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
Rate-Based Compliance Under the Clean Power Plan
|Image courtesy International Civil Aviation Organization (ICAO)|
The new Paris Agreement provides a broad global framework to strengthen efforts to address climate change. Now, governments are working toward another agreement on a critical issue Paris doesn’t directly address – reducing greenhouse gas emissions from aviation.
The Paris Agreement, negotiated under the United Nations Framework Convention on Climate Change (UNFCCC), ties together national efforts pledged by more than 180 countries to limit or reduce their own emissions. However, international aviation is inherently a cross-border activity, and a global approach to reducing emissions from aviation is being negotiated separately under the International Civil Aviation Organization (ICAO). A new sector-wide agreement is expected this October.
Emissions from the aviation sector comprised 2 percent of global emissions in 2013, but that share is set to expand rapidly by 2050 without policy interventions. In 2010, the aviation industry carried 2.4 billion passengers and 40 million metric tons of goods. By 2050, that could grow to 16 billion passengers and 400 million metric tons of goods.
Comments of the Center for Climate and Energy Solutions on Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units; Proposed Rule
Comments of the Center for Climate and Energy Solutions on Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units; Proposed Rule
United States Environmental Protection Agency
(80 Fed. Reg. No. 205 (October 23, 2015))
Docket ID No. EPA–HQ–OAR–2015–0199; FRL 9930–67– OAR
This document constitutes the comments of the Center for Climate and Energy Solutions (C2ES) on the proposed federal plan requirements for greenhouse gas (GHG) emissions from electric utility generating units under the Clean Power Plan, proposed by the U.S. Environmental Protection Agency (EPA) and published in the Federal Register on October 23, 2015. C2ES is an independent, nonprofit, nonpartisan organization dedicated to advancing practical and effective policies and actions to address our global climate change and energy challenges. As such, the views expressed here are those of C2ES alone and do not necessarily reflect the views of members of the C2ES Business Environmental Leadership Council (BELC). In addition, the comments made in this document pertain to existing sources in the specific sector addressed by the Proposal and may not be appropriate for other industrial sectors or for new electric utility generating units.
C2ES believes a nationwide, economy-wide market based policy would be the most efficient and effective way to reduce GHG emissions by harnessing market forces to spur clean energy innovation, development and deployment. However, enactment of federal legislation that would establish a comprehensive market-based policy to reduce GHG emissions is not likely in the near-term. Given the urgency of addressing the rising risks that climate change poses to U.S. economic, environmental, and security interests, and the inability of Congress to establish our preferred approach of a nationwide price on carbon, C2ES believes EPA, as it implements the Clean Power Plan, should rely upon market-based approaches. Acting now will provide environmental benefits now and in the future, economic growth, and the opportunity for US companies to lead development of innovative technologies for which global demand is rapidly increasing.
The proposed federal plan requirements are an important component of the Clean Power Plan as they establish a framework for what may constitute a federal implementation plan in the event a state does not submit an adequate state implementation plan. The requirements are important as they may also serve as model rules offering guidance to states on possible provisions of an adequate state implementation plan.
C2ES supports the proposed federal plan requirements based on several key characteristics of the proposal.
- Market-based mechanisms to reduce carbon emissions are encouraged: The proposed federal plan requirements are market based and offer two market approaches, rate-based and mass-based trading. The inclusion of these market approaches in the proposal guides and facilitates the use of market-based policies by states. Moreover, the proposal retains flexibility for states to create markets that are responsive to specific state needs as well enact ancillary policies to achieve additional policy objectives.
- The Clean Power Plan could serve as a stepping-stone to a comprehensive, national program: In offering the proposed federal plan requirements as model rules, EPA is moving individual state actions toward a broader, nationwide program. The proposal could facilitate the development of market-based policies in more states and could thereby provide additional experience, learning opportunities, and frameworks necessary to ultimately develop a successful national program.
- EPA-defined model provisions encourage interstate consistency: Model provisions for topics such as tracking systems and what evaluation, measurement, and verification (EM&V) protocols to use to track efficiency measures will help states meet the deadline for their plans and could promote consistency across states. Such consistency could facilitate interoperability and the creation of a large, liquid market that reduces compliance costs for all participants.
