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
In his June 25, 2013, climate policy speech, President Obama announced that the U.S. Environmental Protection Agency (EPA) would begin developing regulations to reduce the emission of greenhouse gases from existing power plants. These regulations, known as New Source Performance Standards (NSPS), are required by Section 111(d) of the Clean Air Act (CAA). (Somewhat confusingly, EPA is required to develop New Source Performance Standards for both new (under Section 111(b)) and existing (under Section 111(d)) power plants. EPA has proposed, but not finalized, regulations for new power plants).
Why is regulation of greenhouse gas emissions from existing power plants important?
Electric power generation is responsible for about forty percent of U.S. carbon dioxide emissions.
Figure 1: 2012 U.S. CO2 Emissions
Source: Energy Information Administration
Since the federal government adopted new vehicle efficiency standards last summer to address transportation emissions, the power sector represents the greatest opportunity for greenhouse gas reductions.
Figure 2: Electric Power Sector Carbon Dioxide Emissions
Source: Energy Information Administration
Power sector emissions have declined over the past five years in part due to the economic downturn, increased energy efficiency, greater use of renewable energy and a switch from coal, the most carbon-intensive fossil fuel, to natural gas, the least carbon-intensive. In the absence of any policy changes, the U.S. Energy Information Administration projects that as natural gas prices rise slowly over the next five years, coal use will again begin to increase, leading to higher emissions.
Figure 3: Distribution of Power Plants Across the Contiguous United States
How would this regulation work?
Typically, EPA regulations are set at the federal level and then administered by states. For example, EPA sets a limit on the level of smog in the atmosphere, and states then submit plans for how they will meet that standard. Once approved by EPA, states then administer these plans, known as State Implementation Plans.
As EPA has only adopted regulations using Section 111(d) of the Clean Air Act a handful of times, there are not many examples to help predict how EPA is likely to apply it to existing power plants. One thing we do know is that states will play a major role. EPA will set guidelines for states to follow, likely including a "performance standard" in the form of an emissions rate: pounds of greenhouse gas emitted per unit of electricity produced. From here, states will develop the specific regulations that power plants must follow, and will have some degree of flexibility in crafting these regulations based on EPA's guidelines. States may even be able to translate EPA's performance standard into an absolute amount of emissions, and would then be able to meet the required absolute level of emissions as the state sees fit. That is, by multiplying the emissions rate by the amount of electricity produced by power plants in a state, the state will calculate an absolute emissions target in the form of tons of greenhouse gas emitted per year. The state would then have flexibility as to how to achieve this target, without necessarily requiring reductions at every power plant.
How much flexibility will states have to minimize costs?
EPA will likely adopt a "model rule"' that states may choose to follow. But states will likely have considerable flexibility to adopt alternative approaches, if they can demonstrate that they will produce equivalent results.
Among the possibilities:
- States could allow emission credit trading among power plants owned by the same operator. This means that if one power plant reduced its emission rate below the state target, it could trade credits to a power plant that could not meet the target so that the company overall would be in compliance.
- States might also be authorized to allow emissions trading between power companies and even across state lines (such a program would be similar to the Regional Greenhouse Gas Initiative). Averaging or trading across power plants, companies, and states cuts overall compliance costs by taking advantage of the lowest-cost opportunity for emission reductions.
- States might also be able to use energy efficiency or renewable energy for compliance, provided that the total emissions met an EPA-approved target.
- States might be authorized to allow power companies to use alternative compliance payments (ACP) to comply. This would mean that a power company could pay the state a fee, which would then be directed to projects that cut greenhouse gas emissions elsewhere in the power sector, or in another sector entirely, rather than reduce its own emissions to meet the target.
- States could also set a standard that is more stringent than what would be required by EPA's guidelines.
More information on state flexibility can be found in the C2ES brief GHG New Source Performance Standards for the Power Sector: Options for EPA and the States.
What can power plants do to reduce emissions?
An individual power plant can reduce its greenhouse gas emission rate by using fuel more efficiently or by switching to a lower carbon fuel, such as natural gas or biomass instead of coal. However, depending on how the rule is designed, power companies may be able to comply on a company-wide level and/or states may be able to comply on a statewide level. In that case, as long as power companies, or entire states, meet greenhouse gas emission targets broadly, action will not necessarily be required at particular power plants. States could potentially meet their emission targets by increasing their consumption of renewable electricity relative to fossil-generated electricity or improving energy efficiency.
