EPA Carbon Standard Opens the Door for Renewables, Now States Must Take Them over the Threshold

, , director of state policy & analysis, Clean Energy | June 6, 2014, 8:16 am EDT
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This week the EPA released its draft power plant carbon standard, and renewable energy was included as one of the technologies that states can use for reducing CO2 emissions. That’s terrific news for wind, solar, and other renewable energy technologies, which are already demonstrating they’re capable of ramping up in a big way. But in order to keep the U.S. moving toward a truly low-carbon economy, states must seize the opportunity and make renewables a cornerstone of their compliance plans.

Source: Peter Juvinall - NREL.

Source: Peter Juvinall – NREL.

A role for renewables

Renewable energy resources, along with nuclear power, account for one of the four building blocks of emission reduction measures that the EPA included in their proposal. The other building blocks include efficiency (heat rate) improvements at individual fossil fuel plants, switching to lower carbon sources like natural gas, and greater investments in energy efficiency in buildings and industries.

The EPA made a wise decision by including renewables as an eligible compliance strategy. Renewables emit no carbon, and are already delivering safe, reliable, and affordable power to consumers. They also help diversify their electricity mix, improve public health, strengthen state and local economies, and reduce the risks of over reliance on natural gas.

As states develop their compliance plans, renewables will compete with the other emission reduction strategies for the size of the contribution they’ll make. States have the power and flexibility to use renewable energy for all or none (or likely somewhere in between) of the carbon reductions they need to achieve.

Ready to compete

The good news is that renewable energy resources are in a great position to compete for a big slice of the compliance pie. Falling costs, advances in technology, and strong state policies are already driving a rapid increase in renewable energy capacity. For example, the average installed price of solar photovoltaic (PV) systems fell by about 40 percent from 2008 to 2012, and by another 15 percent in 2013. During this period, U.S. solar capacity grew more than 25-fold. Meanwhile, the cost of wind power dropped 43 percent in the last four years—and is now competitive with power from new fossil fuel plants in many regions of the country.

All states have significant and diverse renewable energy resource potential that can be developed. And with the EPA encouraging regional cooperation for achieving the standard, states have the option to lean on each other to ensure that the best resources are developed first.

At the state level, renewable electricity standards have been the leading driver of new renewable energy development. Twenty-nine states already have these affordable, market-based policies in place to support the long-term growth of renewable energy. The EPA designed its draft carbon rule to give these early acting states a jump start toward achieving the standard. But it’s not too late for other states to follow suit. Adopting the RES in new states and expanding existing state RES targets is a smart and cost-effective way reducing carbon emissions.

Renewables can deliver much more power than EPA estimates

When it comes to renewables, there is at least one area that the draft carbon rule could be improved. In establishing emission rate reduction goals for each state, the EPA has underestimated the true potential for renewable energy to cut carbon emissions.


This post is part of a series on the EPA Clean Power Plan.

To set the state targets, EPA needed to define a ‘Best System of Emission Reductions (BSER)’. That process included a ground up evaluation (and then aggregation) of the emission reduction contribution that each of the four building blocks could reasonably make.  A terrific blog from David Hawkins at NRDC explains in clear detail how the state emission rate reduction targets were set. Or you could read EPA’s more wonky explanation here and here.

For establishing the emission reduction potential from the renewable energy building block, the EPA relied on existing state-level RES policies as a benchmark. They split the country into six regions and established a regional target for renewable energy by averaging the existing state RES requirements within each region. The corresponding renewable energy generation that would result assuming each state meets its respective regional target is then applied to the formulation of that state’s emission rate reduction goal.

The resulting level of renewable energy generation that EPA estimates states could feasibly achieve is quite modest: roughly 524 million MWh in 2029, or approximately 13 percent of total U.S. power mix. That’s only marginally more ambitious than what the U.S. Energy Information Administration projects for renewable energy generation under its business as usual (e.g. no new policies) case: 444 million MWh.

Michigan provides a good example of how this plays out at the state level. Based on EPA’s approach, the level of renewable energy generation that is factored into Michigan’s emission rate reduction goal is just 8 million MWh or 7.4 percent of the state’s total generation. Yet, a recent report from Governor Snyder’s administration concluded that Michigan can cost-effectively and reliably achieve at least 30 percent renewable energy with in-state resources.

Despite this needed improvement, the important take away here is that EPA’s framework provides an opportunity for states to include renewables in their compliance plans. States are free to go beyond the levels of renewables that EPA estimated in order to meet their emissions rate reduction target – and they should, since this is a cost-effective option nationwide.

More renewables can drive deeper emissions reductions

Of course, with the right policies in place, renewable energy can deliver much more power than EPA estimates all across the nation– and that creates an opportunity for the standard to deliver even deeper emissions reductions than the 30 percent reduction below 2005 levels that the EPA projects. A just-released UCS analysis shows that a carbon standard combined with strong complementary renewable energy and energy efficiency policies could yield 992 million MWh of renewable energy generation by 2030 and reduce power sector carbon emissions by approximately 60 percent below 2005 levels.

The EPA’s draft carbon rule presents a tremendous opportunity for accelerating the transition to a renewable energy economy. Fully capitalizing on the opportunity will require strengthening the emissions reduction target in the final rule and strong leadership from the states to include a significant role for renewable energy in their compliance plans. Please lend your voice in support for a strong carbon standard.

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