After months of strategizing in Kentucky about how the state might meet emission targets proposed under the Obama administration's power plant rules, it finds itself facing more daunting requirements under the final rule.
Coal-heavy Kentucky was initially required to reduce its carbon emissions to 77 million tons, a 15 percent reduction from 2012 levels by 2030. Under the final rules released last week, it now faces a steeper slope: reduce emissions to 63 million tons, a 30 percent cut.
Other coal states, too—including Indiana, Wyoming and West Virginia—face significantly tougher targets.
On the other hand, some states, such as New York, New Jersey and Texas, face softer targets.
The changes reflect a fundamental shift in the Environmental Protection Agency's approach, following months of public comment on regulations that for the first time govern greenhouse gas emissions from fossil-fueled power plants.
"They totally changed the rule. This is not what we looked at for the last year," said John Lyons, assistant secretary for climate policy in Kentucky. "States like Kentucky bear a much heavier burden than we originally had."
Broadly, the final rules narrow the disparities among states. It ends up holding states that have been lagging to more stringent targets, and treating those that are ahead of the curve comparatively lightly.
Gina McCarthy, the EPA's top official, said that the final rule set "fair, consistent standards across the country."
The Clean Power Plan, which aims to reduce carbon dioxide pollution from power plants by 32 percent below the levels of 2005 by 2030, is the crown jewel in the Obama administration's effort to address climate change.
The coal industry and its most reliant states have called the rule an illegal example of federal overreach. Even before the rule was finalized, these groups began mounting legal challenges and maneuvered to block state regulators from enforcing it.
The final rule places tougher limits on the very states that have been opposing it most adamantly. Earlier this week, 15 states, mostly led by Republican attorneys general, petitioned a federal judge to stay the rules.
Looking Beyond State Borders
The EPA's final rule is similar to the proposed rule in its broad outlines, but it differs in two important ways that shifted the burdens among states.
First, the agency assigned a single emissions limit for each type of fossil-fuel plant. As a result, a coal plant in Kentucky is expected to achieve the same rate of emissions as one in New York or New Mexico, eliminating some of the disparities from the rule.
Secondly, in assigning state-by-state reduction targets, the EPA moved toward a more regional approach, reflecting how the power grid operates across state lines.
A coal plant in Kentucky is assumed to have the same pollution-control tools available as those in states as near as North Carolina and as far away as New York, holding laggard states such as Kentucky and West Virginia to a higher standard than before. It remains up to each state, and each polluter, to decide what paths to take to compliance, be it efficiency, fuel-switching, renewables – or trading emission allowances among states.
"Compared to the proposal, the pendulum has swung back toward the idea that it's equitable for every state to be in the same neighborhood," said Frank Holleman, a senior attorney at the Southern Environmental Law Center, a Virginia-based nonprofit. "The approach before was more heavily influenced by the notion that wherever a state is today, we just have to see how much more they can do."
Shrinking the gap among state targets also has an important legal implication—the targets may no longer seem so arbitrary. The old proposal was widely criticized for state targets that varied wildly, with North Dakota required to reduce emissions by 11 percent and Washington by 72 percent.
The final version of the rule "eliminates a situation where you have outliers, where two states that share a border are being asked to do radically different things," said Abbie Dillen, the vice-president of litigation for climate and energy at Earthjustice, an environmental group.
"That fends off arguments that targets for states are arbitrary [and the] disparities [in the old rule] show that it's not a rational approach."
The emission reduction targets now range from 7 percent (Connecticut) to 47 percent (South Dakota).
Kentucky in a Straitjacket
Kentucky is on the higher end of that scale, even among the coal states.
Last year, Kentucky became the first state to pass legislation restricting what could be included in a compliance plan submitted to the EPA. The law prohibits the state from proposing a solution that shifts the energy mix away from coal––or increases generation from renewables.
Until last month, Kentucky regulators believed they had found a workaround to meet the EPA's requirements and adhere to local laws. They had concluded the state could reach its target with little effort by relying on the coal plant retirements that had already been announced.
That changed when the final rule was released. The state is now required to reduce its emissions by an additional 10 million tons of carbon dioxide
"The good thing is a retirement is a retirement and those reductions count," said Lyons, the Kentucky official who is in charge of putting together a state plan. "But there's not enough reductions to get anywhere near 63 million tons."
According to an analysis by M. J. Bradley and Associates, an environmental consulting firm, the coal plant retirements will get the state to about 75 million tons, or 60 percent of its target.
Kentucky is required to submit a compliance plan in about a year, at which point it can request an additional year or two years to finalize its strategy. Ultimately, if it does not submit a plan on its own, the EPA will impose a federal plan.
The state has several prominent politicians who have been leading the charge against the Clean Power Plan. Senate majority leader Mitch McConnell called on states to "just say no" to the plan earlier this year. The state's attorney general, Jack Conway, a Democrat who is running for governor, has vowed to fight it in court. Gov. Steve Beshear, also a Democrat, said he was disappointed with the rule, but that "a Kentucky-specific plan would be better than a federal plan imposed on us."
Kentucky's gubernatorial election will take place in November. Conway is opposed by Matt Bevin, a Republican who has said, if elected, he would work to resist the implementation of the Clean Power Plan.
"If the state is hell-bent on resisting, then they're losing an opportunity to tailor a plan and use the flexibility they've been given," said Dillen, the Earthjustice attorney. "It's a real test of what do politicians really care about: politics or ratepayers."