COMMENTARY ON CLEAN POWER PLAN LITIGATION
AEE believes the nature of the electric power system and trends in the energy markets provide a strong basis for the EPA Clean Air Act rule
[Washington, D.C., September 23, 2016] — The case against EPA’s Clean Power Plan will be heard by the full U.S. Court of Appeals for the District of Columbia next week, on Tues., Sept. 27. One of the issues that is likely to be raised in oral arguments, and the eventual decision, is EPA’s consideration of actions that could be taken in the electric power system “beyond the fence line” of carbon-emitting power plants, in setting the carbon emission targets. Such actions include, for example, investing in or utilizing wind and solar to reduce carbon emissions.
Plaintiffs will argue that it is improper to include beyond-the-fence-line elements in EPA’s definition of the Best System of Emission Reduction. They will further argue that it is costly and burdensome to expect states, let alone power plants subject to regulation under the Clean Air Act, to utilize beyond-the-fence-line solutions for compliance, rather than only measures that can be taken at the power plants themselves.
AEE – an intervenor in the case – sees sound basis for EPA’s regulation in the workings of the electric power system itself and in current trends in the market for electric power.
Below are comments addressing the points raised by plaintiffs from Malcolm Woolf, Senior Vice President for Policy and Government Affairs at Advanced Energy Economy, a national business group:
On beyond-the-fence-line elements of EPA’s Best System of Emission Reduction (BSER);
“EPA is right to consider electric power as a system, rather than as simply a collection of independent individual power plants. The Agency has correctly recognized that power plants operate within a highly integrated system of generation, transmission, and distribution facilities, so actions taken throughout that system impact the greenhouse gas emissions from existing power plants.
“In some cases, it may be appropriate to reduce emissions at particular plants by making them more efficient. In other cases, however, more cost-effective solutions for reducing greenhouse gas emissions within the integrated electricity system are often available beyond the emitting plants themselves. And utilities and other owners of emitting generators have years of experience investing in wind, solar, and other solutions. EPA is right to consider beyond-the-fence-line measures in its ‘best system of emission reduction.”
On whether it is reasonable to expect operators of individual power plants under jurisdiction of the Clean Power Plan to employ measures outside of those power plants for compliance:
“There is nothing exotic about power plant owners going into the marketplace to obtain the technologies they need to meet standards for emissions set by EPA. In fact, this is very much consistent with prior EPA rules, and the very nature of the industry. All systems of emission reduction rely on transactions with third party entities, including pollution control devices that are applied directly to power plants. Typically, power plant operators do not construct or install those technologies themselves, but rather buy them from providers of those technologies.
“In the case of the Clean Power Plan, owners and operators of power plants already regularly procure products and services that can reduce carbon emissions and which would be eligible for compliance. Many utilities and owners of power plants already own or contract for renewable energy, and all are certainly capable of doing so. Most utilities also operate or contract with third-party providers for programs that reduce demand for electricity. They could easily ramp up those energy efficiency programs for compliance with the Clean Power Plan. Non-utility power plant operators could contribute to those programs, or pay for energy efficiency through a system of credits similar to those used for compliance with state renewable energy standards. And most power plant owners have years of experience using tradable compliance instruments like renewable energy credits (RECs) or nitrogen oxide (NOx) emission credits, so using the credits envisioned under the Clean Power Plan to expand compliance flexibility is familiar territory. In short, nothing in the Clean Power Plan would require utilities or other power plant operators to do anything they don’t know how to do.”
On claims that what is required under the Clean Power Plan is difficult, onerous, and costly:
“Simply put, compliance with the Clean Power Plan is not difficult. While requirements vary from state to state, compliance requires nothing new from what we already see happening in the market today.
“Coal-fired power is being displaced by cheaper, cleaner burning natural gas. Utilities, previously carrying out state mandates, are now investing in wind and solar power as the cheapest new energy source in many places, while also providing a hedge against the price volatility of fossil fuels. Fortune 500 companies such as Apple, Amazon, Facebook, Microsoft, and Salesforce are purchasing renewable power directly to meet their own corporate sustainability commitments. Rooftop solar is a hit with businesses and residential consumers in states from New Jersey to California. Energy efficiency is half the cost of additional power generation for meeting our energy needs. Sophisticated energy management systems for commercial buildings and the home are making saving energy easy. Energy storage, which is starting to be deployed at customer sites and on the power grid, promises eventually to free us from costly conventional peaking power plants that are needed only to meet peak demand for a few hours a year.
“This is the direction the market is going. As has been well documented in public analysis, six years prior to the compliance period states like North Carolina, Oklahoma and South Dakota have already met their early Clean Power Plan targets and others like Arkansas have achieved their final 2030 targets. The Clean Power Plan will only accelerate changes in the electric power system already under way, and provide market certainty for the growth of advanced energy products and services. In the end, the Clean Power Plan’s goals will be neither costly nor difficult to achieve.”
About Advanced Energy Economy
Advanced Energy Economy (AEE) is a national association of businesses making the energy we use secure, clean, and affordable. AEE’s mission is to transform public policy to enable rapid growth of advanced energy businesses. AEE works with member companies located and doing business in California to help the state reach its energy and climate goals. Visit AEE online at www.aee.net
- Map Graphic: Status of State CPP planning and litigation response for all 50 states—illustrated state maps are here.
- Integrating Renewable Energy into the Electricity Grid, The Brattle Group (with case studies from ERCOT and Xcel Energy Colorado) report is here.
- Competitiveness of Renewable Energy and Energy Efficiency in U.S. Markets report here.
- State CPP compliance modeling shows for various states analyzed, most can comply and reduce electric costs for customers by incorporating energy efficiency, renewables and natural gas. See analysis and access model tools for Arkansas, Illinois, Florida, Michigan, Ohio, Pennsylvania, and Virginia.
- This is Advanced Energy,directory of 52 technologies, is here.
- NERC’s Clean Power Plan “Phase I” Reliability Assessment: A Critique (of the April 21, 2016 report) is here.
- Markets Drive Innovation: Why history shows that Clean Power Plan will stimulate a robust industry response report is here.