The final version of the Clean Power Plan (CPP) was published on Aug. 3, 2015, by the U.S. Environmental Protection Agency (EPA). The CPP is intended to address the largest source of harmful carbon pollution in the United States. It’s a cornerstone of the country’s climate action plan. The main goal of the CPP is to reduce carbon dioxide emissions from the power sector by 32% by 2030, nearly 870 million tons below 2005 levels.
Here are the key details that companies and organizations need to know:
How does the Clean Power Plan work?
States are required to submit a carbon dioxide reduction goal based on current performance rates. The CPP provides guidelines for states to develop, submit, and implement their emissions standards based on their own customized path.
When will the Clean Power Plan be implemented?
Originally, states would have had until Sept. 6, 2016, to submit a final compliance plan or a one-year extension request. However, a recent stay by the U.S. Supreme Court has halted any compliance requirements until the CPP’s legal proceedings are fully adjudicated. While it is likely that the court system will rule in favor of keeping the plan, the timeline for submitting a compliance plan will be pushed back by at least a year. If states do not submit a plan or extension request, the EPA will determine the compliance paths these states must take. However, a two-year extension request can be granted to states organizing to propose a regional compliance plan. Progress toward compliance must begin by 2022, with final compliance by 2030.
What are some benefits of the Clean Power Plan?
Implementing the CPP will reduce sulfur dioxide from power plants by 90 percent and nitrogen oxide by 72 percent compared to 2005 levels. Not only are there positive environmental benefits, but there are public health benefits as well, especially for children, older adults, and those with heart or lung disease. According to the EPA and other sources, lower emissions levels will lead to less premature deaths, and thousands of fewer asthma attacks and hospitalizations in 2030 and forward.
What’s the history of the Clean Power Plan?
The CPP was set to go into effect on Oct. 23, 2015, but before it did, 26 states and several businesses filed a petition with the U.S. Court of Appeals to halt the plan on the grounds that it would cause economic injury. The EPA was given until Dec. 3, 2015, to respond to petitions made against the CPP, giving the U.S. enough time to enter the United Nations climate change summit (COP21), which took place in Paris on Nov. 30, with a significant climate policy. The EPA maintains that the current CPP is constitutionally and legally justified based on the 1970 Clean Air Act. However, opponents to the plan claim that it represents a constitutional overreach.
What impact will the Clean Power Plan have on the coal industry?
The EPA expects thermal coal consumption to decline by 199 million tons by 2020, which represents a reduction of 23 percent from 2014 levels. About 14-19 percent of coal-fired power will most likely be deemed uneconomic by 2030 under the plan, which will lead to many coal plant closures and continue an overall decline of the coal industry.
Moving forward, where does the Clean Power Plan stand politically?
The U.S. House of Representatives along with the Senate passed two bills that would overturn the CPP and new EPA rules that would restrict carbon emissions from new power plants. President Obama has already informed Congress that the White House plans to veto the bills. It’s believed that Congress lacks enough votes to overrule the veto, meaning the plan will most likely be implemented.
Nonetheless, CPP opponents continue to argue that the plan will raise electricity prices for consumers and lead to a loss of American jobs. Looking ahead, with supporters being mainly on the Democratic side of the aisle, the possible election of a Republican president and Congress in the 2016 elections could challenge the CPP’s future.
What are the Clean Power Plan’s potential impacts for renewable procurement?
- The CPP will increase both supply and demand of renewable energy, and encourage innovation.
- CPP will most likely increase demand for renewable generation across all 50 states. The recent extension of tax incentives will provide a stable environment for the industry to invest and grow in the next few years. Both factors will drive competition, accelerate innovation and continue to lower levelized cost of energy (LCOE) for a spectrum of clean technologies.
- There will be an increased value of environmental attributes.
- CPP may propel a wide adoption of carbon markets and put a price tag on carbon. The environmental attributes associated with renewable generation will increase in value, which may heavily influence bundled renewable energy prices in many markets — not unlike solar in Massachusetts today, where the environmental attributes are sometimes valued at 10 times the energy. However, the overall net effect (decreased technology cost vs. increased environmental attribute cost) is unclear.