States, industry await final EPA CO2 rule

OREANDA-NEWS. April 16, 2015. State environmental officials responsible for preparing for the Environmental Protection Agency's (EPA) proposed Clean Power Plan fear that a condensed compliance schedule will hurt their ability to shape their compliance plans, including whether to include emissions trading.

Engagement between state environmental agencies and industry stakeholders, in particular, appears to be lagging somewhat as they wait for EPA to finalize regulations to limit greenhouse gas emissions from power plants this summer. That could result in certain market-based measures and more ambitious multi-state initiatives being overlooked in a rush to draft state implementation plans for the regulations.

"We encourage utilities to talk to each other about what can go into a plan, but we have not started a robust stakeholder process," Martha Rudolph, the director of Environmental Programs for the Colorado Department of Public Health and Environment, said today at a forum hosted by the Center for Climate and Energy Solutions in Washington, DC.

Uncertainty around the final rule extends into deliberations about how states can consider joining emissions trading systems, like the Regional Greenhouse Gas Initiative (RGGI), as a way to comply with the EPA plan.

"Carbon pricing in Virginia will have more legs as the business community gets behind it, but we are finding that business is still in the planning stage," Virginia Department of Environmental Quality director David Paylor said. There has been a big push from NGOs and some quarters of the Virginia legislature for the state to join RGGI, "but we just do not know what RGGI will look like under the Clean Power Plan."

To avoid compromising on multi-state initiatives, the EPA could give states extra time if such plans are proposed, Rhode Island Department of Environmental Management director Janet Coit suggested. "If the current timeframes are not altered, there needs to be adjustments for states that want to participate in a multi-state approach," like RGGI, she said.

The Clean Power Plan as proposed gives states until mid-2016 to submit their plans to EPA, but gives multi-state efforts until 2018 to submit final plans.

Layers of regulatory coordination with utility commissions, and possible state legislative actions could also add new burdens for state environmental officials designing the most cost-effective state plans.

"The EPA is really getting into an area that crosses over with our state energy regulators, and I think that is something a lot of states are grappling with," Rudolph said.

Some in industry prefer market-based approaches because of their familiarity with such measures under Clean Air Act, such as the Acid Rain program. But they too are waiting to see how EPA will address emissions trading.

"We need to know that what we are trading under the Clean Power Plan are fungible commodities, and there are not three copies of it moving around," Duke Energy director of energy and environmental policy Kevin Leahy said.