Climate 411

EPA Responds to States, Provides Useful Information for Developing Cost-Effective Programs to Reduce Carbon Pollution

By / Published: December 20, 2016

By Pam Kiely and Nicholas Bianco

Earlier today the U.S. Environmental Protection Agency (EPA) released several draft  documents designed to provide additional information for states and other stakeholders as they work together to reduce emissions of carbon pollution from power plants.

EPA notes that making these working drafts available:

[A]llows us to share our work to date and to respond to the states that have requested information prior to the end of the Administration.

The materials provide valuable insights that can be used by states currently implementing or considering developing their own programs for reducing carbon pollution, and can be leveraged as states evaluate ongoing state policy efforts to achieve pollution reductions under the Clean Power Plan.

The Clean Power Plan establishes America’s first ever limits on carbon pollution from power plants. Once implemented, it will provide essential protections for public health and the environment – saving up to 3,600 lives each year and delivering up to $54 billion in annual climate and health benefits – while also reducing electricity bills for American families.

These documents reflect extensive public input and engagement as well as decades of practical experience reducing air pollution at the state and federal level. They provide constructive information in response to direct requests for this type of material made by states who are interested in having the best information available as they undertake their own planning, public engagement, and regulatory initiatives.

A letter submitted to EPA by 14 states  requested “additional information and assistance” to help states “prudently plan for and implement a variety of state and federal obligations” because many states, as well as their stakeholders, understand that continuing to navigate the dynamic transition underway today in the power sector requires comprehensively evaluating and integrating state policy priorities with their best understanding of existing and future federal policy.

While the Supreme Court has stayed enforcement of the Clean Power Plan, EPA’s provision of helpful information in response to this letter is entirely consistent with actions taken by past Republican and Democratic Administrations to provide clarification and information on Clean Air Act rules that had been stayed by the courts.

States such as Pennsylvania and Colorado have recently underscored their commitment to continuing state-driven efforts to address climate change and greenhouse gas emissions, while more than a dozen power companies have continued to affirm that the transition to cleaner energy resources and progress toward de-carbonization of the electric sector is ongoing.

State officials and many companies keenly understand that prudent evaluation of the federal policy landscape, and ongoing deployment of no-regrets strategies and investments that well-position them to meet declining limits on carbon pollution, make sense. Additional information about options for Clean Power Plan implementation will only facilitate sensible alignment of state efforts already underway.

EPA released four draft documents today:

  1. Draft state models to help policymakers and regulators develop state-specific strategies to realize the benefits and achieve the emissions reduction targets in the Clean Power Plan. The draft models outline two highly flexible approaches for reducing carbon pollution in a cost-effective manner. By providing these models, EPA is helping to facilitate state innovation and the realization of pollution reductions aligned with state policies and prerogatives. These models provide greater clarity about practical implementation considerations so that states have the best information available about cost-effective opportunities to reduce climate pollution as they move ahead navigating, and helping to facilitate, the transition underway in the power sector.
  2. Draft EM&V Guidance for Demand-Side Energy Efficiency. EPA published draft guidance that states can use if they decide to implement demand-side energy efficiency projects. This guidance details methods for ensuring that project developers deliver high quality projects by providing options for monitoring and verification procedures that states can adopt if they are interested. Such support is extremely valuable, particularly when one considers that energy efficiency projects routinely deliver $2 in savings for Americans for every $1 invested, and in some cases up to $5 for every $1 invested.
  3. Draft Clean Power Plan Tracking Systems White Paper. EPA released draft materials designed to further assist states by providing information about how a tracking system could be designed to facilitate administration of the program. In so doing, EPA further demonstrates the relative ease with which a state can administer a flexible, cost-effective program to achieve carbon pollution reductions.
  4. Draft Technical Support Document: Leakage Requirement. If choosing to adopt a mass-based emission budget trading program instead of other program alternatives, this document  provides valuable information for addressing emissions leakage and securing the emissions reductions contemplated by the Best System of Emission Reduction. In addition to the streamlined approach for leakage mitigation that EPA finalized in the Clean Power Plan (using larger state budgets with the “new source complement” and including all fossil sources in the program), the working draft helpfully outlines a set of sample strategies that states could potentially use to guarantee the expected emissions outcome of their program, depending on particular state circumstances. The draft document notes the expectation that any strategy will include a process for performing periodic evaluations and look-backs that states and EPA could use to ensure the effectiveness of those measures. It also discusses the value of establishing mechanisms to address any shortcomings in performance. Together these measures underscore the importance of continuing to ensure on an ongoing basis that state program design secures the expected level of emissions reductions, and highlights the many options available to do so.

