Advanced Energy Perspectives

Photo by Alan Stark, used under a Creative Commons license. 

With the Trump Administration clear on its intentions to repeal and replace the Obama Administration's Clean Power Plan (CPP), the Environmental Protection Agency (EPA) on August 21 finally released its "Affordable Clean Energy" proposal. Given the name, one might expect the so-called ACE rule to lean on current market trends toward low- and non-emitting advanced energy technologies, such as natural gas, solar, wind, and energy efficiency, on the basis of cost. That’s what the CPP attempted to do, doubling down on these trends and allowing states to design compliance plans using market-based trading to find the lowest-cost paths to compliance. ACE, in contrast, takes a hard turn away from lower-cost advanced energy options and market-based trading in favor of old-fashioned command-and-control regulation that would only allow costly investments at existing coal-fired power plants—which is bad news for consumers and the advanced energy industry alike.  

For more than two years, AEE has been watching the Clean Power Plan (CPP) very closely; we have dissected and analyzed key aspects of the rule, followed the relevant regulatory proceedings, tracked state planning processes, and assessed modeling results. All this work has been motivated by the potential for the CPP to accelerate advanced energy deployment—an opportunity we value at roughly $20 billion annually.

On the campaign trail, President-elect Donald Trump expressed a very different view of the CPP, describing it as a threat rather than an opportunity. With Trump just over one week away from assuming his new role, there are still a number of unanswered questions about the future of the CPP. For now, we’ll steer clear of speculation and stick to what we know for certain.

While supporters and opponents of the Clean Power Plan (CPP) await a decision from the D.C. Circuit Court on the merits of the rule, work continues on the Clean Energy Incentive Program (CEIP), a voluntary early action program that would reward certain renewable energy and energy efficiency measures in the years leading up to the start of the CPP compliance period. AEE submitted comments on the CEIP last week, in advance of the November 1 comment deadline, and not for the first time. In these latest comments, AEE urged EPA to issue credits sooner, expand project eligibility, increase certainty that all early action credits will be available, and ensure a smooth transition to the compliance period beginning in 2022. These suggestions are all in the interest of making the program more effective in jump-starting CPP compliance and putting advanced energy to work for states, communities, and households.

Even as the D.C. Circuit Court weighs the future of EPA’s Clean Power Plan (CPP), states across the country are figuring out how to reduce carbon emissions in the electric power sector. Some states are also beginning to look at how they will administer the compliance plan that gets them to their CPP targets. For many state air regulators, who are used to tracking pollutants coming out of power plant smokestacks, the idea of incorporating “outside the fence line” measures into CPP compliance plans can seem challenging. In particular, concerns might arise when it comes to any aspect of the CPP that involves providing credits to owners and operators of clean energy resources for the emission reductions produced by their technologies, whether as part of the Clean Energy Incentive Program (CEIP), allowance allocations in mass-based programs, or emission reduction credits in rate-based plans.

Some regulators might be tempted to restrict their plans to onsite measures, such as power plant efficiency upgrades, which might seem more familiar and easier to handle administratively. But those retrofits are more costly and provide limited emissions reductions. In contrast, measures like energy efficiency and renewable energy development are cheaper for customers and more effective in reducing emissions, but they are unlike the pollution controls many of these agencies have overseen in the past.

Given fiscal pressures on state budgets and limited staffing, what’s a regulator to do? The answer: go outside the agency for help.

The Obama Administration’s landmark Clean Power Plan (CPP) is currently on hold due to an unprecedented stay issued by the U.S. Supreme Court. A legal challenge to the sweeping rule to reduce greenhouse gas emissions from electric power plants was to be expected. But this court case is not what it seems.

The states and powerful interests suing the Environmental Protection Agency (EPA) say they are trying to rein in an agency that has overstepped its legal bounds. What they are really engaged in is a last-ditch attempt to slow down, if not reverse, changes in our electric power system that are well underway. 

Here’s what’s already happening: