U.S. States & Regions
States and regions across the country are adopting climate policies, including the development of regional greenhouse gas reduction markets, the creation of state and local climate action and adaptation plans, and increasing renewable energy generation. Read More
Q&A: EPA's Federal Implementation Plan
On August 3, 2015 as part of the Clean Power Plan release, the Environmental Protection Agency (EPA) issued a proposed federal plan. The agency is currently soliciting comments on the proposal and intends to issue a final federal plan by summer 2016.
What is a federal implementation plan and when is it used?
The Clean Air Act offer states the opportunity to implement national pollution control programs, including the Clean Power Plan. There is every reason for a state to develop its own plan that takes into account its own unique circumstances, and most states choose to develop and implement programs based on that knowledge. Most states are likely to develop their own program to comply with the Clean Power Plan.
EPA assists state efforts by providing technical and policy guidance. EPA must also review and approve state plans to ensure that they comply with the Act. If a state fails to adopt and implement an adequate plan, EPA is required to issue and enforce a federal implementation plan. States may also choose to adopt the federal plan as an alternative to developing their own plan. However, if a federal plan is implemented in a state, the state may still, at a later date submit a plan to replace the federal plan either in whole or in part. States may take over the administrative and enforcement aspects of a federal plan rather than leaving it to EPA.
What is included in the federal plan?
EPA is proposing two federal plans with different approaches – a rate-based approach and a mass-based approach. These two federal plans can be enforced in states that fail to adopt or implement an adequate plan. These two federal plans may also be considered as model rules which states can adopt or tailor for implementation as a state plan.
How does the federal plan encourage market-based solutions?
The federal plans offers two market-based programs to achieve cost-effective emissions reductions. These may be adopted in part or in whole by states or used as a model for states to design their own plans.
In the rate-based program, units must meet an emission standard or acquire a sufficient number of emission rate credits (ERCs), each representing a zero-emitting megawatt-hour, to bring their rate of emissions into compliance. ERCs can be generated by units not covered directly by this rule, and they can be bought, sold, or banked for later years.
For a mass-based program, EPA would create a state emissions budget equal to the total tons of CO2 allowed to be emitted by the affected units in each state, consistent with the state targets. EPA would initially distribute the allowances within each state budget – less three proposed allowance set-asides – to the affected units based on their historical generation. Allowances may then be transferred, bought, sold, or banked for future use. The compliance obligation on each of the affected unit is to surrender the number of allowances sufficient to cover the unit’s respective emissions at the end of a given compliance period.
The federal plan will also facilitate interstate trading as well as international trading with Canadian and Mexican units that are connected to U.S. electric grid. EPA intends to set up and administer a program to track trading programs – both rate-based and mass-based – that will be available for all states that choose it. EPA proposes that affected units in any state covered by a federal plan could trade compliance instruments with affected units in any other state covered by a federal plan or a state plan meeting the conditions for linkage to the federal plan.
Proper evaluation, measurement, and verification procedures are important to ensure emissions reductions are actually achieved in a trading program. EPA must approve any such procedures and has also offered model procedures to verify that any credits in a state-based trading regime are compliant with federal requirements. States may choose to incorporate these procedures into the state plan to assure approval by EPA.
Will states be penalized for using the federal plan?
No. States will not be penalized for using all or part of a federal plan. The stringency of the proposed federal plan for each state will be the same as required if states were to write their own plan.
The finalization today of EPA’s Clean Power Plan offers Americans a clear, realistic roadmap for addressing planet-warming emissions that threaten the environment and the U.S. economy.
Most importantly, it puts states in the driver’s seat to devise innovative strategies to reduce emissions efficiently and cost-effectively. Now it's time for states to work together with businesses and cities to craft the approaches that work best for them.
Climate change is a critical challenge, and the impacts will only grow more costly if we fail to act. Last year was the warmest on Earth since we started keeping records over a century ago. During the first half of this year, it got even hotter. Climate change impacts include more extreme heat, which can exacerbate drought and wildfires, more frequent and intense downpours that can lead to destructive floods, and rising sea levels that threaten coastal cities.