These draft materials build on decades of experience that EPA and states have in successfully implementing flexible compliance programs to reduce air pollution and drive innovation, and they show how these approaches can be applied for the Clean Power Plan. These same flexible frameworks have been used to reduce emissions under other Clean Air Act standards at a fraction of the cost that opposing parties have claimed –  and there is strong evidence that this will hold true for the Clean Power Plan as well (for examples see here, here, and here).

Climate pollution from the electricity sector has already fallen 21 percent below 2005 levels – which means America is already almost two-thirds of the way towards the 2030 Clean Power Plan emission targets. Emissions reductions and clean energy investments are widespread across states and power companies – even those that may be opposed to the Clean Power Plan itself. Analysis conducted for EDF by M.J. Bradley & Associates found that all 27 litigating states can comply with the Clean Power Plan just by leveraging already planned investments coupled with flexible compliance programs. Many of the power companies litigating against the Clean Power Plan are also well positioned to reach their targets, thanks to the increasingly low cost of lower- and zero-carbon generation.

While this progress is encouraging, the analyses also show that the Clean Power Plan has an essential role to play in ensuring that reasonable protections from climate pollution are realized. With the release of today’s draft documents, EPA is responding to the request by states, power companies, and other stakeholders to share lessons learned for flexible cost-effective implementation of the Clean Power Plan. These insights will prove to be valuable to states at all stages of planning for a low-carbon future.

 

Posted in Clean Air Act, Clean Power Plan, News, Policy / Comments are closed

5 Things You Should Know About America’s Clean Car Standards

By / Published: December 19, 2016

By Nicholas Bianco & Hilary Sinnamon, EDF Consultant

This month EPA released a Proposed Determination that the protective greenhouse gas emissions standards finalized in 2012 for model year 2022-2025 passenger cars and lights trucks remain appropriate under the Clean Air Act. This proposed determination found that auto manufacturers can meet the model year 2022-2025 standards at a lower cost than previously predicted, providing net savings for families, significant benefits to public health and welfare, and enhancing energy security.

Americans overwhelmingly want more fuel-efficient and less polluting vehicles because they help families make ends meet by saving them money at the pump.

EPA had previously estimated that consumers purchasing new vehicles in 2025 would spend up to $8,200 less on fuel over the lifetime of those vehicles.

The Clean Car standards have already helped drive innovation and deployment of the technologies and vehicles that customers are embracing – to the point where manufacturers have beat the standards in each of the last 4 years while setting new sales records.

U.S. manufacturers have returned from the brink of collapse in 2008, making a dramatic return to profitability while selling cleaner and more fuel efficient vehicles than ever before (see figure). Continuing these standards will help ensure that manufacturers retain their competitive edge and remain a vibrant force for the American economy in the years ahead.

1. Clean Car Standards Save American Families And Businesses Money

The Clean Car standards are already delivering benefits to American families and businesses, and these savings are expected to grow in the years ahead. Consumers purchasing new vehicles in 2025 are expected to spend up to $8,200 less on fuel over the lifetime of those vehicles. The 86 percent of Americans who finance their vehicle with a 5-year loan are expected to immediately realize the cost savings from cleaner more efficient vehicles. This is true even with today’s low gas prices.

Over the duration of the Clean Cars program, American families and businesses will avoid up to $1.7 trillion in fuel expenditures, which is more than double the funds injected into the economy by the American Recovery and Reinvestment Act (aka, the stimulus package). When businesses reduce fuel costs, it allows them to invest more money and create more jobs in local communities.

Oil prices may have fallen recently, but everyone knows that oil prices can be volatile. It wasn’t long ago that oil was trading at more than $100 per barrel, and that gasoline prices were roughly 50 percent higher than they are today. Thus, it should come as little surprise that consumers continue to rate fuel economy as one of their top criteria when shopping for a new car – 81 percent said they support the Clean Car standards. More efficient vehicles provide protection against volatility in fuel prices. For example, each Ford F-150 bought in 2015 will use about 180 fewer gallons of gasoline a year than those manufactured before the Clean Cars program went into effect, saving owners $300 to $700 per year. Ford reports that these fuel savings come at the same time as improvements to vehicle strength, pulling power, acceleration, and handling.