EPA has invited comment on whether to finalize a single approach (i.e., either a mass? or rate?based approach) for a federal plan. While choosing a single approach that creates a large, liquid market would reduce compliance costs for all participants and a mass-based approach would likely be administratively simpler to implement, states should be allowed to maintain the flexibility to implement rate-based programs as under the final rule establishing the Clean Power Plan. If a federal implementation plan is necessary for a state, EPA should maintain the flexibility to implement either approach as warranted by the specific circumstances of that state.
C2ES believes states should have the flexibility to use existing systems or a new, EPA-administered tracking system. However, it would be in the best interest of the state and market if the tracking system were interoperable with the national market. Interoperability of tracking systems allow the credible and transparent tracking of assets across state lines, thereby facilitating a larger market which reduces compliance costs for all participants. Existing tracking systems provide insights for the Clean Power Plan. Please see the attached C2ES brief on tracking for more information.
The allocation of allowances in a mass-based program is a significant policy decision. Allowances represent a significant source of value and can be used to compensate firms or individuals affected by climate change policy or to raise funds for other socially desirable policy objectives. The basic allocation decision involves whether to freely allocate or auction some or all emission allowances. And further, if freely allocated, to whom and how to distribute, and if to auction allowances, the type of auction and how to distribute the revenues. Please see the attached C2ES brief on allocation policies for more information.
Carbon markets, like other commoditites markets, require provisions to ensure that the market functions effectively, is efficient and liquid, and is not manipulated by some participants. A carbon market can best achieve its environmnental aim if it is well designed and functions efficiently from the beginning. A well-designed policy should include effective means to prevent excessively high prices, extreme volatility, and market manipulation – the action by an individual or small group of individuals to alter the price of a good for their own advantage – which is best achieved through effective policy and market design.
Statement of Bob Perciasepe
President, Center for Climate and Energy Solutions
January 12, 2016
On the State of the Union address:
President Obama is right when he says we have a huge opportunity to accelerate our efforts to transition to a clean energy future.
We saw unprecedented momentum last year with the completion of the Clean Power Plan and a landmark global agreement in Paris. Our job now is to build on this foundation going forward.
At home, many states are working hard on strategies to implement the Clean Power Plan, and we’re encouraged to see so many of them exploring efficient market-based approaches. Internationally, we must flesh out the details of the Paris agreement to ensure that countries are held accountable and ramp up their efforts over time. On both fronts, strong leadership from business will be critical.
Americans increasingly understand both the risks and the opportunities presented by climate change. The investments and innovation that help us generate clean power and protect our communities from extreme weather and other climate impacts also help build a more sustainable economy.
C2ES is committed to continue working with policymakers, business leaders and other stakeholders to forge common ground and commonsense climate solutions.
Contact: Laura Rehrmann, email@example.com 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.
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 June 10, 2015, EPA issued its proposed endangerment finding for greenhouse gas emissions from aircraft under section 231 of the Clean Air Act. The proposed 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. The final endangerment finding itself would not impose any restrictions on aircraft. It is however a necessary step in determining whether EPA must regulate greenhouse gas emissions from aircraft.
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. The GMBM will be up for adoption at the 39th ICAO Assembly in September 2016, to take effect from 2020 onwards. A Global Market Based Mechanism Task Force is currently working to establish the technical details of how the market mechanism will function.
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?
EPA issued an advanced noticed of proposed rulemaking at the same time as the proposed endangerment finding. The notice solicits comments on a variety of issues related to setting an international carbon dioxide standard for aircraft, including whether such standards should apply to in-production aircraft or new aircraft type designs, the appropriate effective date for a potential international carbon dioxide standard, as well as the appropriate stringency level. However, it does not impose any standards or regulatory requirements at this time.
EPA’s endangerment finding and advanced notice of proposed rulemaking lay the groundwork for U.S. adoption of international emission standards. Once ICAO adopts emission standards for covered aircraft in 2016, EPA is expected to begin rulemaking under section 231 of the Clean Air Act to establish domestic aircraft engine emission standards for covered aircraft that are of at least equivalent stringency as the international emission standards.