New federal standards are already reducing heat-trapping emissions from the second-biggest source, transportation, by increasing the fuel economy of cars and trucks. The Clean Power Plan takes the next logical step by addressing the largest source: the electric power sector, responsible for nearly 40 percent of U.S. carbon dioxide emissions.
For most Americans, getting to work means getting in a car – alone. Using public transportation instead can help the planet because it is more fuel efficient to move people together than separately. At a recent Green Fair in Springdale, Arkansas, we also learned just how much public transportation can help employees, especially those without a driver’s license or a car who struggle to get to work each day.
The Green Fair C2ES hosted with Alcoa brought people together to share information and opportunities about energy conservation and sustainability-focused groups in the community.
The connection made at the fair between Alcoa and Ozark Regional Transit (ORT) brought to light a critical problem – and a potential solution. Some of Alcoa’s workers rely on friends, co-workers, and family members for a ride to work. That means if their ride is sick or has another obligation, they may be late for work, or may not make it at all. For Alcoa, that can mean reduced productivity and high employee turnover.
To address this problem, Ozark Regional Transit has decided to launch a new bus route and a pilot program offering free passes to Alcoa employees for the next several months. The distinctive blue buses will wind through nearby neighborhoods and go past Alcoa and a number of other manufacturing companies, who will also participate in the pilot project.
If the program, initiated by Tyson Foods, is successful, companies may decide to extend the service or offer reduced fares as an employee benefit.
The power and transportation sectors are the top two sources of greenhouse gas emissions in the United States. So for a state like Washington that already relies on low-emission power, transportation is the key opportunity to reduce emissions.
That’s why two concrete steps by the state to support its growing electric vehicle (EV) market in the near term are significant. As part of a transportation package signed by Governor Inslee on July 15, Senate Bill 5987 will:
1. Extend the state’s EV sales tax exemption to 2019, opening up it up to plug-in hybrids that can travel at least 30 miles on electricity while capping eligibility to cars that cost under $35,000.
2. Create a unique EV infrastructure bank to fund innovative charging station projects.
Although both steps were less than the broader climate action the governor sought, it’s notable that the state has given a clear market signal that it wants more EVs on its roads, and that it is encouraging public-private partnerships to fund EV charging infrastructure.
These actions are grounded in broader research C2ES completed this spring for the Washington State Legislature’s Joint Transportation Committee. The study analyzed a variety of roles that the public sector can play to help expand private investment in EV charging infrastructure.
With demand for public charging still low and charging infrastructure costs high, it’s critical to capture the indirect revenue streams associated with charging services.
PREPARED REMARKS BY BOB PERCIASEPE
PRESIDENT, CENTER FOR CLIMATE AND ENERGY SOLUTIONS
INNOVATIVE FINANCE & CLEAN POWER, A SOLUTIONS FORUM
JUNE 25, 2015
Welcome everybody and thank you for being here. I especially want to thank our co-host for today’s event: The George Washington University Law School’s Environment and Energy Program.
My name is Bob Perciasepe and I’m president of the Center for Climate and Energy Solutions, or C2ES.
I think many of you know us, but for those of you who don’t, we’re an independent, nonpartisan, nonprofit group dedicated to bringing diverse interests together to solve our climate and energy challenges.
Today is a perfect example of how we go about doing that. We’re going to be talking a lot about energy efficiency and renewable energy – and how innovative financing can help us increase investment in those areas. I’m pleased to be bringing together top financial experts from Bank of America, JPMorgan Chase, and the Coalition for Green Capital; state leaders from Tennessee and Pennsylvania; and energy leaders from Schneider Electric and Duke Energy. I think this group in itself shows you the mix of people who have to start working harder together to make sure we can make progress on clean energy and energy efficiency.
Finance may or may not have been your favorite class in college, but much of the progress we need to address our climate challenge – more efficiency and more low-carbon energy -- comes down to one question: How do we pay for it? Financing and using markets are ways to accelerate the rate of change.
On the other side of the coin, we’re already paying mounting costs worldwide for climate impacts like increasingly frequent storms and intense heat waves. We’re seeing rising sea levels creating higher risk in coastal areas. We face the prospect of more damage to our infrastructure and more disruptions to our supply and distribution chains, as well as our power and water supplies.