2.  Clean Car Standards Will Improve Climate And Energy Security

The Clean Car standards are also a crucial component of U.S. efforts to reduce carbon pollution and help avert the most damaging effects of climate change. The program will eliminate an estimated 6 billion metric tons of carbon dioxide over the life of the vehicles subject to the standards, which is more than a year’s worth of U.S. carbon emissions. Without the standards, emissions from the sector would rise considerably.

Nearly half of the oil consumed by Americans every year is used driving our passenger cars and light trucks. The Clean Car standards will enhance our nation’s energy security by reducing oil consumption by 2 million barrels per day by 2025. This is almost as much oil as we import from OPEC countries (net imports were 2.65 million barrels per day in 2015). Security experts agree that our nation’s dependence on oil is a threat to security and more efficient cars and trucks will help reduce that threat. According to Retired Lt. General Richard Zilmer:

“Over-reliance on oil ties our nation to far-flung conflicts, sends our troops into harm’s way, and endangers them once they’re in conflict zones. Ensuring that the cars and trucks we drive every day go farther on every gallon of gas makes our nation stronger.”

3. The Automobile Industry Has Made A Dramatic Return To Profitability And Added Jobs – All While Exceeding The Clean Car Standards

During the height of the economic recession in 2008, the American auto industry was on the verge of collapse. This prompted the Obama Administration to develop a bailout package for the industry, which provided the boost the industry needed to help rebound.

Last year drivers in the United States bought more cars than ever before – roughly 70 percent more vehicles than during the recession – as fuel economy rose to its highest levels yet. In total, the auto industry has added nearly 700,000 direct jobs since the recession, supporting several million indirect jobs throughout the economy. In fact, auto manufacturing jobs accounted for 40 percent of all net jobs added in U.S. manufacturing since the recession. Today, the auto industry directly employs nearly 3 million Americans and employment at auto dealerships is at its highest levels ever. Meanwhile, sustained innovation continues to bring new fuel-efficient technologies to the marketplace while creating new jobs throughout the industry.

Source: EPA

Source: EPA p.iii

All this has occurred while the auto industry as a whole has exceeded the climate pollution standards in each of the last four years (i.e., model years 2012-2015 – see figure). These efficiency improvements have come while other metrics of vehicle performance have continued to improve, including acceleration times and durability. In addition to the industry as a whole exceeding today’s standards, a number of individual vehicle models meet standards all the way out to 2025. Today there are already more than 100 car, SUV, and pickup models on the market that meet standards set for 2020 and beyond.

4. Clean Car Standards Have Played A Vital Role In Driving Innovation And Deployment Of Cost-Effective Efficiency Technologies

Automakers and suppliers are developing and deploying innovative technologies faster than EPA anticipated when the standards were finalized. Since the Clean Car program began in 2012, there has been roughly a doubling in: the number of SUVs that achieve 25 miles per gallon or more; the number of cars that achieve 30 miles per gallon or more; and the number of cars that achieve 40 miles per gallon or more (MY 2011 vs. MY 2016 – see chart).

cars-blog-pic3a

Source: EPA, p.ES9

We see this playing out with a number of very popular models like the Ford F-150, Toyota Rav 4, and Honda Civic, where improved efficiency through powertrain innovation, deployment of downsized and turbocharged engines, and use of more advanced materials such as high-strength lightweight steel and high-strength military-grade aluminum, have allowed these vehicles to deliver greater performance while improving fuel economy at a rate greater than required by the standards.

The standards have also helped spur sustained innovation. In 2015 alone, hybrid and electric vehicle technologies combined were granted nearly 700 patents. The majority of these patents were granted to large automakers, including GM, Ford, Toyota, and Honda.

Moving forward, a new generation of zero emission vehicles has the potential to transform the sector. Chevrolet’s all-electric Bolt is just beginning to hit show rooms. Motor Trends has already declared it the vehicle of the year, writing that Chevy “has made electric-powered transport for the masses a reality…[the Bolt] is the car of tomorrow, today.” Chevy is hardly alone. The Tesla Model 3 is set to begin rolling out in 2017, and has already racked up pre-orders for approximately 400,000 vehicles. These advancements have been powered by a remarkable decline in the price of batteries – about 70 percent between 2007 and 2014. These price declines are expected to continue in the years ahead, further reducing the costs of electric vehicles.

