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EPA proposes rule for nationwide 30% cut in GHG from existing power plants by 2030 relative to 2005

The US Environmental Protection Agency (EPA) released the already widely-discussed (albeit without much detail) “Clean Power Plan” proposal, which mandates a national average 30% cut in greenhouse gas emissions from existing power plants from 2005 levels by 2030. Power plants accounted for 32% (2,064 million metric tons of CO2 equivalent) of all domestic greenhouse gas emissions in the United States in 2012, according to the EPA.

Specifically, the EPA is proposing state-specific rate-based goals for carbon dioxide emissions from the power sector, as well as emission guidelines for states to use in developing plans to attain the state-specific goals. Each state’s goal is different, because each state has a unique mix of emissions and power sources to plug in to each part of the formula. The Clean Power Plan broadly proposes:

  • Cutting CO2emissions from the power sector by 30% nationwide below 2005 levels; and

  • Cutting particle pollution, nitrogen NOx, and SOx by more than 25% as a co-benefit.

EPA is only proposing goals for states with fossil fuel-fired power plants. Vermont and Washington, DC are not included in this rule because they do not have fossil fuel-fired power plants. EPA is also not proposing emission rate goals or guidelines for the four affected sources located in Indian country at this time. EPA will work with those tribes and sources to develop or adopt Clean Air Act programs.

Under the Clean Air Act (CAA), state plans must establish standards of performance that reflect the degree of emission limitation achievable through the application of the “best system of emission reduction” (BSER) that take into account the cost of achieving such reduction and any non-air quality health and environmental impact and energy requirements. EPA’s proposed rule contains state-specific goals that reflect the EPA’s calculation of the emission reductions that a state can achieve through the application of BSER.

EPA is using four “building blocks” to determine state-specific goals:

  1. Reducing the carbon intensity of generation at individual affected electric generating units (EGUs) through heat-rate improvements. Heat rate improvements result in any changes in equipment, operating procedures or maintenance practices that increase the efficiency of converting fuel energy into electricity by an EGU.

    The value allocated here in EPA’s goal-setting formula was an average heat rate improvement of 6% for coal steam electric generating units (EGUs).

  2. Lower the electric system’s overall carbon intensity by shifting generation among existing EGUs. This entails leveraging re-dispatch over the grid to substitute generation at the most carbon-intensive affected EGUs with generation from less carbon-intensive affected EGUs (including natural gas combined cycle [NGCC] units that are under construction).

    The value allocated here in EPA’s goal-setting formula was dispatch to existing and under-construction natural gas combined cycle (NGCC) units to up to 70% capacity factor.

  3. Expanded lower-carbon generation. Adding new nuclear or renewable generating capacity to the electric system would tend to shift generation to the new units from existing EGUs with higher carbon intensity. Such expansion is consistent with current trends, EPA notes. While not included in the goal setting for building block 3, the addition of new NGCC capacity would have a similar impact and is one option states may choose to achieve the goal.

  4. Improving demand-side efficiency. Reducing emissions from affected EGUs in the amount that results from the use of demand-side energy efficiency that reduces the amount of generation required.

    The value allocated in the goal-setting was an increase in demand-side energy efficiency to 1.5% annually.

The proposal provides guidelines for states to develop plans to meet state-specific goals to reduce carbon pollution and gives them the flexibility to design a program that makes the most sense for their unique situation. States can choose a generation mix using diverse fuels, energy efficiency and demand-side management to meet the goals and their own needs. The proposal states to work alone to develop individual plans or to work together with other states to develop multi-state plans.

EPA is proposing a BSER goal approach referred to as Option 1 and taking comment on a second approach (Option 2). Each of these goal approaches use the four building blocks described above at different levels of stringency. Option 1 involves higher deployment of the four building blocks but allows a longer timeframe to comply (2030) whereas Option 2 has a lower deployment over a shorter timeframe (2025).

