What will the new Clean Power Plan mean? Insights from some of the best coverage

REUTERS/Ina Fassbender
The Clean Power Plan will stand for a long time as this nation’s most important endeavor on climate change and cleaner energy systems.

The Clean Power Plan that rolled out in final form on Monday runs to a couple of thousand pages, if you count the supplemental materials, and it differs enough from the original proposal of June 2014 that its full meaning will take some time to digest.

Most reports have focused on the revised version’s slightly higher target for emission reductions (32 percent from 2005 levels by 2030, instead of 30 percent) and the relaxed deadline for states and utilities to comply (from 2020 to 2022).

But that barely scratches the surface of what will stand for a long time as this nation’s most important endeavor on climate change and cleaner energy systems, and everything about this effort – its genesis, evolution and  probable impact – is complicated and contentious.

So as a reader service I thought I’d pull on waders, grab a landing net and wade into the torrents of news coverage and commentary, seeking passages that seemed best at bringing clarity, coherence or concision to the subject.

Most of the excerpts that follow have been lightly compressed, and some have been slightly recast to reduce redundancy – to avoid, for example, multiple full references to U.S. Environmental Protection Agency Administrator Gina McCarthy.

Moderation in target-setting

The Climate Progress blog, though an advocacy project, delivered an especially cogent factual summary by Ryan Koronowski; he was one of the few to consider this plan in context with a separate U.S. commitment to reduce overall greenhouse gas emissions 17 percent, from 2005 levels, by 2020:

The targets in the Clean Power Plan apply only to the electricity sector, while the 17 percent target is for all sectors of the economy. At the same time, using 2005 levels allows the EPA to be less aggressive than if it used a more recent year when emissions were lower.

In 2005, U.S. power plants emitted over 2.4 billion tons of CO2 into the atmosphere. These levels dropped after 2007, to just over 2 billion tons in 2012, but jumped up 2 percent in 2013 after several years of decline, mainly because natural gas prices inched up a bit.

The rule divides up the pathways states can use to achieve these carbon pollution reductions into four basic groups: lowering individual plant emissions; switching generation to natural gas combined cycle plants; switching generation to clean, low-emissions renewable energy; and lowering electricity demand or increasing efficiency.

The rule also highlights regional compacts like the Northeast’s Regional Greenhouse Gas Initiative as progress that can already be taken into account for emission reduction achievements, and could serve as a model for other states. McCarthy put it this way: “If states don’t want to go it alone, they can hang out! They can join up with a multi-state market based program, or make new ones.”

Bigger role for renewables

The four pathway groups, aka “building blocks,” have undergone some shifts in emphasis since June. From a New York Times analysis by Coral Davenport and Gardiner Harris:

That new rule also demands that power plants use more renewable sources of energy like wind and solar power. While the proposed rule would have allowed states to lower emissions by transitioning from plants fired by coal to plants fired by natural gas, which produces about half the carbon pollution of coal, the final rule is intended to push electric utilities to invest more quickly in renewable sources, raising to 28 percent from 22 percent the share of generating capacity that would come from such sources.

Although Obama administration officials have repeatedly said states will have flexibility to design their own plans, the final rules are explicitly meant to encourage the use of interstate systems  in which states place a cap on carbon pollution and then create a market for buying permits or credits to pollute.

The rules take into account the fact that some states may refuse to submit plans, and provides for a template to be imposed on such states. The rules will also offer financial benefits for states that choose to take part in cap-and-trade systems. And states that begin to take actions to cut carbon pollution as early as 2020 will be rewarded with carbon reduction credits — essentially, pollution permits that can be sold for cash in a cap-and-trade market.

Perhaps the biggest change in emphasis, though, is that promoting energy efficiency has essentially been dropped as a factor in setting states’ carbon-cutting targets, as Jean Chemnick reported in Greenwire:

The June 2014 draft version of the plan, which included the efficiency building block, assumed that states across the country had the capacity to improve their demand-side efficiency by 1.5 percent per year after 2020. The draft assigned all states reduction responsibilities based on that assumption, though it gave some states more time than others to make the cuts.

“Everybody loves efficiency, but figuring out how to do it in a regulatory context is tricky,” said Jeff Holmstead, an industry attorney for Bracewell & Giuliani, who said the draft’s efficiency input would have added to the rule’s legal vulnerability. Assuming utilities can cut demand for power, he said, is like assuming oil refineries should support mass transit and bike lanes under a hypothetical future regulation for their sector – a regulatory stretch that would have been unlikely to end well for EPA in court.

