EPA’s Clean Power Plan: Highlights of the Final Rule

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EPA’s Clean Power Plan: Highlights of the

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R44145

EPA’s Clean Power Plan: Highlights of the Final Rule

Summary

On August 3, 2015, the Environmental Protection Agency (EPA) finalized regulations that

address carbon dioxide (CO2) emissions in the electric power sector. The Clean Power Plan (CPP)

final rule requires states to submit plans that would reduce carbon dioxide (CO2) emissions or

emission rates—measured in pounds of CO2 emissions per megawatt-hour of electricity

generation—from existing fossil fuel electricity generating units. EPA estimates that in 2030, the

CPP will result in CO2 emission levels from the electric power sector that are 32% below 2005

levels.

The CPP is the subject of ongoing litigation in which a number of states and other entities have

challenged the rule. On February 9, 2016, the Supreme Court stayed the CPP for the duration of

the litigation. The CPP therefore currently lacks enforceability or legal effect, and if the rule is

ultimately upheld, at least some of the deadlines would have to be delayed.

For example, the final rule established a deadline of September 6, 2016, for states to submit to

EPA plans to comply with the rule with the option for a two-year extension (September 6, 2018).

If a state fails to submit a satisfactory plan by EPA’s regulatory deadline, the Clean Air Act directs

EPA to prescribe a plan for the state, often described as a federal implementation plan.

Emission reductions are scheduled to begin in 2022, giving the states two additional years

(compared to the proposed rule) before their plans must go into effect.

The 2015 final rule’s state-specific targets are substantially different from those in the 2014 EPA

proposed rule. For example, EPA’s final rule establishes uniform national CO2 emission

performance rates for each of the two subcategories of electricity generating units—fossil-fuelfired electric steam generating units (whether coal, oil, or natural gas) and stationary combustion

turbines (natural gas combined cycle)—affected by the rule. These standards are the

underpinnings for the state-specific emission rate and mass-based targets, which, as a result, are

considerably different from the proposed rule.

The final rule’s state targets imply lower percentage reductions for some states, while implied

percentage reductions are higher for others states compared to the proposed rule. The statespecific targets differ, because EPA altered its methodology (i.e., underlying calculations and

assumptions) compared to the proposed rule. For example, EPA eliminated “building block” 4

(energy efficiency improvements) and other “building blocks.”

In the final rule, EPA continues to use 2012 data as the baseline for calculated state targets.

However, the agency made several state-specific adjustments to address concerns raised by

stakeholders.

EPA also modified its treatment of nuclear power in the final rule, removing both “at risk” and

under-construction nuclear power from the emission rate calculations. EPA clarified that the final

rule would allow the generation from under-construction units, new nuclear units, and capacity

upgrades to help states meet their compliance objectives.

EPA would allow states to use “qualified biomass” as a means of meeting state-specific reduction

requirements. This appears to be a narrower approach to biomass than in the proposed rule.

The final rule contains a provision for a reliability “safety valve” for individual power plants.

This mechanism would allow for a 90-day reprieve from emissions limits in an emergency

situation.

In addition, EPA created a new program to encourage states to support renewable energy and

energy efficiency projects (in low-income communities) in 2020 and 2021.

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EPA’s Clean Power Plan: Highlights of the Final Rule

Contents

Introduction ..................................................................................................................................... 1

Final Rule Highlights ...................................................................................................................... 2

State Plan Requirements and Options ....................................................................................... 2

Federal Implementation Plan .................................................................................................... 3

Timing Requirements for State Targets ..................................................................................... 3

National Performance Standards ............................................................................................... 4

State-Specific Targets ................................................................................................................ 4

EPA’s Methodology ................................................................................................................... 5

National Performance Standards......................................................................................... 5

Building Blocks .................................................................................................................. 6

Emission Rate and Mass-Based Target Creation ................................................................ 7

2012 Baseline ...................................................................................................................... 8

Renewable Energy Treatment ............................................................................................. 8

Energy Efficiency Treatment .............................................................................................. 9

Nuclear Power Treatment ................................................................................................... 9

Biomass Treatment............................................................................................................ 10

Clean Energy Incentive Program ............................................................................................ 10

Electricity Reliability ...............................................................................................................11

Figures

Figure 1. State-Specific Emission Rate Targets in 2030 Compared to 2012 Emission Rate

Baselines ...................................................................................................................................... 5

Figure 2. Regions in EPA’s Methodology........................................................................................ 6

Tables

Table 1. National CO2 Performance Rates ...................................................................................... 7

Table A-1. State-Specific Emission Rate Targets (2030) and Reduction Requirements

Compared to 2012 Baselines ...................................................................................................... 12

Table A-2. 2012 CO2 Emission Baselines and 2030 CO2 Emission Targets ................................. 14

Appendixes

Appendix. Additional Information ................................................................................................ 12

Contacts

Author Contact Information .......................................................................................................... 15

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EPA’s Clean Power Plan: Highlights of the Final Rule

Introduction

On August 3, 2015, the Environmental Protection Agency (EPA) finalized regulations to address

carbon dioxide (CO2) emissions—or CO2 emission rates—at existing electricity generating units

(EGUs).1 The rule, known as the Clean Power Plan (CPP), appeared in the Federal Register on

October 23, 2015.2

EPA cites Section 111(d) of the Clean Air Act (CAA)3 as the statutory authority for the

rulemaking. EPA estimates that in 2030, the CPP will result in a 32% reduction in CO2 emissions

from the electric power sector in the United States compared to 2005 levels.4

Mass-Based Targets and Emission Rate Targets

A key decision states face under the CPP is whether to meet compliance with a mass-based target or an emission rate

target. An emission rate target is measured in pounds of CO2 emissions per megawatt-hour (MWh) of electricity

generation. A mass-based target is measured in short tons of CO2 emissions. In its CPP final rule, EPA calculates

state-specific emission rate targets and uses those targets to generate equivalent state-specific mass-based targets.