GHG reductions. The power sector was responsible for 2,446 million metric tons CO2e in 2005, according to EPA. Under the proposed rule, EPA projects annual CO2 reductions between 17% and 18% below base case projections for Option 1 in 2020 (reaching 26% to 27% below 2005 emissions), and between 24% and 25% below the base case in 2030 (reaching 30% below 2005 emissions), with ultimate emissions in 2030 of around 1,700 million metric tons CO2e.


For Option 2, EPA projects annual CO2 reductions between 13% and 14% in 2020 (reaching 23% below 2005 emissions) and 17% in 2025 (reaching 23% to 24% below 2005 emissions). For each Option, the regional scenario achieves fewer emissions reductions largely because the ability to average emissions regionally allows those states that were projected to emit below their state goal in the base case to offset reductions that other states would otherwise have made.


In 2020, EPA projects a 20% to 23% reduction of SO2; 22% to 24% reduction of NOx; and a 15% to 18% reduction of mercury, under the proposed Option 1 illustrative scenarios. EPA projects fewer emission reductions overall as a result of the proposed Option 2 in 2020: a 17% to 18% reduction in SO2; 17% to 18% reduction in NOx; and an 11% to 14% reduction in mercury.

Costs. The EPA projects that the annual incremental compliance cost of the proposed Option 1 ranges from $5.4 (state compliance) to $7.4 billion (regional compliance) in 2020 and from $7.3 (regional compliance) to $8.8 billion (state compliance) in 2030 ($2011), excluding the costs associated with monitoring, reporting, and record-keeping.

The estimated cost of Option 2 is between $4.2 (regional compliance) and $5.4 billion (state compliance) in 2020 and between $4.5 (regional compliance) and $5.5 billion (state compliance) in 2025 (2011$). The estimated monitoring, reporting and record-keeping costs for both options are $68.3 million in 2020, $8.9 million in 2025, and $8.9 million in 2030 (2011$).

The annual incremental cost is the projected additional cost of complying with the proposed rule in the year analyzed and includes the net change in the annualized cost of capital investment in new generating sources and heat rate improvements at coal steam facilities; the change in the ongoing costs of operating pollution controls; shifts between or amongst various fuels; demand-side energy efficiency measures; and other actions associated with compliance.

Benefits. EPA calculated the climate benefits resulting from the proposal using the estimated values of marginal climate impacts presented in the Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis under Executive Order 12866 (2013 SCC TSD).

The SCC is a metric that estimates the monetary value of impacts associated with marginal changes in CO2 emissions in a given year. It includes a wide range of anticipated climate impacts—e.g., net changes in agricultural productivity and human health; property damage from increased flood risk; and changes in energy system costs, such as reduced costs for heating and increased costs for air conditioning.

The latest four SCC estimates—each associated with different discount rates—were updated in 2013, are as follows: $13, $46, $68, and $137 per metric ton of CO2CO2 emissions in the year 2020 (2011$). Each estimate increases over time.

EPA used a “benefit-per-ton” approach to estimate the health co-benefits. The range of combined benefits reflects different concentration-response functions for the air pollution health co-benefits, but does not capture the full range of uncertainty inherent in the health co-benefits estimates. EPA said it was unable to quantify or monetize all of the climate benefits and health and environmental co-benefits associated with the proposed emission guidelines, including reducing exposure to SO2, NOx, and hazardous air pollutants (e.g., mercury and hydrogen chloride), as well as ecosystem effects and visibility impairment. While these unquantified benefits could be substantial, the agency said, it is difficult to approximate the potential magnitude of these unquantified benefits and previous quantification attempts have been incomplete.

EPA evaluated the range of potential impacts by combining all four SCC values with health co-benefits values at the 3% and 7% discount rates. For example, EPA estimated that in 2020 the proposed Option 1 regional compliance approach will yield monetized climate benefits of $17 billion using a 3% discount rate (model average, 2011$). The air pollution health co-benefits in 2020 are estimated to be $15 billion to $34 billion (2011$) for a 3% discount rate and $13 billion to $31 billion (2011$) for a 7% discount rate.