How would existing state policies, such as the Regional Greenhouse Gas Initiative, be affected?
States will likely have significant flexibility in setting regulations for existing power plants within their borders, provided they follow guidelines set by EPA. If states are given the authority to use market-based mechanisms, the nine Northeastern states participating in the Regional Greenhouse Gas Initiative (RGGI)may be able to demonstrate that their cap-and-trade program for power plants satisfies the required emission reductions, and that further regulation is therefore unnecessary. The situation would be more complicated in the case of California's cap-and-trade program, which regulates emissions from many sources, not just power plants.
How long will it take for EPA to develop the new rules?
EPA has very little experience using this particular subsection of the Clean Air Act, and therefore does not have much in the way of its own precedent to follow. Additionally, EPA has been directed by President Obama to work closely with states, power plant operators, and other stakeholders as it develops its guidelines due to their novelty and far-reaching implications. Administration officials have said they aim to issue a proposed rule by June 2014 and a final rule by June 2015. Based on past practice, states will then have nine months to develop their own plans, and another year to begin enforcing them.
It is important to note that this action is not voluntary on the part of EPA. According to the Supreme Court in Massachusetts v. EPA (a decision that was recently reaffirmed), EPA is legally required to regulate greenhouse gases under the Clean Air Act just as it has addressed more traditional pollutants for the past 43 years. In 2010, EPA settled a suit with several states and environmental groups by agreeing to finalize greenhouse gas standards for existing power plants by May 26, 2012. The plaintiffs in this case had signaled that they would seek to enforce this court order, but have backed off due to the president's announcement.
Additional C2ES Resources:
Statement of Eileen Claussen
President, Center for Climate and Energy Solutions
June 25, 2013
President Obama is laying out a credible, comprehensive strategy to use the tools at his disposal to strengthen the U.S. response to climate change. His plan recognizes that the costs of climate change are real and rising, and that to minimize them we must both cut our carbon output and strengthen our climate resilience. Putting these critical issues before the American public is itself a step forward. But it will require continued presidential leadership to translate the plan’s good intentions into concrete policy.
The most cost-effective way to reduce greenhouse gas emissions is for Congress to enact an economy-wide price on carbon. As long as Congress is unwilling to act, the president is right to use his powers under the Clean Air Act to curb emissions from power plants, by far the largest unregulated source of U.S. carbon emissions. Many companies are prepared to work with the administration on pragmatic approaches that cut emissions while keeping U.S. electricity affordable and reliable. Companies want regulatory certainty and know that continued inaction exposes them to increasing climate risks.
In crafting the power plant rules, EPA should consult widely with utilities and with the states, which ultimately must implement them. We strongly encourage EPA to devise a flexible strategy that allows a variety of state-level policies, including market-based approaches, and allows utilities to cut emissions at the lowest possible cost.
With extreme weather and other climate impacts being felt across the country, the president also is right to place equal emphasis on strengthening America’s climate resilience. His plan will help communities and businesses apply the lessons learned from Hurricane Sandy and other extreme events to better cope with future climate risks.
Implementing the president’s plan will be extremely challenging. But a clear majority of the American public favors stronger climate action, and with a plan in place, the administration must now follow through with a true sense of urgency. We look forward to working with the administration as it moves forward.
Contact: Laura Rehrmann, 703-516-0621, email@example.com
The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address the twin challenges of energy and climate change. Launched in November 2011, C2ES is the successor to the Pew Center on Global Climate Change. Learn more at www.c2es.org.
Energy efficiency standards for appliances and equipment reduce energy use in residential and commercial buildings and the associated greenhouse gas emissions. In 2011, buildings, and the appliances and equipment used inside of them, accounted for 34 percent of U.S. greenhouse gas emissions (emitted either directly from the buildings or in the generation of the electricity used in the buildings).
Laws authorizing the U.S. Department of Energy (DOE) to set appliance and equipment efficiency standards were first enacted in the 1980s and have since been expanded to new categories of equipment. DOE also is required to periodically strengthen existing standards. In setting a standard, DOE must take into consideration factors including increased cost of the product, lifetime operating cost savings, total projected energy savings, the need for national energy savings, impacts on product performance, and impacts on manufacturer competition. Altogether, the new and strengthened 2013 standards are expected to cumulatively save between $4.9 billion and $16.3 billion and prevent the emission of 300 million tons of CO2.
