Goodbye Clean Power Plan, Hello Affordable Clean Energy Plan

In October 2015, under the Obama Administration, the Environmental Protection Agency (“EPA”), proposed the Clean Power Plan (“CPP”). The CPP was promoted as an important and historic step in combating climate change by reducing carbon emissions from power plants. The CPP was designed to follow Section 111(d) of the Clean Air Act, which provides that the EPA will set emission goals with states and tribes deciding how those emission goals will be met. Under the CPP, Carbon Pollution Standards were proposed for subcategories of fossil-fuel fired electric generating units.

Although many were in favor of the CPP and its environmental improvement goals, others opposed the plan believing it overstepped the EPA’s authority. Ultimately, those opposed to the CPP won in February 2016, when the United States Supreme Court stayed the implementation of the CPP. After the Trump Administration took office, the EPA initiated a review of the CPP to determine if it should be suspended, revised, or rescinded. In October 2017, the EPA proposed to rescind the CPP stating it exceeded the EPA’s authority.

In August of this year, the EPA proposed the Affordable Clean Energy (“ACE”) Rule to replace the rescinded 2015 CPP. The ACE Rule has multiple components including: defining heat-rate efficiency improvements as the “best system of emission reduction” for greenhouse gas emissions from existing power plants, providing a list of “candidate technologies” to states so the states can establish performance standards for state plans, and updating the New Source Review Permitting program. The EPA estimates enacting the ACE Rule, in replacement of the CPP, will save a net $3.4 billion. The ACE Rule is currently out for public comment.

A component of the ACE Rule includes modifications to the New Source Review (“NSR”) Rule applicability to power plants. NSR applies to new and modified power plants by setting emission standards. Previously, under NSR, a power plant would be subject to NSR permitting if the proposed modifications to the facility would increase the annual emission output of air pollutants such as nitrogen oxides, particular matter, and sulfur dioxides. If a power plant triggered NSR permitting it could mean putting into place stricter air quality controls at the facility.

Those opposed to the New Source Review change, believe that although it may seem like a small change, it will actually have various adverse impacts.”

The ACE update to NSR would change the applicability criteria from an annual emission output to analyzing whether the modification will increase the hourly emissions rate. Thus, changing the measuring stick of applicability to trigger NSR from looking at annual emissions to looking at hourly emissions.

Many consider the proposed change to be beneficial to existing power plants. Industry groups have previously argued that the current NSR hinders efficiency improvements that may otherwise be made because of fear of triggering permitting requirements. Those in favor of changing to hourly emissions rate estimates, as the ACE rule proposes, believe it will allow efficiency improvements to be made to power plants and not trigger NSR permitting.

Those opposed to the NSR change, believe that although it may seem like a small change, it will actually have various adverse impacts. They argue it will lead to increased carbon emissions because the facilities will be made more efficient thus making them more competitive and allowing them to extend their operational lifetimes. Therefore, increasing the amount of emissions the plants will have in the long run.

Additionally, although the proposed ACE rule only applies to power plants, other industries like the refining and manufacturing sectors, are hoping a similar NSR modification would be extended to their industries as well. If the NSR modification gets extended to other industries it could lead to an increase of carbon emissions from those sectors as well.