The revised, final form of the EPA’s Clean Power Plan, released today, is already garnering comment from the power sector, including industry groups, political pressure groups, think tanks and politicians.
The plan calls for 32 percent cuts in carbon dioxide pollution from the existing U.S. power plant fleet by 2030.
The Obama administration wants the country to get 28 percent of its electric power from renewable energy by 2030, compared to 22 percent in the earlier proposal. While states previously had until 2020 to achieve their targets, and will now have until 2022.
The emissions cuts are estimated to cost $8.4 billion annually by 2030.
Joseph Hall, Co-Chair of Dorsey & Whitney LLP Energy Industry Group said much depends on the state-level requirements for emissions cuts, which have yet to be announced.
“Undoubtedly, the process leading up to the Carbon Plan and the rule itself has forced the industry to revisit core assumptions about generation resource portfolios and replacing cheaper coal with gas, nuclear and/or renewables. Depending on what their states may require and where they sit relative to EPA’s benchmarks, utilities may need to reassess their resource plans, Hall said.
“With increased pressure to comply with federal standards, if they have not already, states are going to start asking very tough questions about the cost effectiveness and the reliability of renewables as potential replacements for traditional “baseload” resources. To the extent that distributed generation is relied upon, utilities may be required to rethink the traditional customer-provider relationship to determine the value of customer provided services from things such as on-site generation, rooftop solar, community generation or demand response services, ” he said.
Bipartisan Policy Center senior advisor Jennifer Macedonia said the updated version of the plan deserves some credit for offering flexibility for different states.
“While many states continue to express strong reservations about the rule, there is clear desire for states to have maximum flexibility to design plans that are attuned to local and regional interests, state objectives and current trends in the power sector,” Macedonia said.
“With this final rule, EPA has created space for states to allow affected companies to work across state lines to access the lowest cost emission reductions, whether within their fleet or elsewhere in the system. States have asked EPA to provide a less cumbersome pathway to multistate cooperation and early indications are that EPA has illuminated such a path,” she said.
Duke Energy President and CEO Lynn Good called the plan ambitious and said Duke Energy had already made strides to generating electricity with less emissions.
“Even without federal regulations, our company has reduced carbon dioxide emissions from our power plants by 22 percent since 2005,” Good said. “As we continue to move to a lower carbon future, we will also continue to work constructively with states to identify customer solutions that preserve the reliability and affordability that our communities expect. As we continue to modernize our system, energy diversity will be important — nuclear, natural gas, state-of-the-art coal, hydro, renewables, energy efficiency and energy storage.”
Bob Keefe, executive director of Environmental Entrepreneurs said governors would likely play a critical roll in the implementation of this plan.
“This is the most significant environmental policy we’ve seen in recent years, and also a huge catalyst for economic growth,” said Keefe said. “States now have a blueprint for building their clean energy economy,” Keefe said. “It’s up to governors to put this plan into action if they want to create jobs and drive economic growth — and help their state’s environment as well.”
National Mining Association president and CEO Hal Quinn said his organization, which represents the coal mining industry, would sue to prevent the implementation of these new regulations.
“This is change without a difference. It is not a course correction; EPA is still insisting that families accept a subprime energy mortgage but now with a balloon payment,” Quinn said. “NMA filed a request today with EPA to stay the rule while the courts have the opportunity to determine the lawfulness of the agency’s attempt to commandeer the nation’s electric grid. If EPA denies our request we will ask the courts to do so.”
He went on to call for governors to refuse to implement the plan outright — a plan originally proposed by Speaker of the House John Boehner.
“The nation’s governors now have a clear choice to make about their course: accept this flawed plan and put their citizens at risk, or reject it and challenge EPA’s authority and competence to manage their state’s energy economy from Washington,” he said.
Steve Berberich, president and CEO of the California ISO said, “The ISO is proud to be leading the nation in integrating clean, renewable resources such as wind and solar into the grid, and we see the Clean Power Plan as creating opportunities to further modernize the western grid into a flexible, resilient system that will meet or exceed state and federal environmental goals,” Berberich said.
Tony Earley, Chairman, CEO and president of PGE Corp., commented on the release of the final rule saying, “I congratulate the administration on finalizing the Clean Power Plan rule and greatly appreciate the significant outreach and engagement with our sector. They took the time to understand that states and regions are in different starting places and have different opportunities for achieving emission reductions. While we are optimistic about the contributions this rule will make, it is very complex and we must complete an assessment of its impact on our customers, state and region.”
Calpine Corp., which operates a fleet of 83 power plants generating about 27 GW said the implementation of the Clean Power Plan will be a seminal moment in the history of the energy industry.
“The Clean Power Plan represents a commitment to continuing the transition from carbon-intensive generation to efficient, low-carbon generation,” said Thad Hill, president and chief executive officer of Calpine. “This flexible, market-based solution will reward the companies that invest and have invested smartly in cleaner generation. We applaud the EPA for its efforts throughout this collaborative process and look forward to working with the agency, states and other stakeholders as the rule is ultimately implemented.”