DOE recently set new energy efficiency standards for microwave ovens and distribution transformers:
- Microwave ovens. Microwave ovens are consumer products that use microwaves to cook or heat food. Some microwave ovens also have thermal elements that allow them to cook food much like a conventional oven. Standards for this equipment were first authorized by the National Appliance Energy Conservation Act of 1987. However, the first efficiency standards for microwaves for power consumption during operation, as well as standby mode, were released on June 17, 2013. These standards are expected to save consumers from $1.53 billion to $3.38 billion and prevent the emission of 38.11 million metric tons of CO2.
- Distribution Transformers. Distribution transformers transform the high-voltage electric current from power lines into lower-voltage electricity that can be used in homes and businesses. These transformers can be found in metal boxes on utility poles where power enters a neighborhood, at ground level on a metal slab, or underground. Standards for liquid-immersed and medium-voltage dry-type distribution transformers were first required under the Energy Policy Act of 1992, while standards for medium-voltage dry-type distribution transformers were set in the Energy Policy Act of 2005. Strengthened standards for all types were issued by DOE in a final rule on April 18, 2013. These standards are expected to save from $3.4 billion to $12.9 billion and prevent the emission of 264.7 million metric tons of CO2.
Metal halide lamp fixtures. Metal halide lamp fixtures provide lighting for parking lots and streets, flood lighting, athletic facilities, big-box stores, and warehouses. Standards for this equipment were first established in the Energy Independence and Security Act of 2007. Strengthened standards were issued by DOE in a final rule on February 10, 2014. These standards are expected to save consumers from $950 million to $3.2 billion by 2046 and avoid the emission of 22.5 to 27.8 million metric tons of CO2.
External power supplies. External power supplies are the boxes on power cords that convert household electric current into direct current or lower-voltage alternating current in order to operate consumer products, such as computers or cell phones. Standards for this equipment were first established in the Energy Independence and Security Act of 2007. Strengthened standards were issued by DOE in a final rule on February 10, 2014. These standards are expected to save consumers from $1.9 billion to $3.8 billion by 2044 and avoid the emission of 47 million metric tons of CO2.
Commercial refrigeration equipment. Commercial refrigeration equipment is used for food storage and merchandising in the food retail industry (e.g., grocery stores, supermarkets convenience stores, specialty food stores) and the foodservice industry (e.g., restaurants and cafeterias). Standards for this type of equipment were first established in the Energy Policy Act of 2005. Strengthened standards were issued by DOE in a final rule on February 28, 2014. These standards are expected to save businesses between $4.9 billion and $11.7 billion by 2047 and avoid the emission of 142 million metric tons of CO2.
DOE is currently considering establishing or strengthening energy efficiency standards for these categories of appliances and equipment:
- Portable Air Conditioners. Portable air conditioners are units that cool air and can be moved from room to room. They are distinct from window box units or central air conditioning systems. DOE is soliciting public comments on a proposed rule to include portable air conditioners as a category of consumer appliances for which standards can be established.
- Computers. Computers are devices that include (but is not necessarily limited to) desktop computers, integrated desktop computers, laptop/notebook/netbook computers, and workstations. DOE is soliciting public comments on a proposed rule to include computers as a category of consumer appliances for which standards can be established.
- Computer servers. Computer servers provide services and manage networked resources for client devices such as desktop and laptop computers. These services and resources are accessed via a network connection. DOE is soliciting public comments on a proposed rule to include computer servers as a category of equipment for which standards can be established.
- Commercial refrigeration equipment. Commercial refrigeration equipment is used for food storage and merchandising in the food retail industry (e.g., grocery stores, supermarkets convenience stores, specialty food stores) and the foodservice industry (e.g., restaurants and cafeterias). Standards for this type of equipment were first established in the Energy Policy Act of 2005. DOE has set a deadline of 2014 for a new final rule. Proposed regulations were released in August 2013 that, if finalized, would prevent the emission of 55 million tons of CO2 over 30 years.