Statement of Bob Perciasepe
President, Center for Climate and Energy Solutions
December 31, 2015
On the State Department's Second Biennial Report to the U.N. Framework Convention on Climate Change estimating how existing and additional policy measures will help the U.S. toward its 2020 and 2025 targets for reducing greenhouse gas emissions:
“The new U.S biennial report lays out a credible and commonsense pathway toward meeting the country’s greenhouse gas targets for 2020 and 2025. It shows how the combined efforts of governments at all levels, working closely with the private sector, can achieve our greenhouse gas goals while sustaining strong economic growth.
This report is an example the kind of transparency the new Paris Agreement is meant to deliver — countries laying out for all to see the policies through which they intend to meet the goals they’ve pledged to the international community. An important part of the task ahead is fleshing out the details of how the Paris Agreement will also hold countries accountable for progress in implementing those policies.”
Contact: Laura Rehrmann, firstname.lastname@example.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 our climate and energy challenges. Learn more at www.c2es.org.
Comments of the Center for Climate and Energy Solutions on the Clean Power Plan's Clean Energy Incentive Program
C2ES December 2015 comments of the Center for Climate and Energy Solutions on the Clean Power Plan’s Clean Energy Incentive Program (CEIP)
This document constitutes the comments of the Center for Climate and Energy Solutions (C2ES) on the proposed Clean Energy Incentive Program proposed by the U.S. Environmental Protection Agency (EPA). C2ES is an independent, nonprofit, nonpartisan organization dedicated to advancing practical and effective policies and actions to address our global climate change and energy challenges. As such, the views expressed here are those of C2ES alone and do not necessarily reflect the views of members of the C2ES Business Environmental Leadership Council (BELC).
C2ES believes that market-based policies are the most efficient and effective way of reducing greenhouse gas emissions, and we applaud EPA for including multiple provisions in the final Clean Power Plan that promote market adoptions that can be used by states. Market-based policies harness market forces to spur innovation, development and deployment of clean energy technologies. To that end, trading of allowances or emission rate credits (ERCs) under the Clean Power Plan (CPP) can help ensure that emission targets are achieved at the lowest possible cost. Complementary to this, C2ES believes the Clean Energy Incentive Program (CEIP), properly designed, can help meet CPP objectives, promote market mechanisms and provide additional clean energy benefits as outlined below.
The CEIP provides economic value
CEIP credits (allowances or ERCs) issued by states and matched through EPA’s reserved pool could provide economic value to clean energy projects in two ways. First, if a project developer is an electricity generator subject to the CPP, these credits can be used for compliance. Second, if the project developer does not have a compliance obligation, these credits can be sold, which creates a revenue stream that can improve the financial viability of a project. As states develop their implementation plans, they may be able to provide early enhancements for project financing if some of the CEIP credits are allocated in advance by project type. This can help mobilize capital markets who would now know that the additional incentive would be available.
The CEIP will accelerate early market formation and price discovery
CEIP credits will complement other trading mechanisms that states may establish to comply with the CPP and add additional liquidity to CPP markets. Liquidity is important to an emissions trading market because it lowers the risk of price volatility or sudden price spikes caused by an inability to find available allowances. In addition, it can help with price discovery because these will likely be available before CPP compliance markets are functioning.
The trading of CEIP credits could be a key strategy for electricity generators to comply with emissions limits, either by incentivizing them to reduce their emissions and sell (or avoid purchasing) credits, or by purchasing credits from other generators at a lower cost. Early implementation of the CEIP may play a role in fostering the development of these trading regimes.
The CEIP could speed the development of state implementation plans and help reduce regulatory uncertainty
Projects become eligible for CEIP credits only if they commence construction after a final state implementation plan is submitted in the project’s host state. EPA allows plans to be finalized as late as September 2018. Because of the value of CEIP credits, project proponents may encourage states to finalize plans as soon as possible in order to open CEIP eligibility to a greater number of projects. Early plan finalization may give utilities additional time to plan for compliance and lower the regulatory uncertainty around CPP implementation.
The CEIP can incentivize city-level clean energy programs
Finally, the CEIP could provide a way for cities to have a role in meeting CPP compliance goals. U.S. cities have tremendous citizen and policymaker interest in reducing carbon emissions, improving energy efficiency and deploying more renewable energy, but they often face resource constraints. CEIP credits could provide cities a crucial funding resource to expand existing programs or launch new initiatives.