Tom Kuhn, president of the Edison Electric Institute said the EEI’s primary concern is the overall timing and stringency of the near-term reduction targets.
“Until we review the final guidelines in their entirety, it is difficult to assess whether they address the range of concerns we have raised over the past year. Ultimately, it is imperative that the final guidelines respect how the electric system works and provide enough time and flexibility to make the necessary changes to achieve carbon emission reductions,” Kuhn said.
“EEI and its member companies are committed to ensuring that electricity continues to be reliable, affordable, and increasingly clean. Throughout this rulemaking process, we have worked on a good faith basis to improve the final guidelines in order to minimize the costs to customers and to protect the reliability of the system,” he said.
Deck Slone, senior vice president of strategy and public policy for coal mining company Arch Coal, said more than 20 states are already preparing to challenge the rule in court.
“The Administration seems increasingly desperate to salvage an ill-advised and poorly designed rule, which won’t work, won’t pass muster with states, and won’t stand up to legal scrutiny,” said Deck Slone, Arch’s senior vice president of strategy and public policy,” Slone said.
“Even prior to the expensive overhaul announced today, seven governors had stated that they did not plan to comply. That number seems certain to grow as other governors realize that, rather than fix the rule, EPA has in many ways made matters worse,” he said.
Doyle Beneby, president and CEO of CPS Energy offered his initial thoughts on the energy company’s compliance readiness and next action steps:
“We at CPS Energy have been on a steady path to diversify and reduce the carbon output of our generation fleet. With the best market structure, low energy costs, and vast renewable and natural gas resources, Texas is uniquely positioned. After final resolution of the Clean Power Plan, we look forward to working with the state to continue taking a leadership role in carbon reduction.” Beneby said.
Mike Duncan, president and CEO of American Coalition for Clean Coal Electricity said people across the country oppose these regulations and called the plan “illegal.”
“This rule fails across the board, but most troubling is that it fails the millions of families and businesses who rely on affordable electricity to help them keep food on the table and the lights on,” Duncan said. “Sadly, not everyone has the deep pockets of the environmental activists pushing this political agenda.”
Rhea Suh, president of the Natural Resources Defense Council, said the energy industry needs to cut carbon pollution today so children won’t inherit an unsalvageable planet tomorrow.
“The Clean Power Plan will slash the pollution that worsens smog and intensifies cases of asthma and other respiratory diseases. It’s protecting our health and homes, our lives and livelihoods,” Suh said. “I am proud of the work NRDC has done to help make that happen. Now we are going to fight with everything we’ve got to ensure the plan moves forward and provides the necessary momentum for unified global action.”
Sam Adams, director of the World Resources Institute’s U.S. Climate Initiative said the Clean Power Plan will be hotly debated, but it is based upon the Clean Air Act, which is longstanding U.S. law that has been supported by the Supreme Court multiple times.
“For the first time ever, existing power plants have a legal responsibility to limit harmful carbon pollution. This plan gives states plenty of flexibility to adopt more renewable energy and energy efficiency measures. This common sense and long-overdue step will drive technological innovation, avoid local air pollution and help our country lead on climate change. Based on feedback in the comment period, the EPA has added even more incentives and credits for states to comply early,” Adams said.
In a release, the U.S. House of Representatives Sustainable Energy and Environment Coalition said climate change is a threat to human life, national security and the economy.
“We have a moral obligation to act on climate, and we cannot afford to wait any longer to further reduce carbon pollution,” according to the SEEC. “We have an opportunity and the ability to make our economy and our communities stronger by investing in proven clean energy technologies to improve efficiency and reliability. As members of the Sustainable Energy and Environment Coalition, we are leading the fight in Congress against the dirty energy status quo. We applaud the President and the EPA for their leadership on the Clean Power Plan, and we will continue to work with the Administration and our community partners in supporting and defending this initiative for the benefit of American families and our planet.”
In a news release, coal mining company Peabody Energy said the Clean Power Plan is impractical and will end up hurting consumers by triggering higher utility bills.
“Studies show the rules will punish American families and businesses with higher energy costs and damage electric reliability, while having no notable benefit even under climate theory. They would put our energy system at serious risk and further slow our nation’s tepid economic growth. A technology path – not artificial caps and taxes – is the far better approach to address carbon concerns over time,” according to Peabody Energy.
“Americans need relief from “pain at the plug” costs given record electricity rates even amid reduced oil and natural gas prices. Coal provides some of the lowest cost electricity in America and the economy, jobs and households will suffer if these rules move forward. Jurisdictions including Europe, Australia, Ontario and California that have tried such policies have suffered soaring electricity costs and economic harm,” according to the release.