The US Environmental Protection Agency (EPA) issued three rules on June 19 that may give utilities new reasons to consider investing in certain plant modifications and reassessing the projected lifespans of their facilities. The rules also affect each state’s resource planning process and may contribute to changes in a state’s projected energy resource mixes. In response to the rules, utilities should be prepared for possible changes to state policies defining what constitutes “clean” energy and supporting reliability. The rules are intended to go into effect 30 days from their issuance. However, the implementation timeline for the rules is not certain because several states and organizations have stated they intend to challenge the rules in the federal courts.
The Environmental Protection Agency (EPA) proposed the Affordable Clean Energy (ACE) rule on August 21. The proposed rule would replace the Obama administration’s Clean Power Plan, establishing alternative guidelines for states to develop plans to reduce carbon dioxide emissions from existing fossil fuel-fired electric power plants. The ACE rule departs from the Clean Power Plan, among other ways, by removing incentives for natural gas and renewable energy use, limiting averaging and trading in state plans, giving states more flexibility in creating plans, slowing down state plan development and submission schedules, and proposing a new industry friendly test for the New Source Review permitting process. Overall, EPA has projected that the ACE rule will result in similar carbon dioxide emissions reductions in comparison to the Clean Power Plan.
Putting aside the climate change politics swirling around US President Donald Trump’s recent executive order on “Promoting Energy Independence and Economic Growth,” what does the order mean for the nation’s electric generation portfolio? Can the gradual decline in the role of coal-fired generation be reversed?
The executive order, released on March 28, 2017, calls for increased domestic energy production from coal, natural gas, nuclear material, and other domestic sources, explicitly balancing the need to “promote clean and safe development” of energy resources with “avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation.” In addition to revoking various Obama-era executive orders on climate change and carbon emissions and rescinding various reports issued by federal agencies on these topics, the executive order also directs the Environmental Protection Agency (EPA) to review the Clean Power Plan in the context of the domestic production policy adopted in the executive order and to, “as soon as practicable, suspend, revise, or rescind” the rule.
The recent US presidential election results will bring new faces and policies to the energy world next year when the 115th Congress convenes and President-Elect Donald Trump and Vice President–Elect Mike Pence are sworn into office. Read more about the changes for the energy industry on our nuclear blog, Up & Atom.
We host frequent webinars focused on the energy regulatory landscape. If you’ve been unable to join us, we’re providing recordings of our recent discussions on current trends, including energy storage, off-shore wind projects, and clean power.
RENEWABLE ENERGY AND STORAGE TRENDS FOR 2016
Energy storage deployment is rapidly increasing as technology costs decline and new opportunities emerge. Utilities, developers, investors, and regulators are all seeking to understand—and shape—this evolving market, as well as the integration of storage and renewable energy generation.
Kenneth M. Kulak, Partner
William D. Kissinger, Partner
Neeraj Arora, Of Counsel
Monica A. Schwebs, Of Counsel
Pamela C. Tsang, Associate
PERMITTING OFF-SHORE WIND PROJECTS
The US Department of Energy estimates the potential for off-shore wind energy of the contiguous United States as 4,150 gigawatts. While off-shore wind has been on the horizon for over 15 years, we examine the developmental and regulatory outlooks that may herald its time.
Ella Foley Gannon, Partner
Camarin E.B. Madigan, Partner
THE FUTURE FOR THE CLEAN POWER PLAN
EPA’s action on existing coal and gas-fired power plants significantly impacts the regulatory landscape for utilities, with implications on reliability, estimated generator retirements, and compliance deadlines.
Stephen M. Spina, Partner
Ronald J. Tenpas, Partner
The 5-4 decision temporarily blocks further execution of the EPA’s new plan to cut carbon emissions from existing power plants.
On February 9, the US Supreme Court handed a potentially significant defeat to the Obama administration’s Clean Power Plan (CPP) regulations by staying the CPP’s implementation until court challenges to the plan’s legality conclude. The controversial plan seeks to slash carbon emissions from existing power plants by nearly a third in the coming decades through a wide-ranging effort to substitute new low-emission resources, such as wind and solar, for more traditional coal-based generation. Those challenging the CPP maintain that, in seeking to work such a fundamental change in the United States’ energy generation fleet, the US Environmental Protection Agency (EPA) has far exceeded the powers given to it under the Clean Air Act (CAA). The Supreme Court’s granting of a stay of the regulations comes after the US Court of Appeals for the District of Columbia (DC Circuit) rejected a similar request and comes over the Obama’s administration’s opposition, as well as that of some supporting states and industry participants. The decision signals that at least five members of the Supreme Court found the challengers’ arguments more convincing at this stage of the proceedings.
On August 3, US President Obama and the US Environmental Protection Agency (EPA) released the final Clean Power Plan (CPP or final rule), an ambitious regulation establishing state-specific standards for reduced carbon emissions from fossil fuel-fired power plants. Promulgated under the EPA’s authority under Section 111(d) of the Clean Air Act, 42 U.S.C. § 7411(d), the regulation is the first-ever federal limitation on carbon emissions and marks the culmination of the Obama administration’s efforts to reduce emissions from power plants and to encourage renewable energy development, with the stated goal of lessening the impact of climate change.
The final rule is an updated version of a proposal released in June 2014 that called for a reduction in power plant carbon dioxide emissions of 30% below 2005 levels. The final rule targets a 32% cut in power plant carbon dioxide emissions (using 2005 as the baseline) by 2030. The final rule promises to have a significant impact on the electric power sector.