Energy efficiency advocates shrugged at news of the change. Steven Nadel, president of the American Council for an Energy-Efficient Economy, said, “We are fairly confident that most states will include some energy efficiency in their plans because efficiency will generally be the low-cost compliance option.”

Minnesota’s rank among states

The compliance targets that average 32 percent vary widely from state to state, of course, and don’t necessarily fall most heavily – in percentage terms – on those that are most coal-dependent.

Washington state, for example, has to cut its emissions by 72 percent, but Gov. Jay Inslee says it’s well-positioned to do so; according to Politico, the state’s heavily hydropowered utility sector can hit the mark by shutting down a single coal plant, which is scheduled for retirement anyway. At the other end of the list is North Dakota, with a reduction target of 11 percent.

National Geographic put together an interesting interactive graphic that ranks the states three ways: by reduction target, by total carbon emissions currently (in pounds per megawatt hour), and by percent of electric power generated from coal.

Minnesota ranks 26th on total carbon emissions (1,470 pounds), 10th largest by reduction target (40.6 percent), and 18th by percentage of power from coal.

Still, the ranks of states lining up to block the Clean Power Plan in the courts are dominated by coal-producing states, which have a doubled stake in the outcome – they rely on coal not only as a fuel source but also as an economic engine, one that has been faltering of late.

Indeed, in the phrasing of Bloomberg News, High-cost coal production faces a “death spiral” to “extinction.” As for the survivors, wrote Mario Parker,

They will be left to vie for 650 million tons of utility demand annually, compared with the more than 1 billion averaged during coal’s halcyon days at the turn of the century, BB&T Capital Markets Inc. in Richmond, Virginia, said in a report Monday before the formal release of the plan. Alpha Natural Resources Inc. on Monday became the latest producer to seek bankruptcy protection.

Utilities can’t count on challenges

The prospect of delaying the requirements in court – or through a change in partisan control of the White House – isn’t a great source of encouragement, either.

“This uncertainty has a bearing on how utilities plan their fuel needs for years into the future,” BB&T analyst Mark Levin wrote. “That uncertainty can only lead to less, not more, coal consumption, even if the CPP is ultimately delayed or blocked.”

Other sectors of the energy system, however, will see big gains no matter how quickly or steadily the nation moves forward along the clean power route, according to the Wall Street Journal’s Rebecca Smith:

The EPA’s new rules will alter the way Americans make and consume electricity, accelerating a dramatic shift to cleaner fuels, renewable energy and consumer choice. Even as the new regulations on greenhouse gases face legal challenges, they will force sweeping changes to the once hidebound electricity business.

Utility companies and state regulators will need to rewire the electric grid to accommodate more renewable power, much of it  generated by customers. The plan will require billions of dollars in investments to pay for new transmission lines that accommodate more solar and wind power and new pipelines to fuel natural-gas-fired generation.

Utilities, which expect to spend more than $100 billion next year on capital projects, will adjust their spending programs to reflect the new rules even us court challenges proceed, experts said.

Oh, and what about the impact on residential electric bills? In a good “myth-busting” piece for National Geographic, Wendy Koch writes that not much has changed on that score since the first proposal:

The Energy Information Agency said last year’s version would cause rates to rise 3 percent to 7 percent during 2020-2025, citing the shift toward more renewables and natural gas. Even so, it said consumers and businesses would pay “slightly” lower utility bills in 2040 partly because of efficiency gains.

The White House predicts U.S. consumers will pay an annual average of $85 less on their electric bills by 2030. It also says, by reducing air pollution, it will avoid up to 3,600 premature deaths and lead to 90,000 fewer asthma attacks in children.

EPA calculates that the plan will return $7 in public health benefits for every $1 spent on compliance.

Comments (14)

  1. Submitted by joe smith on 08/04/2015 - 09:29 am.

    This Cap and Trade proposal failed in congress already, do the politicians elected to craft and fund bills get a chance to represent their constituents by voting on this? Do “we the people” get a voice in this? Something this big should not be thrown on Americans by executive action, it should be brought to the floors of both chambers and examined, carefully.

    • Submitted by Robert Moffitt on 08/04/2015 - 03:52 pm.

      Let’s review

      1) First, this is not a “cap and trade” proposal. It’s more like a “cap only” plan. It is very flexible, though.
      2) Yes, they did. In 1970, when the Clean Air Act was first passed by Congress (and signed into law by Nixon), and again in 1977 and 1990, when the Clean Air Act was amended and strengthened.
      3) The draft rules now made final were first announced more than a year ago — there has been plenty of time for examination and debate, and changes were made.

