In setting the final goals, EPA made some changes from the draft rule in how it calculated the Best System of Emission Reduction (BSER). The Clean Air Act requires that EPA set technology based emission reduction standards based on the BSER as determined by the Agency. In the draft rule, EPA proposed that for controlling carbon emissions the BSER is a combination of four building blocks: 1) increasing coal plant efficiency; 2) increasing reliance on natural gas plants; 3) increasing use of carbon-zero generation like renewable energy and nuclear; and 4) increasing use of demand-side energy efficiency.
The BSER in the final Clean Power Plan, however, relies on only three building blocks – removing the demand-side energy efficiency piece of the puzzle. Thus, EPA is relying on strictly supply-side emission reduction measures while still allowing states to use demand-side measures in crafting their compliance plans.
Additionally, the carbon-zero building block no longer includes nuclear (both under-construction and existing nuclear plants) nor existing renewable energy projects. This change came in response to concerns expressed by states during the public comment period, primarily Georgia, Tennessee and South Carolina who have the only under-construction nuclear units in the country.
One of the most interesting new pieces to the Clean Power Plan is what EPA is calling the “Clean Energy Incentive Program.” Through this program, EPA is allowing states to create Emission Reduction Credits (ERCs) by achieving emission reductions in the years 2020 and 2021 through either wind or solar generation or through energy efficiency programs that benefit low-income communities. Renewable energy projects will receive a 1-to-1 credit for each MWh of avoided generation and low-income energy efficiency projects will receive a 2-to-1 credit.
By incentivizing these types of projects through its Incentive Program, EPA is not only crediting states for early action but is also prioritizing actions that benefit low-income communities, ensuring these families receive significant benefits from this rule. This is especially important given that low-income communities have traditionally been more heavily impacted by the negative effects of fossil-fuel generation. EPA will engage with stakeholders in the coming months to discuss the Clean Energy Incentive Program and gather feedback on specific elements of the program.
EPA has also extended the compliance timeline in the final version of the Clean Power Plan. As it stands now, states will not have to begin demonstrating compliance with emission reduction standards until 2022 – 2 years later than originally proposed. Starting in 2022, states will begin reducing carbon emissions on a steadily decreasing glide path until arriving at their final reduction goals in 2030.
As mentioned before, EPA has given states maximum flexibility in crafting unique compliance plans that meet the particular needs of each state. States must begin submitting draft state plans to EPA for approval in 2016, although EPA has allowed for states to get an extension until 2018 if needed. EPA also released model trading rules to give states a starting point in crafting plans that allow states to work together to use cost-effective emissions trading as part of a suite of flexible, affordable compliance measures.
If a state refuses to submit a state plan or fails to submit a sufficient plan, EPA will use its authority granted under the Clean Air Act and implement a federal plan. EPA’s proposed federal plan was presented along with the final Clean Power Plan and will be open for comment for the 90-day period following the publishing of the Clean Power Plan in the Federal Register.
The Clean Power Plan represents an important opportunity for our Southeastern states to benefit from an increasingly robust clean energy economy. We’ve already seen significant growth of clean energy jobs in our region, as confirmed in the recent Clean Jobs Tennessee Report. Many of our major utilities, like Southern Company and the Tennessee Valley Authority, are already on the path to compliance and can help spur economic growth in the region by relying on clean energy compliance solutions, like solar, wind and energy efficiency.
Stay tuned for more information as we continue to learn more about the Clean Power Plan! If you are inclined to speak up and support the Clean Power Plan, click here for resources and links.