Federal

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
 

Achieving the United States' Intended Nationally Determined Contribution

Achieving the United States' Intended Nationally Determined Contribution

April 2016

Download (PDF)

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 as much as 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. This paper examines 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.

Doug Vine
0

Secondary Carbon Markets

Secondary Carbon Markets

April 2016

Download the Fact Sheet (PDF)

Many state regulators are considering carbon trading as a compliance option with the Clean Power Plan. An important part of carbon trading is the secondary carbon market—the market among private sector buyers and sellers that arises to provide more efficient price discovery, price-hedging opportunities, and satisfy compliance demand. This fact sheet provides a brief overview of the role of different types of secondary market participants and key policy choices that need to be made to allow secondary markets under the Clean Power Plan.

0

How the US can meet its climate pledge

The following was published in March 2016 on the EcoWomen blog. View the original post here.

I let out a cheer when Leonardo DiCaprio mentioned climate change during his Oscars acceptance speech. But concern about climate extends far beyond the red carpet.

Religious leaders, military officials, mayors, governors, business executives, and leaders of the world’s nations are all speaking about the need to address the greenhouse gas emissions that threaten our environment and economies.

Last December, world leaders reached a landmark climate agreement at the UN Climate Change Conference (COP 21) that commits all countries to contribute their best efforts and establishes a system to hold them accountable. COP 21’s Paris Agreement also sent a signal to the world to ramp up investment in a clean energy and clean transportation future.

The U.S. committed to reduce its greenhouse gas emissions 26-28 percent below 2005 level by 2025. The U.S. Environmental Protection Agency (EPA)’s Clean Power Plan was touted as a key policy tool to help reach that goal. However, with the recent surprise stay of the rule by U.S. Supreme Court, can the U.S. still meet its climate pledge? Simply put, yes.

How the US can meet its climate pledge

The following was published in March 2016 on the EcoWomen blog. View the original post here.

By Manjyot Bhan, Policy Fellow, Center for Climate and Energy Solutions

I let out a cheer when Leonardo DiCaprio mentioned climate change during his Oscars acceptance speech. But concern about climate extends far beyond the red carpet.

Religious leaders, military officials, mayors, governors, business executives, and leaders of the world’s nations are all speaking about the need to address the greenhouse gas emissions that threaten our environment and economies.

Last December, world leaders reached a landmark climate agreement at the UN Climate Change Conference (COP 21) that commits all countries to contribute their best efforts and establishes a system to hold them accountable. COP 21’s Paris Agreement also sent a signal to the world to ramp up investment in a clean energy and clean transportation future.

The U.S. committed to reduce its greenhouse gas emissions 26-28 percent below 2005 level by 2025. The U.S. Environmental Protection Agency (EPA)’s Clean Power Plan was touted as a key policy tool to help reach that goal. However, with the recent surprise stay of the rule by U.S. Supreme Court, can the U.S. still meet its climate pledge? Simply put, yes.

Under the Clean Power Plan, the EPA sets unique emissions goals for each state and encouraged states to craft their own solutions. It is projected that the rule will reduce power sector carbon emissions at least 32 percent from 2005 levels by the year 2030.

Last month’s stay does not challenge “whether” EPA can regulate—the court has already ruled that it can—but rather “how” it can regulate. And the stay is not stopping many states and power companies from continuing to plan for a low-carbon future.

Some of the key ingredients that led to success at COP 21—national leadership and a strong showing by “sub-national actors,” including states, cities and businesses—will also be fundamental to U.S. success in meeting its climate goals.

recent event in Washington—held by the Center for Climate and Energy Solutions and New America—outlined the gap between existing policy trajectories and the U.S. goal. A secondary outcome of the meeting also explored how federal, state, and local policies and actions can leverage technology to close the gap.

An analysis by the Rhodium Group found that even without the Clean Power Plan, the recently extended federal tax credits for solar and wind energy will help significantly. Existing federal policies on fuel economy standards for vehicles and energy efficiency also support the U.S. goals, as well policies in the works to regulate hydrofluorocarbons and methane emissions from oil and gas operations.

States and cities made a strong showing of support for the Paris Agreement, and they have emerged as leaders in promoting energy efficiency and clean energy.

