Obama’s Climate Legacy Takes Shape With Move on Power Plants

(Bloomberg) — The Obama administration on Monday will

issue rules to cut carbon emissions from U.S. power plants, a

move designed to secure the president’s legacy on climate and

one which has already influenced the campaigns of those who want

to succeed him.

The Environmental Protection Agency will finalize measures

that promise to upend a century of electrical power generation,

as it prods states and utilities to use less coal and more wind,

solar and natural gas. The plan, estimated to cost $8.4 billion,

is among the most complex in agency history and is expected to

face a series of contentious legal challenges from states and

coal producers.

Elements of the plan were released Sunday by the White

House, ahead of the full roll-out. The rules are designed, in

part, to put the U.S. on track to meet the goal President Barack Obama laid out as part of negotiations for a global accord on

climate change. Those talks are set to conclude this at the

Paris climate conference in December.

“It’s time for America, and the world, to act on climate

change,” Obama said in a video message released on the White

House Twitter feed.

The final rule aims to accomplish a 32 percent reduction in

carbon emissions from the nation’s fleet of power plants by

2030, compared with 2005 levels, against 30 percent in the EPA’s

original 2014 proposal. Emissions are already down 15 percent

from that peak.

The plan will accomplish this by in part by giving states

credit for solar or wind projects that break ground in the next

few years, before the rule takes effect in 2022. It will also

force utilities to run natural gas plants more or encourage

customers to use less electricity.

Biggest Source

Power generation, specifically the burning of coal to make

electricity, is the biggest source of carbon pollution in the

U.S., and until now there was no cap on those emissions.

“The way electricity is being produced is being

significantly transformed,” said Michael Brune, president of

the Sierra Club. “It will amount to a move away from fossil

fuels toward clean energy.”

Power plants burning coal produce almost 40 percent of the

nation’s electricity, down from about half just a few years ago.

That’s forecast to decline more as these rules kick in.

The administration has bowed to industry demands, though,

and will include a safety valve that would delay the rules for

individual states if they threaten the reliability of

electricity delivery, according to EPA Administrator Gina McCarthy. “We really don’t expect the safety valve to ever have

to be used,” McCarthy said in a media conference call Sunday.

State Plans

The general EPA plan is actually a set of targets for the

states. States will have to submit plans to the agency by 2018

on how it will achieve the EPA-mandated goal, which begin to

bite in 2022 and phase in through 2030.

The EPA’s initial proposal would have forced states with a

lot of natural-gas plants and scope for renewable power growth,

such as Arizona, to make cuts in emissions of more than 50

percent by 2030.

Meanwhile, coal-heavy states including Kentucky, West

Virginia, Wyoming and Montana faced cuts of 21 percent or less.

The EPA tweaked its forecasts for the amount of natural-gas and

renewable-energy growth it estimates can be accomplished in

those states.

“At the end of the day, you will see state goals more

uniform,” said Brian Deese, a White House adviser on energy and

climate.

Greenhouse Gases

The White House says that while it’s backing off on an

initial deadline for the rule and making other changes to help

states, the final plan will lead to more reductions in

greenhouse gases long term because it will boost carbon-free

energy and rely less on switching from coal to natural gas. The

incentive plan will also reward states that submit plans to the

White House early.

“The states that join the race first, and run it the

fastest, will win both more investment in clean technologies and

less air pollution for their communities,” Fred Krupp,

president of the Environmental Defense Fund, a nonprofit group,

said in a statement.

Democratic presidential candidate Hillary Clinton said the

plan is “a significant step forward” in meeting the threat of

climate change.

“It sets a smart federal standard that gives states the

flexibility to choose how to reduce carbon pollution most

effectively,” Clinton said in a statement, adding that it

promotes a healthier environment and a stronger economy.

RNC Statement

The Republican National Committee said in response to

Clinton’s statement that Obama’s plan will have “devastating

consequences” for the economy and cost jobs.

One thing the EPA didn’t do is bend to complaints from

utilities and discard a separate proposal to require new coal

plants to use expensive carbon-capture technology. While the

only coal plant now under construction has carbon capture, that

rule could mean no more coal plants are built in the U.S.,

industry critics say.

“EPA’s final Clean Power Plan reflects political

expediency, not reality for supplying the nation with low cost

reliable power,” said Hal Quinn, president of the National

Mining Association. On Monday, the group will file a stay to try

to stop the plan from going into effect, he said.

The regulation is also expected to face lawsuits from coal-dependent states, coal producers and some utilities or power

cooperatives. They argue that the EPA is exceeding its authority

and forcing a reorganization of power generation for which it

doesn’t have the legal mandate.

‘Unprecedented Interference’

“State leaders are angry that EPA has finalized an

unprecedented interference into state authority over energy

regulation and markets, clearly inconsistent with statutory and

Constitutional principles,” Scott Segal, a lawyer at Bracewell

& Giuliani in Washington, said in a research note Friday.

Obama pledged the U.S. will cut greenhouse-gas emissions 26

percent to 28 percent by 2025, as part of United Nations-led

negotiations for a global climate accord. With the changes in

this regulation, the U.S. will be on track to meet that goal,

according to the White House.

One advantage of boosting renewables and relying less on

natural gas is that the emission reductions after 2030 will be

greater, Deese said.

To contact the reporter on this story:

Mark Drajem in Washington at

mdrajem@bloomberg.net

To contact the editors responsible for this story:

Jon Morgan at

jmorgan97@bloomberg.net

Gail Degeorge, Ros Krasny

About BloombergNEF

BloombergNEF (BNEF), Bloomberg’s primary research service, covers clean energy, advanced transport, digital industry, innovative materials and commodities. We help corporate strategy, finance and policy professionals navigate change and generate opportunities.

Available online, on mobile and on the Terminal, BNEF is powered by Bloomberg’s global network of 19,000 employees in 176 locations, reporting 5,000 news stories a day.
 
Sign up for our free weekly newsletter →

Want to learn how we help our clients put it all together? Contact us