STATES:

Proposed EPA power plant rule launches a new experiment in federalism

States got a first look at U.S. EPA's proposed carbon dioxide regulations yesterday. At first blush, the phone book-sized rule gave them a puzzle with the potential of 50 different ways to lower their carbon emissions. It gave them a deadline with a final rule due next summer.

Reactions ranged from incendiary to a warm enthusiasm.

The draft rule "is the most direct assault yet on the energy providers that employ thousands of Americans," railed Texas Gov. Rick Perry (R), speaking by statement just a few hours after the draft rule's release.

The enthusiasm echoed along the West Coast and in the Northeast. California Gov. Jerry Brown (D) congratulated EPA for "taking the next step on a path to not only reducing carbon pollution in the United States, but also in driving investment in new clean technology."

Directed, as it is, toward coping with the politically charged issue of climate change, EPA's authority to regulate carbon dioxide under Section 111(d) of the Clean Air Act offers a stage for political fulminations. But the more cautious reactions of most state governments and their agencies reflect the complex energy landscape of the United States, where some states have embraced carbon reduction, while others see their fortunes tied to the ongoing viability of fossil fuels.

"All the states are coming at this from a different place, in terms of their current emissions profile, their energy mix," said Dale Byrk, director of the energy and transportation program at the Natural Resources Defense Council (NRDC). "At the same time, everyone wants credit for the [carbon reduction] measures they've already taken. That's a real challenge for the EPA -- to come up with rules that are fair for all the states but that are also going to achieve real targets."

50 shades of complexity

States have wide latitude to meet their carbon reduction targets under the proposed rule, with electrical-sector carbon offsets, interstate emissions trading, renewable energy and energy efficiency all viable options, said Jack Lienke, a legal fellow with the Institute for Policy Integrity. Some may find that running natural gas generators more -- and coal plants less -- represents their least-cost option to cutting carbon emissions, while others may choose to switch from fossil fuels to wind and solar power, he said.

Nor are proposed reductions uniform across the states. "The rules look at the existing power mix. They take it into account that some states are more fossil fuel-dependent than others right now," Lienke said.

Under the proposed rule, Texas -- which imports more coal than any other state and has the highest per-capita emissions -- would be required to cut its emission rate by 40 percent. Washington state, which already draws the majority of its electricity from carbon-free hydropower, would be required to cut its emission rate by 72 percent.

Proposed rate cuts for most other states fall within the 20 to 30 percent range.

That flexibility has won the rule a cautious endorsement from some manufacturing states. In Michigan, which has been growing manufacturing jobs faster than any other state, officials were encouraged that the draft appeared to incorporate several of the state's suggestions for making the rule more palatable, including a range of options for individual states to meet carbon reduction goals and a "staged approach" for implementation.

"Mind you, we haven't gone through it to look at the details of the thing. But at a glance, it's certainly a supportable goal, and we're now embarking on a broader conversation about how to get there," said Brad Wurfel, a spokesman for the Michigan Department of Environmental Quality. "Today is the first chapter of a story that will be written over the next 15 to 20 years."

Others remained hesitant. "I appreciate that the proposed rule regarding existing power plants announced today does recognize that differences do exist among manufacturing states and in states that produce the nation's energy," said Kentucky Gov. Steve Beshear (D). "However, I am still extremely concerned that it does not provide adequate flexibility or attainable goals."

"The president's desire to protect our climate is one that I share," he added. "But that desire must be attained while also providing economic security to our families and businesses."

A head start for some states

For those states already actively engaged in carbon reductions, EPA's proposed rule comes as a welcome endorsement. In a joint statement, the nine states currently participating in the market-based Regional Greenhouse Gas Initiative (RGGI) -- through which carbon allowances are auctioned and traded -- welcomed the proposed guidelines and encouraged EPA to take a page from their book.

"The RGGI states' experience demonstrates that market-based carbon reduction programs achieve the most cost-effective emissions reductions, enable a transition to a low-emitting, reliable, and efficient power sector, and build state economies while growing jobs," according to the statement.

A similar endorsement came from the West Coast, where California, Oregon, Washington and British Columbia have entered into agreement under the Pacific Coast Action Plan to align their climate and energy policies.

"I am particularly pleased to see the administration recognize the important role of regional partnerships, like the Pacific Coast Collaborative, in meeting the objectives of this new effort to curb carbon pollution," said Oregon Gov. John Kitzhaber (D).

Many states have already committed to carbon reductions, renewable energy targets and energy efficiency through renewable portfolio standards and other similar policies, said Sue Tierney, a professor at Stanford University and board member at the World Resources Institute.

"A lot of what the EPA is proposing dovetails with a movement that's taking place anyway," she said. "It's not just in the United States, either -- in China, around the world, we're seeing huge investments in new energy systems."

"If some states hold back, they'll be missing an important opportunity," she added.

Reporters Daniel Cusick, Christa Marshall, Debra Kahn and Anne C. Mulkern contributed.

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