The moment is nigh. After years of frustration and delay, the Obama administration is on the verge of taking its biggest step to cut greenhouse gas emissions. On June 2, the EPA will release proposed regulations to curb CO2 emissions from existing power plants. In a video chat with Grist on Monday, EPA Administrator Gina McCarthy confirmed reports that President Obama will likely unveil the regulations himself, calling it “a strong indication of how important he sees this.”
Though the rules will apply to all power plants, they’re really aimed at cutting emissions from coal-fired facilities. Electricity generation accounts for one-third of U.S. greenhouse gas emissions, and coal — the most carbon-intensive fossil fuel — is responsible for the majority of that.
Regulating CO2 emissions from coal plants, under the authority of the Clean Air Act, is the biggest thing Obama can do to combat climate change without congressional action. The president announced his intent to do it last June, when he unveiled his Climate Action Plan. The EPA proposed CO2 limits for new power plants last September. This next batch of proposed rules will apply to all existing power plants.
What will the regulations look like? We don’t know, as the EPA won’t divulge details ahead of the official release. But, based on conversations with leading experts and advocates on climate policy, we have some idea. The EPA has been meeting with experts to get their input, and based on the questions EPA asks them, we can sketch the broad outlines.
One thing we know is that the rules for existing plants won’t look like the rules for new plants. The new-plant proposal released by the EPA in September calls for each individual new power plant to release less than a specified amount of CO2 per megawatt-hour of electricity produced. For a new coal plant to meet the rules, it would have to incorporate a carbon-capture-and-sequestration (CCS) system to keep some of its CO2 emissions from going into the atmosphere — an expensive proposition that will likely mean few if any new coal power plants will be built. (But few if any have been planned anyway, thanks to market conditions, particularly cheap natural gas.)
For already-existing power plants, the EPA will take a whole different kind of approach. The agency’s proposed rules will probably roughly follow the model proposed by the Natural Resources Defense Council in a March 2013 report. That approach is to set different limits for each state on the amount of CO2 generated per megawatt-hour by the state’s entire utility fleet — so it’s not each individual plant that matters, but the average across the state. Each state’s goal would be set according to its current electricity mix, so states that currently depend more on coal would start with a higher allowance, but would have to improve more over time. Each state’s limit would also be calculated to allow for economic and population growth. NRDC projects that its method would cut 35 to 40 percent of the CO2 emissions from the electricity-generation sector over 2012 levels by 2025.
The main idea behind the NRDC proposal is to give states and electric utilities a lot of flexibility. They could shut down their dirtiest coal-fired power plants, but they wouldn’t necessarily have to; they might be able to make some of those plants run cleaner, or run them less often, and then take other steps like building up capacity from natural gas and renewables. Utilities would also have the option of helping their customers find efficiencies to reduce their demand for energy, thereby earning credit that would allow more CO2 emissions per megawatt-hour of electricity produced, but the same total CO2 output. This is meant to fix the current incentive structure under which utilities are punished, in the form of less demand, rather than rewarded for helping customers reduce their electricity consumption.
And states could set up their own emissions-trading programs, under which solar and wind facilities would receive credits for each megawatt-hour of energy produced with less than the allowable amount of CO2 and sell those credits to coal plants. States could also join existing regional emissions-trading programs, like the Regional Greenhouse Gas Initiative in the Northeast.
Many experts refer to this approach as “outside the fence,” meaning that the rules do not apply to the plants themselves. NRDC prefers to call the method “system-wide,” because some of the changes would happen within plants. “Power plants don’t operate in a vacuum,” notes David Hawkins, NRDC’s director of climate programs. “The energy they produce is fungible.”
The NRDC approach stands in contrast to the classic “inside the fence” method of regulating pollution by imposing limits on each source. If you set such a limit that a coal-fired plant simply cannot meet, you would force such plants to reduce their output or shut down altogether. That could dramatically reduce the amount of energy being produced in the Eastern half of the U.S., where most electricity comes from coal, resulting in drastically increased costs for electricity.
From a purely environmental perspective, this would be fine. Coal burning would be significantly reduced, and with it CO2 emissions. But economically — and therefore politically and legally — such an approach would carry major risks. A dramatic spike in electricity prices could cause a recession and significant hardship for lower-income families. That, in turn, would likely create a political backlash that would spur Congress to try to revoke the EPA’s authority to regulate CO2. It could even splinter the left, pitting unions, consumer groups, and anti-poverty advocates against the environmental movement. The GOP-controlled House has already voted numerous times to revoke the EPA’s authority, and much higher energy prices might cause some Democrats to join the Republicans. After all, it would be bad for a lot of Midwestern states that rely heavily on coal energy, not just for the states like Wyoming and West Virginia where the coal comes from. “To avoid Congress from overturning a regulation, you have to show the impacts are reasonable,” says Hawkins.
And then there is judicial review. The extent to which the Clean Air Act mandates that regulations consider economic impact is complicated and ambiguous in this circumstance. Suffice it to say that any regulation is sure to be challenged and a likely standard for judges to apply is that the rules must take into account technical feasibility and economic impact.
The state-based plan was devised to withstand the inevitable political and legal challenges. “We wanted an approach that would pass legal scrutiny, making conservative assumptions about the law, technology, and economics,” says Hawkins. “We wanted our model not to be subject to the criticism that ‘You used a harebrained model that only a hippie could love.’”
As with Obamacare, some Republican state governments will presumably refuse to develop a plan to comply with the rules. However, unlike Obamacare, the Clean Air Act clearly grants the EPA authority to simply step in and create the rule for them.
The release of the draft rules won’t mean that environmentalists can rest easy. They will need to pressure the EPA to choose sufficiently ambitious CO2 limits and deadlines, and to make sure that all the economic benefits of energy efficiency, cleaner air, less climate change, and growth in the clean energy sector are taken into account in the economic modeling.
Enviros and climate hawks will be able to have their say during a public comment period after the rules are released. Polluters and their allies will of course use that same commenting process to whine that the rules need to be weakened. Then EPA will consider the comments, revise the rules, and release the final version in June of 2015.
But much of the fight over the rules won’t happen within the EPA’s carefully prescribed process. It’ll happen in histrionic political ads and cable news sound bites as conservatives invoke the specter of skyrocketing electric bills and economic collapse to bash vulnerable Democrats ahead of the November elections. “It is likely to become the major point of conflagration of Obama’s second term,” writes Jonathan Chait in New York magazine. “The plan both fulfills a generational goal of liberal social policy and stokes conservative fears of an unaccountable executive. It’s Obamacare and Benghazi rolled into one.”
June 2 won’t be the end of the fight, but just the beginning.