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US Clean Power Plan – Support, opposition and how to bring these perspectives together

Introduction
EPA’s recently proposed Clean Power Plan (CPP) represents a major shift for the US Power industry. Support and opposition for EPA’s Clean Power Plan is divided along predictable lines. Strong support exists in states that generate electricity from low-carbon sources and have already adopted policies to reduce power sector emissions. Resistance is strong in coal-dependent states in the Midwest and Southeast, where retail electric rates are low and industry-related jobs are high.  But there are outliers—Colorado stands out as an example of a state willing to commit to reductions despite a coal-intensive power sector, large amounts of generation from coal, and several thousands of jobs in the industry.

What can states like Colorado teach us about overcoming institutional barriers to plans like the CPP? This blog will review some of the standard positions supporting and opposing the CPP, and look at some lessons and solutions several states can teach the country.

Goals of the CPP
The CPP calls for emission reductions from existing fossil fuel-fired electric generating units of 30 percent by 2030, compared to 2005 levels. As shown in Figure 1, the electric power sector is the largest contributor to CO2 emissions in the US in 2014.  The majority of these emissions results from combusting coal to generate electricity, with more than 75% of the emissions originating from this fuel type.

Figure 1-2014 US Energy-Related Carbon Dioxide Emissions by Sector and Source

Figure 1 – 2014 US Energy-Related Carbon Dioxide Emissions by Sector and Source [1]

The proposed guidelines of 111(d) are designed so each state has an individual CO2 reduction target, with those targets expressed in a lb/MWh rate-based or mass-based CO2 emission performance levels.  The EPA came up with these reduction targets using the “best system of emission reduction” (BSER) determination, looking at technical feasibility, system costs, and technology diffusion within each state. How each state feels about the CPP, and whether they support or oppose the proposed rule, sheds light on the legal and regulatory hurdles EPA may face while trying to implement this plan.

State Perspective throughout the Country
The comments on the map show clear support and opposition to the implementation of the CPP. The reasons behind these comments provide insight on potential obstacles and solutions that may allow certain barriers to be overcome.

Figure 2 - 2012 Electric Power Sector Emissions Million and State generation fuel mix [2, 3, 4]

Figure 2 – 2012 Electric Power Sector Emissions Million and State generation fuel mix [2, 3, 4]. Click to enlarge.

Who are the Supporters?
Unsurprisingly, there is support for the CPP from states whose fuel mix is dominated by natural gas, nuclear, hydro and renewable generation. These are states where Renewable Portfolio Standards (RPS) are prevalent, and they may also be involved with carbon markets, such as the Regional Greenhouse Gas Initiative (RGGI). These pockets mainly exist in the Northeast and Northwestern regions of the US.

For example, Washington and Oregon have more than 60% hydro power in their fuel mix, and some of the lowest total CO2 emissions in the country (shaded light blue on Figure 2). These states have also set Renewable Portfolio Standards; for example,Washington’s is 15% by 2020, and Oregon is 25% by 2025.[5]

In the Northeast, Connecticut, New York and Massachusetts have more than 70% of their generation coming from the combination of nuclear and natural gas, two fuels that have low CO2 emissions.  These states are also participating members of RGGI, which is the only functioning carbon trading market between states currently in the US.

Who is the Opposition?
For the Midwest, Southeast and Southwestern regions of the US, opposition to the CPP is passionate. These are states that have some of the highest concentration of coal generation in the country. Figure 2 highlights these states in dark blue, and illustrates these coal-heavy fuel mixes with pie charts covered in gray.

Many of the opposing states that rely on coal generation connect that reliance to jobs and cheap retail electricity.  Table 1 presents the number of coal industry-related jobs and retail electricity prices in the states with the largest % of coal generated electricity.

Table 1 -  May 2013 Total Employment in Mining, Oil and Gas Industry from BLS

Table 1 – May 2013 Total Employment in Mining, Oil and Gas Industry from BLS

*Jobs included:
Health and Safety Engineers, Except Mining Safety Engineers and Inspectors
Mining and Geological Engineers, Including Mining Safety Engineers
Service Unit Operators, Oil, Gas, and Mining
Continuous Mining Machine Operators
Mining Machine Operators, All Other
Power plant operators
Mining Machine Operators, All Other
Power Plant Operators

If the CPP is implemented, states have serious concerns that coal generation will be taken offline.  This potentially impacts thousands of jobs as the states attempt to meet the CPP targets.  Furthermore, these states enjoy some of the lowest retail prices of electricity in the country, mainly due to cheap coal. These rates might increase significantly if utilities are forced to retire coal and reinvest in gas-fired generation and renewables.

According to the EIA 2014 Annual Energy Outlook, closing coal plants will potentially drive up natural gas prices by 150 percent over 2012 levels by 2040. This cost rise would cause electricity prices to jump 7 percent by 2025 and 22 percent by 2040.[8] As states begin to switch to natural gas from coal to meet emission targets, the price of retail electricity will potentially rise as well, making the CPP a political lightning rod for the states.

One of these things is not like the other…
Interestingly, Colorado represents a state that doesn’t fall neatly into either category. While the state still has a good amount of coal-powered electricity in its fuel mix (over 65%) and a larger number of jobs in the industry, it has taken a proactive approach to support the successful implementation of 111(d).[9] Sixty-six percent of all Colorado residents support the CPP, with more than  70% stating that the nation’s dependence on oil and air pollution are the main reasons for their support.[10]

Colorado demonstrates that it’s not impossible for a coal-heavy state to support a policy that will transition its electric power sector into a low-carbon future.  It offers hope that even states with high numbers of coal-related jobs can focus on combating larger environmental issues at the national level.

Conclusion: Bringing everyone together
EPA’s final proposed rule for the CPP is scheduled to come out during the summer of 2015. From the more than three million comments submitted, it is clear that there are states that strongly support and oppose this rule.

