NEW ORLEANS – In developing action plans for compliance with the Environmental Protection Agency’s Clean Power Plan, states are not going to be able to make everybody happy, as was made clear by the varied opinions voiced by utility executives speaking on a panel here Wednesday.
The Clean Power Plan sets state-specific emissions reduction targets and requires states to develop action plans to meet those goals. Most states appear to be leaning toward a rate- or mass-based trading program under which emissions allocations would be bought or assigned and then traded as needed.
Such plans do not meet the desires of NRG Energy, Maria Race, the company’s director of federal environmental programs for the company, said during the panel. NRG prefers a more piecemeal, non-market-based approach under the rule’s “state measures” compliance option. Such plans would be based on the voluntary, state-enforceable, retirement, refueling, or repurposing of less efficient coal plants. These could also include measures such as improved end-use efficiency and better integration of renewable energy into the state energy mix.
“This approach should provide a more cost-effective and healthier business environment than other alternatives in states with a significant amount of older less efficient coal plants,” Race said, further noting that such plans offer “compliance without the risk of high allowance prices.”
NRG has been working to sell states on a state measures compliance plan, Race said.
New Orleans-based Entergy Corp. has leaned the other way, preferring a mass-based compliance program. “It appears to us that a mass-based program that is trading ready … so you could literally hold up your hand and trade with anybody else in the country who has a mass-based trading program, [would be best]” Chuck Barlow, vice president of environmental policy and strategy, said during the discussion.
Such a system, Barlow said, would help address any reliability issues that may occur due to the rule. “Also, from the modeling we’ve seen so far, we feel pretty strongly that it would be the cheapest way to comply,” Barlow said.
A mass-based option wouldn’t be terrible, Race conceded. “Mass-based would be the way to go if the state measures are not adopted,” she said.
Entergy has also mapped out a worst-case scenario that is closely tied to a Supreme Court stay of the rule, Barlow said. Currently, compliance deadlines are an unknown variable due to a February Supreme Court stay of the Clean Power Plan, which froze implementation of the rule. The stay delayed the first deadline in the rule, which was to hit in September. At that time, states were to have submitted initial plans or requests for an extension. However, it remains uncertain if the September 2018 deadline for final plans will hold.
Several states have halted work on their plans pending the resolution of the court case against the rule, expected in late 2017 or 2018. If the final plan submission deadline is not shifted, or only shifted a few months, states that have put their pencils down could find themselves in a bind.
“If you’re a state, let’s try to think of a worst-case scenario. When might be the quickest time that I’ve got to get something into EPA or else a federal plan will be imposed on me, which is the option and an option that Entergy would like its utility states to avoid,” Barlow said.
Under the Clean Power Plan, if a state does not, or cannot, submit an implementation plan, the EPA has the authority to implement a federal implementation plan, which would by definition be less flexible as the consideration of states’ individual circumstances would be limited. The EPA is currently working to finalize a Clean Power Plan federal implementation plan, which is likely to take a market-based approach.