Quantified net benefits (the difference between monetized benefits and costs) are $26 billion to $46 billion for 2020 and $47 billion to $80 billion (2011$) for 2030.

Economic impact. Under Option 1, EPA projects that average nationwide retail electricity prices will increase roughly 6 to 7% in 2020, and roughly 3% in 2030 (contiguous US), compared to base case price estimates modeled for these same years. EPA estimates an average monthly increase in electricity bills of roughly 3% in 2020, but a decline by roughly 9% by 2030 because increased energy efficiency will lead to reduced usage.

In 2012, the US power sector generated net 3,890 billion kWh of electricity:
  • 38.57% from coal (1,500 billion kWh);
  • 29% from natural gas (1,133 billion kWh);
  • 20% from nuclear (769 billion kWh);
  • 7% from hydro (270 billion kWh); and
  • the remainder from other sources, including wind and solar.
  • Petroleum accounted for 0.52% of net electricity generation (20.1 billion kWh).

EPA projects coal production for use by the power sector, a large component of total coal production, will decline by roughly 25 to 27% in 2020 from base case levels. The use of coal by the power sector will decrease by roughly 30 to 32% in 2030.

EPA also projects that the electric power sector-delivered natural gas prices will increase by 9 to 12% in 2020, with negligible changes by 2030 relative to the base case. Natural gas use for electricity generation will increase by as much as 1.2 trillion cubic feet (TCF) in 2020 relative to the base case, declining over time. EPA anticipates renewable energy capacity to increase by roughly 12 GW in 2020 and by 9 GW in 2030 under Option 1.

EPA also notes that the evolving economics of the power sector, in particular the increased natural gas supply and subsequent relatively low natural gas prices, have resulted in more gas being utilized as base load energy in addition to supplying electricity during peak load.

EPA claims that the cuts will avoid up to 6,600 premature deaths, up to 150,000 asthma attacks in children, and up to 490,000 missed work or school to provide up to $93 billion in climate and public health benefits.

EPA will accept comment on the proposal for 120 days after publication in the Federal Register and will hold four public hearings on the proposed Clean Power Plan during the week of July 28 in the following cities: Denver, Atlanta, Washington, DC and Pittsburgh. Based on this input, EPA will finalize the standards in June 2015.




Not enough, and not soon enough.


Switching from coal to NG can supply a 25% reduction in GHG and increased in efficiency could provide the other 5%?

Roger Pham

IMHO, this rule only applies to "existing fossil power plants." It probably means just as Harvey is thinking: Switching from coal to NG to achieve this...perhaps a lobbying effort of the NG lobby.

Overall, I would predict that, with the continual lowering costs of solar and wind energy as well as advancement in Small Modular nuclear Reactor, and lowering costs of battery storage for RE leveling, we will be able to reduce fossil fuel use to a much greater extent than 30%.


In accord with PHEN and no doubt that the Nat Gas Indusry will skew the 'facts' to their own interests. It is not hard to do if one is not inclined to make direct comparisons. Nuclear including SMR's appear to be the only fix to carbon problem. Notice also the economics seldom enter the arguments and really are the driver for where we are and where we are going.
Doubtful that solar/wind would make major difference due to Capacity Factor. CF for these will vary from 20 to 50% and generally 30% a good average. So what does one do for the other 70% of time?
Either do without power or have 100% backup to cover NO power output from these facilities. Factor in these costs to our power bills. Batteries would help but costs increase an already costly energy source.


At least the idea is to reduce GHG emissions. Many think we will have to actively capture CO2 to fix the problem in the near future. This may turn into a huge jobs program.


Offshore large Wind turbines farms may have a bright future. The best wind are often found offshore.

Siemens is currently installing 15,000 tons AC/DC conversion center platforms, offshore Northern Germany, to collect AC energy from wind farms and transform it to DC to reduce transmission lost to on shore facilities.

