REGULATION:

How much difference can a year make? A lot, where GHGs are concerned

U.S. EPA's choice of which year to use as a benchmark for emissions reductions could hold an important clue to how far the administration will go to curb climate change, experts and state regulators say.

In crafting its highly anticipated regulation for existing power plants, EPA's pick for a base-line year could move the needle toward a preference for one of two priorities: Will EPA seek drastic cuts to decarbonize the country's electricity sector? Or will the agency look to provide maximum flexibility to states, many of which will need all of the help they can get to achieve carbon reductions?

Leaked media reports say that EPA could require carbon cuts of up to 25 percent over two phases between 2019 and 2030. Last year, President Obama vowed to cut greenhouse gas emissions by 17 percent before 2020 compared to 2005 levels -- the second highest-emitting year in the last decade. Since 2005, emissions from the power sector have dropped gradually in the United States.

If the 25 percent emissions cuts are compared to a high-emissions year -- one that doesn't reflect the nation's current levels of carbon emissions -- that target will be more easily achievable.

"A theoretical 25 percent reduction may not be, or sound, as onerous as it would under a different, more recent base line," said Bill Becker, executive director of the National Association of Clean Air Agencies, a consortium of state air regulators. If EPA chooses a more recent base line, states will need to work harder to get reductions beyond what has been achieved in the last nine years, he added.

Electricity generation accounts for roughly 40 percent of the country's greenhouse gas emissions.

U.S. fossil fuel emissions dropped by 15 percent between 2005 and 2012 according to EPA's greenhouse gas inventory and are on a path to lower further as a significant chunk of the nation's coal fleet retires in the next few years.

Using a high-emissions year as a reference could make a distinct target like a 25 percent reduction less clear, agreed Kyle Aarons, a senior fellow at the Center for Climate and Energy Solutions.

"That 25 percent can really lose a lot of force," he said. States "will have an easier time getting there."

Some states yearn for later benchmarks

But some states are advocating for a higher base-line year because it allows the government to show EPA that measures to cut carbon dioxide from the power sector -- like renewable portfolio standards, efficiency rules and emissions trading -- have worked. Setting the benchmark back just a couple of years from the present would be detrimental for a state like Colorado, said Martha Rudolph, director of environmental programs in the state's Department of Public Health and Environment.

"We think that would be troubling," Rudolph said. "It would mean that the work that we've done would go largely unrecognized."

Colorado passed a renewable portfolio standard in 2004, and the Clean Air, Clean Jobs Act in 2010, which calls for the state's largest utility to retire 593 megawatts of coal-fired electricity.

Meanwhile, coal-rich Kentucky's Assistant Secretary for Climate Policy John Lyons wants EPA to recognize future CO2 reductions that will come with coal plant retirements -- not a result of state policies but of economic factors like competition with low-cost natural gas and federal regulations like the 2012 Mercury and Air Toxics Standards (MATS).

"The reductions we're going to see from the MATS rule, we want credit for that," he said (ClimateWire, May 22).

Kentucky used a 2005 base line in its analysis of the upcoming rule's impact because that is the reference year for the voluntary targets Obama presented at the 2009 U.N. climate conference in Copenhagen, Denmark, Lyons said. However, 2010 is the base year that reflects the greatest reductions to date for Kentucky, he said.

The California Air Resources Board, the greenhouse gas regulator in one of the most progressive states for implementing programs to lower greenhouse gas emissions, believes the more recent the base line, the better.

"U.S. EPA needs to help states maximize cost-effective reductions from today, because emissions are still higher than they need to be to stabilize the climate," said Stanley Young, director of the Air Resources Board office of communications. "States like California, have already taken many cost-effective steps, and so will be closer to where they need to be under this approach."

'Choose-your-own-base-line approach' unlikely

To date, it is unclear what year U.S. EPA will set as a base line, or whether the agency will leave it to the states to sort out the details. Clean Air Act experts are divided on how far the agency can go to allow states to choose their own start dates.

The issue of allowing states to choose their own base line is more a policy-driven question than a legal one, said Roger Martella, a partner with Sidley Austin LLP and former general counsel for EPA in the George W. Bush administration. EPA has the authority to provide states enough flexibility by letting them choose the base line, said Martella. The main legal test is whether the agency will be "arbitrary and capricious" -- or make decisions on unreasonable grounds -- in how it treats the states.

"It should be able to provide some flexibility for states to choose a base line based on circumstances unique to that state," said Martella.

EPA has said it will regulate existing power plants under Section 111(d) of the Clean Air Act, a seldom-used section of the law with very few examples to set precedent for the rule. This gives EPA more leeway in how it can interpret the act, including the treatment of base-line years.

"I think that it's within the discretion of the EPA to choose a set of base lines, or legally within the discretion of EPA to defer to the states," said Jonas Monast, director of the climate and energy program at Duke University's Nicholas Institute for Environmental Policy Solutions.

EPA Administrator Gina McCarthy, acting Assistant Administrator for Air and Radiation Janet McCabe and senior counsel Joseph Goffman -- the three principal leaders behind the rule -- have advocated for flexibility to ensure that electricity prices stay reasonable and that reliability remains. But that flexibility could potentially come at a cost if stringent standards aren't in place, said Thomas Lorenzen, a partner at Dorsey & Whitney and former assistant chief of the Justice Department's environment division.

"If you give states too much room, it's not clear if they will achieve their goals," Lorenzen said.

One potential solution is for EPA to set a uniform but early base-line year, said Jack Lienke, a legal fellow at the Institute for Policy Integrity. This way, the benchmark would be a year in which emissions were relatively low but early enough to precede most state's climate policies.

"I can't imagine that EPA would allow a choose-your-own-base-line approach," Lienke said. "But that doesn't mean it won't find a way to credit the efforts that states like California have already made."

President Obama is set to announce the proposed rule on June 2.

Twitter: @TiffanyStecker | Email: tstecker@eenews.net

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