The CPP has generated considerable controversy and garnered interest from Congress and a wide

range of stakeholders. After EPA proposed the CPP in 2014,5 the agency received more than 4.2

million public comments. Some Members in the 114th Congress have made several attempts to

block the implementation of the CPP. In particular, after EPA published its CPP final rule in 2015,

both the Senate and the House passed a resolution of disapproval pursuant to the Congressional

Review Act.6 President Obama vetoed the resolution in December 2015. If enacted, the resolution

would have prohibited the CPP rulemaking from taking effect.

The CPP is the subject of ongoing litigation in which a number of states and other entities have

challenged the rule, while other states and entities have intervened in support of the rule.

Opponents of the rule applied to the Supreme Court in late January 2016 for an immediate stay of

the CPP final rule. In a move that surprised many observers, the Supreme Court issued a stay of

the final rule until the legal challenges have been resolved.7 Therefore, the CPP deadlines

(discussed below) do not have legal effect and will likely be delayed if the rule is ultimately

upheld.

This report provides a brief analysis of EPA’s final rule, summarizing highlights and identifying

differences between the final and proposed rules. The topics discussed do not represent an

In general, an affected EGU is a fossil-fuel-fired unit (e.g., coal, oil, or natural gas) that was in operation or had

commenced construction as of January 8, 2014; has a generating capacity above a certain threshold; and sells a certain

amount of its electricity generation to the electric grid.

EPA, “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units,”

Final Rule, 80 Federal Register 64661 (hereinafter “Final rule”), October 23, 2015.

42 U.S.C. §7411(d).

Final rule, p. 64665. See also EPA, Regulatory Impact Analysis for the Clean Power Plan Final Rule, August 2015.

EPA, “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units,”

Proposed Rule, 79 Federal Register 34830, June 18, 2014.

The Senate passed Senate Joint Resolution 24 on November 17, 2015. The House passed the same resolution on

December 1, 2015.

Order in Pending Case, West Virginia v. EPA, No. 15A773 (S. Ct. Feb. 9, 2016), https://www.supremecourt.gov/

orders/courtorders/020916zr1_8mj9.pdf.

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exhaustive list of the differences from the proposed rule or the support or opposition that may be

raised by various stakeholders. This report does not provide a legal analysis of the final rule.

For a more comprehensive analysis of the CPP, see CRS Report R44341, EPA’s Clean Power

Plan for Existing Power Plants: Frequently Asked Questions, by (name redacted) et al.

For a

detailed discussion of the legal issues, see CRS Report R44480, Clean Power Plan: Legal

Background and Pending Litigation in West Virginia v. EPA, by (name redacted)

In addition, other CRS reports provide more detailed information about particular topics related to

the CPP:



CRS Report R44607, EPA’s Clean Energy Incentive Program: Background and

Legal Developments, by (name redacted) and (name redacted) .

CRS Report R44451, U.S. Carbon Dioxide Emission Trends and the Role of the

Clean Power Plan, by (name redacted)

CRS Insight IN10578, Coal Use Already Near EPA’s 2030 Projection, by (name

redacted) .

CRS Report R44265, EPA's Clean Power Plan: Implications for the Electric

Power Sector, by (name redacted)

CRS In Focus IF10280, The Clean Power Plan (CPP): The Treatment of

Biomass, by (name redacted).

Final Rule Highlights

State Plan Requirements and Options8

Under Section 111(d) of the Clean Air Act (CAA), states must establish performance standards

that reflect the “best system of emission reduction” (BSER) that the EPA Administrator

determines has been adequately demonstrated, taking into account costs and any non-air-quality

health and environmental impacts and energy requirements.

The final rule requires states to submit to EPA either an initial plan or final plan by September 6,

2016. States can submit either individual plans or multi-state plans. If a state submits an initial

plan in 2016, the state can seek an extension from EPA to submit its final plan by September 6,

2018. If EPA grants the extension, the state must submit a progress report by September 6, 2017.

By comparison, the proposed rule would have allowed states to receive a one-year extension for

submitting their final plan and a two-year extension if states submitted a multi-state plan.

The final rule allows states to select from two types of plans, described by EPA as (1) an

“emission standards” approach or (2) a “state measures” approach.9 If a state chooses the

emission standards approach, the state would implement the federally enforceable emission rate

standards (discussed below) directly at the affected EGUs in the state. This approach could

involve multiple states and an emission rate trading system or a mass-based trading system.

The deadlines discussed in this section do not currently have legal effect and because of the February 9, 2016, stay by

the Supreme Court will likely be delayed if the rule is ultimately upheld.

Final rule, p. 64832; see also EPA, The Role of States: States Decide How to Achieve Their Goal, August 2015,

http://www.epa.gov/airquality/cpp/fs-cpp-states-decide.pdf.

