Abby L. Harvey
GHG Monitor
10/17/2014
As stakeholders continue to develop their comments for the Environmental Protection Agency’s proposed carbon emissions standards for existing coal-fired power plants, concerns over certain factors of the proposed standards continue to mount and were expressed by a panel of state regulators at an event hosted by Resources for the Future (RFF) this week. As each state is unique, it was noted that there are several specific concerns regarding factual errors and similar issues which apply to individual states, but there are also several issues that have come to the attention of many states, including the regulation’s interim goals to be met in 2020 and potential economic issues.
The EPA’s proposed regulations would set emissions reductions targets for each state and require the states to develop action plans to meet these targets. The regulations propose four “building blocks,” or categories of emissions reductions, which apply both “inside the fence” like increasing the efficiency of power plants, and “outside the fence” like fuel switching to natural gas, increasing use of renewable and nuclear energy and promoting demand-side energy efficiency.
2020 “Cliff” Presents Daunting Task
A part of the regulation that sets an interim goal to be met by 2020 has been criticized by many states with arguments that 2020 is too soon for such large emissions cuts to be made. “When we look at the interim goal, 2020, some people refer to that as ‘the cliff,’ over 70 percent of our reductions have to made by 2020 when you look at the way the proposal is set up. That is a huge reduction and we’re not sure how we’re going to meet that frankly in the interim goal,” Vinson Hellwig, Chief of the Air Quality Division of the Michigan Department of Environmental Quality, said during this week’s event. “If we shut down coal plants prematurely, how do we make up the capacity and what is that going to do to the cost?”
John Lyons, Assistant Secretary for Climate Policy in the Energy and Environment Cabinet of the Kentucky Department for Environmental Protection, echoed such concerns, noting that other stakeholders within Kentucky have expressed concerns over “the cliff” as well. “We agree that the interim goal maybe doesn’t serve a purpose or doesn’t benefit anybody. It’s really a regulatory cliff,” he said. “A substantial amount of reductions have to come in 2020 with little time to get there and that’s one thing we hear with utilities is they want time to prepare.”
The interim goal system is not ideal, Hellwig said, stating that the state of Michigan would prefer a different timeline. “Let us as a state lay out what we think that that timeline should be. Thereby we can plan for this. We do know that a lot of our coal plants are going to be shut down by 2030 but they may not be shut down by 2020; again this levels out the cost.”
Economic Impact Causes Concern
Hellwig also stated that the potential cost of the implementation of the regulations is worrisome in a state with a large population of low-income citizens who could be negatively impacted by raising energy costs and would have trouble participating in demand side energy efficiency programs. “What’s going to be the cost of [the regulations] … that’s the overriding concern we have. What is going to be the economic impact?” he said. “We also have a lot of areas that are economically depressed in our state, we’ve got Detroit, everyone’s heard about what happened there … You have a lot of low income people who don’t have the opportunity … to invest in energy efficiency. They’d be renters, they don’t always have the opportunity to invest.”
Trading Program Could Solve Problems
The regulations do allow for multistate cooperation and market based programs, like the Regional Greenhouse Gas Initiative (RGGI), a northeastern multistate cap-and-trade program. David Cash, Commissioner for the Massachusetts Department of Environmental Protection, noted that the state’s participation in RGGI has shown that such an option solves many concerns such as confusion over the regulations’ building blocks, how to track energy efficiency and renewables, how to handle imports and exports, what state gets credit for cross border reductions and determining cost effective options for compliance. “One of the things that I’ve been struck by … is that many of the problems that are raised in these conversations are addressed with a trading program. Not all of them certainly, and some of the major ones … [are] still a considerable challenge but many of them become much less important,” he said.
Cash went on to say that a cap-and-trade program simplifies emission reduction efforts by leaving the work to the market. “[Trading programs] provide certainty for achievement of environmental goals; a cap is set that cap has to be met. It allows the markets, very innovative flexible markets, to achieve least cost solutions,” Cash said. “In this case I would much rather have the market make some of these decisions than for me to decide what the right level of renewables is, what the level of energy efficiency [is], how do we ramp those up in different kinds of ways. [I’d] much rather have the market do that. It spurs innovation in a really powerful way.”
