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The Clean Power Plan by Janet McCabe

The Clean Power Plan: Cutting Carbon Pollution from the Power Sector On August 3, 2015, the U.S. Environmental Protection Agency (EPA) issued the Clean Power Plan, one of the most significant steps America has ever taken to combat climate change and protect future generations. The plan puts the United States on track to significantly cut carbon pollution from power plants— our nation’s largest single source of this pollution.

em • The Magazine for Environmental Managers • A&WMA • Jan-Feb 2016

The Clean Power Plan by Janet McCabe

Figure 1: Tap this image to view EPA’s Clean Power Plan interactive presentation.

Firmly Grounded in Science and the Law Firmly grounded in science and the law, the Clean Power Plan establishes smart, achievable standards that will cut carbon pollution from power plants by 32 percent in 2030 (see Figure 1). Science clearly shows that carbon dioxide fuels a changing climate, which, in turn, poses threats to our health and to the environment. The Clean Power Plan is fully consistent with the U.S. Clean Air Act, and relies on the same time-tested state-federal partnership that, since 1970, has reduced harmful air pollution by nearly 70 percent, while the U.S. economy has tripled. The Clean Power Plan follows the direction the power sector is already moving to a more sustainable, less polluting energy system. The nation’s coal fleet is aging—the average unit is 43 years old and 11 percent are over 60—and renewable energy has become cheaper than ever before and has become competitive with fossil energy. Today, we have three times as much wind power, and 30 times as much solar power as we did in 2008. The final Clean Power Plan is the product of one of the most extensive and long-running public engagement processes the EPA has ever conducted. The process began in 2013 and continues today as we work with states and a wide range of stakeholders on implementation, and take comment on the proposed federal plan and model rules. By its very nature, the Clean Power Plan relies on collaboration from many stakeholders and engagement across communities. Many states and utilities were already working to cut carbon pollution from power plants, and to make our homes, businesses, and vehicles more efficient. They are considering these same strategies now and sharing their experiences with

others as they turn to the next phase, which is to develop their state plans. The Clean Power Plan, along with EPA and the U.S. Department of Transportation’s historic CAFE and carbon emissions standards for mobile sources, has demonstrated to the rest of the world that the world’s largest economy and second largest emitter of greenhouse gases is taking responsible steps to reduce its contribution to the pollution affecting our climate. This was evident in the recent Paris climate talks, where the Clean Power Plan was a key point in the negotiations, setting an example for other countries. The Clean Power Plan The Clean Power Plan cuts significant amounts of power plant carbon pollution and the pollutants that cause the soot and smog that harm health. In the final rule, we carefully considered and responded to millions of stakeholder comments, leading to a final rule that is more flexible, more affordable and easier for states and affected sources to implement. We started by cutting pollution in the same way that electricity is generated and distributed— through the interconnected grid. At the heart of the plan is an approach to setting state goals that reflects each state’s particular energy mix—an approach that is built on a fair, consistent treatment of plants from state to state. The consistency comes from the two uniform emission performance rates: one for fossil steam units (coal, oil, and gas) and one for natural gas combined cycle (NGCC) units. The uniform rates are the same for the power plants in every state. States are in the driver’s seat to choose whether to meet a rate-based goal or a

em • The Magazine for Environmental Managers • A&WMA • Jan-Feb 2016

The Clean Power Plan by Janet McCabe

mass-based goal and to design approaches that work for them. The Clean Power Plan mirrors the interconnected nature of the electricity grid. Utilities have bought, sold, and transmitted electricity across state lines for decades, resulting in low-cost energy options for rate-payers. The final Clean Power Plan empowers states to take advantage of the same economic mechanisms to reduce carbon pollution. By providing states and utilities ample flexibility and the time needed to achieve these pollution cuts, the Clean Power Plan offers the power sector the ability to optimize pollution reductions while maintaining a reliable and affordable supply of electricity for ratepayers and businesses.

When we hold power plants of the same type to the same standards, we also make sure their reductions are interchangeable, creating a system that’s ready for trading. The final Clean Power Plan has “trading ready” options for states and utilities—quick and easy pathways that mean states don’t have to partner formally with one another to take full advantage of the opportunities for renewable energy or energy efficiency on the interconnected grid. The built-in ability to trade emissions reductions gives states and utilities even more flexibility in how they achieve their carbon pollution reduction goals. Trading provides affected sources with an opportunity to access a range of low- and zero-emitting power generation resources in meeting emission reduction goals.

It was input from a range of groups that told us we needed to extend the start date of the program to 2022, and allowed us to smooth out the glide path to 2030. Starting the program in 2022 gives states and utilities sufficient lead time, and the glide path gives states and utilities a smoother path to meeting the 2030 goals. The final Clean Power Plan has glide paths for rate-based goals and equivalent glide paths for mass-based goals. Each glide path gradually steps down, phasing in the reductions over the 2022–2029 interim period. States have the flexibility to use EPA’s numbers or elect to customize their own glide path.

