The Environmental Protection Agency is expected to finalize the signature climate change policy of President Obama's administration next week, and sources familiar with the plan said it's undergone changes from a draft version released last summer.
States, environmental groups, the energy industry and others filed more than 4 million comments on the proposed Clean Power Plan, which would set carbon emissions limits on power plants for the first time and aims to cut electricity emissions nationwide 30 percent below 2005 levels by 2030. Concerns were numerous and widespread, and the EPA says it has listened to all of them.
A source familiar with the final rule says the EPA will push back the start date two years, to 2022, for when states must begin phasing in emissions cuts. States that begin adding clean energy and energy efficiency in 2020 will get bonuses. Those tweaks seek to address worries from states that the emissions reductions come on too fast, potentially forcing massive retirements of coal-fired power plants without enough new power to replace them.
The wish list is long for other changes from states that both oppose and support the EPA effort. Here are a few:
1. Will the state targets change?
Under the proposed Clean Power Plan, each state was given a target for reducing electricity emissions by 2030. But changes to the formula could alter how much is expected of each state. Coal-heavy states, for example, have complained that while they have some of the smallest emissions cuts to make, the investments required to shift their power systems are expensive and time-consuming. Whether the EPA gives deference to such claims will be key.
2. Do the efficiency goals stay the same?
The electric power industry has said that the EPA's assumption that power plants could improve their efficiency by 6 percent is too high. The agency's calculation that states could improve customer-side energy efficiency 1.5 percent annually also has been questioned. Does the EPA hold the line, or does it make adjustments?
3. EPA's federal plan
Several state governors have hinted they won't comply with the regulation by refusing to submit a plan to reconfigure their power systems. In that case, the EPA can impose a plan of its own, the structure of which it is expected to release in tandem with the final rule. Experts have advised states against going this route, as the federal plan won't be tailored to specific states and could therefore impose higher costs.
But some conservatives, led by Senate Majority Leader Mitch McConnell, R-Ky., and industry officials contend the EPA only has legal authority to craft a plan that calls for efficiency improvements at power plants, so they say states should take the risk.
4. Will states get credit for early action?
Several states that view the rule positively had concerns that the draft version discourages shifting toward renewable energy and other low-emissions technology before 2020, when states had to begin meeting interim targets in the proposed rule. That's because changes made between now and that interim target date wouldn't be counted toward the individual state emissions goals.
States contended that meant it makes more sense to stall plans to shift their power systems to lower-carbon sources. That, in turn, would concentrate — and possibly make bigger — potential electricity rate increases within a smaller time frame as utilities rush to make investments to comply with the rule.
5. How will nuclear power be credited?
Power industry officials say the EPA fumbled the ball when it designed the nuclear power portion of the draft rule. For one, it assumed that nuclear power plants under construction in Georgia, South Carolina and Tennessee would get built. But given the massive investments and cost overruns those facilities already are enduring, they are not definite. If any of those power plants don't get built, its home state would find it nearly impossible to meet their individual emissions targets.
Secondly, the EPA devised a system that has been mocked by both nuclear advocates and foes for keeping afloat power plants at risk of shutting down due to economics. EPA tried to incentivize states to keep those power plants running, but industry officials and state regulators say the way the agency did it would actually compel closures.
6. Will renewable power expectations increase?
The EPA included a separate scenario for renewable power in its draft rule that industry sources on both sides of the rule say the agency is leaning toward adopting. Under this scenario, the amount of renewable generation the agency will assume states can reach will be based on what is "technically achievable" in a certain region, a play to the trans-border flow of electricity that has developed around renewable energy. It's a move that could increase how much renewable power the EPA believes individual states can add to their electricity mix. That would replace the draft model, which focuses on what's achievable within each state.