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

(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 27^th – 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.

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.