EPA’s Upcoming Carbon Rules: A Primer

By Lauren Ghelardini and Hayley Martinez

On Monday, June 2, the Obama administration will announce proposed federal rules aimed at curbing carbon emissions from existing U.S. power plants–possibly a landmark in U.S. climate policy.The announcement is being closely watched around the world. To be administered by the U.S. Environmental Protection Agency, the rule is considered potentially important not only because power plants create some 40 percent of U.S. emissions; it could also help set the stage for other nations, many of them waiting for the United States to take the first serious steps at reductions, to also finally take action. Below, a primer on what led up to the action, and what might come next.

Original lawsuit that influenced the creation of the legislation: Massachusetts v. EPA

1999: 12 states petitioned the EPA to regulate greenhouse gases from new motor vehicles.  The states were California, Connecticut, Illinois, Maine, Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont and Washington.  Furthermore the cities of New York, Baltimore, and Washington, D.C., the territory of American Samoa, and various environmental groups were included in the petition.The following environmental organizations backed the creation of legislation: Center for Biological Diversity; Center for Food Safety; Conservation Law Foundation; Environmental Advocates; Environmental Defense; Friends of the Earth; Greenpeace; International Center for Technology Assessment; National Environmental Trust; Natural Resources Defense Council; Sierra Club; Union of Concerned Scientists;U.S. Public Interest Research Group.

This led to a prolonged legal case in which the petitioners claimed that human-influenced global climate change was causing adverse effects, such as sea-level rise, to the state of Massachusetts.  The respondents claimed that the EPA did not have the authority to regulate GHGs and that they were not a danger to human health or welfare. The Respondents were the Environmental Protection Agency, the Alliance of Automobile Manufacturers, National Automobile Dealers Association, Engine Manufacturers Association, Truck Manufacturers Association, CO2 Litigation Group, Utility Air Regulatory Group, and the states of Michigan, Alaska, Idaho, Kansas, Nebraska, North Dakota, Ohio, South Dakota, Texas, and Utah.

The lawsuit was elevated to the Supreme Court:

The U.S Court of Appeals for the District of Columbia Circuit decided on September 13, 2005, to uphold the decision of the EPA.  However, the reasoning among the appellate judges for coming to the majority conclusion was sharply at odds.

The case was elevated to the Supreme Court, which in a 5-4 vote reversed the DC Circuit ruling in favor of Massachusetts. The court stated that greenhouse gases could constitute pollutants under the Clean Air Act and thus the EPA was required to regulate them if they were found to endanger human health and welfare.  In 2009, the EPA finalized its “endangerment finding” that concluded that greenhouse gases do endanger human health and welfare. In 2010, the Sierra Club, Natural Resources Defense Council, the Environmental Defense Fund and a collection of states led by New York negotiated a settlement agreement with the EPA. The EPA adopted greenhouse gas emission standards for new cars and light-duty vehicles in April 2010.  

Based on the Supreme Court’s decision and EPA’s assessment of scientific evidence concerning the risks of climate change, the agency has a legal obligation to regulate greenhouse gases under the Clean Air Act.

Regulation of power plants is important:

Electric power generation is responsible for about 40% of U.S carbon dioxide emissions, and power plants are the largest stationary source of carbon pollution in the U.S.  Since federal government adopted new vehicle efficiency standards to address transportation emissions, the power sector represents the greatest opportunity for greenhouse gas reductions. Fossil fuel-fired power plants use sources like natural gas, petroleum and coal for the purpose of generating electricity.

Unchecked carbon pollution leads to long-lasting changes in our climate, such as: rising global temperatures, rising sea level, changes in weather and precipitation patterns, changes in ecosystems, habitats and species diversity. It also encompasses a number of public health risks associated with more variable heat waves, drought, worsening smog, and more intense extreme events such as hurricanes and flooding.

Timeline of the regulations:

December 2010: The EPA entered into two proposed settlement agreements to issue rules that would address GHG emissions from existing fossil fuel-fired power plants and refineries.

March 2012: The EPA proposed the first Clean Air Act standard for carbon pollution from new power plants.

June 2013: President Obama announced an updated “social cost of carbon” (SCC) calculation, which monetized damages associated with increases in carbon emissions in a given year and includes changes in agricultural productivity, human health, property damage, and the value of ecosystem services.  The SCC increased from $22 to $36 for a metric ton of CO₂ emitted in 2013. The higher SCC value makes regulations that limit carbon appear cost-effective.

President Obama sent a memorandum to the EPA, setting a schedule for issuing greenhouse gas performance standards for existing power plants, including the re-proposal of the new source standard.

September 2013: The EPA announced a new proposal for carbon pollution from new power plants, and started to engage with states, stakeholders, and the public to establish guidelines for existing power plants. In the CAA, Congress recognized that the opportunity to build emission controls into a source’s design is greater for new sources than for existing sources, so it laid out different approaches to set the two types of standards: the EPA would publish rules for new power plants, but for existing power plants, emissions guidelines would be administered by state regulators.

January 2014: EPA publishes the rule for new power plants. The regulation mandates that all future coal plants can emit just 1,100 pounds of carbon dioxide per megawatt-hour. New natural gas plants can emit 1,000 pounds per megawatt-hour or 1,100 for smaller natural gas power plants.

• An average U.S. coal plant currently dumps over 1,700 pounds of carbon dioxide into the atmosphere for every megawatt-hour of energy it produces.
• Modern combined-cycle natural gas plants can meet the new standard, but makes it very difficult for any new coal plants to be built.

June 2, 2014: EPA will issue proposed guidelines for existing power plants, using authority under the Clean Air Act. This is expected to be announced by President Obama. When a rule is proposed it is typically published in the Federal Register to little fanfare. But Obama’s personal announcement of the proposal will send a signal to Congress, and opponents of the rule, that he plans to see his climate agenda through to the end. The rule is expected to set a national limit on carbon pollution from existing power plants, but leave it up to the state to come up with a plan to cut its emissions. Plans can include renewables, energy efficiency and state or regional cap-and-trade plans.

June 1, 2015: EPA will issue final guidelines for existing power plants.

June 30, 2016: States will have to submit plans of how they will implement EPA’s guidelines. If the timeline is met the President will have less than 7 months left in office to deal with any implementation challenges and litigation might play out under the next president.