5.  Clean Car Standards Can Help Ensure The Auto Industry Retains Its Competitive Edge And Remains A Vibrant Force For The American Economy In The Years Ahead

Improvements in vehicle efficiency and reductions in climate pollution have coincided with a period of steady growth in the auto industry. Drivers in the United States bought more cars in 2015 than ever before. In total, about 17.5 million cars and trucks were sold last year, overtaking the 17.3 million sales in 2000 and far outpacing the 10.4 million sales in 2009, when taxpayers paid billions to bail out the automakers.

The Clean Car standards are essential to ensuring that this resurgence endures, and that American autoworkers have a strong position in the years ahead. These standards insulate the auto market from fuel price shocks, and that market stability translates into employment stability. The Clean Car standards have led U.S. automakers to offer a more diverse and more efficient mix of vehicles. As a result, their fleets will remain attractive to consumers in the years ahead, even if fuel prices spike again.

Analysis by Ceres found that profits by the three largest U.S. automakers (Ford, GM, and Chrysler) would plummet more than $1 billion per year in response to fuel price shocks without the Clean Cars program. Meanwhile, suppliers would lose up to $1.42 billion, costing American automakers and suppliers billions per year and putting many jobs at risk. Their analysis further showed that by driving deployment of cleaner and more fuel efficient vehicles, the Clean Cars program can insulate these 3 manufacturers from high fuel prices, and that pre-tax profits would remain robust under a wide range of high and low gasoline price scenarios.

Source: ICCT

Source: ICCT

Clean Car standards are also essential if the American auto sector is going to keep pace with global trends. Many other nations have adopted standards that will drive improved performance of passenger vehicles in a manner comparable to those standards established by the Clean Cars program here in the United States, and some nations are planning to go farther faster.

This includes, but is not limited to: Canada, the European Union, China, India and South Korea (see chart). These trends are particularly notable when one considers that the largest market growth will occur in China and India, which together could add nearly 15 million in additional vehicle sales each year in 2025 above and beyond today’s sales. This is almost as much as total U.S. passenger vehicle sales in 2015. As a result, any backtracking on the 2025 standards would therefore risk leaving U.S. manufacturers behind.

 

The Clean Cars program has been an enormous success, delivering savings at the pump to families while providing significant benefits to public health and welfare. Manufacturers have repeatedly demonstrated that they are capable of meeting the standards. They have exceeded the Clean Cars standards in each of the last 4 years, while continuing to deploy new technologies at cheaper costs than previously anticipated.

Meanwhile, the next generation of clean vehicles is beginning to hit the streets, including models that far surpass the standards set through 2025. These vehicles offer the promise of even lower fuel bills, cleaner air, and energy independence. Now is not the time to run from progress. Now is the time to embrace the future, to embrace American innovation, and to reaffirm our commitment to a clean transportation system.

Posted in Cars and Pollution / Comments are closed

It’s Time for the Coal Industry to Come Clean

By / Published: September 26, 2016

coal_mine_wyoming
By now you have all heard the coal industry claims that the Clean Power Plan will kill the coal industry. This week federal judges hearing oral argument on the rule will no doubt hear the same. A new report by Sue Tierney of the Analysis Group clearly demonstrates just how misleading these claims are.

Dr. Tierney’s analysis examines changes in the industry since the 1970’s to unpack the factors that led to coal’s rise through 2000 and steady decline since. It shows how shifting economics for energy production have caused cost-effective lower-emitting natural gas generation and zero-emitting renewables to steadily out-compete coal and erode its market share. The analysis also shows how the industry made a large number of badly misplaced bets that have left them with over-burdened balance sheets, and facing bankruptcy as a result of these self-inflicted wounds.

Citing analyses by the Energy Information Administration and others, the analysis shows the irreversibility of these trends as coal is simply no longer the cheapest form of generation. These trends will also continue to drive a transition to cleaner lower-carbon fuels regardless of the fate of the Clean Power Plan. The clear implication is that industry should focus on preparing for the future and adapting to these new market conditions as opposed to fighting long-delayed protections that will help secure a more stable climate, a sustainable economy and vital public health benefits.

