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Counterpoint: Affordable Clean Energy Rule — Improving the State of Play


Counterpoint:  Affordable Clean Energy Rule — Improving the State of Play

EPA Headquarters building at the Federal Triangle in Washington DC.

Editor’s Note: For an alternative viewpoint, please see: Point: Trump’s Dirty Power Plan Risks Lives to Bail Out the Coal Industry

The Environmental Protection Agency’s proposed regulation to replace the prior administration’s Clean Power Plan with the Affordable Clean Energy rule is another step in the right direction for federal regulatory reform. A brief review of the CPP frames the issues and puts the new EPA proposal in context.

The CPP was a sweeping effort to transform how electricity is produced and distributed in our nation. It was unprecedented in scope and reached well beyond EPA’s authority. With this rule, EPA as environmental regulator would have inappropriately taken on the role of energy regulator. CPP compliance would have come at a severely high cost to the economy and burdened consumers with double-digit electricity price hikes. According to a report by Energy Ventures Analysis, Americans would pay an additional $214 billion for electricity by 2030.

The CPP departed entirely from EPA’s prior regulations for emissions at individual power generating units under the Clean Air Act. It would have applied instead to the entire electric grid, thereby casting aside decades of precedent in implementing and enforcing power sector emissions standards.

In policy terms, the CPP was a nationwide strategy to force the power sector away from coal, treat natural gas as a transition fuel, and rely too heavily on energy efficiency and renewable energy to provide on-demand 24/7/365 electricity to American homes and businesses.

More than half the states and a host of others filed legal challenges to the CPP. The Supreme Court demonstrated its own serious concerns about the rule in early 2016 by taking the extraordinary and unprecedented step of suspending it before the lower court had even made a decision in the case.

In the context of the CPP’s problematic cost, regulatory and legal issues, the Affordable Clean Energy proposal is a major improvement.

The ACE rule returns EPA to a reasoned regulatory approach aligned with its historical interpretation and application of the Clean Air Act. This includes an “inside the fence line” basis for determining the Best System of Emissions Reduction (BSER) for greenhouse gases. The BSER will apply to individual electric generating units, rather than the entire electric grid as the CPP’s

BSER was inappropriately designed to do.

The ACE rule focuses on reducing greenhouse gas emissions through power plant efficiency improvements. Importantly, it addresses the New Source Review preconstruction permitting program that has been a barrier to improvement projects at power plants. The regulatory uncertainty associated with the administration of the NSR program has caused delays and added cost to the process. This has increased risk and inhibited investment in plant modernization, including for improving efficiency and emissions. The ACE rule will provide an avenue for investment without automatically triggering expensive and burdensome NSR provisions.

The ACE rule recognizes not only the role of states but their unique circumstances. It will rebalance federal-state regulatory relationships and give states the responsibility to establish performance standards and plans.

As for costs, the ACE rule will save $300 billion to $500 billion in annual compliance costs, according to the EPA. The agency has also estimated replacing the CPP with ACE will result in $3.4 billion in net benefits.

What about carbon-dioxide emissions? EPA estimates the ACE rule may reduce U.S. power sector carbon-dioxide emissions by 34 percent from 2005 when fully implemented. EPA has noted that the United States leads the world in lowering carbon-dioxide emissions, having reduced energy-related carbon emissions by 14 percent from 2005 to 2017 while such emissions in the rest of the world grew by 21 percent.

Coal is key to maintaining a competitive fuels marketplace with a diverse set of generation resources. It helps keep electricity prices stable and affordable for U.S. consumers, supports grid reliability and resilience, and provides energy security for our nation. The ACE rule is a step toward retaining coal plants, whereas the CPP would have shuttered them and squandered many of the emissions reductions investments — totaling $120 billion — already made. Those investments have reduced sulfur dioxide, nitrogen oxides and particulate matter emissions by 93 percent per kWh through 2017.

The United States has more coal reserves than any other country. Beyond the United States, the amount of coal resources globally is greater than oil and natural gas combined. BP’s Statistical Review of World Energy 2018 reports that coal’s share of the global power sector at 38 percent has not changed in two decades. That is because of coal’s availability, affordability and accessibility.

Coal is an important global energy source, and power plants choosing it continue to be built. Any future focus on emissions reductions including for carbon dioxide must extend beyond the ACE rule for the United States and use available coal technology solutions for worldwide application.

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