Environmental Protection Agency (EPA) Final Rules for Clean Power Plan

           US - Energy News

On August 3rd, the EPA issued the final rule for carbon emissions from the electric power sector, known as the Clean Power Plan. The plan was first announced in June 2014 and over the last year the EPA has been working with individual states in drafting the final rules, a 1560 page document.

While the inevitable lawsuits will most certainly occur, there is a good chance this plan will proceed, causing huge changes in the power industry.

The central theme of the plan is that individual states have to reduce the greenhouse gas emissions of power plants 32 percent by 2030 compared to 2005 levels. These are the firstever national standards to address carbon pollution from power plants. The plan calls for states to develop and implement a schedule that ensures power plants in their states either individually or combined with other measures, meet specific CO2 performance rates between 2022 and 2029, and then reach the final target by 2030.

There are two separate methods that states may choose to meet their goals. One is the Emissions Standard Plan, this includes source specific requirements that ensure that all power plants within a state meet their target emission performance rate. The other is called the State Measure Plan which includes a mixture of methods implemented by the individual state such as renewable energy standards and energy efficiency programs. Targets will be federally enforced starting in 2022 regardless of which approach a state implements.

While the timeline may seem a bit distant, changes to the power market will happen well before 2022 as the market anticipates the changes. The loser in all EPA plans seems to be the coal industry. With coal plants already retiring at a record rate due to the April 2015 implementation of the Mercury and Air Toxic Standard (MATS), this plan could accelerate the coal plant retirement process.

While it may be inferred that this increased regulation will result in higher costs, it may end up being state specific as to what the final cost will be. States that already produce a majority of their power from Nuclear, Hydro or renewables will incur significantly lower costs than states that have majority of their electricity supplied from coal-base electricity generators.

Analyst – David Mousseau
Sources – Energy Manager Today, Forbes, and EPA

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