Emissions

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

On June 2, 2014, the U.S. Environmental Protection Agency (EPA) released its proposed Carbon Pollution Standards for Existing Power Plants (known as the Clean Power Plan), per its authority under Section 111(d) of the Clean Air Act (CAA). The development of this rule was announced by President Obama during his June 25, 2013, climate policy speech. The Clean Power Plan would establish different target emission rates (lbs of CO2 per megawatt-hour) for each state due to regional variations in generation mix and electricity consumption, but overall is projected to achieve a 30 percent cut from 2005 emissions by 2030, with an interim target of 25 percent on average between 2020 and 2029.

See more resources and maps at the C2ES Carbon Pollution Standards Resource Page.

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

Electric power generation is responsible for nearly 40 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 through 2025, the power sector represents the greatest opportunity for greenhouse gas reductions.

Figure 2: Electric Power Sector Carbon Dioxide Emissions without Proposed Emission Standards

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 terms of combustion). In the absence of any policy changes, the U.S. Energy Information Administration projects that as the economy grows and natural gas prices rise slowly over the next five years, emissions will rise. The Clean Power Plan will have to push against these underlying trends.

Figure 3: Distribution of Power Plants across the Contiguous United States

Source: Energy Information Administration

What is in EPA’s proposal?

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.

The proposed Clean Power Plan is similar in that states would be given a target emissions rate, but have broad flexibility to determine how to achieve that target. Each state would be assigned a carbon emissions baseline based on its level of carbon emissions from fossil-fired power plants divided by its total electricity generation. (See our Proposed State Emission Rate Targets Map.) Electricity generation in this case includes fossil generation, nuclear, renewables, plus generation avoided through the use of energy efficiency programs. A target for 2030 is then established for each state based on its capacity to achieve reductions using the following four “building blocks” identified by EPA:

1. Make fossil fuel power plants more efficient.

2. Use low-emitting natural gas combined cycle plants more where excess capacity is available.

3. Use more zero- and low-emitting power sources such as renewables and nuclear.

4. Reduce electricity demand by using electricity more efficiently.

Each state could then meet its established target however it sees fit. States could join multi-state programs to reduce emissions collectively, for example through a cap-and-trade program.

How much flexibility will states have to minimize costs?

States would have considerable flexibility to adopt a variety of approaches to reduce carbon dioxide emissions from the power sector, if they can demonstrate that they will achieve the emissions target.

Among the possibilities:

  • States could allow emissions 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 could 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 cut overall compliance costs by taking advantage of the lowest-cost opportunity for emissions reductions.
  • States could use energy efficiency or renewable energy for compliance, provided that the total emissions met an EPA-approved target.
  • States could also set a standard that is more stringent than what would be required by EPA's guidelines.

How much will this rule cost?

EPA projects that the compliance costs for this rule would be between $7.3 billion and $8.8 billion annually by 2030. EPA projects that this would lead to about a 3 percent increase in electricity rates by 2030. The rule would deliver considerable benefits as well, including a total of $55 billion to $93 billion in public health benefits by 2030, as projected by EPA. The rule could also reduce electricity consumption, meaning a homeowner’s electricity bill could stay the same or even decrease. It is important to weigh any costs of the Clean Power Plan against the costs of allowing carbon dioxide emissions to continue to rise unabated, contributing to climate change. The costs of climate impacts such as more frequent and intense heat waves, higher sea levels, and more severe droughts, wildfires and downpours, are projected to be much higher.

What can power plants do to reduce emissions?

An individual power plant could 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, states would be complying with this rule on a statewide basis using any number of emission reduction options. As long as states met carbon dioxide targets broadly, action would not necessarily be required at particular power plants. States could meet their emissions targets by increasing their consumption of renewable electricity relative to fossil-generated electricity or improving energy efficiency. Options to reduce carbon dioxide emissions in the power sector are illustrated in Figure 4.

Figure 4: Opportunities to reduce carbon dioxide emissions in the power sector

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

States would have significant flexibility in setting regulations for existing power plants within their borders, but are required to follow the broad limits in EPA’s proposed rule. Since states have been given the authority to use market-based mechanisms, the nine Northeast states participating in the Regional Greenhouse Gas Initiative (RGGI)would 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. Policy measures that states might employ to achieve their carbon targets are listed in Table 1.

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

What happens now?

