Next week, the U.S. Environmental Protection Agency (EPA) will unveil its climate rule for existing power plants. The details of the plan have not been released, but they will require reductions in carbon emissions although states will have flexibility in how they make those cuts, according to news reports.
The proposal will likely create regional carbon-trading programs, according to The Washington Post. No matter what the details, there will likely be a challenge from utilities, especially those that rely heavily on coal-fired power plants for generation. Utilities are responsible for about one-third of greenhouse gas emissions in the United States.
Rather than each power plant having to meet the requirement, EPA would require states to meet the overall target. In that case, utilities could meet the requirements by cutting emissions at an individual plant, or could finance energy efficiency on the demand side.
"I cannot see a credible resolution to our climate change challenges without an enormous contribution from the demand side of the equation. The efficiency side is going to have to drive our strong response," U.S. Department of Energy Secretary Moniz, said recently at the 2014 Energy Efficiency Global Forum, according to Greentech Media. The new rules are part of Obama's climate action plan, which was first announced last summer.
The proposal could look like renewable portfolio standards (RPS), according to The Washington Post, which require a certain percentage of electricity to come from non-fossil generation. So the 30-plus states that already have an RPS might find it easier to meet existing goals.
Various energy producers are already lining up for a fight. Wind producers and nuclear companies, such as Exelon, are in support of stricter carbon standards. “We think the reality is in the absence of carbon policy, it’s going to be difficult to keep the existing [base] of clean energy in service,” Joe Dominguez, Exelon’s senior vice president of governmental, regulatory affairs, and public policy, told The Washington Post.
On the other side, coal-heavy states such as Kansas, rural electric cooperatives, and some power producers are ready to fight the measures, as they have with EPA’s regulations for carbon emissions for new coal and gas-fired power plants.
Depending on the details released next week, there could be many technologies that win. If there is wide-ranging flexibility for states to meet the reductions, energy efficiency measures could be one of the biggest winners.
A Natural Resources Defense Council (NRDC) proposal on how to cut carbon pollution is seen as one of the models for the standards EPA will adopt. NRDC’s proposal [pdf] calls for energy efficiency to be the primary means for reducing carbon. State-regulated energy efficiency programs could earn credits for avoided pollution and generators could purchase and use those credits towards meeting compliance. One issue with a focus on efficiency will be having standardized measurement and verification schemes to ensure the savings are being realized.
One technology that won’t necessarily win out if EPA is successful in regulating carbon emissions from existing power plants is carbon capture and storage (CCS) for coal-fired power plants. In Europe, which has decarbonization policies, there has yet to be commercial-scale, affordable CCS. Vattenfall, one of Europe’s largest energy producers, recently announced it was discontinuing its CCS research.
In the United States, coal is already on the decline, new EPA regulations on climate notwithstanding. Earlier this year, the U.S. Energy Information Administration increased its prediction for coal retirements from 40 to 60 gigawatts by 2016, mostly driven by the EPA’s Mercury and Air Toxics Standards and low natural gas prices. So far, the loss of capacity has been replaced by upgraded transmission, energy efficiency, and some renewables.
The EPA rule for existing power plants is expected to be finalized in June 2015.