England (and other countries) are also going ahead with large offshore wind farms. The Southern Argentina-Chile region is a large region with very high quality winds to be developed.

There are many other places (on shore and off shore) with high quality winds where future development is fully justified o increase production of clean e-energy.



There was a major grant recently to oxygen blow a fossil fuel plant so pure CO2 is produced for sequestration. They can use it for synthetic fuels and getting more oil from older fields.


We are going to hear a lot from the naysayers for awhile over this. Maybe a little history is in order;

Dave R

"Doubtful that solar/wind would make major difference due to Capacity Factor. CF for these will vary from 20 to 50% and generally 30% a good average. So what does one do for the other 70% of time?
Either do without power or have 100% backup to cover NO power output from these facilities."

News alert - we already have 100% backup to cover NO power output from existing fossil fuel, nuclear and other power sources.

Yes, storage and HV transmission is needed to maximize the utilization of wind/solar at high penetration levels. The cost is worth it.


Dave R, could you explain your statement about already having 100% backup.


It's simple Jimr, they back up each other. The power plants aren't ALL going to go down at the same time so, as they are interconnected by the grid and operate at less than full load, if a coal power plant in western Montana goes off line another plant in eastern Idaho just increases output to cover it.


The EPA's Greenhouse Gas Rules Are Remarkably Business-Friendly

First, EPA apparently chose the utilities’ preferred baseline year, 2005 against which to measure a 30 percent emissions cut of existing power plant emissions by 2030. Indeed the Wall Street Journal argued several days ago that all of the action was in the baseline year chosen. Utilities wanted 2005 because emissions were especially high in the years immediately preceding the recession so that a 30 percent cut from 2005 levels would be far easier to achieve than a 30 percent cut from 2012. Not only did slower economic growth from 2008-2012 result in lower emissions but so did a dramatic drop in natural gas prices, leading to a big shift in electricity generated from natural gas rather than coal. Natural gas emits only about half the emissions as coal when combusted. The 2005 base year is a big victory for industry. In fact, the total reductions the new proposed rules will achieve are actually lower than what the President committed to in international talks in Copenhagen in 2009. For this reason, Grist is reporting that the rules will fall short of what the environmental community wanted.



The EPA can expect incoming fire from both sides;



The Environmental Protection Agency today will announce new climate-change rules clamping down on emissions from electricity plants. The usual lobbyists and politicians are already braying about Barack Obama’s “war on coal” — liberal, Harvard, lacks-chest-hair/isn’t-a-real-American stuff emanating from a Washington every bit as gaseous as the one portrayed in Steven Spielberg’s “Lincoln,” now in heavy rotation on cable.

But the war on coal already happened — coal lost. And for a reason that should make conservatives happy: They drilled, baby, and it worked, beginning years before Sarah Palin popularized “drill baby drill” in 2008. Massive new exploration of shale formations after 2002 produced a 65% drop in natural-gas prices since 2005 that, with or without Obama’s caps on utilities’ carbon emissions, is wiping out coal’s few remaining growth prospects.

To understand the economics of U.S. climate and coal policy, begin with three facts. About 85% of U.S. coal goes into electricity, according to Moody’s Investors Service. Electricity demand is expected to grow just 0.9% annually through 2040, according to the Energy Information Administration. And the falling price of gas, coupled with existing rules to limit power plants’ mercury emissions, mean coal will be more expensive than gas as well as dirtier. And that’s before new carbon limits raise coal’s effective price again.

That’s why utilities began shifting from coal by 2004, according to the EIA. In the past decade, coal’s share of electricity production fell to 40% from 50%. Natural gas gained 9 points and now commands 27% of the market, and the share of renewables like solar and wind has tripled to 6.2%.

This happened before the first broad federal limits on carbon from existing power plants — expected to be some variation of flexible cap-and-trade standards Republicans proposed in the 1980s but oppose now — are even introduced for public comment. They’ll take years to implement.

