As the Obama administration rolls out its final Clean Power Plan today, what impact will changes made to the rule have on the potential for legal challenges and the ability for states to comply? During today’s OnPoint, EnergyWire reporter Rod Kuckro and Greenwire reporter Jean Chemnick discuss the details of the final plan and preview the next steps for stakeholders.
Monica Trauzzi: Hello and welcome to a special edition of OnPoint. I'm Monica Trauzzi. We are tracking developments as the White House rolls out its cornerstone Clean Power Plan. Joining me today are E&E reporters Rod Kuckro and Jean Chemnick. Thank you both for joining me today.
Rod Kuckro: You're welcome, thank you.
Jean Chemnick: Yes, yes.
Monica Trauzzi: Jean, the White House today is releasing its final Clean Power Plan. It's a key regulation for the administration and its action on climate change. Big changes were expected, and EPA seems to have delivered on what many stakeholders called for. During the public comment period, Administrator McCarthy said the comments were very good. What changes stand out to you?
Jean Chemnick: Well there is a change of intention towards sort of efficiency and renewable energy, and away from incentivizing the shift to natural gas from coal, which was happening anyway for market reasons, and they did that through sort of giving extra time for states to factor renewable energy and efficiency standards and efforts into their state plans. They pushed back the submission date for submission, and then also the beginning of the interim compliance date two years in each case, and they are rewarding states for efficiency and renewable specifically.
Monica Trauzzi: And Rod, what stands out to you?
Rod Kuckro: I think the biggest surprise was how explicitly EPA has gotten behind cap-and-trade program essentially. They want to let states that trade carbon credits, and they're encouraging that in a very strong way.
Monica Trauzzi: Jean, the clean energy incentive program is a new thing, and it seems to be a really crucial element of this final rule. What is EPA trying to achieve through this program?
Jean Chemnick: Well they are trying to reward states that make reduction efforts in 2020 and 2021, because now those years are no longer included in the mandatory compliance period, which now ... begins in 2022. So I guess there is matching funds, and they're going to provide in credits in states that do those early reductions.
Monica Trauzzi: Yeah, and there's a question of how that incentive program interacts with the PTC and ITC, and how all of that is going to play out. I know we'll be reporting on that. That's an interesting element. Rod, the nuclear lobby got its wish, plants under construction are not included in state targets, but they can be used for compliance. Who does that affect the most?
Rod Kuckro: Yes, yesterday was Christmas Day for the nuclear industry. Well there are five plants under construction in the United States. One in Tennessee Valley Authority, two in South Carolina being built by South Carolina Electricity and Gas, and two in Georgia being built primarily by Georgia Power, but there is some other ownership stakes. So those five plants right away will be credited towards part of the goals for those states. In addition, any uprates, so if a nuclear operator wants to take a plant increase let's say from 1,000 megawatts to 1,050 megawatts, those added megawatts were also counted as clean power. What we don't know is how the rule is going to affect the handful of plants that are in trouble in the Midwest because they don't clear the power auctions. They're primarily owned by Exelon Corporation so we'll have to wait more to find out about that.
Monica Trauzzi: Jean, as you mentioned, compliance timelines have changed. We have been reporting on that since last week, but the agency says it's a stronger rule. How do they achieve that if they're giving states more time to comply, and yet it's still stronger?
Jean Chemnick: Well I mean they have, they say they've evened out a lot of the state targets. There are going to be states that have more responsibilities than they used to, and the aggregate is 32 percent compared with the 30 percent by 2030, which is a 9 percent improvement in stringency over what the draft rule would've required. There is, we were talking about this before, there is the possibility that this might be a stronger rule legally as well. I mean that's been raised. Who knows if that pans out, but they are giving extra time for planning and compliance, which might make it less easy to get a stay on the rule.
Rod Kuckro: I think that's what they mean by stronger. They don't mean more stringent necessarily. They mean it's going to be much easier for them to defend any state challenges.
Monica Trauzzi: And Administrator McCarthy, Rod, yesterday during a press call said that the agency switched to using these uniform standards for power plants that will have an impact on what the state target numbers look like. According to EPA, coal will have 27 percent of the market in 2030. How does that compare to projections, and you were saying before the show that this kind of is that all of the above?
Rod Kuckro: Ironically it is. Well the Clean Power Plan proposed last year had coal at 30 percent in 2030. Right now it's about 36 percent, and it's been declining for many years, but at the end of the day in 2030 if you believe the power plan's projections, coal will be 27 percent, renewables will be 28 percent, and gas will be about where it is now 27 to 30 percent, and the other 20 percent will be nuclear. So in a way, those advocates on the Hill from both parties who have been complaining that they want to see an all-of-the-above energy program, this is it.
Monica Trauzzi: Jean, we've already seen a stream of reactions rolling in. Is it sort of the usual suspects saying the usual things? Is anyone happy with what we've seen so far?
Jean Chemnick: Yes, the usual suspects saying the usual things. You know when we started getting details last week, and would go up to the Hill and ask lawmakers if this changed their minds, I mean some said, and Republicans who've been staunch opponents of this rule since it came out as a draft said, well maybe it would help to have a couple of extra years to put together a SIP, but really it doesn't change the underlying fundamentals, which is that they feel that this is a very harmful rule that they're going to throw everything they possibly can at including a variety of legislative options when they get back from August recess.
Monica Trauzzi: Rod, reliability, a key concern as we were going through this proposed rule process. They've included a reliability safety valve in the final rule. What do we know about it?
Rod Kuckro: Well what we know about it is very little actually. We're told it's modeled after the reliability safety valve that's in the MATS rule for mercury. What Administrator McCarthy said yesterday on the conference call with media is that they're going to be working very close with FERC to kind of refine that, but you said the way it's designed to deal with an emergency situation to keep a plant online for reliability purposes, she doubts that it'll ever have to be exercised. I mean that's their hope.
Monica Trauzzi: Yeah that is their hope. Jean, the administration has a full schedule planned for this month to kind of sell and talk about this Clean Power Plan. What's on tap?
Jean Chemnick: Well, I mean they're doing the rollout today at the Rose Garden, which sort of drives home how important this is to Obama himself personally, and later in the month he's going to the Arctic also to do a tour. You know I haven't looked at a lot of the events that he's doing.
Monica Trauzzi: Yeah and he'll also be speaking in Nevada.
Jean Chemnick: Oh OK, yes, that's right. He's headlining Reid's --
Rod Kuckro: Clean Power Summit.
Jean Chemnick: Clean Power Summit, that's it, yes.
Monica Trauzzi: All right, well we will be watching. We will be reporting; a lot to watch and report on over the next two weeks. Thank you both for coming on the show.
Rod Kuckro: You're welcome, nice to be here.
Jean Chemnick: Thanks.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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