While noting that the CEIP as proposed has many benefits, C2ES also sees several potential enhancements, and we recommend the following:
Ensure the maximum number of projects can receive credits under the CEIP
Opportunities for wind, solar, and energy efficiency projects abound, and there is a chance that the demand for credits will exceed 300 million tons. We advise EPA to prepare for this situation by anticipating how to allocate credits when there are not enough to match each megawatt hour generated or avoided.
One way to accomplish this is to provide a reservation system for credits. Clean energy project developers would request credits prior to 2020, based upon two requirements—the launch of the program/beginning of construction and the expected performance of the project. In 2020 and 2021, after the project’s performance is verified, the project could then be allocated credits. C2ES believes this would add certainty to the project financing during the development stage by reducing the chance that a project would receive no credits (because the CEIP pool had been depleted), as could happen under a first-come, first-served system. EPA or states could also modify a reservation system to achieve other policy aims by prioritizing projects that meet desired characteristics. For example, criteria could include project size, project cost, or project operation start date. This approach can help mobilize capital markets earlier.
An alternative approach would be to set a maximum number of credits that a project could request from the CEIP. In this way, an allocation to a large project would not leave too few credits for other projects. A system could be developed where allocation requests happened in stages, so that if, after all eligible projects had received credits for some fraction of the electricity generated or avoided, they could request additional allocation if credits remained in the CEIP matching pool. This is different than the redistribution formula on which EPA is requesting comment, in that this staged distribution would occur in the same year in the same state and applies only to the situation in which the CEIP is oversubscribed.
We recognize that setting a priority to maximize the number of projects that receive CEIP credits creates a risk of missing opportunities for least-cost project development. Giving a large number of CEIP credits to a small number of projects may be more cost effective because it may result in lower costs for project administration per unit of renewable energy or energy efficiency delivered. However, given the limited duration of the CEIP, C2ES believes that the environmental benefits of broad participation outweigh the economic concerns of possibly incentivizing more costly programs over less costly ones.
SPECIFIC COMMENTS REQUESTED BY EPA
EPA requested comment on a number of provisions in the proposed CEIP. C2ES thanks EPA for the opportunity to comment on a few of these areas.
Definition of commence construction
C2ES believes EPA should use a definition of “commence construction” that already exists. This lowers the administrative costs of the CEIP and facilitates faster deployment of CEIP-eligible projects, since developers would not need to educate themselves about a unique definition.
As an example, certain federal-level clean energy tax credits define “commence construction” as when either work of a significant physical nature has been undertaken or more than 5 percent of a project’s total capital cost has been spent. Such requirements are well-understood by project developers and are not considered overly burdensome to meet or demonstrate to authorities.
Definition of low-income community
Similarly, C2ES believes EPA should use a definition of “low-income community” that already exists. State and city policymakers and project developers are familiar with existing terms, for example a geographic region’s area median income, or a comparison to the federal poverty line. While we are agnostic on exactly which definition is used, we believe it should be one currently used in other federal programs, reflecting regional differences in cost of living, and consistent across all states.
C2ES identifies a second aspect of the low-income community definition under the CEIP that we believe should be changed – the prescribed extent in which low-income communities are served. Some projects serve only low-income communities, for example residential energy efficiency improvements. Others, however, serve the broader community, including low-income households. For example, energy efficiency projects at water treatment plants serve the broader community, including low income households.
C2ES believes that applying a broad definition of how communities are served will maximize the environmental and economic benefits of the CEIP. It will do this by increasing the number of projects that are eligible – some of which may be larger and therefore lower cost to implement. Energy efficiency tends to lower electricity bills as consumers who have deployed more energy efficient technologies reduce their consumption of electricity. This provides an additional benefit that can significantly help low-income communities given the regressive nature of any energy cost increase. In addition, it has the added benefit of making these consumers less vulnerable to extreme heat or cold.
Evaluation, measurement, and verification requirements should be explicit and consistent
C2ES recognizes the critical role that evaluation, measurement, and verification (EM&V) requirements play in maintaining the environmental integrity of carbon trading programs. Having EPA-defined EM&V requirements reduces potential costs for state agencies by avoiding the need to develop requirements in every state and provides consistency for project developers as part of the model rule.
C2ES recommends that as EPA finalizes the EM&V requirements, it should prioritize processes that are low-cost and can be applied uniformly across states to allow a greater deployment of energy efficiency under the CPP.
