US power groups push for CO2 rule safety valve

OREANDA-NEWS. Power sector officials are maintaining there should be some type of a "safety valve" exemption for grid reliability in the final version of the rule restricting power sector CO2 emissions despite concerns that it could undercut clean energy investments and carbon markets.

The precise design of a reliability safety valve is up for debate, as is the likelihood that the Environmental Protection Agency (EPA) will include one in its Clean Power Plan that is set to be finalized this summer. But state regulators and grid officials today reiterated their push for a safety valve that could relax the emission limits in the rule if there was a threat to reliability.

"We need to have these mechanisms for the what ifs and the combination of what ifs," North American Electric Reliability Corp. chief executive Gerry Cauley said today at an event hosted by the non-profit Bipartisan Policy Center in Washington, DC. Cauley's agency sets grid reliability standards across the US.

Those "what ifs" could include a nuclear plant closing unexpectedly or a gas supply shortage caused by pipeline issues and extreme weather. Another issue is regulatory risk, such as the pending Supreme Court case affecting demand response. States are responsible for writing compliance plans to reduce emissions under the Clean Power Plan.

"These are the kinds of things that come once in a blue moon that are really hard to plan for," PJM Interconnection federal government policy vice president Craig Glazer said at the event. PJM is a member of regional grid coalition called the ISO/RTO Council that has pushed for a safety valve that could only be triggered once all other options have been exhausted.

But advocates of cutting CO2 emissions say the safety valve is unnecessary and would undermine certainty in investments and carbon markets that could form in response to the rule.

"If you care about the development of markets for carbon, you do not want an escape valve because people who are willing to place a money bet on carbon offsets... need to know that there is going to truly be a market for offsets," said Analysis Group senior advisor Sue Tierney, who has consulted for supporters of restricting carbon emissions.

That point was echoed by Natural Resources Defense Council senior attorney John Moore, who said the Clean Power Plan already includes reliability protections. The rule has long averaging periods for measuring compliance and broad flexibility to develop market-based solutions for compliance.

"The safety valve has the potential to award states that are not using the flexibilities of the plan and punish states that are using those flexibilities," he said.