The analysis also examines the significant job losses seen since 1980, and finds that here too the blame has been misplaced. Data clearly show that decades ago, increasing productivity and a shift from eastern to western coal led to significant job losses even while the industry’s overall production was in a period of dramatic growth. Remarkably, coal mining jobs fell by one-half from 1975 to 2000 even as coal production increased by more than 60 percent.

These market shifts have affected local mining communities. But as the analysis makes clear, these trends have been decades in the making and are driven by profound changes in the energy markets and the way in which coal is produced. Much as the coal industry and its allies like to divert attention from these fundamentals, rolling back life-saving measures to protect our climate and public health from power plant pollution won’t bring back past levels of coal mining jobs or production. However, there is ample room for coal mining companies to support these communities in transition by engaging constructively in the debate on how to move forward in light of these market fundamentals, and how best to harness unique local opportunities. These companies owe it to their workers and communities to do so.

The Clean Power Plan is essential for ensuring vital reductions in climate pollution from the power sector, America’s largest contributor of these emissions. It is expected to deliver $54 billion in annual climate and health benefits while saving up to 3,600 lives each year. It is possible that these benefits could also result in some incremental reductions in coal consumption, depending on how states themselves choose to design their strategies to cut pollution. However, most analyses find that these declines would be only a fraction of those driven by market forces over the past decade.

Therefore, instead of distracting investors and local communities through unfounded attacks on EPA and the Clean Power Plan, coal companies should be honest about what is really driving the erosion of their market share and of their balance sheets. They should come clean about the fact that lower carbon generation is simply beating them in the marketplace and that they made a bunch of bad bets when times were good. So doing would help everyone engage in a more serious and honest discussion about how to move these communities forward and transition into a position of success in the modern energy economy.

There is no time to waste – let’s start working together to forge such solutions for these communities.

About the analysis: This independent report was commissioned by Environmental Defense Fund but solely authored by Susan Tierney. Dr. Sue Tierney is a Senior Advisor at the Analysis Group, specializing on electric and gas economics and policy.  She formerly served as the assistant secretary for policy at the U.S. Department of Energy, state cabinet officer for environmental affairs, and state public utility commissioner.

Posted in Clean Air Act, Clean Power Plan, Economics, EPA litgation, Jobs, Policy / Read 2 Responses

New Analysis: Clean Power Plan Compliance Within Reach for Litigating Companies

By / Published: September 26, 2016

rp_scales_of_justice-300x280-300x280.png (EDF Attorneys Tomás Carbonell and Martha Roberts co-authored this post)

Tomorrow – Tuesday, September 27th – the U.S. Court of Appeals for the D.C. Circuit will hear argument about the historic Clean Power Plan.

The Clean Power Plan places the nation’s first limits on climate-disrupting pollution from the electricity sector, which is responsible for almost 40 percent of U.S. emissions of carbon dioxide.

Many utilities, power producers, and state regulators recognize the importance of addressing climate change – and support the Clean Power Plan. However, some in the electric industry have instead chosen to take a reactionary, obstructionist position against climate progress. They are participating in litigation against the Clean Power Plan. A wide array of prominent legal experts have concluded that these companies’ legal arguments are unsupported. Moreover, in many cases, opponents’ claims are even contrary to their own actions. (See Opening Brief of Petitioners on Procedural and Record-Based Issues, page 12, West Virginia v. EPA, No. 15-1363, D.C. Cir. Apr. 22, 2016)

EDF has just released a new analysis of this issue. It examines a diverse selection of power companies that are litigating against the Clean Power Plan, including Southern Company, American Electric Power, Big Rivers Electric Corporation, and Tri-State Generation & Transmission.

We find that:

  • Overall, power sector emissions of climate pollution are already 21 percent below 2005 levels. As a result, the sector is already two-thirds of the way towards meeting the 2030 emissions reduction requirements of the Clean Power Plan.
  • Even though these particular companies are opposing the Clean Power Plan in court, they are already using a variety of approaches to drive significant cost-effective reductions in climate pollution from their existing fossil-fuel powered units, thanks in large part to favorable economics for lower and zero-carbon generation.
  • These are the same practical, cost-effective methods that EPA identified as the “best system” of emission reduction for climate pollution from power plants, and that formed the basis for the emission limits in the Clean Power Plan.
  • With these investment decisions, power companies are well positioned to comply with the Clean Power Plan, even though they are making claims to the contrary in court.
  • These companies’ own actions affirm the reasonableness of the Clean Power Plan targets as well as EPA’s approach in setting the standard, even though the companies are repeatedly claiming otherwise in court.

