Kevin Gable 4/21/14 NtRes 4300 Short Advocacy Brief Power plants in the United States are responsible

for over forty percent of national Carbon Dioxide (CO2) emissions, and a third of total Greenhouse Gas (GHG) emissions1. Although power plants are subject to many environmental and air quality regulations, GHGs have remained unregulated until recently. Because the Clean Air Act (CAA) has been very successful in controlling other forms of air pollution, policy makers advocated for including GHG emissions in this regulatory framework. The frustration of comprehensive GHG emission regulation in Congress also encouraged this policy. Because of several recent court cases and executive orders, the Environmental Protection Agency (EPA) is now enabled and required to regulate GHG emissions from mobile and stationary sources, such as automobiles and power plants. This advocacy brief will evaluate regulation of CO2 emissions from existing power plants by the EPA under the CAA, section 111(d). The objective of this discussion is to present a regulatory framework that can significantly reduce emissions from existing power plants while being cost-effective, flexible, equitable to states and industries, legally robust, and beneficial to social and environmental welfare. Regulation of GHG emissions from existing power plants is a controversial issue that involves many diverse stakeholders and opinions. The most pertinent stakeholder is the power sector itself. They desire flexible guidelines and equitable baselines that reward previous investment and energy efficiency. Many of the efficiency improvements pay for themselves, so more modern gas fired plants welcome the regulations as a competitive advantage over coal fired plants. The next major stakeholders in this policy are state and local governments. S111(d) allows states to develop their own implementation plans, as long as they meet certain federal guidelines. Many states have already implemented preliminary GHG regulations, which have proven effective in reducing emissions and increasing efficiency. States and utilities want to build upon this success by developing stronger market-based approaches and inter-state cooperation. Labor organizations are another major stakeholder. Particularly in the coal industry, members are concerned that regulations will result in reduced hours or downsizing. They believe a more efficient power plant should increase employee compensation. An additional stakeholder group is composed of Non-Governmental Organizations (NGOs) and academics. Although these advocates and advisors are not directly affected by the regulations, they are instrumental in the future of GHG regulations in the U.S. For the most part, their goals include cost efficiency, legal legitimacy, and local flexibility. The final relevant stakeholders are members of the public. Many individuals only care about air pollution when it affects their local area, so most public interest is triggered by changing energy prices, efficient appliances, tax credits, and employment. Section 111 of the CAA directs the EPA to set performance standards for categorized sources of pollutants that endanger the public. New and modified sources are regulated under section 111(b) by New Source Performance Standards (NSPS). This section of the policy is inflexible and focuses on technology and operations. When a NSPS is issued for a category, the EPA is required to regulate existing sources within that category as well, under section 111(d). In contrast to 111(b), 111(d) is more flexible and systems based, giving EPA and the states shared
1

U.S. Env. Protection Agency, Carbon Dioxide Emissions, http://www.epa.gov/climatechange/ghgemissions/gases/co2.htm

