OREANDA-NEWS. Mass-based compliance strategies under the Environmental Protection Agency's (EPA) plan to limit power sector greenhouse gas (GHG) emissions offer states fewer administrative hurdles, but more uncertainty around the treatment of electricity demand growth, a report says.

Using mass-based compliance approaches would be an easier lift for states as they prepare for the final version of EPA's Clean Power Plan, according to the report released today by the Bipartisan Policy Center and Great Plains Institute.

"States recognize that a mass-based approach is easier to implement and has more predictable interactions with electricity markets," energy consultant and report author Franz Litz said. "But growth in electricity demand is one thing standing in the way of the mass-based approach."

Growth in electricity demand at the state level could unexpectedly raise GHG emissions, thereby moving a state's power generators past their emissions budget under a mass-based approach, the report says. The Clean Power Plan would set CO2 emissions rate targets for each state to meet by 2030, which would allow for emissions to increase as long as the overall rate declined. But EPA is allowing states to convert the rate-based targets into overall emissions, or mass-based, targets for compliance.

To address concerns about demand growth, the report recommends that EPA allow the use of an allowance banking-type mechanism so that regulated sources that over-comply one year can hold on to excess credits for use during years when emissions might increase unexpectedly.

"If EPA makes states feel better about new growth by providing a way to avoid locking in a mass-based budget, more states will gravitate to the mass-based approach, " Litz said.

Consistency among states with mass-based programs could facilitate multi-state collaboration, in which covered entities could spread emissions cuts across their generation portfolio in multiple states.