“Strategic tension”: EPA pushes forward on rules for power plants

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As lawmakers wrangle over new green electricity incentives, the EPA is quietly working on the next generation of Clean Air Act electrical regulations.

Washington’s main event: the fate of the $ 3.5 trillion reconciliation package, which includes an ambitious regulatory and commercial hybrid to reward utilities for green energy investments and penalize them for hanging on to fossil fuels.

The giant would expand fiscal incentives for renewable energy and introduce pollution fees and a host of other actions and policies that Democrats say will deliver on President Biden’s promise to cut greenhouse gas emissions in half. United States by 2030.

But away from the spotlight, lawyers and technical specialists at the EPA are working on new rules on carbon dioxide in the energy sector. The Office of Air Quality Planning and Standards is the leader of the rule that generates work across the agency, an EPA spokesperson said.

“[W]We work across EPA offices to analyze the science and determine which regulatory approaches are best suited to address the full range of climate, health and environmental impacts of the power sector, and how they fit together. The spokesperson told E&E News.

“We are deliberating on this process to ensure that we arrive at an approach that is not only effective in protecting human health and the environment, but that is also cost-effective, legally resilient and sensitive to the unique realities of this. “

The flagship climate policy of the reconciliation package – the Clean Electricity Performance Program or CEPP – would provide $ 150 billion to power companies that meet annual targets for scaling up green electricity. The policy, which would also penalize utilities that do not progress to lower carbon sources, would be a powerful new arrow in the Biden administration’s regulatory quiver for reducing carbon emissions in the industry. ‘electricity.

But White House climate adviser Gina McCarthy has repeatedly said that the EPA’s legislative action and regulation is not a proposition.

This week, she told a virtual forum hosted by a group of investors that CEPP will not “take or remove the power we have to move forward with regulation.”

“And rest assured that we are moving forward with the regulations,” she said.

This message contrasts sharply with the course of the Obama administration 12 years ago, when then EPA administrator Lisa Jackson and congressional climate champions regularly warned that inaction on climate change would subject the industry to more stringent regulations.

But the cap-and-trade bill that the House passed in 2009 – and the Senate did not pass in 2010 – was more comprehensive policy than CEPP or even the broader reconciliation plan. It would have covered CO2 from most stationary sources and could have claimed to be a national climate law.

The Clean Air Act regulations, meanwhile, were still in their infancy in the early years of the Obama presidency. The EPA finalized its finding that greenhouse gas emissions endanger public health in December 2009 – six months after the bill by officials at the time. Henry Waxman (D-Calif.) And Ed Markey (D-Mass.) Cleared the House. It formed the basis for all climate rules the agency would write under the Air Act during the Obama and Trump administrations for categories such as oil and gas methane and CO2 from power plants.

“I think the Clean Air Act was then seen as something that could or could not be continued, or could be traded, as was ultimately done with the Waxman-Markey bill,” said Sam Ricketts, co-founder and co-director. of Evergreen Action. “This is no longer how the community and lawmakers see the Clean Air Act. ”

The value of the law has since been demonstrated, he said, as one way in particular to protect communities near power plants and other pollution generators who might not benefit from a market-based policy allowing for companies to choose where to reduce emissions.

Jeff Holmstead, who was the EPA’s aviation chief under President George W. Bush, said he would be “surprised if the EPA tries to regulate” carbon from power plants if CEPP becomes law in this country. its current form. McCarthy, who chaired rule-making for Obama’s EPA Clean Power Plan as an administrator, knows the Supreme Court presents an insurmountable obstacle to the kind of rule they would like to enact, he said.

“It is certainly true that Biden’s EPA will impose additional regulations on the electricity sector even if CEPP is passed, but they will regulate conventional pollutants – not CO2,” Holmstead said. “If they commit to regulating CO2, whatever happens in Congress, why haven’t they done anything yet? “

‘Clean slate’?

It is unlikely that Congress could approve language preempting EPA regulation as part of budget reconciliation, which allows spending and revenue raising policies to be passed by the Senate by majority vote simple, but does not extend to political provisions.

An incentive policy – CEPP or tax credits – and a Clean Air Act rule perform different functions.

While legislative programs offer incentives to develop renewable energy and clean energy sources, “they don’t touch pollution,” said Dallas Burtraw, senior researcher at Resources for the Future.

“Emissions of conventional air pollutants, encouraging the transition from higher carbon content to lower carbon content – CEPP has no direct influence on this,” he said.

The rules the EPA is developing and may propose early next year would directly suppress CO2, not as the likely byproduct of growing utility demand for renewables and other sources of energy. clean energy.

But it’s unclear what kind of rule EPA will write – especially for the existing electric fleet responsible for the lion’s share of the electricity sector’s emissions.

EPA administrator Michael Regan said during his confirmation hearing that the agency has a “clean slate” to write new rules for the electricity sector and will learn from “examples of success and failure that we have seen in previous trials “.

The Obama-era Clean Power Plan, which took a new systems approach to reducing emissions, was suspended by the Supreme Court before President Trump took office. And the day before Biden’s inauguration, the United States Court of Appeals for the District of Columbia Circuit overturned the EPA Trump replacement rule, saying it needed too narrow a view of the agency authority. Republican-led states and coal companies have asked the Supreme Court to overturn the ruling.

The uneven track record of Clean Air Act rules for power plant CO2 shows why it’s important for the EPA to complete its rules early in a president’s term, when the administration has time to defend them in court .

That would make the EPA reluctant to delay developing a rule to give Congress time to act, environmental policy experts say.

“I guess there must be strategic tension in the administration,” said Barry Rabe, professor of environmental policy at the University of Michigan.

“On the one hand, they want to act as quickly as possible on all fronts in order to maximize the probability, certainly if it is through administrative actions that they get things done,” he said. On the other hand, “I guess the EPA would hesitate to act prematurely because you would want any administrative action to be complementary to what emerged from Congress.”

EPA would not have a direct role in implementing CEPP or revolving tax credits. The Energy and Treasury Departments would be responsible for it. And if CEPP becomes law, the DOE will have to undertake rule making that would take a year.

Hourly

The EPA has not said when it could propose and finalize its power plant rules, but observers expect to see proposals early next year with a final rule a year later.

In other words, the rule would likely be in place before the CEPP regulations.

Carrie Jenks, executive director of the environmental and energy law program at Harvard Law School, said she did not think there was a conflict between the reconciliation bill and the process of development of EPA rules.

“I don’t expect anything to be stuck at this point in the regulatory process or that the EPA will have to go back to significantly change its analysis of the regulatory framework due to congressional action. “she said.

Jenks said the incentive program would change the cost dynamics for clean energy development, which could impact the EPA’s modeling and analysis for its rules.

“In developing the regulations, you would want the EPA to look generally at where the power sector is located and where is it going,” she said. “And any policies that affect that trajectory would likely be considered, whether it’s new tax incentives, a new CEPP, or existing tax incentives.”

Jenks’ predecessor at Harvard, Joe Goffman, now heads the EPA’s Office of Air and Radiation. Before joining Biden’s transition team last fall, he proposed that the EPA draft an aggressive rule for existing power plants that rely on emission reductions that can be made “inside the fence.” »Of a power plant.

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