Wash. plans to regulate CO2 until feds step in

Source: Debra Kahn, E&E reporter • Posted: Monday, May 2, 2016

West Coast states are continuing work on how to mesh their power sectors with federal carbon regulations, with California and Washington releasing new details this week on how they expect generators to fare.

Washington regulators said they plan to issue a new statewide carbon-capping proposal next month that would regulate power plants but allow them to come under federal regulation in the event that U.S. EPA’s Clean Power Plan survives legal challenges.

The Supreme Court in February issued a stay on the implementation of the Clean Power Plan, which aims to curb U.S. greenhouse gas emissions 32 percent from 2005 levels by 2030. California and Washington are among the states that are continuing to work toward meeting the target despite the stay.

Washington Gov. Jay Inslee’s (D) administration on Wednesday outlined its upcoming proposal to cap emissions from facilities that emit more than 100,000 metric tons of carbon dioxide annually.

Rather than an economywide emissions cap, the state Department of Ecology plans to assign facility-specific caps and lower them by 5 percent every three years. The number of facilities covered by the plan would also increase every three years, as the threshold for inclusion gradually falls from 100,000 metric tons of CO2 to 70,000 metric tons in 2035. About 24 facilities are expected to be covered at the outset, and about 60 to 70 facilities by 2035. The plan would cover roughly two-thirds of the state’s emissions.

Industries would be able to meet their targets in several ways. They could reduce emissions at their facilities directly; offset their own emissions with reductions at other facilities; generate and trade emission-reduction credits by lowering emissions faster than they are required to; or submit credits from other carbon programs, like California’s and the Northeastern states’ CO2 markets.

An earlier draft of the plan didn’t specify how it would dovetail with the Clean Power Plan. Regulators withdrew it in February, citing critical feedback from industries and other interested groups (ClimateWire, Feb. 29).

Wash. imports emitting energy

The new plan is to subject power plants to individual caps but release them whenever the Clean Power Plan takes effect. It comes in response to industry concerns about regulatory overlap, the head of the state’s air quality program said in an online presentation Wednesday.

“Representatives from the power sector are actively working on the state’s approach to the Clean Power Plan and voiced concern about the interaction and potential overlap between the two regulatory programs,” said Stu Clark, air quality program manager for the state Department of Ecology.

“We fully believe the Clean Power Plan will be upheld at some point in the future. Up and until that happens, they would remain in the CAR,” or Clean Air Rule.

Whatever happens, Washington is in good shape to meet its 2030 target under the Clean Power Plan of a 37.2 percent reduction in carbon emissions. It gets about 70 percent of its electricity from hydropower — giving it the lowest retail electricity rates in the country — and has 11 power plants that fall under EPA’s rule, 10 of them natural-gas-fired.

A big question will be how the state chooses to interact with nearby states like coal-heavy Montana, from which it imports a significant portion of its electricity despite being a net exporter (ClimateWire, Feb. 12).

Clark said the new combined approach to regulating power plants would allow the state to reduce emissions while still holding out for a regional approach that would address out-of-state power.

“We do not, through our [state] Clean Air Act, have the authority to regulate power plants in other states,” Clark said. “We can, however, through using the Clean Power Plan approach. That does regulate the regional nature of power and get access to imported power and possibly achieve reductions from there, as well.”

Manufacturers of energy-intensive goods that compete on the global scale, like paper, cement and metal, will also receive a different treatment under the new proposal. Their emissions will be converted into carbon intensity rates, based on the efficiency of their operations, and measured against industry benchmarks. Manufacturers that are more efficient would have looser rate-based targets.

Meanwhile, California is trying to make sure its existing regulations will work alongside the federal program. The state’s air regulator released preliminary modeling yesterday that demonstrates the state is in good shape to meet its CPP targets by using existing programs like cap and trade and its renewable portfolio standard.

Under a conservative scenario that does not take into account new renewable generation targets passed last year, California would exceed its 2030 federal target by 17 million short tons of CO2 equivalent.

In a tighter scenario that assumes the closure of the state’s only nuclear plant, it would still be under the federal target by 2 million tons. The California Air Resources Board will release more modeling in July when it issues its draft plan for complying with the CPP.