States asked the U.S. Environmental Protection Agency (EPA) for flexibility in crafting plans to meet the requirements of the proposed Clean Power Plan (also known as 111(d), after the pertinent section of the Clean Air Act), and EPA listened. EPA’s proposal uses four broad “building blocks” (heat rate improvements, re-dispatch to natural gas, non-emitting generation like renewable energy and nuclear power, and energy efficiency) to determine individual state emissions reduction targets. However, EPA has indicated that states may also include measures beyond these four building blocks in their plans, such as improved water efficiency and clean demand response, if their greenhouse gas emission reduction benefits can be evaluated, measured, and verified.
The options are nearly endless, and that may be the challenge. The flexibility EPA provided, coupled with the sheer number of compliance options, could hamper state regulators and lead to suboptimal, business-as-usual approaches to complying with the Clean Power Plan. Instead, we hope states will use the Clean Power Plan as an opportunity to solidify the link between energy and environmental policy and to innovate new approaches that improve both.
It’s Not a State Implementation Plan
States are already initiating careful planning efforts to identify ways to meet the proposed Clean Power Plan requirements, even before the plan is finalized by the EPA. Many observers characterize these state plans as State Implementation Plans (SIPs) for greenhouse gas emissions. In reality, however, the requirements under 111(d) differ markedly from those for traditional criteria pollutant SIPs as found in Section 110. Under Section 111(d), states are free to craft a compliance plan based on state policy rather than relying on prescriptive federal requirements—as long as the plan meets the EPA’s established greenhouse gas emissions reduction targets.
So, a state’s Clean Power Plan compliance plan is not a SIP, and that’s a good thing! States have an array of additional policies and technologies they can use and even tailor to their individual circumstances to achieve compliance more cost-effectively, assist in meeting other or future air quality goals, help address other issues such as water constraints, and boost state employment or economic gains. A new paper from RAP – It’s Not a SIP: Opportunities and Implications for State 111(d) Compliance Planning – details the key differences between 111(d) plans and 110 SIPs and offers recommendations for states to take advantage of the flexibility afforded under 111(d).
Opportunity for States
The flexibility offered under 111(d) presents a conundrum. States commonly prepare and revise SIPs, per the detailed and prescriptive requirements of Section 110 for a variety of common pollutants, such as ozone and fine particles (PM2.5). With more than 40 years of institutional knowledge and experience using Section 110 of the Clean Air Act, states have access to a rich library of guidance, model rules, and sample control measures that they can include or adapt as they develop SIPs. With only three narrow applications of Section 111 in those same 40 years, there’s little such history to go on. No “menu of options” yet exists for 111(d) (though the National Association of Clean Air Agencies is developing a menu, with RAP’s assistance, to be published in Q2 2015). Neither EPA nor the states have directly applicable experience about what will constitute an approvable state 111(d) plan for greenhouse gas reductions, so it’s understandable that some states may choose to develop 111(d) plans consistent with the narrow, but certainly more familiar, character of Section 110 SIPs. In doing so, however, these states risk higher costs, fewer options, and less innovation.
Most states could benefit from the greater flexibility the Clean Power Plan provides and will want to explore the numerous additional options it allows. Breaking new ground invariably involves stumbles, but states can set the stage for an affordable, approvable 111(d) plan by taking the following steps:
- Consider the variety of compliance options offered under EPA’s proposed rule, including options outside of EPA’s four building blocks;
- Consult with their affected sources, stakeholders, and fellow state regulatory agencies;
- Compare notes with their counterparts in other states (whether or not they are engaged in a formal multi-state compliance planning effort); and
- Communicate regularly with their EPA Regional Office to optimize plan effectiveness and avoid unpleasant surprises.
Innovation and the Clean Air Act are usually not terms that appear in the same sentence. State 111(d) plans have such potential. Applying the lessons from good state 111(d) plans can inform traditional criteria pollutant plans, and permit the same policies to jointly reduce multiple pollutants at the same time. In effect, an investment in a good 111(d) plan today can provide a high rate of return by increasing certainty, enabling the state to meet its Clean Power Plan obligations, reduce current and future criteria pollutant non attainment risks, and provide other economic and environmental benefits.