EPA's Clean Power Plan and Supreme Court's Stay: Climate Change Impacts and EPA's Actions

1. EPA’s Clean Power Plan and the Supreme Court’s Stay of the Rule April, 2016 Carol KemkerU.S. Environmental Protection AgencyAtlanta, Georgia

2. Climate Change is a Threat • Public health risks include: • Increase in heat stroke and heat-related deaths • Extreme heat events are the leading weather-related cause of death in the U.S. • Worsening smog (also called ground-level ozone pollution) and, in some cases, particle pollution • Increasing intensity of extreme events, like hurricanes, extreme precipitation and flooding • Increasing the range of insects that spread diseases such as Lyme disease and West Nile virus

3. The President’s Climate Action Plan https://www.whitehouse.gov/climate-change • President Obama’s Climate Action Plan takes a series of ambitious steps to combat climate change • Cuts carbon pollution in America through domestic policies that involve both voluntary and regulatory action • Prepares our country for the impacts of climate change • Leads international efforts to address global climate change • Advances the Science

4. What EPA is Doing http://epa.gov/climatechange/ghgemissions/ Collecting Emissions Data • EPA collects various types of GHG emissions data and promotes consistency in inventories • The Inventory of U.S. GHG Emissions and Sinks • The Greenhouse Gas Reporting Program • These data help policy makers, businesses, and the Agency track greenhouse gas emissions trends and identify opportunities for reducing emissions and increasing efficiency

5. What EPA is Doing http://epa.gov/climatechange/EPAactivities.html Getting Reductions • EPA is reducing GHG emissions and promoting a clean energy economy through highly successful partnerships and common-sense regulatory initiatives, such as: • EPA's vehicle GHG rules • Partnering with the private sector through voluntary energy and climate programs • Reducing EPA's own carbon footprint

6. What EPA is Doing http://www2.epa.gov/climate-research Advancing the Science • EPA contributes to world-class climate research through: • The U.S. Global Change Research Program • The Intergovernmental Panel on Climate Change • The National Research Council of the National Academies of Science • EPA's Office of Research and Development conducts research to understand the environmental and health impacts of climate change and to inform sustainable solutions for adapting to and reducing the impact from a changing climate

7. What EPA is Doing http://www.epa.gov/statelocalclimate/ Partnering With States, Localities, and Tribes • EPA's State and Local Climate and Energy Program provides technical assistance, analytical tools, and outreach support to state, local, and tribal governments • Identifies/documents cost-effective policies and initiatives that address climate change, including those that promote renewable energy, energy efficiency, and related clean technologies • Measures/evaluates the environmental, economic, and public health benefits of climate change and clean energy initiatives • Offers tools, guidance, and outreach support for assessing the options and benefits of actions to reduce greenhouse gas emissions • Fosters peer exchange opportunities for state and local officials to share information on best practices and lessons learned about innovative policies and programs

8. What EPA is Doing UN Framework Convention on Climate Change As a party to the Framework, the U.S. is committed to working with the international community to promote the convention’s key objective: stabilizing greenhouse gas concentrations in the atmosphere at a level that prevents dangerous human-induced interference with the climate system http://epa.gov/climatechange/EPAactivities/internationalpartnerships.html Partnering Internationally EPA is engaged in a variety of international activities to advance climate change science, monitor our environment, and promote activities that reduce greenhouse gas emissions EPA establishes partnerships, provides leadership, and shares technical expertise to support these activities EPA participates in bi-and multilateral partnerships, providing leadership, technical expertise, and capacity building support

9. What EPA is Doing http://epa.gov/climatechange/impacts-adaptation/fed-programs.html Helping Communities Adapt • Across the United States and the world, climate change is already affecting communities, livelihoods, and the environment • In response, many parts of the federal government are taking action to help Americans adapt to current and potential risks • For example, EPA's Climate Ready Estuaries and Climate Ready Water Utilities programs help coastal resource managers and water utility managers, respectively, plan and prepare for climate change

10. Supreme Court Stays the Clean Power Plan • February 9, 2016 – The Supreme Court stayed implementation and enforcement of the Clean Power Plan pending judicial review • The Court’s decision was not on the merits of the rule • EPA firmly believes the Clean Power Plan will be upheld when the merits are considered because the rule rests on strong scientific and legal foundations • For the states that choose to continue to work to cut carbon pollution from power plants and seek the agency’s guidance and assistance, EPA will continue to provide tools and support • EPA will provide additional information as it is available • Key Points • Implementation and enforcement are on hold • State submittals not required on September 6, 2016 • EPA will continue to work with states that want to work with us on a voluntary basis The remainder of this presentation describes the various components of the CPP for existing sources as they were on February 9, 2016, and is presented only for informational purposes – implementation and enforcement of the CPP for existing sources is on hold pending judicial review

