Early movers lament EPA’s use of 2012 as base year

Source: Jean Chemnick, E&E reporter • Posted: Friday, July 18, 2014

U.S. EPA’s top official for air quality issues said today that the agency is getting pushback on its decision to use data from 2012 to set state carbon intensity targets under an existing power plant proposal for carbon dioxide.

Assistant Administrator for Air and Radiation Janet McCabe said today at a breakfast hosted by ICF International that in the six weeks since the proposal was released, states and companies have quizzed EPA about its decision to base emissions assumptions on emissions from a single year.

“What we’ve heard from a lot of states and companies is, ‘Well, gee, we started doing things to reduce our carbon footprint a long time ago — starting in 2005 or before,'” she said. “‘And we’ve done a lot of things already, and that doesn’t seem to be recognized in the rule.'”

States and utilities began grappling with the 2012 date immediately after the proposal was released last month (Greenwire, June 5). Some said that although it appeared to go well out of its way to give fossil fuel-dependent states additional time to meet standards — which were set in many cases to allow them to continue to draw a significant share of their power from coal — “early mover” states in the Northeast and the West still faced tough additional reduction obligations despite years of progress. The agency said that it considered efforts states had already made on renewable energy or energy efficiency when assessing their potential to make additional reductions.

McCabe said EPA was also fielding questions about the way the June 2 proposal would treat renewable energy and energy efficiency mandates adopted by states. Would the programs become federally enforceable if states rely on them to meet the federal standard? What would the role be for state energy administrators, who usually don’t administer federal air quality rules?

Another issue at the forefront of commenters’ minds is the way the rule treats nuclear energy. The rule considers states’ existing and planned nuclear facilities when setting state intensity targets, and new or preserved nuclear capacity might go some way toward satisfying a state’s reduction obligations, especially if nuclear power displaces some portion of that state’s fossil fuel portfolio.

But McCabe said the agency had received many questions about the rule’s provisions aimed at protecting and encouraging nuclear energy.

“That is very clean generation from the perspective of carbon, and we want states to be able to rely on that clean generation going forward as part of their plan,” she said.

All of these and other questions are likely to be raised during the public comment period on the rule, which runs through Oct. 16. They will probably also feature in four two-day listening sessions EPA will host on the rule in Atlanta, Denver, Pittsburgh and Washington, D.C., during the final week of July.

McCabe said again that EPA is not currently considering issuing a model rule that states could opt into when it finalizes the existing power plant rule in June of next year.

“We’ve resisted doing that,” she said.

Although McCabe said the agency is not taking a position about whether states should take steps to harmonize their plans, there might be advantages to their doing so.

“We think there are a lot of opportunities for people to do that, and the bigger the pool you get, the more opportunities you have for cost-effective reductions,” she said.

McCabe noted that state utility and air regulators have begun to weigh whether implementation plans that cross state borders might offer efficiencies that individual state plans would not, especially in cases where utilities serve more than one state. The National Association of Clean Air Agencies is preparing a model rule that states might tap.

“A lot of those ideas are swirling around,” she said.

Some environmental groups have urged EPA to provide a model rule when it finalizes its proposal next year, in part to give states that might opt not to submit an approvable implementation plan a taste of what a federal implementation plan would look like.

“Under the EPA proposal, the initiative on state plans is clearly with the states, and EPA has given them great flexibility,” David Doniger of the Natural Resources Defense Council said in a recent email. “But it is important for the states to have clarity about what will happen, and on what schedule, if they do not participate.”

The Clean Air Task Force has also suggested that EPA present a model rule sooner rather than later. Conrad Schneider, advocacy director for CATF, said that a model would give states an implementation proposal that “EPA has blessed up front.”

“They could adopt that even as they were working on other permutations or other configurations,” he said.

It could be written to encourage trading not only among states within a region, but across regions — a model CATF advocates as a way to give states access to partners with radically different energy mixes and resources.

But EPA Air and Radiation Senior Counsel Joe Goffman said earlier in the week that the agency has yet to determine how — or whether — it will make use of its Clean Air Act authority to step in if states refuse to write approvable implementation plans for the rule.

“The way we’re looking at that now is that we at some point have an independent decision about whether and how to implement that authority, and we’re still on the prospective side of making those decisions,” he said at an Environmental Law Institute event Monday (E&ENews PM, July 14). If EPA waits to unveil a model rule or federal plan until after states have missed deadlines to submit state plans — June 30, 2016, with ample opportunity for extensions — it is likely that the next administration will have the task of making those decisions.

The draft rule assigns carbon intensity targets to states based on four “building block” inputs: on-site reductions, the capacity to ramp up existing natural gas, zero-carbon energy and demand-side efficiency. State comments are likely to focus, at least in part, on whether they view the targets proposed for them to be fair and achievable.

McCabe said after the briefing that targets would be unlikely to change after they are finalized — even if new information becomes available that indicates they will be difficult to achieve. But she said that state plans to meet those targets could change.

“The rule has a process for states to adjust along the way if they find that a particular strategy they identified is not one that works for them,” she said. “But the targets will be finalized in the final rule.”