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EPA Proposal Would Slash Power Plant Carbon Emissions 30% by 2030

The Obama administration on Monday issued proposed new rules to cut carbon emissions from the power generation sector 30% below 2005 levels by 2030, a move cautiously embraced by the natural gas industry, characterized as a "coal killer" by some critics, and hailed by environmental groups as a major effort to address climate change.

The Environmental Protection Agency's (EPA) 645-page Clean Power Plan Proposed Rule is key to President Obama's climate change plan. Its primary target is existing power plants, the single largest source of carbon pollution in the United States. While there are already limits in place for the level of arsenic, mercury, sulfur dioxide, nitrogen oxides and particle pollution that power plants can emit, there are currently no national limits on carbon pollution levels, EPA said. The plan would offer each state the flexibility to create its own program to lower carbon output from power plants within its borders.

In addition to slashing carbon emissions from existing power plants, EPA's proposal would cut particle pollution, nitrogen oxides and sulfur dioxide by more than 25%, avoid up to 6,600 premature deaths, up to 150,000 asthma attacks in children, and up to 490,000 missed work or school days, resulting in up to $93 billion in climate and public health benefits, and shrink electricity bills about 8% by increasing energy efficiency and reducing demand in the electricity system, the agency said.

By 2030, 31-32% of power generation would still come from coal, and about the same amount coming from natural gas-fired plants, according to EPA. Renewables (not including hydro) are expected to make up about 9% of the power generation market.

Obama announced a sweeping climate change initiative last year, which some derided as the makings of a "war" on the coal industry (see Daily GPIJune 27, 2013).

The proposed guidelines build on trends already underway in states and the power sector to cut carbon pollution from existing power plants, according to EPA Administrator Gina McCarthy.

"EPA is delivering on a vital piece of President Obama's Climate Action Plan by proposing a Clean Power Plan that will cut harmful carbon pollution from our largest source -- power plants," McCarthy said. "By leveraging cleaner energy sources and cutting energy waste, this plan will clean the air we breathe while helping slow climate change so we can leave a safe and healthy future for our kids. We don't have to choose between a healthy economy and a healthy environment -- our action will sharpen America's competitive edge, spur innovation, and create jobs."

The Clean Power Plan would be implemented "through a state-federal partnership under which states identify a path forward using either current or new electricity production and pollution control policies to meet the goals of the proposed program," EPA said. "The proposal provides guidelines for states to develop plans to meet state-specific goals to reduce carbon pollution and gives them the flexibility to design a program that makes the most sense for their unique situation. States can choose the right mix of generation using diverse fuels, energy efficiency and demand-side management to meet the goals and their own needs. It allows them to work alone to develop individual plans or to work together with other states to develop multi-state plans."

The proposal also includes a flexible timeline for states to follow for submitting plans to EPA, with plans due in June 2016, with an option to use a two-step process for submitting final plans if more time is needed. "States that have already invested in energy efficiency programs will be able to build on these programs during the compliance period to help make progress toward meeting their goal," EPA said.

"The goals apply to each state based on where they are," a senior EPA official said. "These measures that we used to build a target for a state apply depending on where your starting point is -- so a state that has a lot of coal resources can look at the range of things that are available, but their target is based on the fact that there is a lot of coal in that state already. There's an expectation that there will be forward progress on renewables and energy efficiency, or that the states will find other things to do in order to meet those targets. But these targets, since they're tailored to where every state is, are very achievable and reasonable, for states that have a lot of coal and for states that don't have a lot of coal."

Natural gas organizations were generally supportive of EPA's proposal, which would likely shift some coal-fired generation into gas's wheelhouse.

"Natural gas is already providing significant economic and environmental benefits, and the President has repeatedly recognized the role natural gas will continue to play in growing our economy, strengthening our energy security and reducing emissions," said Marty Durbin, CEO of America's Natural Gas Alliance. "As we consider EPA's proposal with our members and with our power generation customers, we agree the rules should be flexible and fair and we believe they should recognize the ability of natural gas to play an increasing role in the delivery of reliable, safe and clean power."

"The American Gas Association [AGA] believes it is critical that the rule design include a flexible approach for compliance and allow for the efficient and affordable applications of clean natural gas," said AGA CEO Dave McCurdy, President and CEO.

But Republicans in Congress, who are expected to oppose the EPA proposal, came out strong against it Monday. Senate Republican Leader Mitch McConnell called the announcement "a dagger in the heart of the American middle class" that offers "no clear benefit."

"By imposing these draconian new rules on the nation's coal industry, President Obama and every other liberal lawmaker in Washington who quietly supports them is also picking regional favorites, helping their political supporters in states like California and New York while inflicting acute pain on states like Kentucky," McConnell said. "The impact on individuals and families and entire regions of the country will be catastrophic, as a proud domestic industry is decimated -- and many of its jobs shipped overseas."

Some powerful Democrats voiced their opposition, too.