11. HITTING “PAUSE” ON CLIMATE ACTION The Supreme Court’s Stay of the Clean Power plan

13. State of West Virginia v. EPA

14. Supreme Court Stay

17. Kurt D. Ebersbach Senior Attorney Southern Environmental Law Center kebersbach@selcga.org

18. President’s Climate Action Plan Some areas of activity… Building a 21st century transportation sector Cutting energy waste in homes, businesses, and factories Reducing methane and HFCs Preparing the U.S. for the impacts of climate change Leading international efforts to address global climate change Reducing carbon pollution from power plants Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

19. BSER Best System of Emission Reduction

20. Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

21. Summary • On August 3, 2015 EPA announced three actions that will significantly reduce carbon pollution from the power sector, the largest source of carbon pollution in the US • Carbon Pollution Standards – new, modified and reconstructed sources IN EFFECT; NOT STAYED • 80 FR 64509; October 23, 2015 • Clean Power Plan (CPP) – existing sources STAYED • 80 FR 64661; October 23, 2015 • Federal Plan proposal and model rules Proposed, not finalized • 80 FR 64965; October 23, 2015 • When the stay is lifted EPA’s actions will • Achieve significant pollution reductions • Deliver an approach that gives states and utilities plenty of time to preserve ample, reliable and affordable power www.epa.gov/cleanpowerplan Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

22. The Clean Power Plan Overview • Relies on a federal-state partnership to reduce carbon pollution from the biggest sources – existing power plants • Carrying out EPA’s obligations under section 111(d) of the Clean Air Act, the CPP sets carbon dioxide emissions performance rates for affected power plants that reflect the “best system of emission reduction” (BSER) • EPA identified 3 “Building Blocks” as BSER and calculated performance rates for fossil-fueled EGUs and another for natural gas combined cycle units • Then, EPA translated that information into a state goal – measured in mass and rate – based on each state’s unique mix of power plants in 2012 • The states have the ability to develop their own plans for existing EGUs to achieve either the performance rates directly or the state goals, with guidelines for the development, submittal and implementation of those plans Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

23. The Clean Power Plan What sources? Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

24. Category-Specific Performance Rates • Power plants are subject to the same standards no matter where they are located. Emission Performance Rates (application of BSER) Unique State Generation Mix Mass Equivalents Unique State Goal Rates X = EPA established carbon dioxide emission performance rates for two subcategories of existing fossil fuel-fired electric generating units (EGUs): • Fossil fuel-fired electric generating units (generally, coal-fired power plants) and • Natural gas combined cycle units. Emission performance rates have been translated into equivalent state goals. In order to maximize the range of choices available to states, EPA provided state goals in three forms: • rate-basedgoal measured in pounds per megawatt hour (lb/MWh), • mass-based goal measured in short tons of CO2 and • mass-based goal with a new source complement (for states that choose to include new sources) measured in short tons of CO2. Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

25. Choosing the Glide Path to 2030 • Phased-in glide path (compliance timelines currently stayed) • The interim period runs from 2022-2029 and includes three interim performance periods creating a reasonable trajectory (smooth glide path) • Interim steps (currently stayed) • Step 1 – 2022-2024 • Step 2 – 2025-2027 • Step 3 – 2028-2029 • Provided that the interim and final CO2 emission performance rates or goals are met, for each interim period a state can choose to follow EPA’s interim steps or customize their own • Renewables and energy efficiency can help states meet their goals • Investments in renewables can help states under all plan approaches to achieve the Clean Power Plan emission goals while creating economic growth and jobs for renewable manufacturers and installers, lowering other pollutants and diversifying the energy supply • Energy efficiency improvements are expected to be an important part of state compliance across the country and under all state plan types, providing energy savings that reduce emissions, lower electric bills, and lead to positive investments and job creation Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

26. Two State Plans Designs States are able to choose one of two state plan types: Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