EPA has been directed by President Obama to work closely with states, power plant operators, and other stakeholders as it finalizes its guidelines due to their novelty and far-reaching implications. Administration officials have said they aim to issue a final rule by June 2015. The target date for states to submit their proposed plans to EPA is June 30, 2016, but states can apply for a one-year extension. After a plan is submitted, EPA will have a year to either approve plans or send them back to states for revision. If a state does not submit an adequate plan, EPA is authorized to impose a federal plan to drive the necessary reductions.

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 if it finds them to endanger public health and welfare, just as EPA 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.

Additional resources can be found on the C2ES Carbon Pollution Standards Resource Page.

U.S. Department of Energy Investment in Carbon, Capture and Storage

 

The U.S. Department of Energy (DOE) oversees federal efforts to advance the deployment carbon capture and storage (CCS) technology. In addition to working on the research and development of CCS component technologies, DOE has provided financial support to multiple commercial-scale CCS projects in the power and industrial sectors. This brief examines DOE’s support for CCS through the American Recovery and Reinvestment Act of 2009 and through its annual budget.

 

 

 


   
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Country Emissions Targets

International Emissions Targets

 

Entity

Kyoto Target 2008-2012

Pledged targets under the UNFCCC [1]

Domestically mandated targets

Australia

8% above 1990 levels

5% below 2000 levels by 2020

15%-25% below 2000 levels by 2020 under different conditions of a global agreement that stabilizes GHG levels

Clean Energy Future Legislation: 80% below 2000 levels by 2050

Default emissions cap for cap-and-trade system starting in 2015 consistent with target of reducing emissions 5% below 2000 levels by 2020

Canada

6% below 1990 levels

17% below 2005 levels by 2020

 

European Community

EU-15: 8% below 1990 levels

EU-27: 20% below 1990 levels by 2020

30% below 1990 levels by 2020 if comparable and adequate actions by other countries

EU-27: 20% below 1990 levels by 2020, translated to 14% below 2005 levels by 2020

21% reduction from 2005 levels for ETS sectors

10% reduction from 2005 levels for non-ETS sectors

Bulgaria

8% below 1988 levels

Part of EU

 

Czech Republic

8% below 1990 levels

Part of EU

 

Estonia

8% below 1990 levels

Part of EU

 

Hungary

6% below average1985-1987 levels

Part of EU

 

Latvia

8% below 1990 levels

Part of EU

 

Lithuania

8% below 1990 levels

Part of EU

 

Poland

6% below 1988 levels

Part of EU

 

Romania

8% below 1989 levels

Part of EU

 

Slovakia

8% below 1990 levels

Part of EU

 

Slovenia

8% below 1986 levels

Part of EU

 

Japan

6% below 1990 levels

25% below 1990 levels by 2020 on condition of fair, effective international framework with ambitious targets by all major economies

 

New Zealand

Remain at 1990 levels

10-20% below 1990 levels by 2020 if comprehensive global agreement

 

Russia

Remain at 1990 levels

15-25% below 1990 levels by 2020; range depends on accounting of forestry sector and actions by all major emitters

 

United States

 

In the range of 17% below 2005 levels by 2020, in conformity with anticipated legislation

 

Croatia

5% below 1990 levels

5% below 1990 levels by 2020, to be replaced upon EU accession (1 July 2013)

 

Iceland

10% above 1990 levels

Same as EU target

 

Liechtenstein

8% below 1990 levels

Same as EU target

 

Monaco

8% below 1990 levels

Same as EU target

 

Norway

1% above 1990 levels

 

 

30% below 1990 levels by 2020

40% below 1990 levels by 2020 as part of a global and comprehensive international agreement

Strengthening Kyoto target to 9% below 1990 levels

30% below 1990 levels by 2020

Targets in the Report No. 34 (2006-2007) to the Storting (Parliament)

Political pledge to achieve carbon neutrality by 2050

Switzerland

8% below 1990 levels

Same as EU target

 

Ukraine

Remain at 1990 levels

20% below 1990 levels by 2020 under certain conditions

 

United Kingdom

12.5% below 1990 levels

Same as EU target

Domestically legislated emissions target of 34% below 1990 levels by 2020 and 80% below 1990 levels by 2050

Belarus

 

5-10% below 1990 levels by 2020, conditional on access to carbon markets, technology and capacity assistance, as well as clarity on accounting rules for forestry and land-use

 

Kazakhstan

 

15% below 1992 levels by 2020

 

Brazil

 

36.1-38.9% below business-as-usual projected emissions level in 2020

Presidential Decree of 9 December 2010: 36.1-38.9% below business-as-usual projected emissions level in 2020 (3236 MtCO2e)

Chile

 

