US EPA’s Clean Power Plan

Earlier this month, US EPA released its Clean Power Plan. While it remains to be seen how these regulations will play out in practice (and whether it will survive legal challenges), the plan will certainly impact power generation in Ohio.

What is the Clean Power Plan?

The Clean Power Plan aims to reduce carbon emissions by 32% (from 2005 levels) by 2030. To do this, the Plan contains two key components:

Uniform Performance Rates

The Plan sets both interim and final C02 performance standards for coal- and oil-fired power plants, as well as natural gas-fired combined cycle generating units. Interim performance rates must be met between 2022 and 2029, while final performance rates must be met by 2030.

Individual State Goals

The Plan also sets carbon reduction goals for individual states. These individualized goals are based on three “building blocks”: (1) operating existing plants more efficiently, (2) switching from coal to natural gas, and (3) switching from coal to renewable energy. In order to comply with these goals, each state may choose from a variety of strategies. For example:

• Develop renewable energy sources
• Switch to natural gas from coal-fired power plants
• Build nuclear or increase production from nuclear
• Energy efficiency programs
• Emission trading (i.e. cap-and-trade programs)

What are some of the legal challenges to the Clean Power Plan?

Fifteen states, including Ohio, have stated they will challenge the legal authority for the Clean Power Plan in court.  Nine other states have said they will defend it.

At issue is whether US EPA has the authority to set standards for individual states. Opponents of the Plan argue that the Clean Air Act only empowers US EPA to require certain technologies be installed at the plants themselves, and that fuel switching, renewables and a trading program are beyond the scope of the agency’s authority.

Additionally, some opponents question whether US EPA has the authority to require specific technology at existing power plants. The Clean Air Act contains different requirements for new and existing sources of air pollution. And currently, it is unclear how the courts may look upon the Clean Power Plan’s regulations as it applies to existing power plants.

The Clean Power Plan represents an ambitious (and unprecedented) attempt to regulate carbon emissions from our nation’s power plants. And regardless of how the courts ultimately rule on the various legal challenges to the Plan, it will have a significant effect on the power industry in Ohio. It will be well worth keeping an eye on in the coming months and years…