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A state measures approach allows a state to achieve the equivalent of the CO2 emission standards

approach by using some combination of federally enforceable standards for EGUs and elements

that would be enforceable only under state laws. Examples of such elements include renewable

energy and/or energy efficiency requirements that could be applied to affected EGUs or other

entities. A plan that employs the state measures approach requires the inclusion of federally

enforceable standards that would take effect if the state measures approach did not achieve the

required result. If a state uses the state measures approach, the state must use a mass-based target

“to provide certainty that the state measures are achieving the required emission reductions.”10

Multi-state systems are allowed with this approach as well.11

Federal Implementation Plan

EPA cannot compel a state to submit a state plan pursuant to CAA Section 111(d). If a state fails

to submit a satisfactory plan by EPA’s regulatory deadline, CAA Section 111(d) directs EPA to

prescribe a plan for the state, often described as a federal implementation plan (FIP).

On the same day (August 3, 2015) that EPA released its CPP final rule, EPA released a proposed

rule that presents two options for a FIP: (1) a rate-based trading program, and (2) a mass-based

trading program.12 This proposal appeared in the Federal Register on October 23, 2015.13 As of

the date of this report, EPA has not finalized this rule.

A FIP would require compliance by individual EGUs in the affected state and would establish a

trading program that could be used by affected EGUs to meet those limits. According to EPA, the

stringency of the federal plan would be the same as the national CO2 emission performance rates

specified in the CPP.14

Timing Requirements for State Targets

EPA’s final rule directs states to establish interim targets that would be measured between 2022

and 2029. EPA’s proposed CPP rule set an interim target to be achieved “on average” between

2020 and 2029. Thus, the final rule effectively gives the states an additional two years before

reductions are necessary.

In addition, the final rule requires states to demonstrate their progress in implementing a gradual

application of BSER with “glide paths” that the states identify for reductions in three time

periods: 2022-2024, 2025-2027, and 2028-2029. The interim target is, nonetheless, to be achieved

using the average of the eight-year interim period.

Final rule, p. 64827.

Nine states in the Northeast and Mid-Atlantic regions have established a program, which took effect in 2009, to

control CO2 emissions from power plants. For more details, see CRS Report R41836, The Regional Greenhouse Gas

Initiative: Lessons Learned and Issues for Congress, by (name redacted)

Available at http://www.epa.gov/airquality/cpp/cpp-proposed-federal-plan.pdf.

EPA, “Federal Plan Requirements for Greenhouse Gas Emissions from Electric Utility Generating Units Constructed

on or Before January 8, 2014; Model Trading Rules; Amendments to Framework Regulations,” Proposed Rule, 80

Federal Register 64966, October 23, 2015.

See the proposed FIP, p. 64970.

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EPA’s Clean Power Plan: Highlights of the Final Rule

National Performance Standards

A major change in EPA’s final rule compared with the proposed rule is its core of what EPA called

“a traditional, performance-based approach to establishing emission guidelines for affected

sources.”15 The final rule establishes uniform national CO2 emission performance rates (measured

in pounds of CO2 per MWh of electricity generation) for each of the two subcategories of

EGUs—fossil-fuel-fired electric steam generating units (e.g., coal, oil, or natural gas units) and

stationary combustion turbines (e.g., natural gas combined cycle units)—affected by the rule.

These standards are the underpinnings for the state-specific emission rates and mass-based

targets. The methodology for these targets is discussed below.

State-Specific Targets

EPA’s final rule contains state-specific emission rate targets and mass-based targets. These targets

apply to the state’s total electricity portfolio (which can include generation from renewables and

nuclear power), not the individual units, as with the national performance standards (above). The

interim and final targets, however, differ from the ones in the proposed rule. Table A-1 lists each

state’s 2012 baseline, its 2030 emission rate target, and the implied percentage reduction required

to achieve the 2030 target. The mass-based targets are based on the emission rate targets and are

provided in Table A-2.

For comparison purposes, Table A-1 also lists the same information from the proposed rule. The

final rule implies lower percentage reduction requirements for some states and implies higher

percentage reduction requirements for others compared to the proposed rule.16

Figure 1 compares the state-specific emission rate targets in 2030 (the dark-colored columns)

with the state-specific emission rate baselines in 2012 (the combined dark- and light-colored

columns). The light-colored columns illustrate the emission rate reductions required by 2030. The

states on the left side of the figure have the largest emission rate reduction requirements

compared to their 2012 baseline; the states on the right side have the smallest reduction

requirement.

EPA did not establish emission rate goals for Vermont and the District of Columbia because they

do not currently have affected EGUs. In its final rule, EPA stated that Alaska, Hawaii, and the two

U.S. territories with affected EGUs (Guam and Puerto Rico) will not be required to submit state

plans on the schedule required by the final rule. EPA asserts it “does not possess all of the

information or analytical tools needed to quantify” the BSERs for these areas. EPA stated it will

“determine how to address the requirements of section 111(d) with respect to these jurisdictions at

a later time.”17

In addition, EPA crafted emission rate targets for three areas of Indian country. The tribes have

“the opportunity, but not the obligation,” to establish and submit plans to meet their emission rate

targets. If a tribe does not seek authority to submit its own plan, EPA is responsible for

Final rule, p. 64707.

EPA’s final rule does not specifically require percentage reductions. States would reduce their emissions or emission

rates by a certain percentage (compared to their baselines) if they meet their compliance obligation. Hence, CRS uses

the term “implies.”

Final rule, p. 64743.

