EPA's Clean Power Plan Proposal: Are the Emission Rate Targets Front-Loaded?

EPA's Clean Power Plan Proposal: Are the Emission Rate Targets Front-Loaded?

CRS Insights
EPA's Clean Power Plan Proposal: Are the Emission Rate Targets Front-Loaded?
Jonathan L. Ramseur, Specialist in Environmental Policy (jramseur@crs.loc.gov, 7-7919)
November 3, 2014 (IN10172)
On June 18, 2014, the Environmental Protection Agency (EPA) proposed regulations (the "Clean Power
Plan") addressing carbon dioxide (CO2) emissions from existing fossil fuel-fired electric generating
units. Carbon dioxide is the primary human-related greenhouse gas that contributes to climate change,
and these electric generating units, as a group, account for the largest source of CO2 emissions in the
United States.
The proposal would establish state-specific CO2 emission rate targets measured in pounds of CO2
emissions per megawatt-hour (MWh) of electricity generation. The targets include both a 2030 goal
and an interim goal to be achieved "on average" between 2020 and 2029. States would prepare and
submit to EPA implementation plans describing the state-specific activities that would achieve the
emission rate targets.
Assuming the proposal becomes a final rule in June 2015, states would then have until June 30, 2016,
to submit their implementation plans. However, states could request an additional year for submission
of a complete plan, provided that they have taken "meaningful steps" toward completion by the 2016
deadline. Alternatively, states participating in a multistate plan would have until June 30, 2018, to
submit a plan. For more background on EPA's proposal, see this CRS report.
Some industry stakeholders and state agencies have characterized EPA's proposed CO2 emission rate
targets for existing power plants as "front-loaded," with a disproportionate percentage of emission rate
reductions required in the early years of the program (2020-2024). The following analysis provides data
consistent with this observation.
In its proposal, EPA identified four categories of opportunities for states to reduce their CO2 emission
rates. EPA refers to these categories as "building blocks," and they include:
1. efficiency improvements at coal-fired, steam electric generating units;
2. displacement of more carbon-intensive electricity generation, particularly coal-fired generation,
with natural gas combined cycle (NGCC) generation;
3. increased use of renewable energies sources (e.g., wind and solar) and continued use of
existing nuclear power; and
4. energy efficiency improvements.
For more details on EPA's four building blocks, see this CRS report.
Using 2012 baseline data as its starting point, EPA applied a formula with the four building blocks to
establish state-specific CO2 emission rate goals for each year, starting in 2020 and ending in 2029.
These annual emission rates can be found in EPA's "Goal Computation" spreadsheet. States are not
specifically required to meet these annual emission rates. However, states would likely need to reduce
their emission rates on a pathway that is similar to the 2020-2029 annual emission rates, because the
state-specific interim targets were constructed by taking the average of the 2020-2029 annual emission
rates.
As an illustrative example, assume a state's 2012 baseline emission rate is 2,000 pounds of CO2 per
MWh and its 2029 Interim target is 1,750 pounds per MWh. If this state maintained its 2012 emission
rate in the early years (2020-2024), decreased its rate to 1,750 pounds per MWh in 2025, and held this
rate through 2029, the average annual rate (2020-2029) would be 1,875 pounds per MWh, well above

its 2029 target. Thus, assuming a state does not intend in the latter years (2025-2029) to reduce its
emission rate to a level below its 2029 interim target (say, 1,500 pounds per MWh in this example),
the mathematics of EPA's 2029 interim target effectively require states to make emission rate
reductions in the early years, which some have described as "front-loading."
This outcome is a result of EPA's building block emission rate formula. Although EPA's application of
building blocks 3 and 4 produce incremental effects (starting in 2020) that gradually reduce the state
emission rates, the full effects of building blocks 1 and 2 apply to the 2020 emission rate. Building
block 1 applies a 6% heat rate (i.e., efficiency) improvement to coal-fired, steam units. Building block 2
shifts a state's electric generation from high-carbon units, namely coal-fired units, to NGCC units.
The impacts of the building blocks on the 2020 emission rate may be expressed in several ways. One
could compare the 2020 emission rate calculated by EPA with the 2012 baseline. For example,
Washington's 2020 emission rate is 56% lower than its 2012 emission rate baseline (the largest
decrease by this measure). This measure ranges from this 56% decrease to a 4% decrease (Rhode
Island), with a median decrease of 21%.
One could also compare the emission rate reduction in 2020 (from the 2012 baseline) to the final
emission rate reduction required by 2030. For example, 90% of Arizona's total emission rate reductions
occur between its 2012 baseline and its 2020 emission rate (the largest decrease by this measure).
This measure ranges from 90% to 32% (Rhode Island), with a median of 66%. Arguably, this
comparison provides further support for the contention that the emission rate requirements are "front-
loaded."
The 10 states with the largest percentage of emission rate reductions in 2020 (compared to the total
rate reductions) are listed in Table 1. Although each state's electricity generation profile is unique,
building block 2—shifting from coal-fired generation to NGCC generation—has a considerable impact on
the emission rates in these states. Table 1 identifies the percentage decrease in coal generation and
the corresponding increase in NGCC generation between 2012 and 2020. In some cases (Arizona,
Washington, and Mississippi), EPA's emission rate formula results in a 100% decrease in coal
generation.
Table 1. States with the Largest Percentage of Total 2030 Emission Rate Reductions
Effectively Required by 2020 and Coal and NGCC Impacts from Building Block 2
Percent of
Percent
Percent
2030 Final
Decrease
Increase in
2020
2030
Emission
in Coal-
NGCC
Rate
Fired
Electricity
State
2012
"Calculated"
Final
Baseline
Emission
Emission
Reductions
Electricity
(2012-
Rate
Rate Goal
Estimated
(2012-
2020) from
in 2020
2020) from
Building
Building
Block 2
Block 2
Arizona
1,453
778
702
90%
100%
95%
Minnesota
1,470
965
873
84%
51%
198%
Arkansas
1,634
1,028
910
84%
64%
120%
South
Carolina
1,587
921
772
82%
22%
56%
Georgia
1,500
966
834
80%
34%
37%
Oklahoma
1,387
996
895
80%
52%
65%
Washington
756
334
215
78%
100%
66%
Colorado
1,714
1,244
1,108
78%
34%
134%
Mississippi
1,093
783
692
77%
100%
37%
Louisiana
1,455
1,015
883
77%
53%
102%

Source: Prepared by CRS; data from EPA Technical Support Document, Goal Computation
Spreadsheet.
Notes: The "2020 Calculated Emission Rate" is not a required target. EPA generated
annual emission rates between 2020 and 2029 to produce the Interim emission rate target,
which is an average of the 2020-2029 annual rates.
Emission rates in pounds of CO2 emissions per megawatt-hour.