Did the EPA Bulletproof the Clean Power Plan?

By making the Obama administration's landmark climate rules more workable and more stringent, Gina McCarthy may have strengthened their legal footing.

EPA chief Gina McCarthy explains the Clean Power Plan

EPA chief Gina McCarthy explains the Clean Power Plan in a video. Credit: EPA

Gina McCarthy, the head of the Environmental Protection Agency, has learned two lessons from her long career in the regulatory martial arts: adversity can be a source of strength, but a sure way to hurt yourself is to build strength without flexibility.

As the jiu-jitsu artist behind the Obama administration's groundbreaking new rules to control carbon pollution from fossil-fuel power plants being unveiled Monday, McCarthy was determined to emerge from more than two years of legal and technical infighting with final rules that are both stronger and more flexible than the initial proposals.

The Clean Power Plan she produced was stronger in two senses: a little more ambitious in the emission reductions demanded, and better armored against the challenges that they will face in the courts, in Congress, and in the marketplace.

The rules, she and other Administration officials explained over the weekend, are projected by 2030 to cut greenhouse gas emissions from fossil fuel-produced electricity by 32 percent below the levels of 2005 – slightly deeper than the cut of 30 percent originally proposed.

That would prevent more than 800 million tons a year of greenhouse gases from a nation that emits about 6 billion tons a year. The U.S. is the second-largest polluter in the world, only recently surpassed by China, and gives off twice as much carbon dioxide per capita as any other big economy.

The goal would be to generate 28 percent of electricity from renewables – significantly more than the 22 percent envisioned when the rule was first proposed, and enough to rival, but not exceed, generation from coal or natural gas.

"Years from now I'm sure we'll see this as a pivotal moment accelerating the clean energy transition that is already underway," said Bob Perciasepe, McCarthy's former deputy, who is head of the nonpartisan Center for Climate and Energy Solutions in Washington.

McCarthy attributed the strengthening of the rules, even as they were altered in ways that will mollify some critics, to the flexibility of the agency's approach under the Clean Air Act. It forces the states to act, but allows them to decide on the best approach, and provides federal muscle if the states go weak-kneed.

"We got really good comments," she said in a briefing for reporters on Sunday. "They questioned how we were doing this, and whether there was a different, more flexible approach."

Full details of the regulations are being published on Monday. Thousands of pages long, they will take time to fully assess. A crescendo of bully-pulpit publicity, starting with a Facebook video by President Obama, was quickly joined by a chorus of condemnation, especially from Republican presidential candidates, whose excoriation of the rules began just as swiftly – courtesy of climate contrarians sponsored by the Koch brothers.

Administration officials said that Obama would keep up the pressure for climate action with a trip to Nevada to highlight renewable energy, a trip to the Alaskan Arctic to talk about the melting of the icecap, and an emphasis on morality when Pope Francis visits the United States in September. It dovetails with the accelerating negotiations aimed at a climate treaty that the United Nations is trying to complete by the end of the year.

McCarthy said the carbon crackdown was "flexible, customizable, and puts states in the driver's seat." She said the coming technological shift was "all entirely doable and affordable, and will not threaten energy availability or affordability."

As the administration has promised all along, she said the benefits of the rule would outweigh its costs by up to $7 for every dollar spent carrying it out. By driving down other pollutants even more than it reduces carbon dioxide, she promised, it would bring about enormous public health benefits. And although the price of electricity per kilowatt-hour would go up, she said, the use of energy would fall enough to compensate, saving consumers in the end.

Here are several ways in which the administration's flexibility strategy played out:

  • Deadlines. By giving states and power plants two more years to comply, the EPA made compliance less costly without making the rules ultimately less stringent. The first deadline for states to begin meeting emissions targets slid to 2022.

  • Incentives. The later deadline gives states more time to adjust the grid for more solar and wind power to replace coal, and more time for costs of renewable energy to continue their downward path. To speed the shift, the EPA would also create a new system of credits for early action by utilities that move to  clean, renewable fuels or encourage efficiency in poorer neighborhoods.

  • Reliability. To address concerns that shifting from coal to renewables would destabilize the power grid, the rules include what a White House fact sheet called a "reliability safety valve." This promised to "address any reliability challenges that arise on a case-by-case basis."

Changes like those were designed to make the new rules, which are inherently complex, more workable. In other ways, the EPA used flexibility to make the rules more defensible against legal challenges.

The coal industry and its backers in Congress have challenged a requirement, in the part of the rules governing newly built power plants, that those burning coal install costly and unproven technology to capture the carbon dioxide pollution and bury it in the ground. By moderating this stringent requirement so that less pollution would have to be controlled this way, the EPA is trying to head off this challenge. It's more than a technicality: if the controls on new power plants were overturned by the courts, the much more significant rules on existing plants could fall, too.

Other critics of the EPA have said that it was over-reaching its regulatory powers by looking "outside the fenceline" of power plants and calculating state-by-state emissions limits partly based on conservation measures that could reduce demand for electricity. In the final rule, the agency dropped this so-called "building block" from its calculations. States may, of course, still attempt to manage demand for electricity; but the federal agency is safer, both legally and politically, to focus on controlling pollution, not consumption.

The agency set up a template for states to adopt as a "model rule" that would allow them quickly to join or establish emissions-trading arrangements with other states.

The Clean Air Act has long allowed – and even expressly encouraged – interstate trading of pollution credits, most famously in the 1990 amendments' successful approach to fighting acid rain. By adopting the same tactic for carbon dioxide, the EPA has granted a significant and attractive choice to many states that will ease compliance, save money, and emphasize free markets over command and control.

Ultimately, the power of markets even in the heavily regulated arena where electric utilities operate may prove the ultimate source of flexibility for the EPA, and it is an advantage these new rules seek to maximize.

The agency is betting that conservation and renewables will turn out to be not just the cleanest, but the cheapest energy investments in the decades to come.

The wager is that coal's muscles will continue to atrophy, while solar and wind energy providers will continue to flex theirs.

"Our country's clean energy transition is happening faster than anyone expected, even last year when we proposed the rule," McCarthy said.

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