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EPA’s Clean Power Plan: Highlights of the Final Rule

establishing a plan if the agency determines at a later date that “a plan is necessary or

appropriate.”18

Figure 1. State-Specific Emission Rate Targets in 2030 Compared to 2012 Emission

Rate Baselines

States Listed in Order of Their 2012 Emission Rate Baselines (High to Low)

Source: Prepared by CRS; final rule target and baseline data from EPA, CO2 Emission Performance Rate and Goal

Computation Technical Support Document for CPP Final Rule (August 2015) and accompanying spreadsheets,

http://www2.epa.gov/cleanpowerplan/clean-power-plan-final-rule-technical-documents.

Note: The dark-colored columns illustrate the state-specific emission rate targets in 2030. The combined darkand light-colored columns illustrate the state-specific emission rate baselines in 2012. The light-colored columns

illustrate the emission rate reduction requirements states must achieve by 2030.

EPA’s Methodology

The methodology (i.e., underlying calculations and assumptions) in the final rule that EPA used to

create (1) the national CO2 emission performance rates and (2) the state-specific emission rate and

mass-based targets is considerably different from EPA’s methodology in its proposed rule.

Although an in-depth comparison between the two approaches is beyond the scope of this

report,19 some initial observations are included below.

National Performance Standards

In its final rule, EPA established CO2 emission performance standards for two subcategories of

affected sources: (1) fossil-fuel-fired electric steam generating units (e.g., coal- and oil-fired

units) and (2) stationary combustion turbines—namely, natural gas combined cycle (NGCC)

Final rule, p. 64709.

For a detailed analysis of the proposed rule’s methodology, see CRS Report R43652, State CO2 Emission Rate Goals

in EPA’s Proposed Rule for Existing Power Plants, by (name redacted)

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EPA’s Clean Power Plan: Highlights of the Final Rule

units. To derive the BSER on which these rates were based, EPA divided the states into three

regions, illustrated in Figure 2, and compiled 2012 data—CO2 emissions and electricity

generation—from each source in each state.

Figure 2. Regions in EPA’s Methodology

Source: Reproduced from EPA, Overview of the Clean Power Plan: Cutting Carbon Pollution from Power Plants,

August 2015, http://www.epa.gov/airquality/cpp/fs-cpp-overview.pdf. The figure has a minor error, as the Texas

region should be labeled as the Electric Reliability Council of Texas (ERCOT) Interconnection.

Notes: EPA did not establish emission rate goals for Vermont and the District of Columbia because they do not

currently have affected EGUs. Although Alaska and Hawaii had targets in the proposed rule, in its final rule, EPA

stated that Alaska, Hawaii, and the two U.S. territories with affected EGUs (Guam and Puerto Rico) will not be

required to submit state plans on the schedule required by the final rule, because EPA “does not possess all of

the information or analytical tools needed to quantify” the best system of emission reduction for these areas.

EPA stated it will “determine how to address the requirements of section 111(d) with respect to these

jurisdictions at a later time.”

Building Blocks

Both the final and proposed rules included “building blocks” in the underlying calculations. In its

final rule, EPA applied three building blocks to the aggregated regional data:



Building block 1: EPA applied heat rate improvements to coal-fired EGUs,

improving their overall emission rate. The improvements vary by region from

2.1% to 4.3%.

Building block 2: EPA assumed that NGCC generation would increase to a

specific ceiling, displacing an equal amount of generation from steam units

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EPA’s Clean Power Plan: Highlights of the Final Rule



(primarily coal). Note that in the final rule, EPA applies building block 3 before

building block 2, dampening the impact of building block 2.

Building block 3: EPA projected annual increases in renewable energy

generation, which resulted in corresponding decreases in generation from

affected EGUs. EPA based the future increases on renewable energy generation

increases between 2010 and 2014.

In its final rule, EPA eliminated building block 4 (demand-side energy efficiency improvements

in the commercial and residential sectors) and modified the components in building blocks 1-3. In

particular, the renewable energy assumptions (building block 3) changed dramatically in the final

rule. According to EPA, the final rule’s renewable energy generation level in 2030 is more than

twice the level in the proposed rule.20 In addition, EPA assumed a coal-fired plant efficiency

improvement of 6% in the proposed rule (building block 1), while the final rule includes regionspecific improvements that range from 2.1% to 4.3%. The natural gas generation assumptions in

building block 2 changed as well.

EPA’s building block application produced annual CO2 emission performance rates for steam and

NGCC units in each region. EPA compared the rates in each of the three regions and chose the

least stringent regional rate as the national standard for that particular year for each EGU category

(Table 1).

Table 1. National CO2 Performance Rates

Pounds of CO2 per Megawatt-hour

2022

2023

2024

2025

2026

2027

2028

2029

2030

Interim

(Average of

2022-2030)

Fossil

steam

units

1,741

1,681

1,592

1,546

1,500

1,453

1,404

1,355

1,304

1,534

1,305

NGCC

units

898

877

855

836

817

798

789

779

770

832

771

Final

(2030)

Source: Prepared by CRS; annual rates from EPA, CO2 Emission Performance Rate and Goal Computation Technical

Support Document for CPP Final Rule (August 2015).

Note: To generate the final rates, EPA used the 2030 rates and rounded up to the next integer.

Emission Rate and Mass-Based Target Creation

To generate state-specific emission rate targets, EPA applied the annual performance rates to each

state’s baseline (2012) fossil fuel generation mix (steam generation vs. NGCC generation).

For example, in 2012, Arizona’s electricity generation mix included 49% steam generation, and

51% NGCC generation. To calculate Arizona’s 2030 emission rate target, EPA multiplied the

percentage of each generation type by the corresponding 2030 national CO2 emission

performance rate (Table 1):

(49% * 1,305 lbs. CO2/MWh) + (51% * 771 lbs. CO2/MWh) = 1,031 lbs. CO2/MWh

The state-specific emission rate targets are listed in Table A-1.