States, utilities, and reliability entities highlighted the need for flexibility to optimize carbon pollution reductions, ratepayer affordability, and electric system reliability. The final Clean Power Plan adds features that are essential to maintaining electric system reliability: time and flexibility sufficient to allow for planning and implementation, and the integration of actions needed to address reliability while achieving the required emissions reductions. States must show they have considered reliability in developing their state plans. States can also amend their approved plans in the event that reliability challenges arise. Finally, the rule includes

Photo courtesy of the U.S. Environmental Protection Agency.

em • The Magazine for Environmental Managers • A&WMA • Jan-Feb 2016

The Clean Power Plan by Janet McCabe

a reliability safety valve to address unforeseen emergencies. All of these features, and the other flexibilities included in the rule, also mean that the costs of electricity will remain affordable. Implementing the Clean Power Plan EPA designed the Clean Power Plan to give states flexibility and a host of options to decide how best to achieve pollution reductions from power plants. States can pursue a range of approaches. And the tools states can choose from to meet the goals are wide open, too. Utilities can improve plant efficiency, run cleaner plants more, use renewables, and take advantage of energy efficiency and interstate trading. EPA is actively engaging with states as they work to develop plans that ensure the power plants in their state—either individually, together, or in combination with other measures— achieve the equivalent, in terms of either or rate or mass, of the interim carbon dioxide performance rates between 2022 and 2029, and the final carbon dioxide emission performance rates for their state by 2030. The final rule gives states up to three years to submit a final plan. Specifically, states can submit either a final plan or make an initial

submittal by September 6, 2016, with a request for an extension up to September 2018. In the initial submittal, a state must explain why it needs more time to submit a final plan, such as time needed for legislative or regulatory processes, and demonstrate that it has taken certain preliminary and readily achievable steps toward the development of its plan. In developing a plan, each state will have the flexibility to select the approach it prefers in order to achieve the carbon dioxide emission performance rates for its affected sources or meet the equivalent statewide rate- or mass-based carbon dioxide goal. States will also have the ability to shape their own emissions reduction pathways over the 2022–2029 period. EPA has also proposed model rules, which include rate- and mass-based options and are designed to be used directly by a state if it so chooses. The model rules provide a cost-effective pathway to adopt a trading system supported by EPA, making it easy for states and power plants to use emissions trading. The proposed model rules provide a good starting point for states and will be finalized in time for states to use them. For the proposed federal plan, EPA would implement the plan in any state that does not submit an approvable plan.

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em • The Magazine for Environmental Managers • A&WMA • Jan-Feb 2016

The Clean Power Plan is compatible with many of the actions that states are taking, including programs that states already have in place, such as in California or the Regional Greenhouse Gas Initiative (RGGI). Many state meetings have already taken place with EPA staff and we expect these meetings will continue. States are also consulting with one another, utilities, and numerous other organizations on the development of plans. And, indeed, states across the country are having discussions and beginning the work needed to design and develop plans. Communities and Engagement A major reason for this rule is to protect vulnerable communities, and that includes keeping electricity bills affordable for low-income Americans. That’s why the Clean Power Plan gives states and utilities the time and flexibility they need to reduce carbon pollution while preserving affordable, reliable power. One of the ways EPA is accomplishing this goal is to provide a Clean Energy Incentive Program to reward early investments in certain renewable energy and demand-side energy efficiency projects that generate carbon-free electricity or that reduce enduse energy demand during the years 2020 and 2021. State participation in this program is optional. Through this program, EPA intends to make emission rate credits (ERCs) or allowances available to states to encourage early reductions from renewable energy and from energy efficiency projects that are implemented in low-income communities. We’re also requiring that states give vulnerable communities a seat at the table with other stakeholders as they craft their state plans, making sure everyone has a voice in the decision-making process. The requirement for meaningful engagement will provide an avenue for all communities to both hear from the state about strategies that might work best to tackle carbon pollution, and to provide input on where possible impacts to low-income communities, minority communities, and tribal communities could occur along with strategies to mitigate those impacts.

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The Clean Power Plan by Janet McCabe

EPA designed the Clean Power Plan to give states flexibility and a host of options to decide how best to achieve pollution reductions from power plants.

Act and implementing regulations for being “modified” or “reconstructed.” For this action, EPA is establishing separate standards for two types of fossil-fuel fired sources: • stationary combustion turbines, generally firing natural gas; and • electric utility steam generating units, generally firing coal.

The new plants built under this standard would be cleaner than the average coal unit operating today, which emits about 3.5 million tons of carbon dioxide per year. By comparison, a new natural gas plant would emit 1.6 million ton a year, or about 1.9 million tons less; and a new, modern coal unit would emit 3.1 million ton per year, or about 400,000 tons less. Power plants are the biggest emitters of carbon pollution. This rule will make sure any new power plants burning fossil fuels use modern technology to minimize this harmful carbon pollution. Planning for a Cleaner Future The final Clean Power Plan is fair, flexible, and designed to strengthen the fast-growing trend toward cleaner and lowerpolluting American energy. With strong but achievable standards for power plants, and customized goals for states to cut the carbon pollution that is driving climate change, the Clean Power Plan provides national consistency, accountability, and a level playing field while reflecting each state’s energy mix. It also shows the world that the United States is committed to leading global efforts to address climate change. em

Carbon Pollution Standards for New, Modified, and Reconstructed Plants Along with the Clean Power Plan, EPA finalized Carbon Pollution Standards for new, modified, and reconstructed power plants. These standards apply to new units or to an existing unit that meets certain, specific conditions described in the U.S. Clean Air

Janet McCabe is the Acting Assistant Administrator for the U.S. Environmental Protection Agency’s (EPA) Office of Air and Radiation.

em • The Magazine for Environmental Managers • A&WMA • Jan-Feb 2016