Timing of credit allocation
C2ES notes that having credits available to the market as early as possible is the best way to reduce uncertainty and stimulate early market formation. In terms of credit allocation to projects in 2020 and 2021, C2ES recommends that EPA provide matching credits to clean energy projects shortly after performance, potentially on a quarterly or six-month basis.
Redistributing unused credits
If there are insufficient projects in a state to utilize its full share of EPA’s matching pool, C2ES recommends that the credits be available to projects in any state in which the CEIP is implemented and there is excess demand for credits, on a first-come, first-served basis. The initial matching pool allocation to participating states will ensure that states with a large capacity for clean technologies do not utilize the entire pool at the expense of states with smaller capacities. However, if a state’s share of the matching pool is unused, this would most likely reflect capacity that is too expensive to develop in the 2020-2021 timeframe. C2ES believes the EPA matching credits should then be rewarded to projects in other states that have met eligibility criteria but have not yet been allocated credits (reflecting an oversupply of economic renewable and energy efficiency potential in that state).
Converting the 300 million short ton matching pool into ERCs
C2ES believes that such a conversion should be administratively simple and consistent with the actual emission reductions taking place on the electricity grid. For example, the emission rate of the marginal generation source in a given power market could be used. In addition, C2ES recommends that the conversion factor be periodically updated to account for the expected change in carbon intensity of electricity generation occurring even before the first compliance period. For example, if new renewables lowered the carbon intensity (in tons/MWh) of electricity in a power market between 2020 and 2021, the conversion factor (expressed in tons/MWh) would have to be similarly lowered so that projects receiving ERCs or allowances are treated fairly, with respect to one another.
Participation by states, tribes and territories without CPP goals
Since CEIP-eligible projects serve to reduce overall emissions of the entire electricity grid, it is appropriate to allocate CEIP credits to projects in states that do not have CPP goals but are connected, via interstate transmission lines, to states that do. These jurisdictions, if they wish to participate in the CEIP, should submit an intent to do so in the same way as CPP states. EPA should then allocate a portion of its matching pool to these jurisdictions using the same formula as for other states. Since there is no corresponding state match for these jurisdictions, EPA could consider doubling the allotment from the federal matching pool for projects in these jurisdictions only. In this way, project developers would have an equal incentive to develop CEIP-eligible projects in these jurisdictions. For example, an energy efficiency project located in the District of Columbia could be granted two full CEIP credits from the EPA matching pool for every megawatt hour of electricity avoided. In this way, the project receives the same economic incentive as a project located in a state with a CPP target.
C2ES recognizes that EPA has finalized the eligibility criteria in the final Clean Power Plan. As mentioned earlier, the CEIP has the potential to be an important stimulator of clean energy and also of market-based implementation plans. We view these as important and that the CEIP can play this role.
However, in finalizing the eligible projects to solar, wind, and energy efficiency in low income communities, EPA is making some essential policy advances, but at the same time missing some others.
Encourage other clean energy technologies
C2ES believes that the CEIP as proposed encourages other clean energy technologies too narrowly. For example, hydropower and geothermal facilities could increase capacity at existing plants within a similar two-year construction window, while carbon capture and storage (CCS) could be deployed at existing coal and natural gas units to significantly decrease emissions.
We suggest that EPA explicitly help states to understand and use the flexibility they have in their overall state-wide allocations to complement the objectives of the CPP and CEIP, including rate payer protection, and potentially allocations for other clean energy technologies. Each state is unique, with its own set of industries, resources and population needs. For example, we believe one state may desire to buffer rate impacts, while another might want to use a portion of its allocation to credit a CCS retrofit or capacity upgrade at another existing power plant. We believe that states should have as much flexibility as possible.
Related to this issue, states should also be granted the flexibility to determine how many CEIP credits to allocate to clean energy or energy efficiency technologies from their state budgets. For example, under the proposal, a wind project would receive half credit from a state and half credit from EPA, for every megawatt hour generated. If a state wanted to give a wind project a full credit, for example, we see no issue (even if EPA only provides a half of a credit). Similarly, if a state deems CCS to be eligible for CEIP allocation, but EPA does not, then a state should be able to decide the size of the credit for the the CCS project. In this way, the megawatt hour generated from wind and the CO2 reductions from CCS would receive the same economic incentive, even though the source of this incentive (state versus EPA) would be different.
