EPA’s proposed regulations of carbon dioxide emissions under the “The Clean Power Plan” calls for emission reductions from existing fossil fuel-fired electric generating units of 30 percent by 2030, compared to 2005 levels. EPA proposes to achieve these reductions through four building blocks: heat rate improvements; increased dispatch of natural gas combined cycle units; increased reliance on renewable and nuclear generation; and increased end-use energy efficiency.
The proposed regulation has triggered 1.6 million responses filed during the June-December 2014 public comment period. Judging from these responses, the review from both regulators and the industry is mixed, and it is clear that much remains to be done before workable regulations are in place across the United States. In addition to a myriad technical concerns, many stakeholders question EPA’s regulatory authority to mandate the proposed actions. This is likely to trigger extensive political, regulatory and legal debates, leading to delayed implementation.
The Clean Power Plan introduces the most significant environmental reform to the power industry since the Clean Air Act of 1970. Power plant owners will need to devise a strategy for controlling compliance costs and identifying growth opportunities. Based on this, they need to determine the best regulatory strategy at the state and federal level.