This article, from law firm White & Case, is authored by Patrick Holten.
On a sweltering day in late June, President Obama announced an ambitious, largely regulatory-driven initiative to reduce carbon-based emissions and combat climate change. The centerpiece of the President’s plan is a first-ever effort to regulate and restrict the carbon emissions of existing power plants. The plan also lists other efforts to encourage renewable energy, reduce reliance on fossil fuels and improve energy efficiency.
Under the plan, outlined in a Presidential Memorandum, President Obama directed the Environmental Protection Agency (EPA) to:
- i. Issue proposed carbon pollution standards, regulations or guidelines, as appropriate, for modified, reconstructed, and existing power plants by no later than June 1, 2014
- ii. Issue final standards, regulations or guidelines, as appropriate, for modified, reconstructed and existing power plants by no later than June 1, 2015 and
- Include in the guidelines addressing existing power plants a requirement that States submit to the EPA the implementation plans required under section 111(d) of the Clean Air Act and its implementing regulations by no later than June 30, 2016
For new plants, the President noted that 15 months ago the EPA published a Notice of Proposed Rulemaking entitled “Standards of Performance for Greenhouse Gas Emissions for New Stationary Sources: Electric Utility Generating Units.” As first proposed, the rule would generally require new fossil fuel-fired plants with greater than 25-megawatt electric output to meet an output-based standard of 1,000 pounds of CO2 per megawatt hour. In light of comments received, the President directed the EPA to issue a new proposal by no later than September 20, 2013 but did not set a deadline for a final rule, saying only that it should be promulgated “in a timely fashion.”
Conserving Fuel and Promoting Renewables
Another key provision in the President’s plan is a new effort to further increase fuel economy standards for heavy-duty vehicles. Noting that such vehicles are the second-largest source of greenhouse gas emissions in the transportation sector, the plan pledges to develop new fuel standards for this sector for 2019 and beyond.
To promote renewable energy, the plan seeks US$8 billion in loan guarantee authority available for certain advanced fossil energy and efficiency projects to support investments in new clean technologies. The President will also direct the Interior Department to permit renewables projects on public lands by 2020 to power more than six million homes. The plan also directs the Defense Department to install three gigawatts of renewable energy and sets a new goal to install 100 megawatts of renewables in federally assisted housing by 2020.
The plan again reiterates the long-sought goal of repealing several tax preferences used by large oil and gas companies that subsidize fossil fuel energy development and production.
Finally, the President made news in declaring that he would approve construction of the Keystone pipeline from Canada’s tar sands to the Gulf of Mexico “only if this project does not significantly exacerbate the problem of carbon pollution.” A final decision is not expected until late this year or in early 2014.
Taken together, the President’s initiatives aim to reduce carbon pollution by at least three billion metric tons cumulatively by 2030, which would roughly halve the current carbon emission output of the energy sector in the United States. Much of the effort hinges on regulatory fiat to be executed by the EPA and other federal regulators. However, tax law changes, agency funding for loan increases and other energy programs sought by the President would need to clear Congress, which may prove difficult given the partisan divide in both chambers.
The President’s Climate Action Plan is posted at:http://www.whitehouse.gov/sites/default/files/image/president27sclimateactionplan.pdf.
The President’s memorandum directing the EPA to issue carbon emission rules for new and existing power plants is posted at:http://www.whitehouse.gov/the-press-office/2013/06/25/presidential-memorandum-power-sector-carbon-pollution-standards.
White & Case LLP
Filed Under: News, Policy