At first glance, the proposed EPA regulation seems straight forward: 30% reduction in carbon intensity of the electricity industry by 2030 compared to 2005 levels. However, the compliance targets vary widely from state to state.
"The intensity-reduction targets range from 72% in Washington State to 11% in North Dakota The reductions would take place between EPA’s base measurement year of 2012 and the proposed full-compliance deadline of 2030. Neither the timeline of these state goals (2012-2030, vs. 2005-2030) nor the metric being used (measure of CO2 intensity usage vs. total CO2 volume reduction) match." wrote Bloomberg New Energy Finance in a white paper which explains the complexities.
There are also the legal issues. The Clean Power Plan regulates a network of electricity matters in states when up until now, the EPA only regulated individual emission points/individual plants. It is likely that states and electricity generating companies will challenge the ability of the EPA to enforce regulations this way. States will also challenge the varied emissions targets, accusing the EPA of unequal treatment.
Yes, the EPA is treating each state separately, but only after taking into account the measures and abilities of each state. Washington state's reduction target of 72% is partly based on the expectation that TransAlta’s 1,460MW Centralia, WA, coal plant will be decommissioned between 2020 and 2030, an EPA official said during a background briefing for reporters and analysts. Other states have less aggressive targets because they may have limited access to new, cleaner natural gas plants.
The proposed rule considers four (4) building blocks in reducing carbon intensity (lbs CO2/MWh).
30-35 states are likely to start on their implementation plan this summer for compliance as planned. That leaves 15-20 states to challenge the regulation in courts. Legal issues related to the Clean Power Plain will be resolved by 2018, a mere two years before aggressive targets need to be met.
Since states are allowed to partner with other states to reach targets, analysts expect the regulation to result in a default national cost of carbon. California and RGGI, the East Coast's cap and trade program, are likely to be models for other states to follow. California's GHG and CO2 programs will need to be restructured so that electricity generation can be measured independently of other carbon reduction measures across the state. RGGI will require fewer modifications.
All views expressed here are for the purpose of meaningful dialogue and are solely my opinion.
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