Sometime this summer, the United States Environmental Protection Agency (EPA) is expected to announce the final Clean Power Plan (CPP) rule, a set of standards that will greatly reduce carbon emissions from power plants. Upon the approval, each state will be responsible for developing their compliance plans by 2016.
According to the draft version of the rule, the CPP seeks to reduce national electricity sector emissions by an estimated 30 percent below 2005 levels by 2030. In order to do so, the new plan aims to establish state-by-state targets for carbon emissions reductions, with each state having its own target. However, states can work independently or together to achieve their Clean Power Plan goals.
To get a jumpstart on compliance strategies, we outline the top five ways companies can satisfy requirements as proposed by Navigant Consulting.
Although it’s not applicable to all states, coal retirement represents the single largest available source of emissions reductions. It’s anticipated the Northeastern, Southeastern and Midwestern states will rely on this to meet its targets.
According to Navigant Consulting, the addition of renewables is a cost-effective compliance option for most states. The model found that wind expansion is very economic throughout the western and central United States, while solar and wind play a critical role in ensuring low-emission generation in California.
Although there are tradeoffs, a glide path helps the final 2030 targets by reducing overall costs, especially those that could potentially skyrocket with the rise of coal retirements. Analysis by Navigant Consulting has proven the implementation of a glide path has the ability to result in savings of over $200 billion when compared to non-glide path scenarios.
The obvious choice here, energy efficiency is the lowest-cost compliance option in all states. However, the need to expand programs is critical in order to achieve compliance. According to the proposed model by Navigant Consulting, expansion of energy efficiency programs can save roughly $250 billion above business-as-usual EE through 2030.
Without a doubt, natural gas will play a fundamental role in complying with the Clean Power Plan for states. Due to coal retirements, the Northeast and Southeast will rely heavily on new natural gas plants to supplement energy efficiency, while central and western United States will rely on gas to maintain capacity margins.