Additionally, many states are continuing to work toward implementing aspects of the Clean Power Plan. And even those not doing public planning are discussing ways states and the power sector can collaborate to cut carbon emissions cost-effectively. Last month, a bipartisan group of 17 governors announced they will jointly pursue energy efficiency, renewable energy, and electric and alternatively fueled vehicles. The Clean Power Plan stay can be looked at as giving states more time to innovate.

More than 150 companies have signed the American Business Act on Climate Pledge committing to steps such as cutting emissions, reducing water usage and using more renewable energy across their supply chains. One hundred companies have signed the Business Backs Low-Carbon USA, which calls the entire business community to transition to a low-carbon future.

Following the court’s stay, many power companies came out in support of the rule or reaffirmed plans to work toward clean energy and energy-efficiency.

2015 UNEP report suggests that beyond each countries’ individual commitments, actions by sub-national actors across the globe can result in net additional contributions of 0.75 to 2 gigatons of carbon dioxide emissions in 2020. While it is hard to accurately quantify the specific contributions of U.S. states, cities, and businesses in reducing emissions, they have the potential to accelerate the pace at which the U.S. meets its climate goals.

 

Bob Perciasepe statement on US-Canada climate cooperation

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

March 10, 2016

With their joint announcement today, President Obama and Prime Minister Trudeau have set the stage for closer cooperation than ever before between the United States and Canada in meeting our shared climate and energy challenges. Given the inextricable links between our economies and our energy systems, it’s in everyone’s interest that our respective efforts are more closely aligned. 

We’re especially encouraged by the emphasis placed by the two leaders on the use of market-based approaches to reduce greenhouse gas emissions as cost-effectively as possible. California and Quebec have already formally linked their emissions trading systems, and the recent Paris Agreement can facilitate broader use of market-based policies globally. As the United States and Canada work to strengthen their domestic policies and implement the Paris Agreement, they should explore opportunities to realize the environmental and economic benefits of a more fully developed regional trading system.

In other areas, including the urgent need to reduce short-lived climate forcers such as methane and hydrofluorocarbons, the two leaders have set ambitious goals. In pursuing their common agenda, it is vital the two governments continue work in close partnership with the private sector to ensure that policies aimed at achieving those goals are practical and cost-effective.

--

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

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

We need states to show clean energy leadership

Smart policy often comes from the states, and many states have shown and are expected to continue to show leadership in addressing climate change and promoting clean energy.

The Clean Power Plan stimulated discussions across the country, sometimes for the first time, among state energy and environment department officials, regulators, and energy companies about ways to reduce emissions. And we see momentum to keep those and other conversations going.

Consider some of the many ways states are leading:

Key Insights: Business, State and City Collaboration on Interstate Trading under the Clean Power Plan

Key Insights: Business, State and City Collaboration on Interstate Trading under the Clean Power Plan
 

February 2016

Download the Fact Sheet (PDF)

C2ES facilitated a second private Solutions Forum workshop around the Clean Power Plan in February 2016. More than 50 business leaders, state and city officials, other experts, and representatives of the U.S. Environmental Protection Agency (EPA) participated. The discussion built on previous Solutions Forum events and took a deeper dive into implementation issues states are facing as they consider trading-ready compliance plans. This paper summarizes key insights and remaining questions from the workshop.

The week following our workshop the U.S. Supreme Court ordered a stay of the Clean Power Plan. In our assessment, most stakeholders continue to value answering these questions while awaiting the legal outcome.

More information about the C2ES Solutions Forum

0

States, cities, companies support clean power

A number of states, cities, and power companies plan to press forward with clean energy efforts despite this week’s Supreme Court stay of the Clean Power Plan.

That’s because the future of carbon regulation is not “if” but “how and when,” and it is too big a question not to continue a thoughtful conversation among thoughtful people.

States to explore options

Officials in states including California, Colorado, Minnesota, Virginia, and Washington have said the court’s temporary stay won’t stop them from continuing to explore implementation options, which include leveraging the power of market forces to reduce emissions. Even states suing the Environmental Protection Agency (EPA) have been having these conversations, and most will continue to.

For instance, Montana Department of Environmental Quality energy bureau chief Laura Andersen told ClimateWire, "The market forces at play in the region are quite significant and will not go away just because the Clean Power Plan has a stay on it.”

Al Minier, chairman of the Wyoming Public Service Commission, said the stay could give regulators more time to develop strategies that are best for the state.

