proposed federal standard, and would also have to submit tradable emission allowances annually to comply with the requirements of RGGI.

How does this proposal relate to EPA’s work on a standard for existing power plants?

Section 111 of the Clean Air Act requires EPA to regulate greenhouse gas emissions from new and existing power plants under two separate but related provisions. Section 111(b) requires EPA to set emission performance standards for new, modified, and reconstructed power plants, while Section 111(d) requires EPA to set guidelines for existing power plants. The guidelines for existing power plants cannot be finalized until a final standard is in place for new power plants.

Section 111(b) vests relatively more authority in EPA, and is more straightforward. EPA is required to find emission-reduction technology that has been adequately demonstrated and use this to set federal, numerical performance standards that new power plants must meet. These Section 111(b) standards are implemented by the states, as are most EPA air rules, but states do not have much flexibility to alter the standards set by EPA. On the other hand, under Section 111(d), states have greater flexibility in how they implement the EPA standard. For instance, Section 111(d) allows for the possibility of market-based mechanisms to reduce emissions system-wide, rather than focusing on individual power plants.

How long will it take EPA to finalize this standard?

President Obama’s June 2013 memo to EPA directed the agency to propose standard for new power plants by September 2013, but did not set a deadline for finalizing the standard. Federal agencies typically have a year to finalize proposed regulations.

EPA must finalize the standard for new power plants before it can finalize its guidelines for existing power plants. EPA's current timeline notes that both rules will be finalized in the summer of 2015.

Under what authority is EPA regulating greenhouse gas emissions?

EPA is required by the Clean Air Act to develop and enforce regulations on greenhouse gases, much in the way it regulates other air pollutants. This authority was clarified in the U.S. Supreme Court decision in Massachusetts v. EPA (2007). The decision was a result of 12 states petitioning EPA to regulate greenhouse gases from new motor vehicles in 1999. The Supreme Court ruled that greenhouse gases meet the definition of air pollutants under the Clean Air Act and must be regulated if these gases could be reasonably anticipated to endanger public health or welfare. Responding to the Court’s ruling, EPA finalized an endangerment finding in December 2009. Based on overwhelming scientific evidence it found that six greenhouse gases, including carbon dioxide, constitute a threat to public health and welfare. Thus, it is the Supreme Court’s interpretation of the existing Act and EPA’s assessment of the scientific evidence that form the basis for EPA’s regulatory actions.

Once any substance becomes a regulated pollutant under the Clean Air Act, certain other provisions of the Act automatically kick in. Greenhouse gases first became regulated under the Act with EPA’s rule setting new standards for light-duty vehicles. This, in turn, triggered the requirement that major new or modified stationary sources be subject to a handful of Clean Air Act provisions, including Section 111(b).

Has EPA regulated greenhouse gas emissions before?

Yes. In addition to its existing greenhouse gas standards for new light duty vehicles, EPA regulates greenhouse gas emissions from new, large stationary sources through a process called New Source Review (NSR). If a new emissions source, including a power plant, will emit above a certain threshold, it must acquire a permit to emit greenhouse gas. This permit will include a requirement that the source employ the Best Available Control Technology (BACT) to ensure it will take all feasible steps available to limit greenhouse gas emissions. BACT is set on a source-specific basis, and so far EPA has determined BACT for greenhouse gas emissions from power plants to be efficiency improvements. Once EPA’s proposed NSPS is finalized, new power plants will have to comply with both this NSPS and NSR, as well as other permitting requirements already in place.

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Energy efficiency will play a key role in the Clean Power Plan

A new C2ES study outlines the significant role energy efficiency is expected to play in reducing carbon emissions from power plants under the proposed Clean Power Plan.

Energy efficiency can be an attractive way for states to meet the plan’s targets because, in addition to being relatively inexpensive to deploy on its own, energy efficiency reduces the need to build new, costly power plants in the future.

C2ES examined six economic modeling studies that project the likely impacts of the Clean Power Plan on the U.S. power mix and electricity prices. Despite starting with different assumptions, all of the studies project that energy efficiency will be the most used and least-cost option for states to implement the plan, and that overall electricity consumption will decline as a result.

