McCarthy Says Power Plant Climate Rule Will Push Efficiency, Renewables

Source: Chris Knight, Inside EPA • Posted: Monday, February 10, 2014

EPA Administrator Gina McCarthy is publicly confirming that the agency’s first-time climate rule for existing power plants will offer a way to “incent” energy efficiency and renewable energy, remarks observers say are the clearest signals to date that EPA plans to accommodate a widespread request from states and others to offer beyond-the-fenceline credit for programs that cut greenhouse gas (GHG) emissions.

“You will see when we put this proposal out in June that we have not just listened but we have absorbed the lessons that you have been trying to teach us, that we will be able to use this to incent additional energy efficiency, to incent renewables, to incent all of the work that you have been doing for so long,” McCarthy said in a Feb. 7 speech in Washington, D.C.

Her remarks, delivered at a conference organized by the National Association of State Energy Officials (NASEO), provide some of the most extensive details yet on EPA’s pending new source performance standards (NSPS) for existing power plants, according to several officials at the speech who have been tracking the rule. EPA is set the release the proposed rule by June 1 and to finalize it one year later.

State officials over the past six months have been urging EPA to use the flexibility included in section 111(d) of the Clean Air Act — a section under which EPA sets guidelines but states must write state implementation plans (SIPs) that will then be reviewed, and possibly rejected, by the agency — to provide credit for energy efficiency and renewable energy programs that are already operating in dozens of states.

In particular, states have been asking EPA to provide clear guidance on what types of efficiency programs EPA might approve in their SIPs, as state officials say they may need years to tweak existing renewable and efficiency programs or introduce new ones in their states, even as they face a looming June 2016 deadline to submit their SIPs to EPA.

McCarthy, an outspoken supporter of energy-efficiency programs, said at the NASEO event that EPA is “listening very close” to requests for a clear crediting mechanism for an array of state efficiency programs, many of which intend to drive demand-side reductions in electricity use.

She said she does not want EPA to issue a proposal that “simply sets up a whole lot of ideas, I want a proposal that people will feel good about, that we can get folks to embrace as a great step forward.”

She added, “I don’t think you will be disappointed when you see this rule.”

An EPA spokeswoman, asked whether McCarthy was confirming that EPA would give states a way to credit renewable energy and efficiency programs in their NSPS SIPs, stopped short of offering confirmation but noted that it “is something that we’re looking at closely as we develop the proposed rule.”

Since last June when President Obama in his climate action plant directed EPA to start work on NSPS rules for new and existing power plants, the agency has been involved in what McCarthy said has been an extensive outreach effort with state air and energy officials, utility companies, environmental groups and other stakeholders. She said the outreach has provided a “remarkable opportunity” to understand what states and others have already been doing to limit GHG emissions.

With that outreach concluding, McCarthy said the agency is “now only beginning to put pen to paper” in writing the rule, though others have said that EPA hopes to send a pre-publication draft for interagency review next month.

Many critics of the rule have warned that any attempt by EPA to start regulating GHGs from the power sector, which accounts for about 40 percent of the country’s emissions will cause profound and undesirable disruptions across the economy, raising electricity prices, costing jobs, and creating winners and losers, the largest of which could be a coal industry already struggling to survive because of competition from the booming natural gas sector.

But McCarthy downplayed those concerns, saying EPA is writing a rule that would meet environmental and energy goals while being a “boost to economies in each state and not a burden to anyone.” She also said the rule would not be “imposing solutions” but rather was “opening up opportunities” to reduce emissions that contribute to climate change.

As evidence that cutting GHGs could be a boon to the economy, McCarthy pointed to EPA’s landmark tailpipe rule for light-duty cars and trucks, a 2010 rule that requires the auto sector to cut GHGs and boost fuel economy for model years 2012-2016. The rule, she said, drove investments in electric vehicles and helped to revitalize the auto sector, which backed the measure.

McCarthy also touched on efforts beyond the power sector at her NASEO talk, including initiatives within EPA to address climate change, such as pending plans to cut emissions of the potent GHG methane from natural gas drilling and distribution infrastructure.

Trying to clamp down on methane leaks is “both a challenge and an opportunity,” McCarthy said, and indicated that EPA’s comprehensive strategy to limit methane emissions would be released this spring. — Chris Knight (