On August 21, 2018, the EPA followed its proposal to repeal the Obama administration’s Clean Power Plan (CPP) (October 18, 2017, Federal Register (FR)) with a proposed replacement the Agency is calling the Affordable Clean Energy (ACE) rule (proposal and supporting materials are here).  

The objective of the two documents is the same—the reduction of greenhouse gas (GHG) emissions from existing coal-fired power plants. Also, when compared to 2005, the emission reductions projected for 2030 under each action are almost identical—32 percent for the CPP and 33–34 percent for the proposed ACE rule. The major economic difference, the EPA now says, is that the proposed rule would achieve these reductions with a $400 million cost savings when compared to the CPP.

Supreme Court stayed the CPP

The new proposal is the latest is a series of major actions that began in 2007 when the U.S. Supreme Court found that Congress had drafted the Clean Air Act (CAA) broadly enough to allow the EPA to regulate GHGs from new motor vehicles. The Agency followed this ruling with an endangerment finding, which formed the platform on which the EPA proposed and issued its CPP. Soon after, 27 states and many industry stakeholders filed suit to block the CPP. In 2016, the Supreme Court stayed the CPP, immediately halting implementation. In March 2017, President Donald Trump signed an Executive Order directing the Agency to a review the CPP and, if appropriate, initiate proceedings to suspend, revise, or rescind the rule.

BSER

According to the EPA, the proposed ACE rule has four elements. The first element, and the one that differs most dramatically from the steps in the CPP, concerns the best system of emission reduction (BSER), a term developed under CAA Section 111(d). That section established a procedure whereby states submit plans to the EPA establishing standards of performance for existing sources, which must reflect the application of the BSER the Agency has determined is adequately demonstrated for category of air pollutants.

Under the CPP, BSER was defined as three building blocks—reducing the carbon intensity of electricity generation by improving the heat rate of existing coal-fired power plants; substituting increased electricity generation from lower-emitting existing natural gas plants for reduced generation from higher-emitting coal-fired power plants; and substituting increased electricity generation from new zero-emitting renewable energy sources (like wind and solar) for reduced generation from existing coal-fired power plants. States would have had the flexibility to apply these blocks in any fashion they wished, provided they met state-specific GHG emission reduction goals.

The proposed ACE rule would eliminate the second and the third building blocks and define BSER as heat-rate efficiency improvements at individual plants. In the proposal, the EPA says that its primary role is to write emissions guidelines states use to develop and submit to the Agency plans to establish standards of performance for existing plants based on the BSER. The Agency explains its reasoning:

“In the proposed repeal, EPA asserted that the BSER in the CPP exceeded EPA’s authority because it established the BSER using measures that applied to the power sector as [a] whole, rather than measures that apply at and to, and can be carried out at the level of, individual facilities. This proposed action aligns with EPA’s statutory authority and obligation because, as EPA has done in the dozens of [New Source Performance Standards] issued to date, the BSER is to be determined by evaluating technologies or systems of emission reduction that are applicable to, at, and on the premises of the facility for an affected source.”

Also, by eliminating the second and third building blocks from BSER, the EPA would effectively resolve concerns that the CPP’s focus on shifting to cleaner and renewable sources of electricity effectively regulated “the entire U.S. energy sector,” a power that no federal law provides to the EPA. The proposed ACE rule “lets states set their own standards that meet federal guidelines consistent with current law,” the EPA now says.

Other provisions

In addition to its proposed new definition of BSER, three additional major provisions in the proposal would:

• Provide states with a list of candidate technologies that can be used to establish standards of performance for incorporation into state plans.
• Update the New Source Review (NSR) permitting program to remove obstacles to implementing efficiency improvements at existing power plants.
• Align regulations under Section 111(d) to give states more time and flexibility to develop their state plans when compared with the CPP.

Upon publication in the FR, the EPA will begin accepting comments on the proposal for 60 days.