Obama Directs the EPA to “Work Expeditiously” to Complete Standards for New and Existing Power Plants: Now the Details on How the EPA Can Deliver the Goods

, , Policy Director and Lead Economist, Climate & Energy | June 25, 2013, 11:26 am EDT
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Today President Obama will make a major speech outlining his administration’s plans to cut carbon emissions through agency actions. The centerpiece of the speech is expected to be an announcement that the President will direct the EPA to move ahead in setting carbon standards for both new and existing power plants. Today and in the weeks to come we’ll be following closely to hear the details on both timing and substance for these standards.

A short digression on how we got here

Obama-climate-speech-blog-boxThis post is part of a series on President Obama’s Climate Action Plan.

The failure of the comprehensive climate and energy bill in Congress shifted focus to what could be achieved through administrative action. That’s where the EPA’s role in cutting emissions comes in.

The EPA has already moved ahead with setting strong fuel economy standards for cars and trucks under the Clean Air Act. However, action has been slow to come on power plants. In April 2012 the EPA proposed a standard for new power plants that has yet to be finalized over a year later. And meanwhile we have had no word on plans to set a standard for existing power plants.

Fast forward to today’s (mostly) good news on the power plant carbon standards

The President’s announcement today is a welcome sign that the administration recognizes the critical significance of the power plant carbon standards in cutting emissions, especially by regulating emissions from existing power plants.

But time is of the essence. President Obama has directed the EPA to “work expeditiously to complete carbon pollution standards for new and existing power plants.” More clarity on timing is essential. We need to know that the Administration has a timetable and a process to get these standards done well within this president’s term in office.

What about the already-proposed (sound) standard for new power plants?

Rumors have been building, echoed in recent news stories, that the Administration was set to take back the draft standard for new power plants issued last April and then re-propose standards simultaneously for new and existing power plants at some point in the future.

The advance draft of the President’s Climate Plan neither confirms nor denies this.

The already proposed standard for new power plants is a good one, informed by science and supported by millions of Americans. As the Climate Plan says, “The EPA’s proposal reflects and reinforces the ongoing trend towards cleaner technologies, with natural gas increasing its share of electricity generation in recent years, principally through market forces and renewables deployment growing rapidly to account for roughly half of new generation capacity installed in 2012.”

If the Administration has cause to believe that the road to finalizing the standards for both new and existing power plants will be made smoother and faster by proposing them together, perhaps a re-proposal of the standard for new plants would make sense. But the standard for new power plants must remain as strong as originally proposed, and in particular the EPA should keep the standard the same for all fossil-fired power plants. Creating separate categories for coal and natural gas-fired power plants could significantly weaken the standards. The EPA must also move quickly to finalize the standards for both new and existing power plants as soon as possible.

My colleagues who keep a closer eye on Congress say that finalizing the rules together could have an important political advantage. Opponents of climate action may try to block the rules through the Congressional Review Act (CRA), a move that could require clearing the 60-vote hurdle in the Senate. The CRA has been repeatedly misused by some in Congress as the EPA has worked to finalize public health standards, including in a failed attempt led by Senator Inhofe to block the Mercury and Air Toxics Standard. The administration may want to reduce delays caused by having two separate CRA debates if the standards are finalized at different times.

Emissions reduction opportunities abound for existing power plant fleet

As everyone knows, this is where the action is. Roughly a third of our global warming emissions in the U.S. come from power plants. Any serious attempt to address climate change must tackle this major source, and it is excellent news that the president is committing to action on this front.

There are significant opportunities to reduce emissions from our existing fleet of power plants, particularly because of the numerous old, inefficient, and polluting coal and oil-fired units that are currently part of the fleet. The design for the standard for existing plants could take different forms but the key metric for judging its effectiveness must be that it leads to near-term, significant, and sustained emissions reductions from the existing fleet of power plants and ensures a transition to a cleaner, more efficient power system.

Plants could meet these standards via a variety of options, including by making efficiency improvements, investing in waste-heat recovery, biomass co-firing (subject to strict criteria for biomass that include lifecycle emissions and other sustainability criteria), fuel switching to cleaner-burning fuels, retiring old and inefficient plants, reducing the electric output from high-emitting plants, investing in carbon capture and storage (CCS) technology, or investing in energy efficiency and renewable energy resources.

If well designed, a performance standard that includes the flexibility to average emissions across plants could help achieve deeper emissions reductions than would otherwise be possible.

The legal framework for existing power plant standards

Standards for existing power plants will be issued under Section 111(d) of the Clean Air Act. This section allows for the EPA to set overarching guidelines for the standard that will then be implemented by states. The role of states is crucial and provides a built-in flexibility in how states choose to operationalize the EPA’s guidance. Once the EPA issues its guidelines, states will work on compliance plans to help meet them and submit those to the EPA for review and approval. If a state plan is rejected as inadequate, the EPA has the authority to issue a plan and direct the state to implement it.

Guidelines for a strong standard for existing power plants

There are a few guidelines that could help ensure a strong standard for existing power plants:

  • The standard should apply to all fossil fuel-fired power plants, including coal, oil, and gas.
  • It should be in the form of an output-based emissions standard (designated in lbs of CO2/MWh), set in a manner that allows for a shift over time to low-carbon sources of electricity.
  • There should be no loopholes that extend the lives of older, higher-emitting coal-fired plants and thereby risk locking us into a high emissions pathway.
  • The standard should allow for the flexibility to average emissions across plants, generation fleets belonging to a utility company, or even across states/regions, should they choose to exercise this flexibility. This could provide opportunities for deeper emissions reductions than may be achievable at the plant level.
  • There should also be the flexibility to incorporate renewable energy and energy efficiency as compliance mechanisms that help reduce the overall emissions rate in the electric sector.
  • The EPA should engage in an open and consultative process with states and other stakeholders as it drafts its guidelines. Some states and regions have taken a leadership role in setting up carbon reduction programs and should have appropriate incentives to continue to implement and strengthen their programs. They could apply for “equivalence” based on some set of criteria established by the EPA that shows their programs deliver at least as much emissions reductions as the draft standards would.
  • As soon as possible, the EPA should clearly indicate a schedule for these standards to be proposed and finalized, and signal that they will be made stronger over time. Power plant owners and investors need to have this certainty to make appropriate long-term investment decisions. The urgency of the climate problem requires that we maintain an ambitious schedule of emissions reductions.

After Obama’s speech, what next?

It will be exciting to hear the president finally provide some details on his plan to address climate change. The advance copy shows that it is ambitious in scope, covering many important action areas for cutting emissions and helping communities prepare for climate change through a variety of administrative actions. If fully implemented, these proposals could put us firmly on a path to a 17 percent cut in emissions by 2020 relative to 2005 levels – the commitment President Obama made to the world in 2009.

Now we need the agencies responsible to fill in the details on how they plan to implement the president’s plan on an accelerated timeline. We have lost too much time to inaction, and the health consequences and economic costs of our failure to address climate change are mounting.

We also need to go much further in cutting our emissions. Congress needs to wake up to its responsibilities and implement policies that would put a price on carbon, reflecting the costs of carbon pollution, and provide long-term incentives to invest in renewable energy and energy efficiency.

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  • Richard Solomon

    Why does Congress need to get involved at all? I thought this proposal is to allow the EPA to do its job, as the law and the Supreme Court has directed it to, and to keep Congress from messing things up with its inability/unwillingness to take action as needed!