The primary cause of these problems, and you can take this all the way to the Vatican, is us. We’ve been pumping heat-trapping gases into the atmosphere for generations. Last year was the hottest since we started keeping records over 100 years ago.
But we know that there are things we can do. We know what some of the solutions are. We know how to make progress within a generation to change that trajectory. We need cleaner energy, cleaner cars, and more efficient ways to use energy.
Here in the United States, the No. 1 source of carbon emissions is the generation of electricity. EPA is in the process of finalizing a plan that will put a lot of responsibility on states to look at how they can innovate to develop clean power plans to reduce emissions from electric generation. We already have a process underway with light duty vehicles and heavy duty trucks, making them more energy efficient. And we have a lot of opportunity to think about how to do this at the state level for power.
The beauty here is while we continue to think about how to deal with this at the national level, cities and states and businesses are already innovating. They’re already making progress not only in reducing emissions but also in finding ways to accelerate the rate of change and stimulate innovation.
Of course, we want not just clean energy, but also affordable energy. This is a balance we have to have. We’re seeing solar and other renewables drop in price, something that can continue with increased deployment. Efficiency reduces how much energy we use, so that even if there’s a slight uptick in rates, a homeowner’s bill can stay the same.
The objective of having cleaner power and also using less of it provides a real opportunity to find that sweet spot of maintaining that affordability. It’s like what we’re looking at with automobiles. If you use less fuel, the actual cost to own the car is cheaper. The same can be said of energy efficiency in the home, business, and industry.
C2ES found something interesting on affordability when we recently looked at six economic modeling studies of the Clean Power Plan. All of the models project energy efficiency will be the most-used option to implement the plan. The majority of the studies project either cost savings to consumers or total costs of less than $10 billion a year, Per household, that’s about 25 cents a day.
So, how do we get to this future of affordable clean energy and energy efficiency? It takes investment, and that’s what we’re here to explore. How do we catalyze that investment? How do we leverage public funds to get more private dollars? What innovative business models are already working, and how do we scale those up?
It’s not simple. We face some barriers to investment like high upfront costs. If you invest in new windows and solar panels for a high rise, it will take a while to recover those costs in lower energy bills. Another barrier is lack of familiarity. People aren’t sure about new technologies and new financial products, which can make them harder to buy and sell.
Fortunately, there are ways to overcome these barriers. We have a brief overview of some of these options. I’ll mention two: Clean Energy Banks, sometimes called Green Banks; and Energy Savings Performance Contracts.
Clean Energy Banks are generally government-created institutions that can leverage a small amount of public money to increase private investment in clean technologies. Several states have them or something like them – Connecticut, New York, Kentucky, and Hawaii. And others, like Maryland, California, and D.C are thinking about them.
They can provide direct loans, but they also have other tools, such as credit enhancements, letters of credit, and loan loss reserves, that can help lower the risk for private lenders and investors.
So far, Connecticut’s green bank, the nation’s first, has attracted about $9 of private investment for every $1 of public money invested in clean energy projects. The bank oversees more than $100 million in assets.
The second example is an Energy Service Company, or ESCO, whose business model is based on establishing Energy Savings Performance Contracts with customers like cities, hospitals and universities. These contracts let a customer get energy-saving or clean-energy technology at little to no upfront cost. They pay the investment back over time from the money saved through reduced energy bills.
The City of Knoxville, Tennessee, has a 13-year energy performance savings contract that will fund energy efficiency measures at all city buildings, parks and sports facilities. Each year, Knoxville will pay the ESCO a fee based on expected savings from things like better lighting, water conservation, weatherization, and heating and cooling upgrades.
Innovative financial tools are not a panacea, but they are an essential tool to overcoming many of the barriers facing a new technology. They can also engage a broader group of investors, bring more capital to the table, and reduce costs. Those are the conditions that allow new technologies to spread.
Key Insights from a Solutions Forum on
By Jason Ye
Energy efficiency is a critical component of the proposed Clean Power Plan. It offers states a least-cost pathway for reducing carbon dioxide emissions from the power sector. A C2ES Solutions Forum held May 18, 2015, brought together city, state, and business leaders to explore how intelligent efficiency can drive reduced energy usage and emissions under the rule.
Among the questions C2ES discussed at this event:
- What is intelligent efficiency and how can it reduce costs and emissions?
