“That means cleaner and more affordable energy for the American public,” said EPA Administrator Andrew Wheeler, addressing a group that included coal miners from Pennsylvania and West Virginia.
Under the Trump rule, utilities are expected to cut emissions 35 percent below 2005 levels by the end of the next decade. But to avoid global average temperatures from rising beyond 2 degrees Celsius, the U.S. electricity sector would need to cut its emissions 74 percent, according to the International Energy Agency.
Unlike the Obama administration’s 2015 Clean Power Plan, the new rule does not set specific greenhouse gas emissions cuts for each state. Instead, it allows state regulators to determine how utilities can improve efficiency and will not force companies to switch from coal to lower-carbon energy sources.
But market forces have already prompted many utilities to cut back on coal.
DTE Chairman and CEO Gerry Anderson, whose Detroit-based utility has pledged to cut its carbon output 80 percent by 2040, said the new regulation won’t affect the decision to shutter 14 of its 18 coal-fired units by the end of the decade.
“The industry’s in motion, and it’s got its own life,” Anderson said in an interview. “We’re moving on, and the rest of the industry is in a similar direction.”
Critics of the Trump rule argue that because it doesn’t require a move away from coal, some utilities will leave their plants open for longer, producing more pollution. They also say the new rule will result in even more confusion as states set their own climate agendas.
While liberal states are adopting ambitious climate policies, more conservative ones might not allow power companies to pass on carbon-free investment costs to customers if there’s no federal mandate to cut emissions.
Either way, the U.S. power sector is on track to surpass the Trump emissions projections, which amount to about one-third less than 2005 levels. Last year, utilities had lowered their emissions by 27 percent, and many companies plan to go even further, cutting carbon dioxide in half by 2030.
Environmental groups and some attorneys general, including New York’s Letitia James and California’s Xavier Becerra, are threatening to challenge the Trump rule in court. The strategy carries some risk, since a more conservative Supreme Court could limit the EPA’s ability to set mandatory carbon emissions limits for the states under existing law.
Instead, said Bracewell LLP partner Jeff Holmstead, business and environmentalists might seek to cut a deal in a future Congress.
“If Trump isn’t reelected and the next president makes climate change a priority, I think there’s a good chance that we’ll see a climate change bill enacted into law, even if Republicans control both houses of Congress,” said Holmstead, who headed the EPA’s air office under President George W. Bush.
BloombergNEF analyst Ethan Zindler, whose firm projects that U.S. utilities will reduce their carbon output 55 percent by 2030 due to market forces alone, said they are unlikely to shift course due to Trump. But he added it will be hard for them make much deeper emissions cuts after 2030, since they will already have retired their dirtiest coal-fired plants and many of the aging nuclear plants providing the United States with carbon-free electricity will be taken offline.
Steeper reductions would be necessary to meet the goal of keeping global temperatures from rising more than 2 degrees Celsius above preindustrial levels, a pledge the United States and most of the world’s other nations first made in 1992 and have reaffirmed frequently, including in the 2015 Paris agreement. Trump has since said he plans to withdraw from the Paris accord.
Jason Bordoff, founding director of Columbia University’s Center on Global Energy Policy, said in an interview that his group had found that more aggressive action by U.S. officials, such as a nationwide carbon tax of $50 per ton, could cut the country’s greenhouse gas emissions by 40 percent over the next decade.
“Market forces don’t do that by themselves,” Bordoff said. “You need regulations.”
But current and former Trump administration officials said the new rule represents a more restrained approach that would allow state regulators rather than Washington bureaucrats to determine the right energy mix for their region. It requires utilities to make efficiency improvements and curb the amount of carbon dioxide released from power plants, but does not dictate specific emissions targets the way the Obama administration did in the Clean Power Plan.
After more than two dozen states and the energy industry challenged President Barack Obama’s plan, it was stayed by the Supreme Court in 2016 and has been stuck in federal court ever since.
Mandy Gunasekara, who was principal deputy assistant administrator for the EPA’s air and radiation office until February and now runs a pro-Trump advocacy group called Energy45, said in an interview that the agency was adhering to the confines of the Clean Air Act.
“We’re well on our way to paring back the offensive overreaches of the last administration’s climate policies,” she said. “The role of EPA is not to turn a coal plant into a wind farm or a solar field. It’s to look at a coal plant and look at how to make it more efficient or environmentally friendly, however you want to look at it.”
Eight GOP lawmakers from coal-producing states, along with state business leaders, also hailed the new policy. “Coal will continue to keep our lights on and our houses warm,” said Rep. Carol Miller (R-W.Va.).
Critics, however, said it could keep some coal plants in business and make it harder for companies to pass on the cost of investing in renewables to consumers.
A paper published this year by researchers at Harvard University, Syracuse University and Boston University, as well as Resources for the Future, said that the agency’s new rule might increase efficiency at individual coal plants, but then they might end up operating more frequently and for a longer time.
The researchers found that as many as 28 percent of the plants affected could actually produce higher overall emissions in 2030 than if there was no federal policy in place. They also estimate that emissions of sulfur dioxide and nitrous oxide could rise in nearly two dozen states by 2030 compared with having no new federal regulation.
A senior administration official who discussed the rule on the condition of anonymity because they were not authorized to speak about it publicly confirmed Wednesday that some plants may end up emitting more pollutants under the rule but these units would be running more efficiently.
Now that state regulators have a stronger voice, they will help guide the nation’s energy future.
Josh Price, a senior analyst at Height Capital Markets’ energy and utilities team, noted that the Texas Public Utility Commission rejected American Electric Power’s proposed $4.5 billion Wind Catcher project last year, after questioning whether the benefits justified its cost.
John McManus, AEP’s senior vice president for environmental services, said the company was working to build multiple wind projects “on a smaller scale” to take the place of Wind Catcher.
“We still believe renewables make economic sense for our customers, and we’re still pursuing them,” said McManus, whose company has already cut its carbon emissions 53 percent compared with 2005 levels. “Will this make it harder for them to get approved? I don’t know.”
Some segments of the electricity sector haven’t moved as swiftly.
Members of the National Rural Electric Cooperative Association have cut their carbon output 12 percent between 2005 and 2017, according to the group. The association’s chief executive, Jim Matheson, praised the new rule Wednesday, saying in a statement that it “represents a more flexible path forward that will minimize the cost to consumers and preserve the reliability of the electric grid as electric co-ops work to promote a healthy environment and vibrant rural communities.”
Environmentalists are already threatening to challenge the administration in court, on the grounds that it cannot defend such a radical about-face by the EPA.
Jill Tauber, Earthjustice’s vice president of litigation for climate and energy, said the rule is legally vulnerable because it “will provide trivial reductions” in carbon dioxide. “This fails to establish any emissions limit to ensure pollution reductions and protect public health,” she said.
However, some legal experts said there is little chance that environmentalists would succeed. Chapman University law professor Donald Kochan said the EPA would be likely to defend its shift and prove it was authorized under the Clean Air Act.