responsibility in developing implementation plans. When the EPA reviewed the power plant category in 2006, they issued NSPS for many pollutants but not CO2. Many states and NGOs challenged that decision, and the Supreme Court ruled in April 2007 during Massachusetts v. EPA that GHG emissions from mobile sources meet the definition of air pollutant under the CAA2. The Court also mandated a study by the EPA which scientifically determined that GHGs are reasonably anticipated to endanger public health and welfare.3 Later, in New York v. EPA (2011), the U.S. Court of Appeals required GHG regulation for stationary sources and a schedule for GHG standards. NSPS for CO2 emissions were finalized in September 2013, which triggered the requirement to regulate GHG emissions from existing sources. The proposed guidelines will be issued in June 2014 and finalized in June 2015 after public comment. State plans for existing power plants are due in June 2016, and after a review, the policy finally takes effect. The first major policy choice for regulating GHGs under the CAA is whether section 111 is the appropriate regulatory framework for these pollutants. The flexibility of 111 can be beneficial, but critics argue that this framework lacks regulatory strength. Alternatives include listing GHGs as a criteria pollutant or as a hazardous. Among these two, CO2 fits better under criteria pollutants because they are widespread and have less acute effects. However, most policy analysts feel that this is unnecessary, because it inadequately regulates the sources of GHG emissions and there is no acute exposure concern for CO2. The next policy choice is how flexible the EPA should allow the State Implementation Plans (SIP) to be in meeting the standard of performance developed by the EPA. The EPA issues guidelines that assume the best system of emissions reduction (BSER) is used. States have so much more experience with GHG regulation that many SIPs will not use the BSER, which indicates that the BSER is incorrect. It is important that approval of SIPs does not depend on procedural criteria; if a state can achieve the standard in a more cost-effective way than the BSER they should be allowed to do so. Another policy consideration is the degree to which demand-side efficiency should be credited towards meeting standards. Supply efficiency improvements, or less pollution emitted per unit generated, are available in many power plants, but they can be expensive relative to the improvement. Demand efficiency, meaning more economic output per unit of electricity consumed, is the cheapest way to reduce emissions, and 24 states already have programs. The difficulty of this policy is that the regulations may focus on unit-level standards, which are difficult to reconcile with end-use improvements. This brings us to the next policy question: whether performance standards should focus on the source or the system. A system based approach would allow for carbon trading, offsets, and emissions reduction outside the plant, in order to meet a total regional standard. A source based approach would focus on the average fuel per unit of electricity at each power plant for a global average to compare to the standard. Most analysts agree that system based approaches are more cost effective, especially given how many are already in place. In conclusion, section 111 is not perfect for GHG regulation, but it is the best option currently available. An effective federal plan would be a system based approach that encourages both demand- and supply-side efficiency, with economic incentives for technology and fuel switching. The plan would allow the states a great deal of flexibility in meeting a strict standard, such as a carbon market, renewable fuel mixing, or offsets, to name a few. In the future, however, GHG emissions should have unique regulation that reflects their unique impacts and scope that are less obvious but over time more dangerous than more visible pollution.
2 3

Massachusetts v E.P.A., 549 U.S. 497, 528 (2007) EPA Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66,496, 66,499 (Dec. 15, 2009)

References Ceronsky, M., & Carbonell, T. (2013, October 1). The Legal Foundation for Strong, Flexible & Cost-Effective Carbon Pollution Standards for Existing Power Plants. Environmental Defense Fund. Retrieved April 1, 2014, from http://blogs.edf.org/climate411/files/2013/10/Section-111d-of-the-Clean-Air-Act-The-LegalFoundation-for-Strong-Flexible-Cost-Effective-Carbon-Pollution-Standards-for-Existing-PowerPlants-O.pdf EPA Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66,496, 66,499 (Dec. 15, 2009) Lashof, D., Yeh, S., Doniger, D., Carter, S., & Johnson, L. (2013, March 1). Closing the Power Plant Carbon Pollution Loophole: Smart Ways the Clean Air Act Can Clean Up Americas Biggest Climate Polluters. Natural Resources Defense Council. Retrieved April 1, 2014, from http://www.nrdc.org/air/pollution-standards/files/pollution-standards-report.pdf Lashof, D., & Yeh, S. (2014, March 1). Cleaner and Cheaper: Using the Clean Air Act to Sharply Reduce Carbon Pollution from Existing Power Plants, Delivering Health, Environmental, and Economic Benefits. Natural Resources Defense Council. Retrieved April 1, 2014, from http://www.nrdc.org/air/pollution-standards/files/pollution-standards-IB-update.pdf Litz, F., Bianco, N., Gerrard, M., & Wannier, G. (2011, February 1). Whats Ahead for Power Plants and Industry? Using the Clean Air Act to Reduce Greenhouse Gas Emissions, Building on Existing Regional Programs. World Resources Institute. Retrieved April 1, 2014, from http://pdf.wri.org/working_papers/whats_ahead_for_power_plants_and_industry.pdf Massachusetts v E.P.A., 549 U.S. 497, 528 (2007) Response to EPA: Considerations in the Design of a Program to Reduce Carbon Pollution from Existing Power Plants . (2013, December 1). Alliance to Save Energy. Retrieved April 1, 2014, from http://www.ase.org/sites/ase.org/files/resources/Media%20browser/ase_aceee_comments_on_11 1d_-_12-5-13.pdf Tarr, J., Monast, J., & Profeta, T. (2013, January 1). Regulating Carbon Dioxide under Section 111(d) of the Clean Air Act: Options, Limits, and Impacts. Nicholas Institute for Environmental Policy Solutions. Retrieved April 1, 2014, from http://nicholasinstitute.duke.edu/sites/default/files/publications/ni_r_13-01.pdf U.S. Environmental Protection Agency. Carbon Dioxide Emissions. US EPA. Retrieved April 1, 2014, from http://www.epa.gov/climatechange/ghgemissions/gases/co2.htm