The majority of the studies project either cost savings to power users under the Clean Power Plan or increases of less than $10 billion a year. That translates to less than $87 a year per household, or about 25 cents a day.

C2ES President Bob Perciasepe moderates a Solutions Forum panel with (l to r): Steve Harper, Global Director, Environment and Energy Policy, Intel Corporation; Alyssa Caddle, Principle Program Manager, Office of Sustainability, EMC; and Lars Kvale, Head of Business Development, APX Environmental Markets.

Our second Solutions Forum focused on how to spur more energy efficiency, especially through “intelligent efficiency” — a systems-based approach to energy management enabled through networked devices and sensors.

Energy and technology experts from leading companies like PSEG, EMC, Intel, and Nest and leaders of premier city and state energy efficiency programs in Illinois, Minnesota and Philadelphia agreed there is plenty of room for improving efficiency in how we produce, transmit and consume electricity. The technologies already exist and cities and states are already taking action to cut U.S. energy use and emissions while increasing reliability.

Twenty-one states have established mandatory energy savings targets through an energy efficiency resource standard, and five other states have a non-mandatory energy savings goal. But as Lars Kvale, head of business development for APX Environmental Markets, noted, no two states have the same energy efficiency program. Programs differ in how they are implemented, how they measure and verify energy savings, and whether they have a tradable market.

States without existing programs can still harness the benefits of energy efficiency in implementing the Clean Power Plan without having to reinvent the wheel. States can share measurement and verification protocols without having to create their own. In addition, energy efficiency groups, state officials, and businesses are developing new protocols to quantify the impacts of intelligent efficiency.

Another strategy for spurring more efficiency discussed at our forum is being smarter about communicating the benefits. Saving energy and money are great, but most people don’t know how many kilowatts they use in a morning, or how much that costs. Intelligent efficiency can deliver more control, convenience, and comfort to consumers. That’s what Nest’s Rick Counihan and Philadelphia Director of Sustainability Katherine Gajewski said really sparks consumers’ interest.

Ralph Izzo, President and CEO of New Jersey utility PSEG, also pointed out another tool for encouraging efficiency: a price on carbon emissions. Sending a clear market signal that producing climate-altering emissions has a cost would undeniably tilt the tables toward energy efficiency in ways that other measures could build upon. The models we reviewed certainly back up this sentiment.

Carbon Pricing and Clean Power: A Solutions Forum

Promoted in Energy Efficiency section: 
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9 a..m-NoonCapitol View Conference Center101 Constitution Ave. NWNinth FloorWashington, DC 20001

States have an array of policy options to reduce carbon emissions from power plants. In the first of a three-part clean power series, C2ES brings together state leaders and industry experts to explore market-based approaches to efficiently and effectively implementing EPA's proposed Clean Power Plan.

April 15, 2015
9:00 a.m. – 12:00 p.m.

Capitol View Conference Center
101 Constitution Ave. NW
Ninth Floor
Washington, DC 20001
(Doors open at 8:30 a.m.)

Janet Coit
Director, Rhode Island Department of Environmental Management

David Paylor
Director, Virginia Department of Environmental Quality

Martha Rudolph
Director of Environmental Programs, Colorado Department of Public Health & Environment

____

Skiles Boyd
Vice President, Environmental Management and Resources, DTE Energy

Erika Guerra
Government Affairs and Corporate Social Responsibility, Holcim (US) Inc.

Kevin Leahy
Director of Energy and Environmental Policy, Duke Energy

Katie Ott
Senior Manager, Federal Government Affairs, Exelon

____

Adele Morris
Senior Fellow, Brookings Institution

Michael Wara
  Professor, Stanford Law School

Bob Perciasepe
President, Center for Climate and Energy Solutions

How can we use intelligent efficiency to reduce power sector emissions?

Nobody likes waste. And yet when we produce, distribute and use electricity, we’re wasting up to two-thirds of the energy.

