Are market-based approaches to complying with U.S. EPA's Clean Power Plan in line with the environmental goals established by the agency? During today's OnPoint, Bob Perciasepe, former deputy administrator of EPA and now president of the Center for Climate and Energy Solutions, and Martha Rudolph, director of environmental programs at the Colorado Department of Public Health and Environment, discuss the options and challenges facing states as they work to prepare compliance plans for the Power Plan.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today are Bob Perciasepe, former deputy administrator of EPA and now president of the Center for Climate and Energy Solutions, and Martha Rudolph, director of environmental programs at the Colorado Department of Public Health and Environment. Thank you both for joining me.
Bob Perciasepe: Great to be here, Monica.
Monica Trauzzi: Bob, a group of Democratic senators recently sent a letter to the National Governors Association pushing back against this increasingly popular idea of just saying no to EPA's Clean Power Plan. There's a lot of political and legal muscle behind this just say no idea. What would your advice to states be? States that are potentially considering this option, how would you advise them?
Bob Perciasepe: Well, first of all, it's unclear how much momentum there is behind this. There's certainly a lot of activity, and I think states always have this option on many things in the environmental laws to allow the federal government to do it for them, and I think that's the choice that states need to be thinking about. Do they want to sit down and think through their own plan and how they can best do it in their state or with partner states, or do they want to wait to see what the federal government will do? So I think that EPA is likely to put a model together of what they're likely to do, which will, I think, help people make that kind of a decision.
Monica Trauzzi: But some of the momentum surrounding just say no is based on this idea that the Clean Power Plan will not survive court challenges.
Bob Perciasepe: Yeah, well, again, I think that the track record of clean air litigation is pretty much in EPA's favor. Obviously no one knows what the courts will decide, and that's another thing. Do you want to play that roulette game, or do you want to sit down and chart your own -- your own destiny on clean power, and that is, I think, an essential decision, and I will venture that most states will do their own plan.
Monica Trauzzi: Martha, Colorado has a 35 percent emissions reduction target in the draft Clean Power Plan. What are some of the biggest challenges facing Colorado on getting coal power plants to be more efficient?
Martha Rudolph: Well, we've got about 60 percent of our power in Colorado is generated from coal, 20 percent is gas, about 11 percent comes from wind energy. We've got also a variety of utilities that provide energy to our citizens. Again, a little over half of the -- or 60 percent of the power is generated by two investment-owned utilities. The rest is split between municipal utilities and rural electric associations.
So our challenge is just -- when you're looking at the power structure and the energy structure and the -- you know, who are the players at that table, quite diverse. Interests are very broad. So the challenges we have are going to bring them all together, figuring out what works for Colorado. The investor-owned utilities are regulated by our energy regulator, the Public Utility Commission, so they're going to play a big role as well in helping us build the plan. We're going to use them, the energy office. We've got a lot of players. And then beyond that, you've got a number of citizen groups and other entities.
So the challenge for us is to figure out what's the best mix for what we need to do. I think we've got some different opportunities out there. There's different mixes. What we're hoping to do is get the utilities to -- we're encouraging them to get together to look at what they can do and what they're willing to do and hopefully bring that to us. We're going to start our stakeholder process in the summer, once the rule comes out, and we're hoping to hit sort of the ground running at that point, but we're hoping that they can -- they can share with us what ideas they have.
Monica Trauzzi: So is it possible to get the 60 percent of coal that you mentioned, to bring all of those power plants to the efficiency standards that EPA would like to see while still maintaining reliability?
Martha Rudolph: I think it's going to be -- you're talking about Building Block 1, and I think it's going to be very difficult. I think a lot of the utilities in Colorado, like they are in many states, have already done a lot to achieve that -- those heat rates that are in Building Block 1, so I think we're going have to be looking at other ideas. Trading is an idea that actually I've been looking at on a more modest scale than what RGGI states have done and what California has done, but on a scale that would allow credits to be traded, either intrastate or interstate. I think those are the options that we're going to be looking at. Basically, as I've heard it described, it's the -- sort of the Chinese menu of options, and you can bet that we're going to be looking at all of them.
Monica Trauzzi: So, Bob, Colorado's sort of in the middle of the pack in terms of emissions reduction targets. The challenges for many other states are far greater, though. They have much higher targets to hit. What does EPA need to do to sort of level the playing field in its final rule?
Bob Perciasepe: Well, certainly the approach that was taken is prescribed by the law, that EPA defines the best system of emission reductions, what are the pieces of it. We -- everybody's been calling it building blocks, but what are the pieces of it, and then they apply it to the situation that's in that state. So since every state is different, when you apply that system of reductions, whether it's heat rate improvement, efficiency, renewable mixes, when you apply it to that state, you get these different numbers. I think, obviously, things have changed since they proposed the rule. They've gotten a lot of comment. They'll be looking at how they adjust those numbers.
Monica Trauzzi: And Martha mentioned this idea of trading and talking to other states, so there are some states, though, that say multistate options are not a good fit for them. Are there certain states where that multistate option is a better fit, and have you identified some states where it just wouldn't work?
Bob Perciasepe: I think multistate options are solid things that should be on the menu, as Martha said, that every state looks at. And I think one of the observations that I have is that this is not a binary choice where we don't do any kind of interstate work or we do all interstate work. There are many things in between, and this is what Martha was just talking about, and many states are now looking -- well, we already trade renewable emission credits across states. What if we start doing some of these other things? Not do the full thing, but do some of it so that you get some regional equalization and sharing of responsibility and accountability. I think there's a lot of fruit there. We had a forum today where we talked about these ideas with some of the power companies and with some of the state environmental directors, so there's a lot of opportunity for working together between business and states on that.
Monica Trauzzi: And, Martha, are market-based approaches in line with the environmental goals established by EPA?
Martha Rudolph: I think they definitely are. I mean, EPA, this is a pretty remarkable rule where EPA has allowed states immense flexibility to figure out what works for them, and I certainly think that market-based approaches is an option that has worked for many states in the past and likely will be chosen and work for states in the future.
Monica Trauzzi: All right, very interesting. Thank you both for joining me today.
Martha Rudolph: You're welcome.
Bob Perciasepe: Great to be here. Thanks.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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