This is not the first time some of these companies have advanced deeply flawed “sky is falling” claims about clean air safeguards. Back in the 1970’s, AEP published a series of Washington Post newspaper ads claiming:

There is no way on God’s green earth that the present sulfur-dioxide emissions standards can be met. (Washington Post, April 30, 1974, AEP Display Ad 13)

Not surprisingly, coal plants across the nation are routinely meeting sulfur dioxide limits far more stringent and at very low cost.

This was also true in 1990, when AEP told the Boston Globe that bipartisan solutions to address acid rain could lead to:

the potential destruction of the Midwest economy.

Of course, they then proceeded, along with the rest of the industry, to go out and comply at a small fraction of the costs predicted by EPA. This same story is playing out again today.

The Clean Air Act has achieved deep reductions in pollution and delivered benefits exceeding the costs by 30 to 1 – all while our economy has prospered, and all at a small fraction of the costs predicted by obstructionists in the power industry.

The Clean Power Plan is no different. As our analysis shows, day by day it becomes clearer that the reductions it requires are wholly consistent with driving trends in the industry, and that the benefits will far exceed any cost of compliance.

The full analysis is available here.

Posted in Clean Air Act, Clean Power Plan, Economics, EPA litgation, Greenhouse Gas Emissions, Policy, Setting the Facts Straight / Comments are closed

Compliance with Clean Power Plan is Within Reach — Even for States Opposing It

By / Published: September 21, 2016

(Tomás Carbonell, EDF Director of Regulatory Policy and Senior Attorney, and Diane Munns, EDF Senior Director of External Affairs, co-authored this post)

In one week – on Tuesday, September 27th – the U.S. Court of Appeals for the D.C. Circuit will hear oral argument in legal challenges brought by the coal industry and its allies against the Clean Power Plan.

The Clean Power Plan establishes the nation’s first ever climate pollution standards for the power sector, which is the largest source of climate pollution in the United States, and one of the largest sources in the world. (According to the U.S. Environmental Protection Agency, the next largest sector – light-duty vehicles, which includes passenger cars and most pickup trucks – accounted for roughly one-half the emissions of the power sector in 2014.)  As a result, the Clean Power Plan is one of the most important measures the United States has ever taken to combat the threat of climate change.

The Clean Power Plan is expected to reduce carbon dioxide emissions from the power sector by 32 percent below 2005 levels by 2030, yielding up to $54 billion in annual climate and health benefits and saving up to 3,600 lives each year.

The good news is that the United States’ power sector is already rapidly reducing emissions by transitioning toward low cost, lower carbon sources of generation. In 2015, emissions were already 21 percent below 2005 levels. That’s almost two-thirds of the way toward the 2030 emission reduction target reflected in the Clean Power Plan. The rate of emission reduction we have seen over the last decade far exceeds the rate that would be required to achieve the Clean Power Plan targets by 2030. Meanwhile, analysts are projecting that the combination of falling prices for renewable energy and the extension of federal tax credits will drive a significant surge in new renewable development (see here, here, and here for just a few examples).

Even though powerful market forces are already driving dramatic progress in reducing climate pollution, opponents of the Clean Power Plan have argued in court that the plan represents a dramatic “restructuring of nearly every State’s electric grid” and have also argued that compliance with the Clean Power Plan’s emission reduction goals is “impossible.”  (See Opening Brief of Petitioners on Core Legal Issues, page 6, West Virginia v. EPA, No. 15-1363, D.C. Cir. Apr. 22, 2016, and Opening Brief of Petitioners on Procedural and Record-Based Issues, page 12, West Virginia v. EPA, No. 15-1363, D.C. Cir. Apr. 22, 2016)

To evaluate these claims, EDF commissioned an analysis to examine how far measures already planned by power companies could go towards helping achieve the Clean Power Plan emission targets in the states that have challenged these standards.

What the analysis found stands in stark contrast to allegations by the litigating states and power companies.

About the Analysis

M.J. Bradley and Associates conducted the analysis using its publicly available Clean Power Plan Compliance Tool. The analysis drew on multiple, widely-used sources of industry-provided information on investments in new generation and planned retirements, and was based on policy scenarios and assumptions provided by EDF. The analysis is cited in a court declaration filed by EDF clean energy expert Diane Munns, and was recently featured in a Reuters article titled “Most states on track to meet emissions targets they call burden.”