Although we can’t eliminate all of these losses, we could reduce waste and increase reliability through “intelligent efficiency”— technology like networked devices and sensors, smart grids and thermostats, and energy management systems.

If we used energy more efficiently, we’d also reduce the harmful carbon dioxide emissions coming from our power plants — and reduce our electric bills.

That’s why energy efficiency is expected to be a critical, low-cost path for states looking to reduce power plant emissions under the proposed Clean Power Plan.

C2ES is pulling together top experts in sustainability, efficiency, and technology from cities, states and business to explore how we can deploy intelligent efficiency to help reach Clean Power Plan emissions targets. (RSVP for our event Monday, May 18, in Washington, D.C.)

Just as technology can instantly connect us with people across the globe or monitor our calories and whether we’re burning enough of them, we have technology that will allow us to network and monitor how we produce, deliver and consume electricity.

 

 

Technology can improve energy efficiency in:

  • Generation: Network sensors and controls can increase the operational efficiency of power plants. Ravenswood, one of New York City’s largest power plants, was retrofitted with technologies from GE to optimize operations and increased output 5 percent using the same amount of fuel.
  • Distribution: An integrated system of smart meters, communication networks, and data management systems (also known advanced metering infrastructure) can improve efficiency. Dominion Virginia has installed 250,000 smart meters, cutting energy consumption 3 percent annually by delivering electricity at a more efficient voltage across the local network.
  • Usage: Advanced controls and energy management systems can minimize energy use in factories, offices and homes. Rudin Management, one of the largest privately-owned real estate companies in New York, developed a smart building management system that cut energy use 7 percent. Three recent studies found Nest smart thermostats could reduce consumer electricity bills 15 percent by scheduling energy use and using less of it.

 

Recent studies have suggested that intelligent efficiency could save up to 22 percent of electricity in just a few years.

Using more of these technologies would require more back-end computing power, but this marginal increase in energy use will be more than offset by significant reductions across the rest of the economy, according to the Global e-Sustainability Initiative. Plus, information and communications technologies can shift to large-scale, energy-efficient data centers, and companies like Apple, Google and Microsoft have committed to powering more of these data centers with renewable energy.

These innovative technologies can help cities, states and businesses reduce emissions and costs while increasing the reliability of the grid.

We have the technology. What are the barriers to using more of it? What are the opportunities?

We’ll seek answers from energy and technology experts from leading companies like Intel, Nest, PSEG and EMC and from leaders of some of the country’s premier city and state energy efficiency programs in Illinois, Minnesota and Philadelphia.

I hope you will join us Monday, May 18, in Washington at our Solutions Forum on Driving Energy Efficiency with IT.

In Brief: Legal Options for U.S. Acceptance of a New Climate Change Agreement

In Brief: Legal Options for U.S. Acceptance of a New Climate Change Agreement

May 2015

By Daniel Bodansky, Sandra Day O’Connor College of Law, Arizona State University

Download the full report (PDF)

U.S. acceptance of the new climate agreement being negotiated under the United Nations Framework Convention on Climate Change (UNFCCC) may or may not require legislative approval, depending on its contents. U.S. law recognizes several routes for entering into international legal agreements. The president would be on relatively firm legal ground accepting a new climate agreement with legal force, without submitting it to the Senate or Congress for approval, to the extent it is procedurally oriented, could be implemented on the basis of existing law, and is aimed at implementing or elaborating the UNFCCC. On the other hand, if the new agreement establishes legally binding emissions limits or new legally binding financial commitments, this would weigh in favor of seeking Senate or congressional approval. However, the exact scope of the president’s legal authority to conclude international agreements is uncertain, and the president’s decision will likely rest also on political and prudential considerations.

The brief is based on the report, Legal Options for U.S. Acceptance of a New Climate Change Agreement, which provides a fuller legal analysis.