- Electric motors. Electric motors convert electric energy into rotational energy and are often used for blowers, compressors, conveyors, fans, and pumps. There are three categories of electric motors, defined, among other ways, by their voltage, power, and rotation speed. Standards for this equipment were first established in the Energy Policy Act of 1992, but the Energy Independence and Security Act of 2007 significantly expanded the scope of covered motors. In November 2013, DOE issued proposed standards for electric motors that would avoid emission of 400 million metric tons by 2044. DOE expects to make a final rule in May 2014 that will go into effect in December 2015.
- Ellipsoidal diameter, bulged reflector, and small diameter reflector lamps. Ellipsoidal diameter, bulged reflector, and small diameter reflector lamps are types of incandescent reflector lamps (IRLs). IRLs are directional lamps, such as spotlights and floodlights, which can be used in residential and commercial applications, such as recessed downlighting and track lighting. They have a reflective coating on the inside of the bulb to focus and aim the light. While most IRLs were subject to efficiency standards under the Energy Policy Act of 1992, these subcategories were excluded before enactment of the Energy Independence and Security Act of 2007, and then delayed by a rider to the FY 2012 Energy and Water Appropriations bill.
- Walk-in coolers and freezers. The coolers and freezers covered by the new standards are used primarily in the food service and food sales industry. Coolers and freezers covered by the regulations are enclosed storage spaces that can be walked into, have a total chilled storage area of less than 3,000 square feet, and do not include products designed and marketed exclusively for medical, scientific, or research purposes. The 2013 standards for walk-in coolers and freezers set a minimum R-value* for insulating panels, as well as requirements for doors, door closures, motors and lighting. Standards for this equipment were first established in the Energy Independence and Security Act of 2007. DOE has set a deadline of 2014 for a new final rule. (*R-value is a measure of the amount of insulation provided. For example, insulation panels with a higher R-value will allow less heat to pass through them.) Proposed regulations were released in August 2013 that, if finalized, would prevent the emission of almost 300 million tons of CO2 over 30 years.
President Obama's Climate Action Plan outlines a wide array of actions his administration will take using existing authorities to reduce carbon pollution, increase energy efficiency, expand renewable and other low-carbon energy sources, and strengthen resilience to extreme weather and other climate impacts. As part of the plan, annoujnced in June 2013, the president directed the Environmental Protection Agency to set standards by June 2015 to reduce carbon pollution from existing power plants.
C2ES President Eileen Claussen calls Obama's plan "a credible, comprehensive strategy to use the tools at his disposal to strengthen the U.S. response to climate change. His plan recognizes that the costs of climate change are real and rising, and that to minimize them we must both cut our carbon output and strengthen our climate resilience."
Here are links to:
- The President’s Climate Action Plan
- President Obama’s speech at Georgetown University
- The President’s Memorandum to EPA on Power Sector Carbon Pollution Standards
C2ES Resources on Key Topics:
President Obama’s Climate Action Plan focuses on:
- Regulating Greenhouse Gas Emissions
- Energy Efficiency
- Renewable Energy
- Natural Gas
- Leading by Example
- Climate Resilience
- International Climate Change Leadership
Congress has granted the Environmental Protection Agency (EPA) authority to regulate a wide range of pollutants through several laws, including the Clean Air Act. The Supreme Court ruled in 2007 that EPA has authority under the Clean Air Act to regulate greenhouse gases. Carbon pollution standards for new power plants proposed by EPA in March 2012 have not yet been finalized. On June 25, President Obama announced a Presidential Memorandum directing the EPA “to work expeditiously to complete carbon pollution standardsfor both new and existing power plants.”
For more information, see:
- Q & A on Regulating Emissions from Existing Power Plants
- Carbon Pollution Standard for New Power Plants
- EPA Climate and Energy Action
- Overview of the U.S. Power Sector
- Climate Techbook: Carbon Capture and Storage
- Domestic Policies to Reduce the Near-Term Risks of Climate Change
- National Enhanced Oil Recovery Initiative
The president directed the Department of Energy to build on efficiency standards set during his first term for dishwashers, refrigerators, and other products. He set a goal of cumulatively reducting carbon dioxide emissions by 3 billion metric tons by 2030 through efficiency measures adopted in his first and second terms. The president also committed to build on heavy-duty vehicle fuel efficiency standards set during his first term with new standards past the 2018 model year.