“If you have less demand and you have a cheaper fuel source, you don’t have to run the coal plants as often,” Morningstar utilities analyst Travis Miller says. A bonus: Carbon-dioxide emissions from power plants dropped 10% between 2010 and 2012, EPA says.

Markets have seen this coming like — sorry — a train full of coal. Coal prices haven’t recovered nearly all of their 2012 losses, even though gas prices have doubled from a trough that year.


(Reuters) – China said on Tuesday it will set an absolute cap on its CO2 emissions from 2016 just a day after the United States announced new targets for its power sector, signalling a potential breakthrough in tough U.N. climate talks.

Progress in global climate negotiations has often been held back by a deep split between rich and poor nations, led by the United States and China, respectively, over who should step up their game to reduce emissions. But the fact that the two biggest emitters of greenhouse gases made unprecedented announcements on climate within 24 hours of each other sparked optimism among observers hoping to see the decades-old deadlock broken. The steps come ahead of a global meet on climate change starting on Wednesday in Germany.

China, the world’s biggest emitter, will set a total cap on its CO2 emissions when its next five-year plan comes into force in 2016, He Jiankun, chairman of China’s Advisory Committee on Climate Change, told a conference in Beijing.

Carbon emissions in the coal-reliant economy are likely to continue to grow until 2030, but setting an absolute cap instead of pegging them to the level of economic growth means they will be more tightly regulated and not spiral out of control.

“The Chinese announcement marks potentially the most important turning point in the global scene on climate change for a decade,” said Michael Grubb, a professor of international energy and climate policy at University College London.

Paul Krugman: ". . . there have been many cynical declarations over the past few days to the effect that China will just go ahead and burn any coal that we don’t. And we certainly don’t want to count on Chinese altruism.

But we don’t have to. China is enormously dependent on access to advanced-country markets — a lot of the coal it burns can be attributed, directly or indirectly, to its export business — and it knows that it would put this access at risk if it refused to play any role in protecting the planet."


This new Obama diktat over greenhouse emissions is exactly that -- a constitutionally shaky bit of puffery that is more likely to destroy jobs and extend dysfunctional bureacracy than do any environmental good.

How do we glean this? A few facts and informed conjectures are in order:

The EU has consistently failed or circumvented its own GHG targets through overreach with unenforceable targets on the one hand, and outright political loopholes on the other. Favoritism to the cement and German coal industries are the most frequent complaints.

Three attempts to create carbon trade exchanges have ended in bankruptcy. After Intrade and Fan and Fred you'd think investors would know better. A good reason why some will not care is that carbon tax schemes are skewed by favoritism, while adding no particular efficiency to obvious choices, such as gas over coal.

The record of Washington diktat over GHG is horrendous. Obama's ethanol mandates cannot be met, even as oil majors surreptitiously slip up to five percent ethanol in standard gasoline (go check your BP station in New Jersey -- I did)ruining mileage performance. This follows the Clinton era CAFE standards which simply lied to consumers. It was assumed that since ethanol would be available, less gasoline would be used, and voila! More miles per gallon of gasoline! In short, government promises are imposed on us without a clue as to real world results.

It is clear where such dirigism will get us in power generation. Most electricity is wheeled on the grid. Does Kentucky have a problem using too much coal? No problem -- pool that coal based electricity with out of state nuclear, and Kentuckian's electric bill will look greener. Does New York have a problem not getting enough natural gas? No problem -- import coal electric from Ohio and then sue the bejeezes out of Columbus for allowing too many emittants waft eastward over the Hudson. A federal consent decree will follow.

I wish I can finish this, I have been called away. But if you doubt this nightmare scenario, there are two little things called the ACA and the VA to guide you accordingly.




China now burns about as much coal as the rest of the world combined and still increasing its use.


China WILL set an absolute cap on its CO2 emissions starting in 2016 ?

