The EPA’s New Climate Rule: A Complete Breakdown

On Monday, the EPA proposed a landmark rule to limit carbon emissions from existing power plants. The goal is a 30% nationwide reduction from 2005 levels by 2030. The EPA’s proposal marks the first time the federal government has taken any action to reduce CO2 emissions from power plants and it stands to become the hallmark of modern climate change advocacy.

Beyond climate benefits, limiting emissions is also essential to protect human health, especially in the fight against asthma. The plan is flexible and business-friendly, with an array of options for compliance that should spur innovation and jobs in the growing clean tech and clean energy industries. Here’s a complete breakdown of the new rule.

Background
Current Emissions
Implementation
Cost/Benefit Analysis
Public Health
US Leadership What You Can Do

Background
In the early 2000s, the EPA claimed it lacked the authority under the Clean Air Act to regulate carbon, either from power plants or tailpipes. Connecticut, Massachusetts, ten other states, several cities, and a dozen environmental organizations disagreed, and sued the EPA. In the 5-4 Mass v. EPAdecision in 2007, the Supreme Court ruled that carbon dioxide and other greenhouse gases fit the Clean Air Act’s definition for pollutants. This triggered Section 202 of the Clean Air Act that legally required the EPA to develop emission standards. Fast forward two years and we now have the first national plan for carbon emissions.

Current Emissions
The new EPA rule is aimed at reducing emissions from power plants, and with good reason. Our nation’s fleet of power plants is the largest contributor of carbon emissions, accounting for 38 percent. And for coal plants especially, age is becoming a factor. 60 percent of coal plants are older than 40, meaning they are not exactly the cleanest, most efficient models out there. Most natural gas and renewables facilities were built in the last 20 years and don’t face nearly the same issues when it comes to upgrading or retrofitting—and of course, they’re cleaner to begin with.

Implementation
This new rule will be more flexible than other so-called “command and control” environmental regulations we’ve seen in the past. Each state will have a specific emission reduction target; if all 50 targets are met, we’ll get to a national average of 30 percent. Using Clean Air Act section 111d, the EPA is giving states complete control in reducing their emissions. States will also have the ability to mix-and-match from a variety of best emission management practices.

For power plants, the EPA recommends plant upgrades such as emission scrubbers, or switching from coal to cleaner-burning natural gas. The EPA is also pushing energy efficiency and demand reduction. Highlighting energy efficiency is especially important. Most don’t realize it, but if done properly, improving efficiency can offer some huge returns on investment for businesses and home owners. Of course, bolstering our growing renewable energy sector is a key feature of the new plan.

The EPA is also encouraging regional, multi-state plans. We have RGGI here in the Northeast—the nation’s first regional cap-and-trade program. The Western Climate Initiative is another example. By teaming up, states will find more cost savings and flexibility in meeting targets.

Ultimately, the goal of this rule is to reduce emissions by spurring innovation in efficiency, developing cleaner ways of generating power, and creating a more diverse and reliable grid.

Cost/Benefit Analysis
The EPA included a cost and benefit analysis of full compliance with the rule. Acknowledging that improving our energy system will not come cheap, EPA estimates $5-$7 billion in annual costs to reach the national goal. However, the projected benefits far outweigh the costs. Net gains in public health and climate mitigation could be $40 billion annually in 2020 and $65 billion annually by 2030.

Of course, the public is most concerned about how much of the cost will be passed down to them. According to EPA research, the average American monthly electric bill would increase by up to 3.2 percent in 2020, but then go down by more than 8 percent by 2030 as efficiency and demand reduction measures become more widespread. To put that in perspective, the average monthly American electric bill in 2012 was $107, meaning 3.2 percent is roughly $3.42—a small (and temporary!) price to pay for healthier air and reduced climate impacts.

For emissions reductions to be truly cost effective, it is essential to take advantage of every possible practice. Increasing energy efficiency and reducing demand should be major priorities going forward.

And for jobs, the EPA predicted that by 2020, we’d see 27,000 new jobs in power production annually and 78,000 annual new jobs “outside the fence” but cautioned its analysis “should not be interpreted as a net national employment impact.” Overall, though, jobs in clean energy fields tend to be safer for workers than jobs in the fossil fuel industry, and many of them can be done closer to home.

Public Health
The impacts of climate change and carbon pollution on public health are well documented. From asthma to insect-borne diseases, to hurricanes and heat waves, there are plenty of concerns in a wetter, wilder climate. And carbon dioxide isn’t the only pollutant that puts our health at risk. This rule has the potential to reduce a host of toxins polluting our air.

A joint Harvard-Syracuse health study indicated this rule would “confer substantial local and regional benefits by reducing power plant emissions of major co-pollutants by up to 27% for sulfur dioxide and mercury, and up to 22% for nitrogen oxides.” The EPA projected these public health improvements will improve quality of life for millions of Americans, and could immediately save as much as $25 billion in 2020 and as much as $40 billion annually in 2030.

US Leadership
Finally, this rule represents an American commitment to finding solutions for climate change and the future of energy. This bold and broad plan comes a year and a half before the UN’s next major climate change conference in Paris in December, 2015. The conference is seen by many scientists and political leaders as our best opportunity to negotiate and achieve a global accord to limit climate change.

The UN’s chief climate change official, Christina Figueres, has praised the plan and hoped it would spur international action.  The plan sends “a good signal to nations everywhere that one of the world’s biggest emitters is taking the future of the planet and its people seriously,” she wrote. “I fully expect action by the United States to spur others in taking concrete action.”

And it appears this international response has already begun. Just one day after the EPA’s release, China—the world’s #1 polluter—issued its own climate agenda. Back in March, the Chinese Premier declared “war on pollution” in response to growing concern over suffocating air pollution that bordered on hazardous. Now it looks like they’ll take it a step further by setting an “absolute CO2 cap by 2016.” Hoping to stave off climate change and improve the health of its people, a China serious about carbon pollution is a good thing. And now, with US showing signs of leadership, a 2015 global understanding is may be more feasible.

What You Can Do
If the EPA’s bold and broad plan proves successful, it could lead to even more action on local, state, and federal levels. But no one government has the magic silver bullet to solving—or slowing—climate change. Ultimately, it comes down to choices. We can make individual changes that add up a better and healthier environment.

“Think Globally, Act Locally” has a special resonance applied to climate change. As consumers, our choice of goods and services hold an enormous amount of power, so buy for quality, longevity, efficiency, and sustainability. Think carefully about your transportation options. Start the summer with low-cost home energy audit. Check out the Healthy City / Healthy Climate Challenge for more ideas. Government leadership on issues like climate change is crucial, but policies can’t do the whole job. We must take charge in our lives and our decisions to strengthen our communities and change the world.

In a later blog, we’ll cover what Connecticut has already accomplished in reducing emissions and what more we can do going forward.

UPDATE: Connecticut & Carbon: What the EPA’s New Rule Means for our State

Posted by Tyler Archer, Outreach & Development Associate