Carbon Pollution Standards
The U.S. Environmental Protection Agency (EPA) issued final rules in August 2015 to limit carbon pollution from existing and new power plants. Electric power generation accounts for 40 percent of U.S. carbon emissions, making it the largest source.
Reducing power sector emissions is a key part of President Obama’s Climate Action Plan, which aims to reduce overall U.S. greenhouse gas emissions 17 percent below 2005 levels by 2020. In addition, the U.S. contribution to the international climate agreement in Paris sets an economy-wide target of reducing greenhouse gas emissions by 26-28 percent below 2005 levels by 2025.
Under the Clean Power Plan for existing power plants, each state has its own target (due to regional variation in generation mix and electricity consumption). Overall, the rule is designed to cut emissions 32 percent from 2005 emission levels by 2030.
In February 2016, the U.S. Supreme Court issued a stay halting implementation of the Clean Power Plan while a legal challenge is resolved in a lower court. Some states may suspend their planning efforts, given the court’s stay, but others will press on with preparations. If the plan is ultimately upheld, the implementation timeline may have to be extended.
EPA's “Carbon Pollution Standard for New Power Plants” finalizes a standard first proposed in March 2012 that was modified and proposed again in September 2013. States would apply the standards for new coal- and natural gas-fired plants (measured as tons of greenhouse gas emissions per megawatt-hour of electricity produced) at each regulated plant.
Explore the issues and options involved in reducing carbon pollution from power plants through the following resources:
C2ES Resources on the Clean Power Plan
- Q&A on the Clean Power Plan, EPA Greenhouse Gas Standards for Existing Power Plants (Updated February 2016)
- Statement: Bob Perciasepe on the Supreme Court stay of the Clean Power Plan
- Map: State action on the Clean Power Plan
- Map: State emission rate targets
- Clean Power Plan Timeline
- Q&A: EPA's Federal Implementation Plan
- Blog Post: EPA’s Clean Power Plan puts states in the driver’s seat
- C2ES comments on the Clean Power Plan
- Insights on implementing the Clean Power Plan from the C2ES Solutions Forum
C2ES Resources on the Clean Energy Incentive Program
- Fact Sheet: The Clean Power Plan's Clean Energy Incentive Program (CEIP)
- Key Insights from Stakeholders on the Clean Energy Incentive Program
- C2ES comments on the Clean Power Plan's Clean Energy Incentive Program
- C2ES Comments on Proposed EPA Rule for New Power Plants (May 2014)
- Cornerstone Article: Carbon Pollution Standards for New and Existing Power Plants and Their Impact on Carbon Capture and Storage
- Event: Carbon Pricing: State and Federal Options (May 2014)
See presentations by Dallas Butraw, David Bookbinder, Brian Turner, and Jon Brekke
- U.S. Environmental Protection Agency, Carbon Pollution Standards web page.
- U.S. Environmental Protetction Agency, Clean Power Plan Toolbox for States
- Presidential Memorandum, Power Sector Carbon Pollution Standards
Recommendations for Maryland's
By Todd McGarvey, Timothy Markle, and Doug Vine
Amid the more well-known national-level activity, U.S. states are demonstrating serious climate action. In the past 15 years, 18 states have set greenhouse gas emission reduction targets through legislation or executive orders. Efforts in some of these states have faded as proactive governments have been replaced with less climate-friendly administrations. However, eight states (California, Maine, Maryland, Massachusetts, New York, Oregon, Vermont and Washington) remain committed to their greenhouse gas reduction targets and stand out as leaders. These sub-national efforts (including programs and plans announced by U.S. businesses) are critical to the United States meeting its international climate commitments, as analysis has shown that current and announced federal policies fall around 6 to 9 percent short of its 2025 target.
The Clean Power Plan's Clean Energy Incentive Program
Under its final Clean Power Plan (CPP), the U.S. Environmental Protection Agency (EPA) proposed to establish the Clean Energy Incentive Program (CEIP) to encourage early action in meeting CPP objectives. The CEIP is a voluntary program for states to incentivize renewable and energy efficient projects by giving them assets that will be tradeable in Clean Power Plan markets. EPA outlined an initial structure for the CEIP, though it is soliciting stakeholder feedback before finalizing elements of the CEIP in the coming year.