      • Submitted by joe smith on 08/04/2015 - 07:19 pm.

        It was debated in congress (where laws used to drawn up) and Obama knew he didn’t have the votes so he rammed it thru with executive order. Really no need for 3 branches of government to check and balance each other, we have Obama.

  2. Submitted by Connie Sullivan on 08/04/2015 - 11:14 am.

    Those of us who are aware of how embarrassingly little the U.S. has done to control and reduce the carbon-burning damage we are doing to the environment of the Earth, have been waiting for more than six years for President Obama to take action on emissions caused by power plants and motor vehicles. Finally! And on a big scale.

    There is no such thing as clean coal. There is self-serving obfuscation and denial on the part of coal-based energy producers, and especially politicians from states where there’s not much more going for them economically than an environmentally devastating coal industry (have you ever looked at what coal mines do to the land?).

    Good for Obama and the nimble, flexible, legally-aware EPA: it’s about time for this historic move!

  3. Submitted by Mike Downing on 08/04/2015 - 11:20 am.

    What it means is much higher electrical bills

    President Obama’s plan is to dramatically increase electrical bills which will hit the poor and the middle class the hardest. It is truly sad to hear President Obama’s speeches where he says he is the defender of the poor but his actions make the poor poorer.

    • Submitted by Frank Bowden on 08/04/2015 - 01:41 pm.

      Higher electrical bills

      Mike, I’m sure that it is not “President Obama’s plan to dramatically increase electrical bills,” but let’s agree that that may be the outcome of Obama’s plan or any other plan that attempts to force the energy industry to internalize the until-now external costs inflicted on society at large (e.g., pollution, increased health costs, environmental degradation) . The energy industry has always been able to take the profits and externalize the costs to society; this must change. Conservatives used to embrace such logic, which is why the Reagan and first Bush administrations used cap-and-trade systems to phase out leaded gasoline and reduce gasoline. (http://www.politifact.com/florida/statements/2014/may/23/debbie-wasserman-schultz/cap-and-trade-legislation-was-originally-republica/ )
      Some people, like President Obama, are trying to preserve a livable planet for future generations. If you have better ideas, please share them with us. Since you are so concerned about the pocketbooks of the poor and the middle class, perhaps you would be interested in some form of income-based tax credits or other changes to the tax system to reduce the impacts of increased energy costs on those without the ability to absorb those costs.

    • Submitted by Robert Moffitt on 08/04/2015 - 03:58 pm.

      On the contrary

      Studies that look at the overall effect on electrical bills generally find that consumers will see modest, but real savings on their electric bills, provided that states take a smart approach to cutting carbon pollution. Synapse Energy has a report out on this very subject.

    • Submitted by jason myron on 08/04/2015 - 08:44 pm.

      Wow…

      How were you able to crack Obama’s nefarious plan, Mike? No offense, but I’m going to file it along with all of the other conspiracy plots that have been conjured up by fellow sufferers of ODS.

    • Submitted by Todd Hintz on 08/05/2015 - 12:51 pm.

      Cost/Benefit

      The article states that for every dollar spent on this program, it’ll save seven dollars in reduced health care costs. Even assuming all the program costs are put on the backs of the populace, that’s still quite a bit of savings seeing as how health care is such a huge part of people’s budgets.

    • Submitted by John Appelen on 08/09/2015 - 07:52 pm.

      Correct

      I don’t know if that is the intent, however it will be a consequence. Just like when Dayton wanted to increase the tax on fuel in MN. Folks here are very concerned about regressive taxes until they are ones proposing them… Oh well. Trade offs.

  4. Submitted by Tom Karas on 08/04/2015 - 12:54 pm.

    Thanks Ron, again………

    As usual this subject is a challenge to break down to street level understanding. A few points though about having to upgrade the electrical grid to accommodate more renewables. 1) the grid was sadly in need of upgrading period, to make it clean energy friendly is just a bonus that will serve us for decades, and 2) distributed energy through customer owned solar can actually decrease the need for upgrades and new lines which was nicely included as one of the many values of distributed energy in the MN Value of Solar discussions of 2014.

  5. Submitted by Tom Karas on 08/05/2015 - 08:37 am.

    more background material

    A well thought out chronology of actions on carbon over the years that has brought us to the point where we have these rules and why the EPA is charged with enforcement is posted on the Huffington Post this morning-
    http://www.huffingtonpost.com/entry/congress-climate-rules-emissions_55c127b8e4b0b75c1c8c79a6?utm_hp_ref=politics&kvcommref=mostpopular

    It has a lot of history, references, and science type stuff so tread carefully……..

Leave a Reply