See EPA, Greenhouse Gas Mitigation Measures, Technical Support Document, August 2015, p. 4-11,

https://www.epa.gov/sites/production/files/2015-11/documents/tsd-cpp-ghg-mitigation-measures.pdf.

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EPA’s Clean Power Plan: Highlights of the Final Rule

EPA used the state-specific emission rate targets to calculate mass-based targets for each state.

This conversion process is more complicated. First, EPA multiplied a state’s emission rate target

(lbs. CO2/MWh) for a particular year (e.g., 2022) by the state’s 2012 CO2 generation baseline

(MWh). This yields an initial mass-based value for that year (lbs. CO2). Second, EPA determined

the amount of renewable energy generation (pursuant to building block 3) that would not be

needed to achieve the emission rate targets. This “excess” renewable energy generation is

available because EPA chose the least stringent of the three regional CO2 performance rates as the

national CO2 performance rate. EPA calculated the CO2 emissions associated with this “excess”

generation and allocated the CO2 emissions to all of the states based on their 2012 generation,

increasing their annual mass-based targets. As a result, some of the states’ 2030 mass-based

targets are higher than their 2012 emission baselines.

Table A-2 lists the state-specific, mass-based targets from EPA’s final rule. The table compares

the 2030 targets with the 2012 baselines as calculated for the final rule and provides a percentage

change between the two values.

2012 Baseline

After EPA’s proposed rule in June 2014, multiple states and stakeholders raised a variety of

concerns with EPA’s use of 2012 as the baseline year to calculate the emission rate targets. In both

its proposed and final rules, EPA uses 2012 as the baseline year in its emission rate and massbased target calculations. However, EPA made several state-specific adjustments in the final rule

to address some of the concerns. Perhaps the most substantial adjustments are in states that

generate a significant percentage of electricity from hydropower. According to EPA, 2012 was an

“outlier” year for snowpack, resulting in relatively high use of hydropower and a corresponding

decrease in fossil fuel generation in particular states.21 As Table A-1 indicates, this adjustment

seemed to have a considerable impact in states that use a high percentage of hydropower:

Washington, Oregon, Idaho, and Maine. In addition, EPA made other state-specific adjustments

for EGUs that came online during 2012.

Renewable Energy Treatment

Renewable energy played a significant role in the proposed rule, and its role appears to be even

greater in the final rule. Although an in-depth analysis of renewable energy in the final rule is

beyond the scope of this report, a comparison of estimated results from the Regulatory Impact

Analyses (RIA) accompanying the proposed and final rules indicates a substantial increase in

EPA’s analysis of renewable energy’s contribution to the nation’s electricity portfolio by 2030.

For example, in the proposed rule RIA, non-hydro renewable energy generation was projected to

increase by 2% in 2030, compared to a business-as-usual scenario.22 In the final rule RIA, nonhydro renewable energy generation was projected to increase by 9% in 2030 (under a rate-based

scenario), compared to a business-as-usual scenario.23 EPA explained that this difference resulted

from both its revised methodology in the final rule and updated economic data for renewable

energy, which included substantially lower cost estimates for project installation.24

Final rule, starting on p. 64815.

EPA, Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power Plants and

Emission Standards for Modified and Reconstructed Power Plants, June 2014, Table 3-11.

EPA, Regulatory Impact Analysis for the Clean Power Plan Final Rule, August 2015, Table 3-11.

EPA, Greenhouse Gas Mitigation Measures, August 2013.

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In addition, renewable energy is included in a new voluntary program that EPA developed for the

final rule. This program would provide incentives to states to develop renewable energy projects

in 2020 and 2021 (discussed below).

Energy Efficiency Treatment

As mentioned above, EPA’s final rule does not include demand-side energy efficiency (EE)

improvements in its emission rate methodology. In EPA’s proposed rule, EE improvements were

addressed in building block 4. The impacts of building block 4 on emission rate targets varied by

state.25 In general, the effects appeared more pronounced in states that generate a large percentage

of their electricity from sources that were not already included in the proposed rule emission rate

equation—primarily hydroelectric power and, to some extent, nuclear power.

In its final rule, EPA explained its reasoning for removing EE from the building blocks:

[Clean Air Act] section 111 has allowed regulated entities to produce as much of a

particular good as they desire provided that they do so through an appropriately clean (or

low-emitting) process. While building blocks 1, 2, and 3 fall squarely within this

paradigm, the proposed building block 4 does not.26

Building block 4 is outside our paradigm for section 111 as it targets consumer-oriented

behavior and demand for the good, which would reduce the amount of electricity to be

produced.27

Although EPA removed EE from its emission rate calculations, states may choose to employ EE

improvement activities as part of their plans to meet their targets. In particular, the final rule

includes a new voluntary program that provides incentives for early investments (in 2020 and

2021) in EE programs in low-income communities (as discussed below).

