08.13.2020

EPA’s Affordable Clean Energy Rule and Related Issues: Frequently Asked Questions

By the Congressional Research Service

In 2019, the U.S. Environmental Protection Agency (EPA) completed its reconsideration of a Clean Air Act (CAA) rulemaking for greenhouse gas (GHG) emissions from existing fossil-fuel-fired power plants. Specifically, the agency repealed the Clean Power Plan (CPP) and promulgated new guidelines for coal-fired power plants in the Affordable Clean Energy (ACE) rule. EPA based these actions on its conclusion that the CPP exceeded CAA authority by using measures that applied to the power sector as a whole rather than measures implemented at an individual facility. EPA also promulgated new general regulations to implement the ACE rule and any future emission guidelines issued under CAA Section 111(d).

EPA promulgated the CPP in 2015 to limit GHG emissions—specifically, carbon dioxide (CO2)—from existing fossil-fuel-fired power plants. The CPP was the subject of ongoing litigation and never went into effect. In 2017, EPA reviewed the CPP in response to Executive Order (E.O.) 13783, which directed federal agencies to “review existing regulations and policies that potentially burden the development or use of domestically produced energy resources.” EPA’s review concluded that the CPP exceeded EPA’s statutory authority. The agency therefore proposed repeal of the CPP in 2017 and a rule to replace it in 2018.

The structure and major provisions of the final ACE rule largely resemble those EPA proposed in August 2018. For example, the ACE rule defines the best system of emission reduction (BSER) for existing, coal-fired power plant CO2 emissions as “heat rate improvement” measures, also known as efficiency improvements. EPA stated that it lacked adequate information to establish a BSER for other types of existing fossil-fuel-fired units, particularly natural-gas-fired units. Similar to the proposal, the ACE rule does not establish a binding, numeric performance standard for CO2 emissions from existing coal-fired units. Rather, EPA identified six candidate technologies, which it characterized as the “most impactful” in the 2018 proposal, along with operating and maintenance practices that states must evaluate in establishing a standard of performance for each source in their state plans under CAA Section 111(d). Noting that many state and industry commenters requested a presumptive standard or additional clarity, EPA specified the level of emissions reductions achievable using the candidate technologies. States, however, must ultimately establish a rate-based standard and have the option to establish performance standards reflecting a heat rate improvement that falls outside of these ranges.
EPA analyzed the ACE rule and the CPP repeal impacts separately, projecting emission changes under each rule in 2025, 2030, and 2035. The agency projected “modest” CO2 reductions (less than 1%) under the final ACE rule compared to a baseline, which excludes the CPP. In its separate CPP repeal analysis, EPA projected CO2 reductions ranging from zero to 3.5% under several CPP implementation scenarios compared to a baseline without the CPP. EPA considered these projections as well as power sector trends and concluded that “the most likely result” of implementing the CPP would be “no change in emissions.” Others have modeled different assumptions than EPA to assess the CPP repeal and reached different conclusions about projected emission changes.

EPA also finalized revisions to the general implementing regulations under CAA Section 111. The revisions codify EPA’s current interpretation that states have “broad discretion” to establish and apply emission standards consistent with the BSER. Among other things, EPA lengthened the timeline specified in federal regulations for development and review of state plans.
EPA did not finalize the proposed revision to the applicability test for certain power plants under New Source Review (NSR). The NSR program generally requires emission limits based on the best available control technology when new facilities are built or when an existing facility makes a change that increases emissions above specified thresholds. Historically, NSR applicability determinations have been contentious and extensively litigated. According to EPA, the NSR changes that were included in the ACE proposal would prevent NSR from discouraging the installation of energy-efficiency measures. EPA stated that it intends to take final action on the proposed NSR changes at a later date.

Twenty-three states, the District of Columbia, and seven municipalities are challenging the CPP repeal and ACE rule in the U.S. Court of Appeals for the D.C. Circuit. A coalition of 21 states has intervened in the litigation in support of EPA. Various other public interest organizations, industry groups, and Members of Congress are also participating in the litigation.

The full report is available at
https://crsreports.congress.gov/product/pdf/R/R46482

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