The rules are finally out. In what some pundits are calling the most important act of President Obama’s second term, on Monday morning the EPA released its “Clean Power Plan.” These are the proposed rules that will require reductions in greenhouse gas emissions from existing electric power plants. Electric generation accounts for about 40 percent of current U.S. CO2 emissions.
The text of the regulations runs to 645 pages, and it isn’t exactly a page-turner. We suspect you’ve got more fun things to do with your time on this lovely spring day than to read it. So here we answer the nine most important questions about the proposal for you:
1. What will the rules do? The EPA intends to create a “rate-based” limit on greenhouse gas emissions from power plants for each state depending on its current emissions. Rate-based means it sets a standard for how much CO2 is emitted per megawatt hour of electricity produced, not a limit on total carbon tonnage. The plan is designed, as was expected, to give states maximum flexibility to meet these goals in whichever way works best for them and to avoid constricting economic growth. States can, however, choose to convert their rate-based goal into a total tonnage goal if they prefer.
2. How much will the plan cut emissions? Nationwide, the plan is projected to reduce power plants’ CO2 emissions from 2005 levels by 26 or 27 percent by 2020 and about 30 percent by 2030. What’s strange about these numbers is that EPA is setting an ambitious target for 2020, and then barely improving it over the next decade. That’s pretty weak. As clean energy technology becomes cheaper, states should be able to do a lot more to reduce their emissions. The targets can be strengthened in the future, but don’t expect a President Marco Rubio or Jeb Bush to do so. When asked why the rate reductions are so front-loaded, an EPA senior official told reporters, “Some of the measures [to reduce emissions] can be implemented pretty rapidly.”
The targets make more sense politically than policy-wise. 2020 happens to be the year by which Obama has pledged to reduce U.S. greenhouse gas emissions by 17 percent from 2005 levels. Setting the power-plant standard just high enough to help the U.S. get there, and then not going much further thereafter, is potentially a way to get credit domestically and internationally for a promise kept, while minimizing industry opposition.
Technically, because the rule is rate-based, it doesn’t call for specific cuts compared to a baseline year. But talking about a baseline year provides a point of comparison. “The reason that we’re using 2005 is because it’s a number people use to measure progress on reducing carbon,” said one senior EPA official on a press call Monday afternoon. “It is not a baseline with respect to the rule. We are not expecting states to reduce from a specific baseline.” EPA is bragging about the 30 percent cut from 2005 levels because it’s a way of keeping both sides happy. Emissions have dropped in recent years because of the recession, the rise of renewables, and the fracking boom in natural gas. Using the current year as a baseline for comparison, the plan is expected to cut emissions by about 20 percent, which is a little bit less than environmentalists were hoping for. To your average Democrat, 30 percent sounds better than 20 percent. But the energy industry knows that it’s really not because of the baseline differential. Environmental policy experts say that appeasing energy companies is important to EPA. “They’re trying to get utilities to be on board on with this,” says Tyson Slocum, director of Public Citizen’s energy program. “They want utilities to participate in this process.”
3. Why are these referred to as regulations on “coal-fired power plants,” and why are opponents calling this a “War on Coal”? Coal is the most carbon-intensive fossil fuel, and it accounts for more than 40 percent of American electric generation and 74 percent of the CO2 emissions from the electricity sector. Under the proposed rules, only coal plants will have to be cleaned up, reduce their usage, or be retired. The rules would have to be much stricter to make us also shift away from natural gas. (We get almost none of our electricity from oil.)
4. What do states have to do? Each state will be required to submit its own plan for complying with the rules by June 2016, although they can request a one-year extension, until June 2017. States can also create a multi-state plan, thus encouraging more interstate compacts like the Regional Greenhouse Gas Initiative, a cap-and-trade system in Northeastern states; for such multi-state plans, they can request a two-year extension. If states don’t submit a compliant plan, EPA will make one for them.
EPA lays out four main approaches that states can use: make coal plants more efficient (for example by reducing their heat loss), increase natural gas-burning capacity, increase non-carbon energy producing capacity (that’s mainly renewables, but also nuclear), and reduce demand for electricity through improved efficiency. States don’t have to pick just one. “There is no one-size-fits-all option,” said EPA Administrator Gina McCarthy when announcing the rules at EPA headquarters Monday morning. “It’s up to states to mix and match to meet their goals.” They can also submit a plan with a whole other approach, such as a carbon tax.
5. How will this affect the mix of fuels the U.S. uses? It’s bad for coal and it’s good for natural gas. It’s good for renewables too. Controversially among environmentalists, the plan also specifically encourages nuclear energy along with renewables, noting that a state can demonstrate its ability to meet the goals in part by increasing nuclear generation capacity.
