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Emissions Plan Powers Energy Efficiency

Brett Feldman — June 2, 2014

President Obama has finally unveiled the long-awaited draft carbon emissions regulations on existing power plants.  The goal of the Clean Power Plan Proposed Rule is to reduce carbon emissions from the power sector by 30% by 2030.  While most of the focus is on how this rule will affect coal power plants, it has huge ramifications for the demand-side management and renewable energy sides of the equation, as well.

This is the first time that the U.S. Environmental Protection Agency (EPA) will allow “outside the fence” solutions for such a major regulation.  Instead of requiring unit-specific actions to reduce emissions, regulators will allow each state the ability to submit its own compliance plan by June 2016.  States can choose from a menu of four sets of measures, or building blocks, that the EPA has identified as being eligible for Best System of Emission Reduction (BSER) status:

  • Make fossil fuel power plants more efficient
  • Use more low-emitting power sources (such as natural gas)
  • Use more zero- and low-emitting power sources (renewables and nuclear)
  • Use electricity more efficiently, with a goal of an annual increase of 1.5% in demand-side energy efficiency

Have It Your Way

In addition, states have the option to convert their emissions rate-based goals to emissions mass-based goals in order to set up cap and trade-based systems.  The agency also made it clear that states can develop their own individual plans or collaborate to develop multistate plans, including existing programs, such as the Regional Greenhouse Gas Initiative (RGGI), or new ones.  Finally, the EPA stated that states that have already invested in energy efficiency programs will be able to build on these programs during the compliance period to help make progress toward meeting their goals.

The draft rule is extremely accommodating to energy efficiency.  For states that have existing energy efficiency programs, this presents a new avenue to provide value and expand their reach.  For states that have yet to develop energy efficiency programs, or for those states (mostly out west) that have the highest emissions reductions goals, this rule can act as a jump-start for energy efficiency.  It also provides a roadmap to attain emissions cuts in ways that are more cost-effective than strictly targeting power plants and that have the smallest economic impacts – possibly even economic benefits.

There is still some ambiguity about how solutions like demand response and smart grids will be applied under the plan, but that can be hammered out through comments and negotiations prior to the final rule in 2015.  This is just the beginning of what will be a long, arduous, and likely litigious process – but the opening salvo certainly bodes well for clean demand-side resources.

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