- Can intelligent efficiency also help with reliability?
- What role will energy efficiency play in the Clean Power Plan?
- What are some cities, states and businesses doing right?
- What role can cities, states, and businesses play together in using energy efficiency to implement the Clean Power Plan?
- What would help cities and states use energy efficiency under the Clean Power Plan?
- Why would a utility want to sell less of its product – electricity?
C2ES will continue the conversation with cities, states, and businesses to share insights and innovative ideas that will help us get to a clean energy future. Our third Solutions Forum on June 25 will explore innovative ways to finance clean energy technology and infrastructure.
For more information about the C2ES Solutions Forum, see: http://www.c2es.org/initiatives/solutions-forum
Energy efficiency can be an attractive way for states to meet the plan’s targets because, in addition to being relatively inexpensive to deploy on its own, energy efficiency reduces the need to build new, costly power plants in the future.
C2ES examined six economic modeling studies that project the likely impacts of the Clean Power Plan on the U.S. power mix and electricity prices. Despite starting with different assumptions, all of the studies project that energy efficiency will be the most used and least-cost option for states to implement the plan, and that overall electricity consumption will decline as a result.
The majority of the studies project either cost savings to power users under the Clean Power Plan or increases of less than $10 billion a year. That translates to less than $87 a year per household, or about 25 cents a day.
|C2ES President Bob Perciasepe moderates a Solutions Forum panel with (l to r): Steve Harper, Global Director, Environment and Energy Policy, Intel Corporation; Alyssa Caddle, Principle Program Manager, Office of Sustainability, EMC; and Lars Kvale, Head of Business Development, APX Environmental Markets.|
Our second Solutions Forum focused on how to spur more energy efficiency, especially through “intelligent efficiency” — a systems-based approach to energy management enabled through networked devices and sensors.
The technology works. So why aren’t we using more of it?
Join top experts in efficiency, technology, and sustainability from cities, states, and business as we explore the opportunities for “intelligent energy efficiency” under the Clean Power Plan.
Energy efficiency can be a low-cost option for states to meet targets for reducing carbon pollution from power plants.
How can networked devices and sensors, smart grids and thermostats, and energy management systems reduce waste and increase reliability when we make, transmit or use electricity? What are the barriers to using these technologies? And what can we learn from city, state and industry leaders?
Monday, May 18, 2015
9 a.m. – Noon
101 Constitution Ave., NW, Washington, DC, 20001
Why Energy Efficiency is Smart for States and Business
Ralph Izzo – Chairman and CEO, PSEG
Intelligent Efficiency and the Power Sector; Options, Opportunities and Challenges
Steve Harper – Global Director, Environment and Energy Policy, Intel Corporation
Alyssa Caddle – Principle Program Manager, Office of Sustainability, EMC
Lars Kvale – Head of Business Development, APX Environmental Markets
Moderated by: Bob Perciasepe – President, C2ES
Delivering Intelligent Efficiency to Consumers – Why It Matters
Doug Scott – Vice President of Strategic Initiatives, Great Plains Institute
Katherine Gajewski – Director of Sustainability, City of Philadelphia
Jessica Burdette – Conservation Improvement Program Supervisor, Minnesota Department of Commerce
Rick Counihan – Head of Energy Regulatory and Government Affairs, Nest
Moderated by: Janet Peace – Vice President for Markets & Business Strategy, C2ES
To learn more:
Bob Perciasepe's blog post: How can we use intelligent efficiency to reduce power sector emissions?
|C2ES President Bob Perciasepe moderates a Solutions Forum panel with (l to r): Martha Rudolph, Director of Environmental Programs, Colorado Department of Public Health & Environment; David Paylor, Director, Virginia Department of Environmental Quality; and Janet Coit, Director, Rhode Island Department of Environmental Management.|
States will have tremendous flexibility to choose how to reduce their carbon emissions under the Clean Power Plan, and one idea they should explore is putting a price on carbon.
The Center for Climate and Energy Solutions (C2ES) recently brought together legal and economic experts, state environmental directors, and business leaders to explore the potential to use market mechanisms to reduce these damaging emissions efficiently and cost-effectively.
Here are three key insights from this Solutions Forum: