"The new EPA carbon pollution limits will not only accelerate the retirement of the nation's oldest coal plants, but will also encourage states and power producers to help consumers use less electricity. This flexibility is very important in the South, where the efficient use of energy has been a struggle."
"In 2013, TVA met the Administration's 30% carbon reduction goal. Other utilities in the South can surely do the same by 2030."
The Fine Print of the Carbon Reduction Plan
The EPA will unveil the details of the Administrations carbon reduction plans from power plants today. If successful, they will certainly be the most significant rule of the decade on the use of electric power. Moreover, while the process has been messy and will certainly face significant legal challenges, it nonetheless will provide the power industry with some clarity that is needed for planning. While the big attention is on the plan to reduce CO2 emissions by 30% by 2030, here are two critical details to pay attention to:
2005 start date – first, the 30% reduction is relative to 2005. This will be a big deal for utilities that have already been retiring coal plants and states that have already rolled out CO2 reduction plans, as they will get credit for those actions. As such, although 30% sounds like a big number, the fact is that US CO2 emissions have already been decreasing due to increases in efficiency, the recession, and increased coal to gas switching.
Flexibility – When a new power plant gets permitted today, it must meet certain emissions limits on regulated pollutants, such as smog forming emissions. However, this rule will not apply on a plant by plant basis, but apply in aggregate to states. This is what states and utilities wanted, as it will spur innovation and reduce the cost of compliance. Ironically, however, this approach will also increase the legal vulnerability of the rule. In addition, the rule will allow for achieving targets by demand response (i.e., having customers curtail their demand at peak periods), efficiency, and distributed solar power.
Pay attention to the details on these two items, because they will have a big influence on exactly how significant the required investments, costs of compliance, and strategies for legal challenges will be going forward.
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