No matter what the state’s current position may be, if the CPP becomes final, states will need to know about viable solutions to meet the target reductions. There are several solutions currently running that can provide insight on implementation strategies. Places like Colorado can empathize with coal-heavy states going through this transition, but provide perspective on how to move forward towards these goals. Delaware had 58% coal generation in 2002, and reduced it to 16% coal generation in 2012.  This type of quick transition could provide an example for coal heavy states on how to move the fuel mix from mostly coal to mostly natural gas.

RGGI provides a live demonstration of how a carbon trading market between states can function in the US. These Northeastern states can lead the way for those states where changes may be more dramatic and proper design of rules will be crucial.  Utilities like Exelon are suggesting that EPA propose a national price on carbon, providing the option for a clear price signal to electricity markets.[11]

We are a country built on different opinions and perspectives, but it is when we work towards a common goal that these differences can give way to market transformation and global environmental impact.

To learn more about what states and utilities are saying about 111(d) and find out how DNV GL sees the proposed regulations moving forward, please download our paper, Working towards Compliance—Impact of EPA’s 111(d) on State Regulators and Utilities.


[1] EIA, “ANNUAL ENERGY OUTLOOK 2014 : Table 18” 5/7/2014 accessed on  1/20/2015 from http://www.eia.gov/forecasts/aeo/tables_ref.cfm

[2] EPA, “Clean Power Plan Proposed Rule Technical Documents,” 12/2/2014 accessed on 2/1/2015 from http://www2.epa.gov/carbon-pollution-standards/clean-power-plan-proposed-rule-technical-documents

[3] Regulations.gov, “Standards of Performance for Greenhouse Gas Emissions from Existing Sources: Electric Utility Generating Units,” accessed on 2/15/2015 from http://www.regulations.gov/#!docketBrowser;rpp=25;po=0;D=EPA-HQ-OAR-2013-0602

[4] EIA, “Electricity Data Browser,” accessed on 2/25/2015 from http://www.eia.gov/electricity/data/browser/#/topic/0?agg=2,0,1&fuel=vvg&geo=14fvvvvvvvvvo&sec=g&freq=A&start=2001&end=2013&ctype=linechart&ltype=pin&rtype=s&pin=&rse=0&maptype=0

[5] C2ES, “Renewable and Alternative Energy Portfolio Standards,” accessed on 3/4/2015 from http://www.c2es.org/node/9340

[6] BLS, “2013 State data,” accessed on 2/27/2015 from http://www.bls.gov/oes/tables.htm

[7] EIA, “Table 5.6.A. Average Retail Price of Electricity to Ultimate Customers by End-Use Sector,by State, November 2014 and 2013,” accessed on 3/4/2014 from http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a

[8] EIA, “2014 Annual Energy Outlook,” accessed on 3/4/2015 from http://www.eia.gov/forecasts/aeo/section_issues.cfm#power_plant

[9] State Environmental Agency leaders from CA, CO, DE, IL, ME, MD, MA, MN, NH, NY, OR, RI, VT, WA, Open Letter to the EPA Administrator Gina McCarthy on Emission Standards Under Clean Air Act Section 111(d), December 16, 2013.,”States’ §111(d) Implementation Group Input to EPA on Carbon Pollution Standards for Existing Power Plants,” accessed on 12/23/2014 from http://www.regulations.gov/#!documentDetail;D=EPA-HQ-OAR-2013-0602-0198

[10] Long, Noah, “Poll: Colorado Supports Clean Energy and Limits on Dangerous Power Plant Carbon Pollution,” 1/23/2015 accessed on 3/3/2015 from http://switchboard.nrdc.org/blogs/nlong/poll_colorado_supports_clean.html

[11] Environmental Leader, “Exelon Urges Voluntary Option for Clean Power Plan Compliance,” 2/23/2015 accessed on 3/4/2015 from http://www.environmentalleader.com/2015/02/23/exelon-urges-voluntary-option-for-clean-power-plan-compliance/#ixzz3TRay1DCt

Jason Symonds

Jason Symonds is a consultant in DNV GL’s Policy Advisory and Research practice, with experience helping utility clients perform M&V evaluations on both residential and non-residential energy efficiency programs. This includes developing energy efficiency potential models, as well as performing program attribution methodology, and incorporating Net-to-Gross Ratios into impact analysis. He has developed and implemented surveys for Transportation and Renewable Energy program evaluations, collecting primary data from program participants and vendors. To join Mr. Symond’s professional network on LinkedIn, click here.

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Bert Taube

Bert Taube is a Principal Consultant in DNV GL’s Policy Advisory and Research practice. He is focused on project developments related to energy efficiency programs, utility load and financial solutions as well as data technology. Mr. Taube’s has spent more than 20 years creating and leading projects for high-voltage power transmission and electric transportation networks as well as Big Data analytics and automation software to serve mission-critical infrastructures. To join Mr. Taube’s professional network on LinkedIn, click here.

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2 Comments Add your comment
Avatar Yossi K. says:

Mr. Leighty,
You are absolutely right, we are at Enrgy Vision Energy Vision doing exactly that.
We are looking for hybrid solutions for our costumers.

Avatar Bill Leighty says:

Since humanity’s goal must be to supply ALL energy, for ALL purposes, from non-CO2-emitting sources, we need to look beyond electricity systems to gather, transmit, storage, distribute, and extract energy services from diverse, dispersed, time-varying, renewable energy resources. Gaseous hydrogen (GH2) and anhydrous ammonia (NH3) are attractive candidates. See our co-authored papers and presentations at: http://www.leightyfoundation.org/earth.php
I plan to attend Mr. Bystrom’s presentation at Windpower 2015

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