Rule may never need to be revised — McCarthy

Source: Jean Chemnick, E&E reporter • Posted: Wednesday, August 12, 2015

U.S. EPA’s Clean Power Plan will be so effective at incentivizing a shift to lower-carbon sources of power that the agency may never find it necessary to tighten its emissions limits, Administrator Gina McCarthy said today.

Speaking at an event hosted by Resources for the Future, McCarthy said the existing power plant rule released Aug. 3 set a long-term market signal that would continue to encourage reductions even after its final compliance deadline.

“I have every expectation that we will go way ahead of what this actually calls for in 2030,” she said.

If states and the private sector respond to the rule by accelerating the introduction of new technologies and bringing down the cost of reductions, an update to the Clean Power Plan may not be needed, she said.

“I never regret a regulation I don’t have to do,” she said.

The former state agency head said again that EPA based its flagship climate rule on policies some states had already implemented to reduce their emissions, apparently because they saw an economic advantage in doing so.

“States would not have gone out front at significant determent to themselves,” she said.

Last year’s draft version of the rule assigned many of these first-mover states much tougher targets because of past actions like the adoption of hefty regional renewable energy mandates or substantial investment in combined cycle natural gas facilities. The revised version goes much easier on first-mover states or states with diversified energy portfolios — some of which would even be allowed to grow their emissions between now and 2030 under a mass-based compliance approach. But the final version increases its overall cut from 30 to 32 percent by 2030 compared with 2012 levels because it comes down much harder on states that remain overwhelmingly dependent on coal-fired power.

But McCarthy said in today’s remarks that all states would find their compliance targets achievable. States can comply through efficiency or renewables or by shifting load away from coal-fired power plants and toward less emitting generators, she said. They can also trade credits or allowances even if they don’t adopt a fully backed emissions trading scheme as their state implementation plan, she said.

“No plant has to do this alone, no state has to do it alone. They all have the resources of the grid at their disposal,” she said.

McCarthy again trumpeted the substantial public outreach EPA performed in crafting the rule, calling it the “epitome of engagement.” She expressed pride in how much the rule had changed as the result of comments received.

But some states that feel they came out on the losing end of last week’s substantial reworking of state targets say they would have commented differently if they knew EPA would saddle them with so much more responsibility.

“We see this as a very significant impact on what we thought we could do under the proposed rule,” said Kentucky Energy and Environment Secretary Leonard Peters in an interview.

Kentucky’s obligation under the final rule changed from a proposed 18 percent cut by 2030 to a 39 percent reduction requirement.

“It is a dramatically different document from what we commented on,” he said. “If we commented on this final rule, our comments would be very, very different.”