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3 Things to Know About the EPA’s Clean Power Plan

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On Monday, President Obama unveiled the final version of the Environmental Protection Agency’s (EPA) Clean Power Plan

The highly anticipated plan targets a 32 percent emissions reduction in the electric power sector — the largest source of carbon pollution in the United States — by 2030. The new rule — which is an increase from the initial proposal of 30 percent — is projected to cut carbon pollution by a whopping 870 million tons below 2005 levels. 

While the plan will continue to be parsed by energy experts and stakeholders in the coming months and years, here are a few of the major provisions that caught our eye.

1. States have the power to create their own path to compliance. 

Under section 111(d) of the Clean Air Act, the EPA sets different emissions goals for each state and states choose how they will meet it. 

The EPA has set carbon emissions performance rates for two main types of power plants: coal and natural gas-fired power plants. To offer a range of flexible options, states and utilities are given three compliance choices for interim and long-term emission reduction goals: a rate-based state goal in pounds per megawatt hour (lb/MWh); a mass-based state goal in total short tons of CO2; and, a mass-based state goal with a new source complement measured in total short tons of CO2. 

States will develop and implement plans ensuring that power plants — either individually, together, or in combination with other measures — meet the interim CO2 performance rates for 2022-2029 and the final performance rates by 2030. For states that choose not to comply with the new standards, the EPA will assign a federal implementation plan and enforce it through its regional offices. 

2. The plan addresses reliability. 

To ensure the reliability of electricity, the Clean Power Plan requires each state to demonstrate it has considered reliability and allows for plan revisions in the event of significant, unanticipated reliability issues.  

Among the reliability protection considerations are: an extended compliance time frame over the draft rule; a gradual compliance glide path to the 2030 final goal; and multiple compliance options. Lastly, the EPA signed a Memorandum of Understanding (MOU) with the Department of Energy and FERC to ensure that they coordinate on the implementation of the Clean Power Plan, especially on ensuring reliability. 

3. The compliance period doesn’t begin until 2022.

While the plan requires a larger emissions reduction than the initial proposal, it also gives states and utilities — and the markets — more time to prepare. 

States are required to submit a final plan — or an initial state plan with an extension request — within 13 months, or September 6, 2016. Final plans must be submitted no later than September 6, 2018. 

The compliance period for the Clean Power Plan doesn’t commence for until January 1, 2022. In total, the final rule provides 15 years for full implementation of all emission reduction measures.


Stay tuned to the Direct Energy Business Blog for more news and analysis on the Clean Power Plan. To learn more about the specifics of the plan, check out these ten things to know about EPA’s Clean Power Plan.

Special thanks to Lindsay Westfield and Tim Bigler. 

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Posted: August 06, 2015