The Environmental Protection Agency proposed a regulation Monday that would cut carbon dioxide emissions from existing coal plants by up to to 30 percent by 2030 compared with 2005 levels, taking aim at one of the nation’s leading sources of greenhouse gases.
Under the draft rule, the EPA would let states and utilities meet the new standard with different approaches mixing four options including energy efficiency, shifting from coal to natural gas, investing in renewable energy and making power plant upgrades. Other compliance methods could include offering discounts to encourage consumers to shift electricity use to off-peak hours.
The rule represents one of the most significant steps the federal government has ever taken to curb the nation’s greenhouse gas emissions, which are linked to climate change, and the draft is sure to spark a major political and legal battle. Conscious of that, President Obama called a group of Senate and House Democrats on Sunday afternoon to thank them for their support in advance of the proposed rule, .
Speaking to an audience of more than 100 ebullient supporters at EPA headquarters, the agency’s administrator Gina McCarthy framed the move in both pragmatic and moral terms.
“This proposal is all about flexibility. That’s what makes it ambitious, but achievable,” said McCarthy, who received two standing ovations and did a fist bump with Rep. James P. Moran (D-Va.) before starting her speech. “For the sake of our families’ health and our kids’ future, we have a moral obligation to act on climate.”
Ever since a climate bill stalled in the Senate four years ago, environmental and public health activists have been pressing Obama to use his executive authority to impose carbon limits on the power sector, which accounts for 38 percent of the nation’s carbon dioxide emissions. Opponents, including coal producers, some utilities and many Republicans, argue that the EPA is using a novel legal approach to demand stringent greenhouse gas cuts that are not achievable given current technology.
The proposal, which would cut 500 million metric tons of carbon dioxide annually by 2030, ranks as one of Obama’s most far-reaching climate policies. His previous measures to limit carbon emissions in cars and light trucks produced between fleet years 2012 and 2025 will cut 6 billion metric tons of greenhouse gas emissions over the lifetime of those vehicles.
“This momentous development raises the bar for controlling carbon emissions in the United States,” said Andrew Steer, president of the World Resources Institute. Steer said that “many states are well positioned to meet or exceed the proposed carbon reductions through existing infrastructure and policies that are already in place.” And, he said, “the proposed standards give states flexibility to implement plans according to their needs.”
The Wall Street Journal first reported details of the rule Sunday afternoon.
Much of the electricity sector’s carbon pollution stems from aging, coal-fired plants. The average U.S. coal plant is 42 years old, according to the EPA, meaning that most of them aren’t nearly as efficient as new ones, although many have been updated. Some were built when Dwight D. Eisenhower was president, said Christopher Crane, chief executive of the energy producer Exelon.
EPA estimated that even if the rule go into effect 30 percent of U.S. electricity in 2030 will come from coal-fired plants.
The regulation could also affect natural-gas-fired power plants, which emit about half as many greenhouse gases as coal plants. The EPA said that U.S. natural-gas-fired combined cycle plants are 14 years old on average.
Sen. Edward J. Markey (D-Mass.), one of the lawmakers who spoke with Obama Sunday, said in an interview the rule will make it easier for politicians to make even deeper carbon cuts a few years from now.
“This decision is going to unleash the same kind of technology revolution that the tighter fuel economy standards for automobiles unleashed,” Markey said.
The EPA plan resembles proposals made by the Natural Resources Defense Council (NRDC), which would allow states and companies to employ a variety of measures — including new renewable-energy and energy-efficiency projects “outside the fence,” or away from the power plant site — to meet the target for carbon reduction. This approach aims to keep consumer electricity prices from rising too sharply.
Usually when the EPA regulates pollutants under the Clean Air Act, the agency sets an emissions limit for each facility. By contrast, under a “mass-based system,” states would have to meet an overall target for greenhouse-gas emissions and ensure that power plants either make those reductions at their facilities or finance efforts to achieve them in other ways, such as by reducing consumer demand or investing in carbon-free electricity generation.
Meeting the EPA targets might not be difficult for states that have cut emissions in the electricity sector or that have been meeting their own renewable energy standards. Since the EPA proposed a baseline year of 2005, 13 states and the District have cut carbon emissions by about 30 percent or more, according to a Sierra Club compilation of Energy Information Administration data.
Most of the carbon reductions stemming from the rule would be made in the first decade, reaching 26 percent by 2020, and states will have the ability to craft multi-state plans in order to comply.
Nicholas Akins, chief executive of AEP, one of the nation’s largest carbon dioxide emitters, said that his company is already producing 21 percent less CO2 than it did in 2005 and that it plans to retire another 6,600 megawatts of coal plants by late 2015 that will bring it to a level 25 percent below 2005.
Akins said he was “still digesting” the proposals, but that he was “encouraged” that EPA used 2005 as a baseline and that AEP and states wouldn’t lose credit for measures taken. But he said that he wanted to clarify key issues including the capacity for increasing natural gas use, making sure that boosting plant efficiency doesn’t trigger other environmental requirements, and that plants can take advantage of energy efficiency elsewhere.
Daniel J. Fiorino, who directs American University’s Center for Environmental Policy, said in an interview that using this approach is “a really nice example of smarter regulation,” because it gives firms and state regulators greater leeway in how they would meet a federal standard.