6. How much of a difference will it make in the big scheme of things? It is expected to cut U.S. CO2 emissions by more than 6 percent from 2005 levels by 2020 and then a tiny bit more by 2030. While that is far short of the 80 percent reduction from 1990 levels by 2050 that we need to avert climate catastrophe, it is a significant step. And it could enable to U.S. to meet the goal Obama committed to at the 2009 climate talks in Copenhagen: a 17 percent reduction from 2005 levels by 2020. It is widely presumed that Obama has to be on pace to meet his own target to have any moral authority in calling for an ambitious deal in the next big round of international negotiations in Paris in 2015. As McCarthy said to Grist in our Google Hangout last month, U.S. climate action is essential for “getting some additional leverage in taking these strong actions in the international discussion.”
U.S. energy-related CO2 emissions already dropped by 13.2 percent from 2005 to 2012, so we’re already halfway to EPA’s goal for 2020. But to reach Obama’s goal of an economy-wide 17 percent drop from 2005 levels, some experts estimate that we’d need about a 25 percent decrease in emissions from the power plant sector from current levels, not 2005 levels. That’s why environmentalists will push for stricter caps before the rules are finalized.
Moving away from coal has many other environmental benefits. Coal burning pollutes the air with toxins such as mercury, which causes neurological problems, and sulfur, which contributes to respiratory ailments. Reducing climate change also helps cut down on breathing problems, since warmer weather leads to more smog. Obama predicted on Saturday, “In just the first year that these standards go into effect, up to 100,000 asthma attacks and 2,100 heart attacks will be avoided — and those numbers will go up from there.” Coal mining and processing also have terrible effects on local communities. Not only is the coal itself dangerous to your health, but so are the chemicals used to treat it, as Charleston, W.Va., recently learned the hard way.
7. Are there any downsides? Increased natural gas production has its drawbacks. While burning the gas doesn’t create as much CO2 or other pollutants as burning coal does, if gas leaks before being burned, it results in emissions of methane, a particularly potent greenhouse gas. So much of it is leaking in the drilling and transport process right now that natural gas may be just as bad as coal for global warming. Since today’s proposed rule only governs the emissions from the burning of fossil fuels at power plants, not their extraction and transportation, this could be a major problem unless EPA institutes tough rules governing methane leakage. EPA is currently studying possibilities for that, but has not announced whether it will require reductions in methane leakage or merely make recommendations. “It’s just like how EPA’s tailpipe emissions don’t take into account that oil fields are flaring natural gas,” says Slocum. “These rules don’t do a life-cycle analysis although there’s a case to be made that they should.” Fracking also creates problems in the communities where it takes place: Gas and fracking chemicals can leak into the local water supply, and fracking companies don’t have to disclose which chemicals they’re using. Also, nuclear energy poses risks of terrible environmental destruction if a reactor melts down or is the site of a terrorist attack.
8. Will it hurt the economy? No. As McCarthy noted in her remarks Monday, even the upper bound of projected cost increases for an average household’s utility bill will equal the price of a gallon of milk every month. Such a minor rate of increase is unlikely to cause many factories to pull up stakes and move to Mexico. Job losses in the coal industry will be offset by hiring in the construction and clean energy sectors. Lower rates of respiratory illness will save money on health care and improve productivity. EPA estimates that lower particle pollution from coal burning will reduce annual heart attacks, asthma attacks, premature deaths, hospital admissions, and lost days of work and school by the thousands. The economic value of these savings could outweigh increased costs by up to a factor of 10.
9. What happens now? There will be a public comment period for 120 days, and during the week of July 28, EPA will hold hearings in Denver, Atlanta, Pittsburgh, and Washington, D.C. Denver and Pittsburgh are both in states with large reserves of coal and natural gas. The rules will then be finalized by June 2015.
Industry groups and Republican state attorneys general will inevitably sue to stop the implementation, as they are already suing to overturn rules for new power plants that were proposed last September. They may just be trying to run out the clock, since a Republican could take office in January 2017. If the legal challenges are quickly dispatched, though, then compliance with the rules will be well underway by the time the next president takes office. “Whoever is the next president will be a factor in how successful these standards are,” says Mary Anne Hitt, director of the Sierra Club’s Beyond Coal campaign. “But by that point you’ll have a lot of work done in states to draft implementation plans. It will already be driving investment decisions.” A Republican president might weaken the rules, but fully repealing them might be more trouble than it’s worth, especially since the Supreme Court has already ruled that EPA is obligated to regulate CO2 under the Clean Air Act.