Monday, February 18, 2019

EPA to Announce Clean Power Plan Repeal

By Rich Heidorn Jr.

EPA will repeal the Clean Power Plan, saying the Obama administration’s call for switching to more natural gas and renewable generation exceeded the agency’s authority.

According to a draft rule leaked last week, EPA will contend that Section 111(d) of the Clean Air Act requires emission regulations be based on reductions that can be applied at a single source.

“Instead, the CPP encompassed measures that would generally require power generators to change their energy portfolios through generation-shifting (rather than better equipping or operating their existing plants), including through the creation or subsidization of significant amounts of generation from power sources entirely outside the regulated source categories, such as solar and wind energy,” said the 43-page proposal, which numerous news sources obtained last week.

That is the same interpretation of Section 111(d) that EPA Administrator Scott Pruitt espoused as Oklahoma attorney general, when his state and more than two dozen others challenged the CPP in court. In August, after President Trump issued an executive order directing EPA to review the CPP, the D.C. Circuit Court of Appeals agreed to hold the challenges in abeyance. (See Trump Order Begins Perilous Attempt to Undo Clean Power Plan.)

EPA REV Clean Power Plan Natural Gas

President Trump signing his executive order seeking to undo the Clean Power Plan as coal miners, Interior Secretary Ryan Zinke, EPA Administrator Scott Pruitt and Vice President Mike Pence watch.

Pruitt told a gathering in Hazard, Ky., on Oct. 9 that the repeal will be formally announced on Tuesday. “Here’s the president’s message: The war on coal is over,” Pruitt said.

“Regulatory power should not be used by any regulatory body to pick winners and losers,” Reuters quoted Pruitt. “The past administration was unapologetic. They were using every bit of power, every bit of authority to use the EPA to pick winners and losers on how we generate electricity in this country. And that’s wrong.”

An EPA spokeswoman last week declined to comment on the authenticity of the leaked draft but issued a statement saying, “Any replacement rule that the Trump administration proposes will be done carefully and properly within the confines of the law.”

Building Blocks

EPA said it will seek to repeal the rule because two of the three “building blocks” in the CPP — switching from coal to natural gas and to renewables from fossil fuel plants — exceed the agency’s authority. The third building block, improving the heat rate of coal-fired plants, “could not stand on its own,” EPA said.

“Any potential future rule that regulates [greenhouse gas] emissions from existing EGUs [electricity utility generating units] under CAA Section 111(d) must begin with a fundamental re-evaluation of appropriate and authorized control measures and recalculation of performance standards,” it said.

Going forward, EPA said it will interpret the CAA’s “best system of emission reduction” as referring to measures “that can be applied to or at an individual stationary source. That is, such measures must be based on a physical or operational change to a building, structure, facility or installation at that source, rather than measures that the source’s owner or operator can implement on behalf of the source at another location.”

Repeal and what?

Now that Pruitt has decided on his legal strategy for undoing the CPP, he must develop an alternative response to the Supreme Court’s 2007 ruling that carbon dioxide is a pollutant that EPA must regulate. The draft indicated EPA will not seek to reverse the agency’s 2009 finding that GHGs endanger public health. “The substance of the 2009 endangerment finding is not at issue in this proposed rulemaking, and we are not soliciting comment on the EPA’s assessment of the impacts of greenhouse gases with this proposal,” the draft said.

EPA REV Clean Power Plan Natural Gas

Pruitt (R) speaks as Trump listens on June 1, 2017 | © RTO Insider

The agency said it will solicit comments in an Advanced Notice of Proposed Rulemaking “in the near future” on systems of emission reduction applicable at individual sources. Developing a replacement regulation could take years.

The new interpretation will “substantially [diminish] the potential economic and political consequences of any future regulation of CO2 emissions from existing fossil fuel-fired EGUs,” the agency said.

EPA’s new regulatory impact analysis projects the repeal will save $3.7 billion in compliance costs in 2020, rising to $33.3 billion in 2030, while forgoing pollutant benefits of $1.6 billion to $21.5 billion over the same period. The analysis, which is based on a 3% discount rate, includes only the benefits of reducing CO2, unlike the Obama administration’s estimate, which also included the co-benefits of reduced SO2 and NOX emission reductions.

The Obama EPA said the CPP would produce net benefits of $26 billion to $45 billion in 2030.

The CPP would have required a 32% cut in emissions below 2005 levels by 2030. EPA previously estimated that “inside-the-fence-line” plant modifications, such as equipment upgrades and adoption of best practices, would improve average coal plant heat rates by 4%.

‘Wholesale Retreat’

Former EPA Administrator Gina McCarthy, who shepherded the CPP during the Obama administration, blasted her successor’s proposal.

“A proposal to repeal the Clean Power Plan without any timeline or even commitment to propose a rule to reduce carbon pollution isn’t a step forward; it’s a wholesale retreat from EPA’s legal, scientific and moral obligation to address the threats of climate change,” she said in a statement.

McCarthy also made an apparent reference to Energy Secretary Rick Perry’s Sept. 28 directive to FERC urging it to ensure that nuclear and coal generation in deregulated states with 90-days on-site fuel supply receive “full recovery” of their costs. (See related story, ICF Analysis: DOE NOPR Cost Could near $4B/Year.)

EPA Clean Power Plan Natural Gas

Coal plant | NOAA

McCarthy said the administration “is using contrived problems with our energy system to take money out of consumers’ pockets and giving it to fossil fuel companies, so they can force a shift away from clean energy and back to dirty fossil fuel. That not ‘back to basics,’ that’s just plain backwards.”

Clean Energy ‘Accelerating’

Some environmentalists have said a plant-specific approach could make a significant dent if it went beyond efficiency improvements to include switching to natural gas or installing carbon capture — though it would be more expensive.

Despite the repeal, “the transition to a clean energy future is accelerating,” insisted Charlie Jiang, a climate and energy associate for the Environmental Defense Fund, wrote in a blog post.

He cited carbon-reduction pledges announced by states and cities in response to Trump’s decision to withdraw from the Paris Agreement, and utilities’ continued move to renewables from coal. Wind and solar comprised more than 60% of utility-scale generating capacity added in 2016; in March, wind and solar totaled more than 10% of U.S. electricity generation for the first time ever.

As of the end of 2016, CO2 emissions from U.S. generators was already 25% below 2005 levels, “meaning the power sector is already almost 80% of the way to achieving the Clean Power Plan’s 2030 targets,” Jiang said.

Industry also is making the switch. At a House Energy and Commerce Committee hearing last week, a Walmart executive said the company seeks to obtain half of its energy from renewable sources 2025 — up from 25% in 2015. “It is a win-win,” said Mark Vanderhelm, Walmart’s vice president of energy. “Green power is more cost effective than brown power.” (See Consumer Advocates Slam Perry NOPR, RTOs, FERC.)

EPA REV Clean Power Plan Natural Gas

Left to right: Zinke, Pence, Trump, Perry and Pruitt

In addition, the Trump administration’s efforts to reverse Obama’s environmental rules have run into opposition in the courts. Last week, a federal magistrate in California vacated the Interior Department’s plan to delay implementation of rules curbing flaring of methane — the third time in three months that environmental rollbacks have been rejected by courts, according to a report in The New York Times. The administration also has withdrawn three rule changes in the face of legal challenges, the Times reported.