Nuclear Power Treatment

EPA modified its treatment of nuclear power in the final rule. In its proposed rule, EPA factored

“at risk” nuclear power (estimated at 5.8%)28 into the state emission rate methodology. As a

result, states had an incentive to maintain the at-risk nuclear power generation or their emission

rates would increase (all else being equal). The final rule does not include at-risk nuclear

generation in its building block calculations. EPA stated:

It is inappropriate to base the BSER in part on the premise that the preservation of

existing low- or zero-carbon generation, as opposed to the production of incremental,

low- or zero-carbon generation, could reduce CO2 emissions from current levels.29

In addition, in its final rule, EPA decided not to include under-construction nuclear power

capacity in the emission rate calculations. In its proposed rule, EPA identified five underconstruction nuclear units at facilities in Georgia, South Carolina, and Tennessee. Including the

See Table 7 in CRS Report R43652, State CO2 Emission Rate Goals in EPA’s Proposed Rule for Existing Power

Plants, by (name redacted)

Final rule, p. 64673.

Final rule p. 64778.

Using projections from Energy Information Administration, EPA determined that 5.8% of total U.S. nuclear power

capacity was at risk of being retired in the near future. See EPA, GHG Abatement Measures, Technical Support

Document, June 2014, http://www2.epa.gov/sites/production/files/2014-06/documents/20140602tsd-ghg-abatementmeasures.pdf.

Final rule, p. 64738.

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estimated generation from these anticipated units in the emission rate equation would have

substantially lowered the emission rate targets of these three states. If the final rule had retained

this feature, and these nuclear units did not complete construction and enter service, these three

states would likely have more difficulty achieving their emission rate goals. EPA clarified that the

final rule would allow the generation from under-construction units, new nuclear units, and

capacity upgrades to help sources meet emission rate or mass-based targets.

Biomass Treatment30

In its final rule, EPA would allow states to use “qualified biomass” as a means of meeting statespecific reduction requirements.31 This appears to be a narrower approach than was taken in the

proposed rule. Also, EPA requires additional accounting and reporting requirements if a state

decides to use qualified biomass. The agency gives some indication as to which biomass types

may qualify:

The EPA generally acknowledges the CO2 and climate policy benefits of waste-derived

biogenic feedstocks and certain forest- and agriculture-derived industrial byproduct

feedstocks.... Use of such waste derived and certain industrial byproduct biomass

feedstocks would likely be approvable as qualified biomass in a state plan when proposed

with measures that meet the biomass monitoring, reporting and verification

requirements.32

Clean Energy Incentive Program33

EPA established the Clean Energy Incentive Program (CEIP) as a voluntary complement to the

CPP. The CEIP is intended to promote early reductions of CO2 emissions before the CPP is

scheduled to take effect in 2022. EPA established the framework of the CEIP in its CPP final rule

and published a proposed rule for the CEIP in the Federal Register on June 30, 2016.34 The

proposed rule seeks to provide additional detail, clarify certain elements that were previously

outlined, and alter some of the program eligibility requirements.

The CEIP would award either emission rate credits or emission allowances for two categories of

activities:

1. Energy efficiency and solar renewable energy projects in low-income

communities, and

2. Renewable energy projects in participating states.

The CEIP credits take the form of emission rate credits or emission allowances, depending on

whether a state chooses an emission rate or mass-based target. The credits/allowances could be

sold to or used by an affected emission source to comply with the state-specific emission or

For more information on biomass issues, CRS In Focus IF10280, The Clean Power Plan (CPP): The Treatment of

Biomass, by (name redacted).

EPA defines qualified biomass as a “feedstock that is demonstrated as a method to control increases of CO2 levels in

the atmosphere” (Final rule, p. 64886).

Final rule, p. 64886.

For more details, see CRS Report R44607, EPA’s Clean Energy Incentive Program: Background and Legal

Developments, by (name redacted) and (name redacted) .

EPA, “Clean Energy Incentive Program Design Details,” 81 Federal Register 42940, June 30, 2016.

Congressional Research Service

EPA’s Clean Power Plan: Highlights of the Final Rule

emission rate reduction requirements. In a CO2-constrained regime, these credits/allowances

would have monetary value.35

Renewable energy projects would receive one credit/allowance from the state and one credit from

EPA for every two MWh of renewable energy generation in 2020 and 2021. Projects in lowincome communities would receive double credits: For every two MWh of generation from solar

power or avoided electricity generation through energy efficiency, these projects would receive

two credits/allowances from the state and two from EPA.

The amount of EPA credits/allowances potentially available to each state participating in the

CEIP depends on the relative amount of emission reduction each state is required to achieve.

States with greater reduction requirements would have access to a greater share of the EPA

credits.

EPA requires state plans to ensure that state-issued credits/allowances for the CEIP will maintain

the stringency of the emission or emission rate targets. In contrast, states do not need to account

for the matching credits/allowances provided by EPA. The proposed CEIP rule does not provide

details as to the source of the EPA's matching pool. In its proposed rule, EPA sought comments

from stakeholders on multiple CEIP issues.

Electricity Reliability36

EPA’s proposed CPP generated substantial interest in the potential effects of the rule on the

reliability of the electric power supply. In the final rule, EPA includes several measures to “ensure

that it does not interfere with the industry’s ability to maintain reliability.”37 In particular, the final

rule contains a provision for a reliability “safety valve” for individual power plants.38 EPA states

that there may be a need for an EGU to continue to operate and release “excess emissions” if an

emergency situation arises that could compromise electric system reliability. The reliability safety

valve allows for a 90-day reprieve from carbon emissions limits. EPA states that the safety valve

could be triggered only in an emergency situation. For example, extreme weather events are “of

short duration and would not require major—if any—adjustments to emission standards for

affected EGUs or to state plans.”39

In addition, EPA, the Department of Energy, and the Federal Energy Regulatory Commission

agreed to coordinate efforts while the state compliance plans are developed and implemented to

ensure that the power sector can continue to maintain electric reliability. A formal memorandum

expresses their joint understanding of how they will cooperate, monitor, implement, share

information, and resolve difficulties that may be encountered.40

For example, in the Regional Greenhouse Gas Initiative, a CO2 cap-and-trade program involving nine northeastern

states, emission allowances have sold at auction at prices between $2 per ton and $7.50 per ton. See auction results at

http://rggi.org/market/co2_auctions/results and CRS Report R41836, The Regional Greenhouse Gas Initiative: Lessons

Learned and Issues for Congress, by (name redacted)

For more information, see CRS Report R44265, EPA's Clean Power Plan: Implications for the Electric Power

Sector, by (name redacted)

Final rule, p. 64861.