27. Opportunities for Early Investments • In the final Clean Power Plan, EPA provided the Clean Energy Incentive Program (CEIP) to incentivize early investments that generate wind and solar power or reduce end-use energy demand during 2020 and 2021  • The CEIP is an optional, “matching fund” program states may choose to use to incentivize early investments in wind or solar power, as well as demand-side energy efficiency measures that are implemented in low-income communities • EPA will provide matching allowances or Emission Rate Credits (ERCs) to states that participate in the CEIP, up to an amount equal to the equivalent of 300 million short tons of CO2 emissions. The match is larger for low-income EE projects, targeted at removing historic barriers to deployment of these measures. Also, states with more challenging emissions reduction targets will have access to a proportionately larger share of the match • EPA engaged with stakeholders in the fall of 2015 to discuss the CEIP and gather feedback on specific elements of the program Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

28. Design Preserves Reliability • The CPP includes features that reflect EPA's commitment to avoid interfering with the industry's ability to maintain the reliability of the nation's electricity supply: • long compliance period starting in 2022 with sufficient time to maintain system reliability • design that allows states and affected EGUs flexibility to include a large variety of approaches and measures to achieve the environmental goals in a way that is tailored to each state’s and utility’s energy resources and policies, including trading within and between states, and other multi‐state approaches • requirement that each state demonstrate in its final plan that it has considered reliability issues in developing its plan, including consultation with an appropriate reliability or planning agency • mechanism for a state to seek a revision to its plan in case unanticipated and significant reliability challenges arise • reliability safety valve to address situations where, due to an unanticipated event or other extraordinary circumstances, there is a conflict between the requirements imposed on an affected power plant and maintaining reliability • EPA, Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) are coordinating efforts to preserve continued reliable electricity generation and transmission Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

29. Many CO2 Reduction Opportunities • Heat rate improvements • Fuel switching to a lower carbon content fuel • Integration of renewable energy into EGU operations • Combined heat and power • Qualified biomass co-firing and repowering • Renewable energy (new & capacity uprates) • Wind, solar, hydro • Nuclear generation (new & capacity uprates) • Demand-side energy efficiency programs and policies • Demand-side management measures • Electricity transmission and distribution improvements • Carbon capture and utilization for existing sources • Carbon capture and sequestration for existing sources Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

30. Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

31. Proposed Model Rules Overview This information is presented for informational purposes only in light of the stay. • On August 3, 2015, EPA proposed two different plan types for a federal plan and model trading rules  ̶  a rate‐based trading plan and a mass‐based trading plan • The model trading rules would serve as tools that state can follow in developing their own plans to capitalize on the flexibility built into the final Clean Power Plan • The model rules are intended to be flexible and affordable options for states and provide a cost-effective pathways to adopt a trading system supported by EPA and make it easy for states and power plants to use emissions trading • The model rules • Contain the same elements that state plans are required to contain, including: • Performance standards • Monitoring and reporting requirements • Compliance schedules that include milestones for progress • Ensure the CO2 reductions required in the final CPP are achieved • Preserve reliability • Both proposed plan types would require affected electric generating units (EGUs) to meet emission standards set using the CO2 emission performance rates in the Clean Power Plan Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

32. Proposed Federal Plan How does it work? This information is presented for informational purposes only in light of the stay. • As proposed, a federal plan would be finalized onlyfor those affected states with affected EGUs that EPA determines have failed to submit an approvable Clean Air Act 111(d) state plan by the relevant deadlines set in the emission guidelines as may be modified as necessitated by the stay • Even where a federal plan is put in place, a state will still be able to submit a plan, which if approved , will allow the state and its sources to exit the federal plan • As proposed, the EPA explained its intention to finalize a single approach (i.e., either the mass-based or rate-based approach) for every state in which it finalizes a federal plan • Affected states may administer administrative aspects of the federal plan and become the primary implementers • May also submit partial state plans and implement a portion of a federal plan • Affected states operating under a federal plan may also adopt complementary measures outside of that plan to facilitate compliance and lower costs to the benefit of power generators and consumers • Proposed a finding that it is necessary or appropriate to implement a section 111(d) federal plan for the affected EGUs located in Indian country. CO2 emission performance rates for these facilities were finalized in the Clean Power Plan Presented for informational purposes only; the CPP for existing sources is stayed pending judicial review

33. CPPComplianceTiming Initial State Submission Progress Rept/PlanType Interim Step 1 Interim Step 2 Interim Step 3 FinalPlan Submission Clean Energy Incentive Program 2016 2017 2018 2019 2020 2021 2022 2023 2025 2026 2027 2028 2029 2030 2031 2024 Source: RAP from modified NicholasInstitute graphic