Finding #1: All 27 litigating states can comply with the Clean Power Plan by leveraging planned investments coupled with flexible compliance programs

The analysis found that all 27 states opposing the Clean Power Plan could come into compliance with their emission reduction targets all the way through 2030, without making any additional investments beyond those that are already planned by power companies or required under existing state law. All state regulators need to do is take advantage of the inherent flexibility provided by the Clean Power Plan and adopt flexible compliance programs that allow power plants to fully leverage the benefits of planned investments – such as by allowing companies to average across their sources or trade compliance credits across states lines.

As Clean Air Act experts have noted, this compliance approach is familiar territory under our nation’s clean air laws. The Supreme Court recently upheld this approach in reviewing EPA’s Cross State Air Pollution Rule, and many of the litigating states have already successfully adopted these types of emissions trading programs to achieve compliance with limits on soot and smog pollution from power plants.

Finding #2:  Even if they do not take full advantage of these program flexibilities, the vast majority of litigating states can comply with Clean Power Plan goals through 2030 through planned investments alone

The analysis also considered very conservative scenarios where states do not take advantage of these program flexibilities, and each state comes into compliance solely through in-state investments and existing state policies – without engaging in trading of compliance instruments with any other states. Such constraints seem unlikely, given that most of the litigating states are already taking advantage of interstate trading in other Clean Air Act programs for the power sector and requested that interstate trading be an option under the Clean Power Plan.

Even in these very conservative scenarios, as many as 21 of the 27 states challenging the Clean Power Plan could fully achieve their emission targets through the first three-year compliance period of the Clean Power Plan (the period from 2022-2024) by relying exclusively on existing generation, investments already planned within each state, and implementation of respective existing state policies. The study also found that as many as 18 of these states could comply all the way through 2030 as a result of these measures. Also, since this analysis was completed, Arkansas announced that it was already in compliance with the 2030 emissions targets. This suggests that at least 22 of the states could comply through 2024 as a result of planned investments, and that 19 states could comply through 2030.

For the minority of states that were not found to meet their Clean Power Plan emission reduction targets through planned investments alone, this analysis indicates that very modest additional measures would be sufficient to close the gap. For example, it finds that all of the states could come into compliance in the first three-year compliance period merely by deploying cost-effective energy efficiency measures and developing new clean resources at a rate comparable to the average of their neighboring states.

mjb-graphic

 

Finding #3:  The Clean Power Plan has an essential role to play in reducing emissions from the power sector

While the analysis shows that these states are well positioned for compliance, it also reaffirms the importance of the Clean Power Plan in delivering the needed reductions in climate pollution over the long term.

This is because building new clean generation alone is not enough – it is also vital to ensure that the benefits of these investments are fully realized. By establishing nationwide emission limits through 2030, the Clean Power Plan will provide clear market and regulatory signals to power companies that encourage them to cost-effectively deploy their generation in a manner that reduces climate pollution. However, any delay or disruption in the implementation of the Clean Power Plan would interrupt those signals and put these eminently achievable reductions in climate pollution at risk.

Power companies, states, and others agree: compliance is readily achievable

We aren’t the only ones who have concluded that the Clean Power Plan targets are eminently reasonable. Our results are consistent with recent, independent economic analyses by the Nicholas Institute, M.J. Bradley & Associates, the Bipartisan Policy Center, and others. All of these analyses predict very low compliance costs because favorable economics for lower and zero-carbon sources of electricity are expected to continue driving sustained investment in these resources even in the absence of the Clean Power Plan. As a result, states around the country are well positioned for compliance.

Notably, states and power companies from across the country have themselves affirmed this very point:

  • In Georgia, an official at the state Public Service Commission, Sheree Kernizan, affirmed that: “We were already on track under the proposed rules to kind of meet the goals anyway – without doing anything – and this was prior to the 2016 [integrated resource plan] that was filed this year …. and [Georgia Power Company’s] talking about adding more renewables, continuing the energy efficiency programs that have been in place.”
  • The state of Arkansas announced in May that it has already met the 2030 emission targets in the standards by moving to cleaner and more affordable sources of energy.
  • The Michigan Department of Environmental Quality says the state can comply with the federal Clean Power Plan to reduce carbon emissions without changing anything until at least 2025.
  • Oklahoma’s two largest utilities, PSO and OG&E, both say they’re on a path to compliance with the Clean Power Plan by the 2030 deadline.
  • Analysis conducted by Pace Global for the Arizona Utilities Group shows that the state can comply with the Clean Power Plan based on investments already planned under business-as-usual. (The Arizona Utilities Group consists of Arizona Electric Power Cooperative, Inc., Arizona Public Service Company, Salt River Project Agricultural Improvement and Power District, Tucson Electric Power Company, and UniSource Energy Services.)