Really? That is not a breakthrough, it’s a joke.

A joke that rivals the selling of the Brooklyn Bridge.

This is just a promise to make a promise.


China's per capita GHGs are still 3+ times lower than USA's.

China has a very long way to go before it will catch up with USA's unless the rest of USA's manufacturing facilities are transferred to China. That could raise USA's unemployment to 20+%.


Now that we're on the subject of China, we can do some good, hard thinking about GHG credit trading schemes.

China will not pay for our GHG abatements.

Consider an analogy in agriculture. China can buy every speck of our wheat and corn on the futures market, but why should they? the US taxpayer subsidizes grain production with treasury bonds that the taxpayer will fully guarantee to CHINESE INVESTORS. Whose risk? Whose shirts?

The most recent credit proposals actually have embedded taxes in which the original issue of the credit is from the government, not a private entity such as a bank or utility. There is no incentive for China to buy in on terms comensurate with those of treasury issue, and we know what great shape our public debt is these days.

Perhaps China will bargain hard to make GHG credits pay more than what the Fed is willing to pay on treasuries. But that will not make them subject their industries to a US cap and trade scheme. Rather, they will be happy to gravitate more industry their way, to keep their excess steel capacity at work, with promises of green compliance and free trade. Some US industry actors will be satisfied that more natural gas is used and be on their way, while net growth by any measurable stagnates. Less coal, not much more of anything else to replace it, except the money supply.

By the way, did you know "lol" is about as timely an expression as "twenty-three skidoo"? Get a cell phone with spell check on your text, bub.

Roger Pham

Perhaps with a $400 billion NG deal with Russia, and more nuclear plants to come, more solar and winds...,China will finally be able to curb coal consumption and hence be able to set an absolute cap on CO2 emission. China have strong internal political pressures to clean up the air quality in big cities, so coal plants and petroleum-burning vehicles are to be replaced gradually with NG, nuclear plants, solar, wind, BEV's, PHEV's etc.


China makes a lot of noise about cleaning up the air quality in big cities, but coal plants and petroleum-burning vehicles there are growing explosively

The much promised, but slight, inroads of NG, nuclear power, solar, wind, BEV's, PHEV's etc, is being badly outpaced.

So China will soon burn as much coal as the rest of the world combined, and the USA is a leader in CO2 reduction while China is touted as an environmental leader by the types that believe the citizens of China, Cuba and North Korea really do live in utopia and the US is the great Satan (how about some incentive programs to aid their emigration, it would support diversity).

The shift from coal fired power plants and the reduction in GH gasses in the US is largely due to the three decades long struggle, mostly by small independent oil drillers, to tap into tight oil and gas.

They are responsible for fracking and for our shift from coal and the unprecedented reduction in CO2 in the US.


Too many posters worry too much about China's apparent high GHG. China's per capita GHG may never reach USA's or Canada's or Australia's and a few other champions in the over 20/tonnes per years category.

EU's per capital GHG has been going down slowly for the last 10+ years.

Canada's is going up at a faster rate than China's due to Alberta's tar sands exploitation.

USA's may start going up with further oil shale and gas shale exploitation.


However you feel about Obama's "diktat" over greenhouse emissions one thing is certain: Doing nothing is not an option, and if you left it to Congress doing nothing is exactly what you'd get!

That said here's two important facts for you.
#1 2/3 of Americans polled favor the new EPA rules.
#2 Obama's use of executive orders has been comparatively lite. Here are the numbers:
Barack Obama 180
George W. Bush 291
William J. Clinton 364
George H. W. Bush 166 (in one term)
Ronald Reagan 381
Jimmy Carter 320
Do I need to go on?


Oh and BTW, your comment about the VA? It takes money to solve problems like that, and it's Congress that holds the purse strings. And of course they're not doing anything on that front either; http://www.rawstory.com/rs/2014/07/09/rachel-maddow-shreds-house-gops-shameless-lip-service-on-bill-helping-veterans/

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