Final rule, p. 64671.

Final rule, p. 64878.

EPA-DOE-FERC Coordination on Implementation of the Clean Power Plan, August 2015, http://www.ferc.gov/

media/headlines/2015/CPP-EPA-DOE-FERC.pdf.

Congressional Research Service

EPA’s Clean Power Plan: Highlights of the Final Rule

Appendix. Additional Information

Table A-1. State-Specific Emission Rate Targets (2030) and Reduction Requirements

Compared to 2012 Baselines

Proposed Rule vs. Final Rule

Proposed Rule

State

2012

Emission Rate

Baseline

2030

Emission

Rate

Target

Final Rule

Percentage

Change

Compared

to Baseline

2012

Emission Rate

Baseline

2030

Emission

Rate Target

Percentage

Change

Compared

to Baseline

Pounds of CO2 emissions per MWh

Alabama

1,444

1,059

27%

1,518

1,018

33%

Alaska

1,351

1,003

26%

Not established

Arizona

1,453

702

52%

1,552

1,031

34%

Arkansas

1,634

910

44%

1,816

1,130

38%

California

698

537

23%

954

828

13%

Colorado

1,714

1,108

35%

1,904

1,174

38%

Connecticut

765

540

29%

846

786

Delaware

1,234

841

32%

1,209

916

24%

Florida

1,199

740

38%

1,221

919

25%

Georgia

1,500

834

44%

1,597

1,049

34%

Hawaii

1,540

1,306

15%

Not established

Idaho

339

228

33%

834

771

Illinois

1,894

1,271

33%

2,149

1,245

42%

Indiana

1,924

1,531

20%

2,025

1,242

39%

Iowa

1,552

1,301

16%

2,195

1,283

42%

Kansas

1,940

1,499

23%

2,288

1,293

43%

Kentucky

2,158

1,763

18%

2,122

1,286

39%

Louisiana

1,455

883

39%

1,577

1,121

29%

Maine

437

378

14%

873

779

11%

Maryland

1,870

1,187

37%

2,031

1,287

37%

925

576

38%

1,003

824

18%

Michigan

1,690

1,161

31%

1,928

1,169

39%

Minnesota

1,470

873

41%

2,082

1,213

42%

Mississippi

1,093

692

37%

1,151

945

18%

Missouri

1,963

1,544

21%

2,008

1,272

37%

Montana

2,246

1,771

21%

2,481

1,305

47%

Nebraska

2,009

1,479

26%

2,161

1,296

40%

Nevada

988

647

35%

1,102

855

22%

Massachusetts

Congressional Research Service

EPA’s Clean Power Plan: Highlights of the Final Rule

Proposed Rule

Final Rule

2012

Emission Rate

Baseline

2030

Emission

Rate

Target

Percentage

Change

Compared

to Baseline

2012

Emission Rate

Baseline

2030

Emission

Rate Target

Percentage

Change

Compared

to Baseline

New Hampshire

905

486

46%

1,119

858

23%

New Jersey

928

531

43%

1,058

812

23%

New Mexico

1,586

1,048

34%

1,798

1,146

36%

New York

978

549

44%

1,140

918

19%

North Carolina

1,647

992

40%

1,673

1,136

32%

North Dakota

1,994

1,783

11%

2,368

1,305

45%

Ohio

1,850

1,338

28%

1,855

1,190

36%

Oklahoma

1,387

895

35%

1,565

1,068

32%

Oregon

717

372

48%

1,089

871

20%

Pennsylvania

1,531

1,052

31%

1,642

1,095

33%

Rhode Island

907

782

14%

918

771

16%

South Carolina

1,587

772

51%

1,791

1,156

35%

South Dakota

1,135

741

35%

1,895

1,167

38%

Tennessee

1,903

1,163

39%

1,985

1,211

39%

Texas

1,284

791

38%

1,553

1,042

33%

Utah

1,813

1,322

27%

1,790

1,179

34%

Virginia

1,302

810

38%

1,366

934

32%

Washington

756

215

72%

1,566

983

37%

West Virginia

2,019

1,620

20%

2,064

1,305

37%

Wisconsin

1,827

1,203

34%

1,996

1,176

41%

Wyoming

2,115

1,714

19%

2,315

1,299

44%

State

Source: Prepared by CRS; proposed rule target and baseline data from EPA, Goal Computation Technical Support

Document (June 2014) and accompanying spreadsheets, http://www2.epa.gov/carbon-pollution-standards/cleanpower-plan-proposed-rule-technical-documents; final rule target and baseline data from EPA, CO2 Emission

Performance Rate and Goal Computation Technical Support Document for CPP Final Rule (August 2015) and

accompanying spreadsheets, http://www2.epa.gov/cleanpowerplan/clean-power-plan-final-rule-technicaldocuments.