"While it is important to reduce carbon in the atmosphere, this should not be achieved by EPA regulations," said Sen. Mary Landrieu (D-LA), chair of the Senate Committee on Energy and Natural Resources. "Congress should set the terms, goals and timeframe. Greater use of natural gas and stronger efficiency measures adopted by the industry have already helped us reduce carbon emissions to their lowest levels in 20 years, and this should continue."

"Despite negative economic growth last quarter, and despite far better approaches pending in Congress to promote energy efficiency and energy innovation, the president has decided to push ahead and propose a sweeping new regulation on our still-weak economy," said Sen. Lisa Murkowski (R-AK), the top Republican on the committee.

"For years, I have expressed concern that EPA's unilateral regulations will come at a high cost and harm the affordability and reliability of our energy supply. Nothing I have seen today, including the general dismissal of concerns about the rule's costs, has lessened my concerns.

"This draft rule is more than 600 pages long and paired with nearly 400 pages of regulatory analysis. As a result, it's impossible to immediately give a full reaction to what EPA has proposed...As we begin our review, however, I would encourage stakeholders to remember that this is one of many rules that EPA has issued in recent years. We still do not have an accurate accounting of the cumulative costs associated with them, but we do know that EPA has dramatically underestimated plant retirements in the very recent past. "

Some Democrats seemed ready to embrace the changes.

"American businesses, farmers, ranchers and families are experiencing the effects of climate change in the United States today," said Sen. Ron Wyden (D-OR). "Inaction on climate change is no longer an option, so those who would criticize EPA's plan have a responsibility to put forward their own ideas on how to move to a low-carbon economy."

Three West Coast state governors and British Columbia's premier, representing the Pacific Coast Collaborative (PCC), said they expect the Obama proposal to achieve "meaningful greenhouse gas reductions" from existing power plants. At the same time, it should allow states the flexibility to build on programs and partnerships that are already "protecting public health, saving consumers money and spurring innovation in cleaner, safer energy," they said.

"President Obama and U.S. Environmental Protection Agency Administrator Gina McCarthy are to be congratulated for accelerating a national response to the costs and risks of climate change," said Oregon Gov. John Kitzhaber, noting that the standards support a growing renewable energy economy on the West Coast. "I am particularly pleased to see the administration recognize the important role of regional partnerships, like the PCC, in meeting the objectives of this new effort to curb carbon pollution."

"The Obama Administration continues its war on coal with the issuance of carbon dioxide rules for existing coal plants," said Georgia Public Service Commissioner Stan Wise. "These overreaching rules trump state authority, put energy users at risk to future price swings, ignores the investments and progress Georgians have made to improve the environment, and are a backdoor attempt to force federal renewable energy mandates...These rules are simply the means to an end -- the end of coal and an annual loss of $10.5 billion in GDP and 59,700 jobs in our south Atlantic region alone, and the backdoor mandating of energy renewables."

Industrial Energy Consumers of America (IECA) said its members are "deeply concerned" that the proposal would significantly increase electricity prices.

"A major shift from coal, and an over reliance on natural gas and renewable energy generation, will reduce reliability. All costs imposed by the U.S. EPA rule will be passed onto us, the consumers," IECA said.

The American Chemistry Council also warned of higher energy prices resulting from the regulations, an unintended consequence that it said would make it more difficult for manufacturers to compete abroad and grow in the United States.

"Since many chemistry processes require large amounts of electricity and natural gas, the U.S. chemistry industry is highly attuned to how EPA's regulations for the electricity sector could affect energy markets. We welcome the flexibility the administration gave to states in designing compliance plans, and urge states to carefully assess how specific programs would affect energy costs, diversity and reliability."

The nine states participating in the Regional Greenhouse Gas Initiative (RGGI), the nation's first market-based regulatory program to reduce greenhouse gas pollution, said they welcomed the release of EPA's proposed guidelines for state programs.

"The RGGI states' experience demonstrates that market-based carbon reduction programs achieve the most cost-effective emission reductions, enable a transition to a low-emitting, reliable, and efficient power sector, and build state economies while growing jobs," RGGI said.

And there were calls from some quarters for even sharper cuts to the nation's carbon emissions.

"While the power plant carbon standard is a tremendous step forward, ultimately we will need to make much deeper cuts in emissions to help limit worsening climate impacts, something the administration cannot do alone," said Rachel Cleetus, senior climate economist for the Union of Concerned Scientists. "Congress must step up and enact legislation that will lead to deep cuts in emissions throughout the economy."

A coalition of environmental organizations, including Sierra Club, Environmental Defense Fund and National Wildlife Federation, called the proposal a "bold step [that] will help protect public health and our communities from the impacts of climate change and further spark clean energy innovation that will drive the next generation of economic growth."

EPA will accept comment on the proposal for 120 days after publication in the Federal Register and will hold public hearings on the proposed Clean Power Plan during the week of July 28 in Denver, Atlanta, Pittsburgh and Washington, DC. EPA expects to finalize the standards next June.

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