20% below business-as-usual projected emissions in 2020, projected from 2007 levels, requiring international support

 

China

 

40-45% reduction in CO2 emissions per unit of gross domestic product (GDP) from 2005 level by 2020

12th Five Year Plan: 17% reduction in CO2 emissions per unit of GDP from 2010 levels by 2015

Costa Rica

 

Carbon neutral by 2021

Carbon neutrality goal in 2008 Climate Change Strategy

India

 

20-25% reduction in emissions per unit of GDP (excluding agriculture sector) from 2005 level by 2020

 

Indonesia

 

26% below business-as-usual projected emissions in 2020

Presidential Decree No. 61 2011, National Action Plan for Reduction Greenhouse Gas Emissions

Israel

 

20% below business-as-usual projected emissions in 2020

41% below business-as-usual projected emissions in 2020 with international support

 

Mexico

 

30% below business-as-usual projected emissions in 2020, subject to provision of adequate support

General Climate Change Law, April 2012: 30% below business-as-usual projected emissions by 2020 and 50% below 2000 levels by 2050

Korea (Republic of)

 

30% below business-as-usual projected emissions in 2020 (4% below 2005 level)

Cabinet decision of 17 November 2009: 30% below business-as-usual projected emissions in 2020

Singapore

 

7-11% below business-as-usual projected emissions in 2020

16% below business-as-usual projected emissions in 2020, contingent on legally binding global agreement

2009 Sustainable Singapore Blueprint goals expected to lead to 7-11% reduction in business-as-usual projected emissions in 2020

 

South Africa

 

34% below business-as-usual projected emissions in 2020

42% below business-as-usual projected emissions in 2025, extent of implementation dependent on level of support

 

Marshall Islands

 

40% below 2009 levels by 2020 (CO2 only)

 

Maldives

 

Carbon neutrality by 2020

 

Antigua and Barbuda

 

25% below 1990 levels by 2020

 

 

European Community
 

Kyoto Target [2] 2008-2012

EU Climate and Energy Package Effort Sharing targets for 2013-2020 [3]

 

Austria

13% below 1990

 16% below 2005 level

 

Belgium

7.5% below 1990

 15% below 2005 level

 

Bulgaria

 

20% above 2005 level

 

Czech Republic

 

 9% above 2005 level

 

Cyprus

 

5% below 2005 level

 

Denmark

21% below 1990

 20% below 2005 level

 

Estonia

 

11% above 2005 level

 

Finland

1990 levels

 16% below 2005 level

 

France

1990 levels

 14% below 2005 level

 

Germany

21% below 1990

 14% below 2005 level

 

Greece

25% above 1990

 4% below 2005 level

 

Hungary

 

10% above 2005 level

 

Ireland

13% above 1990

 20% below 2005 level

 

Italy

6.5% below 1990

 13% below 2005 level

 

Latvia

 

17% above 2005 level

 

Lithuania

 

15% above 2005 level

 

Luxembourg

28% below 1990

20% below 2005 level

 

Malta

 

5% above 2005 level

 

Netherlands

6% below 1990

 16% below 2005 level

 

Poland

 

14% above 2005 level

 

Portugal

27% above 1990

 1% above 2005 level

 

Romania

 

19% above 2005 level

 

Slovenia

 

4% above 2005 level

 

Slovakia

 

13% above 2005 level

 

Spain

15% above 1990

 10% below 2005 level

 

Sweden

4% above 1990

 17% below 2005 level

 

United Kingdom

12.5% below 1990

 16% below 2005 level

 

 

References:

1. United Nations Framework Convention on Climate Change 2011, FCCC/AWGLCA/2011/INF.1 and FCCC/SB/2011/INF.1/Rev.1

2. The EU-15 nations have joined a "bubble" which allows the joint fulfillment of emissions commitments and preserves the collective emissions reduction goal of 8% below 1990 levels by 2008/2012. http://europa.eu.int/eur-lex/pri/en/oj/dat/2002/l_130/l_13020020515en00010020.pdf

3. http://ec.europa.eu/clima/policies/effort/index_en.htm. The EU’s collective 20% reduction target from 1990 levels translates to a 14% reduction from 2005 levels, split into sectors covered by the ETS (21% reduction) and those not covered by it (10% reduction). These targets apply to sectors not covered by the EU Emissions Trading System (ETS), such as buildings, transport, and other commercial activities. The EU ETS applies a sectoral cap and reduction target across the EU countries for emissions from power and heavy industry, and aviation from 2012. The ETS reduction target is 21% below 2005 levels by 2020. 

 

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