TRC

Regulatory Update   |   Aug 13th, 2015 Clean Power Plan Impacts Generators and Developers

power-plant-cropped

On August 3, 2015 EPA issued the final Clean Power Plan (CPP), a historic and important step in reducing carbon pollution from power plants that takes meaningful action to prevent climate change. There will undoubtedly be legal challenges in the coming months and litigation will proceed on an unpredictable timetable. Despite this uncertainty, States, existing generating companies, developers and energy efficiency companies should prepare for compliance now.

Requirements

Claiming statutory authority under §111(d) of the Clean Air Act, EPA will set a national goal for emission reductions, and require States, tribes and U.S. territories to determine how they will meet it.

Draft State Implementation Plans (SIP) must be prepared and submitted by September 2016 detailing the strategy and tactics for achieving Plan goals. Stakeholders, especially existing power generators and developers, must work with their respective States to determine their role and responsibilities for emissions reductions. Final complete plans are required by September 2018.The interim compliance period runs from 2022 through 2029 with final compliance in 2030.

Assuming full implementation, CO2 emissions from power plants would be reduced by 32% from 2005 levels.

EPA will establish interim and final statewide goals in three forms:

  • Rate-based state goals measured in pounds of CO2 per megawatt-hour;
  • Mass-based state goals measured in short tons of CO2;
  • Mass-based state goals with a new source complement measured in short tons of CO2.

States will have the option to create Emissions Standards Plans, requiring power plants within the State to meet certain performance objectives. This approach will not be practical for most States because some plants may be able to reduce CO2 emissions but others may not. States then can choose to implement State Measures Plans, in which mixtures of measures including renewable energy or efficiency programs contribute to meeting meet the State’s mass-based goals.

States are required to implement emissions reduction plans that ensure the continued provision of safe, reliable power while achieving CPP goals. They will need to decide whether to join with other states in emission trading systems, and, if choosing to include renewable energy or energy efficiency, create and finance programs that interact with those emission trading systems.

Impact on Generators and Developers

Existing generators, developers, renewable energy, battery storage and energy efficiency firms must work to protect their interests and ensure proper treatment within each State’s compliance plans. Actions potentially taken by States may affect reliability, power costs and could impact other plans for new construction, retrofits and generation shut downs. And while some States have already started the process of planning for compliance, others may choose not to submit a State Implementation Plan, subjecting generators to requirements of a Federal Implementation instead.

TRC recommends that each stakeholder – states, tribes, U.S. territories, existing generators, developers, energy efficiency firms and local utilities prepare now for implementation of the Clean Power Plan. Balancing the need for safe, reliable power with Clean Power Plan goals for CO2 reduction will require expert consulting services and lots of open communication.


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