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  • 08
  • December
  • 2016

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Correcting the New York Times on the Impact of Clean Power Plan

In a December 7, 2016, editorial regarding President-Elect Trump's plans to nominate Oklahoma Attorney General Scott Pruitt to lead the EPA, the New York Times editorial board wrote the following about the Clean Power Plan (“CPP”): 

If approved by a federal court, the plan could transform the electricity sector, close down hundreds of coal-fired power plants and encourage the growth of cleaner energy sources like wind and solar.

 
This statement is incorrect, and troublingly perpetuates a fundamental misunderstanding of the impacts of the CPP. Most significantly, it completely ignores the substantial shifts in power generation investment—due to low natural gas prices, conventional air pollutant regulations, and the declining costs of renewable generation—that have already taken place, which has resulted in significant decreases in electric power sector CO2 emissions.

According to the Energy Information Administration (“EIA”), electric power sector CO2 emissions fell nearly 21% between 2005 and May of 2016. These reductions were primarily the result of a shift away from coal-fired generation. In its Annual Energy Outlook 2016: Early Release, EIA concludes that the major drivers of coal plant retirements in 2016 are low natural gas prices and implementation of the mercury air toxics standards (“MATS”). These data show that the trends toward decreased use of coal-fired generation were set in motion well before the CPP was finalized, and it seems unlikely that the stay of the never-implemented CPP will have a material impact on these market trends.

The EIA’s analysis further concludes that in the absence of the CPP “emissions rise slightly over the projection [in EIA’s reference case with the CPP], but remain at least 19% below 2005 levels in all years.”

A more nuanced analysis by the Bipartisan Policy Center (“BPC”) finds that “lower natural gas prices will drive many of the power sector trends projected under the Clean Power Plan.” The BPC analysis concludes that the 2022 CPP targets will be reached under a business-as-usual scenario. Projecting further into the future, the analysis concludes that over much of 2022 to 2030 interim period, business-as-usual GHG emissions will remain below the CPP’s mass goals, allowing the creation of a bank of allowances that could be used in future years for CPP compliance. Therefore, while it is possible (and the BPC model projects) that the electric power generation sector may make additional investments in lower-carbon generation when the CPP is implemented, these projected future reductions would not be mandated by the CPP itself.

While the CPP could have the impact of creating long-term signals towards lower-carbon generation, it is a mistake to ascribe the shift in the United States’ generation mix to a single regulation that has yet to take effect. Rather, broader underlying market dynamics—including lower natural gas, wind, and solar prices—and other environmental regulations have set in motion a transition in the energy industry that the CPP sought to enshrine.

Therefore, while the precise trajectory that power sector CO2 emissions follow may change without the CPP, the transformation of the generation sector was already well underway and is likely to continue into the future.

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Author

Margaret E. Peloso

Margaret E. Peloso Counsel

Margaret’s areas of practice are environmental law and climate change. With respect to climate change, she handles a variety of matters, including advising on climate change risk management, with a particular emphasis on the changing regulatory environment, and climate change adaptation issues. View Full Bio