For more information, see:
- Department of Energy Appliance Standards
- Federal Vehicle Standards
- Make an Impact
- Corporate Energy Efficiency
Renewable energy is the fastest growing energy source. In 2012, renewable energy was responsible for 12.7 percent of net U.S. electricity generation with hydroelectric generation contributing 7.9 percent and wind generation 2.9 percent. In the president’s climate plan, he reiterates his support to make renewable energy production on federal lands a top priority.
For more information, see:
- Renewable Energy
- Clean Energy Markets: Jobs and Opportunities
- Climate Techbook: Solar Power
- Climate Techbook: Wind Power
New drilling technologies such as hydraulic fracturing (sometimes called fracking) have vastly increased the amount of recoverable natural gas in the United States and elsewhere. These advances are projected to keep the price of this lower-carbon fuel near historically low levels, significantly altering energy economics and trends, and opening new opportunities to reduce greenhouse gas emissions. To better leverage natural gas to reduce greenhouse gas emissions, the administration will develop an interagency methane strategy to further reduce emissions of this potent greenhouse gas.
For more information, see:
In his first term, President Obama set a goal to reduce federal greenhouse gas emissions by 24 percent by 2020. He also required agencies to enter into at least $2 billion in performance-based contracts by the end of 2013 to finance energy projects with no upfront costs. In his climate plan, the president established a new goal for the federal government to consume 20 percent of its electricity from renewable energy sources by 2020—more than double its current goal of 7.5 percent.
For more information, see:
- Leading by Example: Using Information and Communication Technologies to Achieve Federal Sustainability Goals
The president wants federal agencies to support local investments in climate resilience and convene a task force of state, local, and tribal officials to advise on key actions the federal government can take to help strengthen communities. President Obama also wants to use recovery strategies from Hurricane Sandy to strengthen communities against future extreme weather and other climate impacts and update flood-risk reduction standards for all federally funded projects.
For more information, see:
- Climate Adaptation
- Building Business Resilience to Climate Change
- Climate Change Adaptation: What Federal Agencies Are Doing
- Extreme Weather and Climate Change
- Climate Change and Hurricane Sandy
The president promised to expand new and existing international initiatives with China, India, and other major emitting countries. He also called for an end to U.S. government support for public financing of new coal-fired powers plants overseas, except for the most efficient coal technology available in the world's poorest countries, or facilities deploying carbon capture and sequestration technologies.
For more information, see:
Leading by Example 2.0: How Information and Communication Technologies Help Achieve Federal Sustainability Goals
As the nation’s largest landlord, employer, fleet operator, and purchaser of goods and services, the federal government has the opportunity, if not the responsibility, to lead by example in moving our country in a more economically efficient and environmentally sustainable direction. Faced with tightening budgets, agencies are looking for new ways to reduce costs and increase productivity, while at the same time meeting a growing list of congressional and executive mandates to consume less energy and reduce greenhouse gas emissions.
The discussion of a carbon tax continues. Conservatives met recently in Washington, D.C., to debate the mertis of a carbon taxt at an event hosted by the R Street Institute and the Heartland Institute, featuring representatives with opposing viewpoints from four conservative think tanks.
A 2013 C2ES brief found that a carbon tax was one way to put a price on carbon emissions, reduce greenhouse gas emissions, and raise significant revenue for the federal government. A tax starting at about $16 per ton of carbon dioxide (CO2) in 2014 and rising 4 percent over inflation per year would raise more than $1.1 trillion in the first 10 years, and more than $2.7 trillion over a 20-year period. This revenue could fund a wide range of things, including deficit reduction, a reduction in statutory corporate income tax rates from 35 percent to 28 percent (often cited as a goal by both conservatives and liberals), and research and development into low-emitting technology. Importantly, such a carbon tax could also reduce CO2 emissions by 9.3 billion tons over 20 years.
The National Journal Energy Experts blog asked this week whether we need to rethink the global warming debate, given the gridlock in Congress. My response is, by all means, we need to change the debate about climate change. But that starts well beyond the Beltway, where farmers, coastal residents, small-town mayors and others are feeling its impact – and are seeing the opportunities in a clean energy future.
I recently replied to a question on the National Journal blog on whether small legislative measures will be effective in fighting climate change.
You can read responses at the National Journal.
Here is my response: