Obama Administration Announces Clean Power Plan

On August 3, 2015, President Obama and the Environmental Protection Agency (EPA) announced the unveiling of the Clean Power Plan.  The Clean Power Plan 40 CFR Part 60 is a regulation advanced by the EPA under the Clean Air Act.  The plan proposes to cut carbon dioxide emissions from U.S. power plants to 32 percent below their 2005 levels by the year 2030. According to the White House, fossil fuel-fired power plants are the largest source of U.S. CO₂ emissions, making up 32 percent of U.S. total greenhouse gas emissions. The plan calls for renewable energy sources to account for 28 percent of the power capacity by 2030.  The EPA has set targeted emission goals for each state.

The states are tasked with developing and implementing plans to ensure that their power plants achieve the interim emissions performance rates between 2022 and 2029 and the final emission performance rates, rate-based goals, or mass-based goals by 2030. According to a White House fact sheet, the states can choose from three different forms of goal measurement: “a rate-based state goal measured in pounds per megawatt hour; a mass-based state goal measured in total short tons of CO₂; and a mass-based state goal with a new source complement measured in total tons of CO₂."  The states can reach these goals by increasing the percentage of their electricity that comes from renewable sources, increasing efficiency at power plants, increasing reliance on nuclear power, implementing carbon capture and storage,  and/or switching away from coal-fired power plants and toward natural gas generation.   An administration fact sheet says that these emission reduction goals will be less reliant on a growth of the use of natural gas than was the case with the earlier proposed rule in 2014.   The final rule includes a Clean Energy Incentive Program, which will promote “early deployment of renewable energy and energy efficiency.”  

The states also may reduce their emissions through emissions trading.  States can use either emission rate credits (for a rate-based standard) or allowances (for a mass-based standard).   The rule enables states to design state rate-based or mass-based plans the will make their units “trading ready” which would allow individual power plants to use out-of-state reductions in the form of credits or allowances.  States are required to submit a final or initial state plan with an extension request by September 6, 2016.  The final complete state plans must be submitted by September 6, 2018.

Written by Stephen Kenney - Research Assistant

Center for Agricultural and Shale Law

August 3, 2015