Notes: EPA did not establish emission rate goals for Vermont and the District of Columbia because they do not

currently have affected EGUs. Although Alaska and Hawaii had targets in the proposed rule, in its final rule, EPA

stated that Alaska, Hawaii, and the two U.S. territories with affected EGUs (Guam and Puerto Rico) will not be

required to submit state plans on the schedule required by the final rule, because EPA “does not possess all of

the information or analytical tools needed to quantify” the best system of emission reduction for these areas.

EPA stated it will “determine how to address the requirements of section 111(d) with respect to these

jurisdictions at a later time.”

EPA used different formulas to prepare the 2012 baselines in the proposed and final rules. The final rule baseline

includes pounds of CO2 generated from affected EGUs in each state (the numerator) divided by the electricity

generated from these units. The proposed rule baseline included pounds of CO2 generated from affected EGUs

in each state (the numerator) divided by the electricity generated from these units and “at-risk” nuclear power

and renewable energy generation (the denominator). Including these additional elements in the denominator can

yield lower baselines compared to the final rule.

Congressional Research Service

EPA’s Clean Power Plan: Highlights of the Final Rule

In addition, EPA made several state-specific adjustments to the 2012 baselines in the final rule. In all cases, these

adjustments increased the state baselines.

Table A-2. 2012 CO2 Emission Baselines and 2030 CO2 Emission Targets

Short Tons—Alphabetical by State

State

Alabama

2012 CO2 Emission

Baseline

2030 CO2 Emission

Targets

Percentage Change

75,571,781

56,880,474

-25%

Alaska

Not established

Arizona

40,465,035

30,170,750

-25%

Arkansas

43,416,217

30,322,632

-30%

California

49,720,213

48,410,120

-3%

Colorado

43,209,269

29,900,397

-31%

Connecticut

6,659,803

6,941,523

Delaware

5,540,292

4,711,825

-15%

Florida

124,432,195

105,094,704

-16%

Georgia

62,843,049

46,346,846

-26%

Hawaii

Not established

Idaho

1,438,919

1,492,856

Illinois

102,208,185

66,477,157

-35%

Indiana

110,559,916

76,113,835

-31%

Iowa

38,135,386

25,018,136

-34%

Kansas

34,655,790

21,990,826

-37%

Kentucky

92,775,829

63,126,121

-32%

Louisiana

44,391,194

35,427,023

-20%

Maine

2,072,157

2,073,942

0.1%

Maryland

20,171,027

14,347,628

-29%

Massachusetts

13,125,248

12,104,747

-8%

Michigan

69,860,454

47,544,064

-32%

Minnesota

34,668,506

22,678,368

-35%

Mississippi

27,443,309

25,304,337

-8%

Missouri

78,039,449

55,462,884

-29%

Montana

19,147,321

11,303,107

-41%

Nebraska

27,142,728

18,272,739

-33%

Nevada

15,536,730

13,523,584

-13%

New Hampshire

4,642,898

3,997,579

-14%

New Jersey

19,269,698

16,599,745

-14%

New Mexico

17,339,683

12,412,602

-28%

New York

34,596,456

31,257,429

-10%

North Carolina

67,277,341

51,266,234

-24%

Congressional Research Service

EPA’s Clean Power Plan: Highlights of the Final Rule

State

2012 CO2 Emission

Baseline

2030 CO2 Emission

Targets

Percentage Change

North Dakota

33,757,751

20,883,232

-38%

Ohio

102,434,817

73,769,806

-28%

Oklahoma

52,862,077

40,488,199

-23%

Oregon

9,042,668

8,118,654

-10%

Pennsylvania

119,989,743

89,822,308

-25%

Rhode Island

3,735,786

3,522,225

-6%

South Carolina

35,893,265

25,998,968

-28%

South Dakota

5,121,124

3,539,481

-31%

Tennessee

41,387,231

28,348,396

-32%

Texas

251,848,335

189,588,842

-25%

Utah

32,166,243

23,778,193

-26%

Virginia

35,733,502

27,433,111

-23%

Washington

15,237,542

10,739,172

-30%

West Virginia

72,318,917

51,325,342

-29%

Wisconsin

42,317,602

27,986,988

-34%

Wyoming

50,218,073

31,634,412

-37%

Source: Prepared by CRS using data from EPA, CO2 Emission Performance Rate and Goal Computation Technical

Support Document for CPP Final Rule (August 2015). The interim and final targets are codified in 40 C.F.R. Part 60,

Subpart UUUU, Table 3.

Notes: EPA did not establish emission targets for Vermont and the District of Columbia because they do not

currently have affected EGUs. Although Alaska and Hawaii had targets in the proposed rule, in its final rule, EPA

stated that Alaska, Hawaii, and the two U.S. territories with affected EGUs (Guam and Puerto Rico) will not be

required to submit state plans on the schedule required by the final rule, because EPA “does not possess all of

the information or analytical tools needed to quantify” the best system of emission reduction for these areas.

EPA stated it will “determine how to address the requirements of section 111(d) with respect to these

jurisdictions at a later time” (EPA, “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric

Utility Generating Units,” Final Rule, 80 Federal Register 64743, October 23, 2015).

Author Contact Information

(name redacted)

Specialist in Environmental Policy

[redacted]@crs.loc.gov

, 7-....

Congressional Research Service

(name redacted)

Specialist in Environmental Policy

[redacted]@crs.loc.gov, 7-....

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