Cross-State Electricity Load Reductions Under EPA’s Proposed Clean Power Plan

States will likely invest in energy efficiency and renewable energy in order to comply with the Clean Power Plan. Yet the flow of power between states creates accounting problems since the actions of power importers can affect those of exporters. EPA is likely to require states to validate the environmental integrity of their plans by ensuring that power importing and exporting states do not take credit for the same emissions reductions. This brief reviews current EPA guidance on accounting for this “interstate effect,” finding that no method is sufficiently precise in the absence of a regional approach that fully subsumes all interstate dynamics. This suggests that power-importing states choosing to comply in isolation will have difficulties in reaping the benefits of programs that they put in place, which could lead to under-investment in energy efficiency in particular. It further suggests that states have strong reasons to work together on multi-state plans.