Q&A: EPA Regulation of Greenhouse Gas Emissions from Existing Power Plants

Q&A: EPA Regulation of Greenhouse Gas Emissions from Existing Power Plants

Download this fact sheet (PDF)

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.

Overview

Compliance Options

Impacts

Next Steps

Overview

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 the largest source 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, newly abundant natural gas has begun to displace coal (which emits twice as much carbon) in the U.S. electrical generation mix.  But in the absence of major new policies, U.S. emissions are projected to rise 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. Under a business-as-usual forecast, fossil fuels are projected to provide 66 percent of the U.S. fuel mix in 2030 compared with 60 percent under the Clean Power Plan, with most of the reduction coming from higher-emitting coal plants. Therefore, under a business-as-usual scenario, carbon dioxide emissions from the power sector are expected to increase around 6.5 percent (from 2014 levels) to 2,177 million metric tons in 2030, while under the Clean Power Plan carbon dioxide emissions would fall more than 19 percent (from 2014 levels) to 1,644 million metric tons in 2030.

Figure 1: U.S. 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:

  1. Make affected fossil fuel power plants more efficient;
  2. Increase generation from lower-emitting natural gas combined cycle plants; and
  3. 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.

Back to top.

Compliance Options

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

PolicyDescriptionExamples
Power plant performance standardEach power plant must achieve a set emissions intensityCalifornia, New York, Washington
Renewable Portfolio StandardUtilities must deliver a set percentage of renewable electricityColorado, Hawaii, Kansas, Missouri, Nevada, Rhode Island, and others
Energy Efficiency Resource StandardUtilities must cut demand by a set amount by target yearsArizona, Connecticut, Maryland, Minnesota, Texas, and others
DecouplingReduce utility incentive to deliver more electricity by decoupling revenue and profitCalifornia, Idaho, Massachusetts, Michigan, Oregon, and others
Net MeteringEncourage residential solar by paying homeowners to put excess electricity back on gridArkansas, Colorado, Georgia, Louisiana, and others
Cap & TradeIssue a declining number of carbon allowances, which must be surrendered in proportion to each plant’s emissionsCalifornia, Regional Greenhouse Gas Initiative
Carbon TaxCharge a tax for emitting carbonBritish Columbia
Grid Operator Carbon FeeAdd a carbon price to grid operator decision over which power plants to runNone currently
Appliance Efficiency StandardsRequire new appliances sold to meet set electricity consumption standardsCalifornia, Florida, New Jersey, and others
Commercial & Residential Building CodesRequire new buildings to include electricity saving measuresCalifornia, 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.

Back to top.

Impacts

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. Under a business-as-usual scenario, coal is expected to deliver 36 percent of U.S. electricity in 2030.

Figure 4: Distribution of Fossil Fuel Power Plants across the Contiguous United States

Back to top.

Next Steps

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.

Back to top.

 

 

 

/publications/achieving-united-states-intended-nationally-determined-contribution

Clean power progress will continue despite Supreme Court ruling

The Supreme Court’s stay of the Clean Power Plan may slow, but certainly does not stop, progress toward a cleaner power system in the United States.

There’s no telling how the legal challenges to the Clean Power Plan, which were always expected, will ultimately play out. But here are a few important points to keep in mind:

The Environmental Protection Agency’s authority to regulate greenhouse gases is settled. The Supreme Court ruled in 2007 that EPA has authority under the Clean Air Act to regulate greenhouse gases. It affirmed that ruling 8-0 in 2011 when it rejected nuisance suits against greenhouse gas emitters, ruling that “the Clean Air Act and the EPA actions it authorizes displace any federal common law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired power plants.”  

What’s at issue is whether the particular way EPA has chosen to exercise that authority in regulating carbon emissions from power plants is appropriate.  Because there was little precedent to work from, EPA had to chart the direction, and did so with a very careful eye to the legal defensibility of its approach. 

The Clean Power Plan has already generated tremendous learning about the practicalities of decarbonizing our power sector. In crafting the rule, EPA engaged extensively with states, utilities and others (and was widely praised for doing so). The adoption of the rule last summer has triggered similar state-level conversations across the country. Even states that are suing to overturn the rule have been actively considering how to implement it.

As a result, we all know a lot more today about the challenges of cutting carbon and the smartest strategies for doing it cost-effectively. That knowledge will be of tremendous value going forward, with or without the Clean Power Plan.

Syndicate content