(You can find even more analyses and statements about how states and power companies are well positioned to achieve Clean Power Plan targets here.) 

At this point it is abundantly clear that America is rapidly transitioning to a low carbon economy – yielding enormous benefits for climate and public health, and opening new economic opportunities in communities across the nation. With the price of low-carbon resources at all-time lows, the market is already strongly driving this transition. The Clean Power Plan is a common sense framework that can provide an essential role in harnessing this momentum and providing a clear, certain path forward to protect against climate change — while at the same time giving states the ability to achieve emission reductions in ways that maximize local public health benefits for communities affected by air pollution.

Litigating states and power companies should stop wasting money fighting against the protection of public health and the environment, and instead focus more fully on how to seize the opportunities of a clean energy future and maximize benefits for communities and consumers.

 

Posted in Clean Air Act, Clean Power Plan, Economics, EPA litgation, Greenhouse Gas Emissions, News, Policy / Read 1 Response

An Early Look at the Clean Power Plan in Six Charts

By / Published: August 11, 2015

(This post was written by EDF’s Nicholas Bianco and Tomás Carbonell)

On August 3rd, 2015, President Obama announced the Clean Power Plan – a historic set of Clean Air Act standards that will finally put an end to the era of unlimited carbon pollution from America’s fossil fuel-fired power plants.

Fossil fuel-fired power plants are the nation’s single largest source of climate-destabilizing pollution, accounting for nearly 40 percent of our emissions of carbon dioxide. Unlike other major air pollutants from the power sector that have been subject to protective standards under the Clean Air Act, carbon pollution from power plants has been subject to no national limits –until now.

In our new white paper, An Early Look at the Clean Power Plan in Six Charts, we summarize the Clean Power Plan, and provide an overview of the major features of these vital standards and explain the broader market and industry trends that will shape the implementation of the Clean Power Plan, including:

  • an examination of the nationwide emission reduction targets
  • the process by which state targets were developed
  • state flexibility in the development of implementation plans
  • early action crediting
  • reliability mechanisms
  • environmental and public health benefits of the standards

As we explain in the white paper, reducing carbon pollution from the power sector will yield a safer and more stable climate for ourselves and for our children.

It will also result in near-term public health benefits in the form of thousands of avoided deaths, hundreds of thousands of avoided childhood asthma attacks, and fewer strokes and heart attacks.

By creating incentives for energy efficiency, the Clean Power Plan also has the potential to reduce energy bills for households by an average of approximately $80 per year when fully implemented – yielding significant economic benefits.

Click to enlarge. Source: EDF white paper

The Clean Power Plan is an important step for America, but it should be seen as setting the floor for ambition, not the ceiling. It is abundantly clear that the power sector is fully capable of achieving – and greatly exceeding — the standards laid out in the Clean Power Plan, and doing so in a highly cost-effective way that maintains a reliable and affordable electric system.

Experience has shown that states that move early and in a rigorous way to reduce emissions will reap the greatest health and economic benefits. States will have tremendous flexibility under the Clean Power Plan to determine how best to win this race, and how to take advantage of their own unique opportunities.

Deploying that flexibility to surpass the carbon pollution limits established in the Clean Power Plan will maximize benefits to ratepayers and power companies, while improving health in local communities.

With the finalization of the Clean Power Plan, states and power companies will now begin the important work of developing state-based solutions. The Clean Air Act requires that this process include extensive public outreach and involvement. It’s important that citizens engage in this process, and tell their state officials, regulators, and power companies that they want to win the race to a low-carbon economy — and that officials should therefore act early and boldly to make progress in reducing carbon pollution.

By leveraging all of the opportunities and tools that the Clean Power Plan offers, we can secure healthier air, a safer climate, and a more resilient and affordable electricity grid. That’s something all Americans can celebrate.

You can read more in our white paper.

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