But the National Association of Clean Air Agencies, a nationwide group of state air pollution control agencies, while supporting the proposed regulations, warned that “the regulatory and resource challenges that lie ahead are daunting.”
And Fiorino, who worked at the EPA for 31 years and served as associate director of the agency’s office of policy analysis, added, “When you have flexibility, there’s potentially more room for a legal challenge.”
Several coal industry and business officials have questioned the administration’s approach, saying it will cost coal miners their jobs and could lead to electricity shortages. The Electric Reliability Coordinating Council, a lobbying group that represents energy companies with major investments in coal-fired power plants, has prepared an analysis that cites a study estimating that a phase-out of coal plants could cost consumers $13 billion to $17 billion a year between 2018 and 2033.
“There are no off-the-shelf technologies to address carbon, only fuel-switching regardless of expense or energy rationing,” the group writes.
Scott Segal, a government relations and communications specialist at Bracewell & Giuliani who has been working with the council, said the proposed rule “is likely to be expensive, controversial and intrusive for households and small businesses.”
The U.S. Chamber of Commerce has commissioned a separate study, projecting that the proposed rule could cost the U.S. economy an average of $50 billion a year during the next 16 years.
“There are still special interest skeptics who cry the sky is falling,” the EPA’s McCarthy said. “They deliberately ignore the risks, overestimate the costs, and undervalue the benefits.”
Supporters of the administration’s plan, meanwhile, say that it will save Americans money because of the public health benefits that result from cutting plants’ soot and smog-forming pollutants. Moreover, they say, renewable energy has become increasingly competitive with fossil fuels.
The EPA estimates that the new rule would cut traditional air pollutants such as sulfur dioxide, nitrogen oxides and soot by 25 percent, according to those who have been briefed, yielding a public health benefit of between $55 billion to $93 billion when it is fully implemented with 2,700 to 6600 premature deaths avoided and 140,000 to 150,000 asthma attacks a year avoided. The cost, by contrast, would be $7.3 billion to $8.8 billion.
EPA said that for every $1 invested, Americans would reap $7 in health benefits.
The EPA also said that even without counting health benefits, the climate benefits would make the proposed regulations worthwhile, saving about $30 billion in 2030. “Climate inaction is costing us more money, in more places, more often,” McCarthy said. “As our seas rise, so do insurance premiums, property taxes, and food prices.”
Recent improvements in energy efficiency will accelerate the rule’s implementation, the agency projects, with a roughly 8 percent cut in the national average cost of electricity bills by 2030.
Michael Brune, executive director of the Sierra Club, noted in an interview that a spokesman for the Colorado-based utility Xcel Energy explained that his company was expanding its investments in solar and wind power because they are the “most cost-effective and most reliable.”
The American Wind Energy Association, which also supports a federal carbon cap on existing plants, recently published a study that found that consumer rates declined over the past five years in the 11 states that use the most wind, while rates increased collectively in all the other states during that same time period.
Rhone Resch, president and chief executive of the Solar Energy Industries Association, said the rule will have an enormous impact because it is so different from previous air-quality regulations in which power plants installed pollution controls to curb the emissions coming out of their stacks.
“This is renewable energy as a compliance technology, and that’s a huge change from what it’s been in the past,” he said. “We think that solar will be an option, one of the technologies of choice for both the utilities and the air directors of these states.”
The proposed regulations will provide new impetus for energy-
efficiency measures to flatten out or even lower electricity consumption. A March report by the American Council for an Energy-Efficient Economy looked at efficiency programs in 20 states from 2009 to 2012 and found an average cost of 2.8 cents per kilowatt hour — about one-half to one-third the cost of alternative new electricity resource options, the group said.
A significant number of lawmakers, including Republicans and some Democrats from coal-
dependent states, have indicated that they will try to fight any attempt by the EPA to crack down on existing plants. Several state attorneys general have vowed to fight the proposed regulations in court.
Just last month, the House passed language in the Defense Authorization Act that would bar the Pentagon from analyzing how climate change will affect national security.
While White House officials have indicated that Obama would veto any attempt to override his proposal to regulate these facilities, Democrats will still have to defend this policy on the campaign trail in conservative states this fall. Last week Republicans began pressuring Kentucky Democratic Senate candidate Alison Lundergan Grimes to return campaign donations from Frances Beinecke, president of the NRDC, and her husband.
Grimes’s opponent, Senate Minority Leader Mitch McConnell (R), called the EPA proposal Sunday a “national energy tax — a failed tax which has already been rejected by Congress.”
Democratic officials are trying to rally the president’s supporters around the EPA proposal. Business Forward, a group affiliated with the White House, has scheduled a call Monday afternoon with White House counselor John D. Podesta so he can explain the plan to corporate allies.
And Organizing for Action Chairman Jim Messina sent out a pitch Saturday to his group with the tagline, “This is huge,” urging members to sign an online petition backing the proposal before it was unveiled.
“As I write this, powerful interests on the other side are lining up their dirty budgets to try to tear this down. They have plenty of allies in Congress that will try to stop us,” Messina wrote. “I’m asking everyone who cares about this fight to stand up and say so today — stand with President Obama and new carbon pollution standards.”