How Does the Clean Power Plan Measure Up?

Against intense pressure from the coal industry to tie Americans to dirty fuels forever, the Obama administration has surged forward in the battle to fight climate change. The Clean Power Plan rule, released today by the EPA, promises serious cuts in greenhouse gas emissions, while giving states the flexibility and incentives they need to reduce pollution, keep the grid humming, and save consumers money. The challenge, as EPA Administrator Gina McCarthy put it, was “wicked hard.”  But polls show Americans want action on climate change.

Last week, CPR Scholars released a white paper on a number of key issues to watch on the Plan, offering insights on what to look for and on how states could implement it. Some of the key questions the report raises are included below with my reactions after reading the final rule for the first time. This is the beginning of an on-going discussion. CPR Scholars will continue to monitor the implementation of this rule and will closely examine the final rule’s implications for both states and citizens alike.

• Will the Administration weaken the plan by making significant concessions to industry and political pressure? Will it extend compliance periods significantly? Make major revisions in the “building blocks” that shape state targets? More

There are no significant concessions. In fact, the final rule is tougher. It requires a 32 percent reduction of carbon emissions from 2005 levels by 2030, a 9 percent increase compared to the proposed rule. That’s the most important number in the whole document. The abandonment of the fourth “building block” (consumer-side energy efficiency) in determining targets is not a huge problem because the abandonment does not result in a lower nationwide target (rather EPA has adjusted its formulae to produce a higher target of 32%). In addition, states retain the option of encouraging consumer-side energy efficiency (often the cheapest tool) to meet their targets.

There are two “extensions.” States have until 2022 (rather than 2020) to make cuts. Also a “safety valve” provision gives states more time if needed to avoid disruptions in the grid. But, new provisions give states incentives (carbon reduction credits) to cut emissions early and also incentives to move straight to zero-carbon energy sources, thereby bypassing concerns associated with natural gas.

These extensions could be somewhat or wholly offset by the incentives. It’s hard to tell. But this doesn’t seem to be a significant concession. Honestly, in practice they would have likely happened anyway.

• Will the final CPP embrace or hinder existing regional agreements that rely on cap-and-trade? Will the final Clean Power Plan retain or improve the incentives for states to cooperate with each other to develop and submit regional compliance plans? More

The provisions facilitating existing cap-and-trade agreements are intact.

• Will the final CPP set or allow preferable mass-based state targets, or will it retain rate-based targets? Will the states retain flexibility to use either form? More

CPP will allow mass-based targets, but will not require them. This set up, which was present in the draft, is not the optimal solution. But it is acceptable. Increased participation in regional cap-and-trade programs would lead to more states adopting mass-based targets.

• Will the state targets continue to reflect states’ past efforts, with the states that have done the least being expected to meet weaker targets and the states that have done the most being expected to meet more stringent targets? More

Yes, this weakness remains.

• What will be the environmental justice implications of the CPP and CPP implementation options, particularly with respect to co-pollutants? More

Co-pollutants will decrease, a win for environmental justice advocates. In the words of McCarthy, “In 2030, we’ll avoid up to 3,600 fewer premature deaths; 90,000 fewer asthma attacks in children; 1,700 fewer hospital admissions; and avoid 300,000 missed days of school and work.”

But, the rule could still have been more aggressive. Open questions: How likely is it that coal plants will upgrade and continue to run? What proportion of fuel switches will be toward natural gas? Or zero-carbon? The final rule has added incentives for states to choose zero-carbon. A move to zero-carbon means full reduction of the accompanying co-pollutants. A move to natural gas means only a partial reduction. Within the zero-carbon world, a move to nuclear power creates a need for waste storage, which is also an environmental justice issue, as many low-income neighborhoods are located near nuclear power stations.

• How will states react to the final CPP? Will state governments refuse to participate in developing state implementation plans (SIPs), as Sen. Mitch McConnell has urged, even though they will then be subject to a federal implementation plan that could have the effect of limiting their input into regulation of their state’s power systems? More

The final rule has lots of incentives for states to participate. But, as the Obamacare saga shows, conservative governors are capable of refusing to participate in federal programs even where the states’ would benefit financially. The coming elections make this event even more likely, as governors set out to make political points. This problem is likely beyond the rule’s control.

• Will the states and others challenge the constitutionality of the CPP and the legality of its system wide approach to reducing existing emissions, despite legal justification in support of the approach? More

Absolutely. Many of the features identified by industry as legal vulnerabilities remain: the hammer of a Federal Implementation Plan (seen as commandeering), the devaluation of coal assets (seen as a taking), the “outside the fence-line” factors incorporated into the second and third building blocks, etc. The rule does seek to reduce legal liability somewhat by eliminating building block four (which concerned energy demand, not supply) and by adding extensions to state cuts. My own view is that the final rule is completely defensible from a legal standpoint. But there issues of contention remain.

• Will states draft state implementation plans that prioritize renewables and energy efficiency, or choose less environmentally sustainable options like carbon capture, nuclear, and natural gas? More

Big question. The new rule adds more incentives for the zero-carbon option, but the states will vary, probably according to politics and geography. This variance will probably not be helpful to vulnerable populations in the South.