Daniel Bodansky
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Legal Options for U.S. Acceptance of a New Climate Change Agreement

Legal Options for U.S. Acceptance of a New Climate Change Agreement

May 2015

By Daniel Bodansky, Sandra Day O’Connor College of Law, Arizona State University

Download the full report (PDF)

The success of ongoing negotiations to establish a new global climate change agreement depends heavily on the agreement’s acceptance by the world’s major economies, including the United States. The new agreement is being negotiated under the United Nations Framework Convention on Climate Change (UNFCCC), a treaty with 195 parties that was ratified by the United States in 1992 with the advice and consent of the U.S. Senate. U.S. acceptance of the new agreement may or may not require legislative approval, depending on its specific contents.

U.S. law recognizes several routes for entering into international agreements. The most commonly known, under Article II of the Constitution, requires advice and consent by two-thirds of the Senate. In practice, however, the United States has accepted the vast majority of the international agreements to which it is a party through other procedures. These include congressional-executive agreements, which are approved by both houses of Congress, and presidential-executive agreements, which are approved solely by the president.

The President would be on relatively firm legal ground accepting a new climate agreement with legal force, without submitting it to the Senate or Congress for approval, to the extent it is procedurally oriented, could be implemented on the basis of existing law, and is aimed at implementing or elaborating the UNFCCC. On the other hand, if the new agreement establishes legally binding emissions limits or new legally binding financial commitments, this would weigh in favor of seeking Senate or congressional approval. However, the exact scope of the President’s legal authority to conclude international agreements is uncertain, and the President’s decision will likely rest also on political and prudential considerations.

Daniel Bodansky
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Canadian hydropower can help states achieve carbon-cutting goals

About 10 percent of Canadian electricity, much of it generated from hydropower, is exported to the United States. With Canada expected to expand its hydropower capacity in coming years, could some states take advantage of this non-emitting resource to meet Clean Power Plan goals to reduce carbon emissions?

A new C2ES report, Canadian Hydropower and the Clean Power Plan, explores this question, including how the proposed plan would need to be adjusted, and how select states could benefit.

While U.S. hydropower is not expected to significantly expand in the near future, hydropower is growing in Canada, where it already supplies 60 percent of the country’s electricity. More than 5,500 megawatts (MW), enough to power about 2.4 million homes, have been added in the last decade. An additional 11,000 MW is either under construction, nearing the construction phase, or has been announced. To put this in perspective, Canada’s entire electricity generation system is about 128,000 MW.

Key Insights from a Solutions Forum on Carbon Pricing and Clean Power

Key Insights from a Solutions Forum on Carbon Pricing and Clean Power

April 2015

Download the Key Insights (PDF)

 

States will have tremendous flexibility to choose how to reduce carbon emissions under the Clean Power Plan. One idea states are exploring is putting a price on carbon. The first C2ES Solutions Forum — held on April 15, 2015 — brought together legal and economic experts, state environmental directors, and business leaders to explore the potential use of market mechanisms to reduce these damaging emissions efficiently and cost-effectively.

For more information about the C2ES Solutions Forum, see: http://www.c2es.org/initiatives/solutions-forum

Key insights and highlights from the event on carbon pricing and clean power include:

  • Most economists agree that the most efficient way to address climate change is to put a price on carbon.
  • The U.S. Environmental Protection Agency (EPA) has given states tremendous flexibility to determine the best way to achieve emission targets.
  • Virtually every state is already engaged in some activity that reduces emissions.
  • Market-based options available under the proposed Clean Power Plan go beyond creating or joining a cap-and-trade program or instituting a carbon tax.
  • States and businesses generally agree that market mechanisms are a proven, least-cost way to reduce emissions.
  • States believe support from the business community will be essential to adopting market-based options.
  • State and business leaders recognize the need to talk to one another about the best way to reduce emissions.
  • States are concerned about having enough time to develop market-based policies.
  • State and company representatives see a role for EPA to help states after the Clean Power Plan is finalized. 

C2ES will continue the conversation with states and businesses to share insights and innovative ideas that will help us get to a clean energy future. Our second Solutions Forum on May 18 will explore improving energy efficiency, which reduces emissions, through information and communication technologies. Our third event on June 25 will examine how to finance clean energy technology and infrastructure.

Jason Ye
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