As we indicated in our blog last week, on Monday, the U.S. Environmental Protection Agency (EPA) released a proposed rule, known as the “Clean Power Plan,” to drastically cut carbon dioxide emissions from existing power plants across the United States by the year 2030.

In a video on EPA’s website, EPA Administrator Gina McCarthy announced that with this proposed rule “EPA is delivering on a vital piece of President Obama’s Climate Action Plan … that will cut harmful carbon pollution from our largest source–power plants.” “We don’t have to choose between a healthy economy and a healthy environment–our action will sharpen America’s competitive edge, spur innovation, and create jobs.”

The nearly 650 page Clean Power Plan (Plan) follows an earlier proposed rule limiting emissions from new power plants, first released on March 27, 2012, and updated on September 20, 2013. The Plan sets state-wide limits on carbon dioxide emissions from existing power plants, calling for a 30% reduction of carbon dioxide emissions below 2005 levels by the year 2030.  According to the White House, nearly 40% of all carbon dioxide pollution in the United States comes from fossil-fuel fired power plants.  EPA says reaching the Plan’s target by 2030 will reduce overall emissions of carbon dioxide by over 730 million metric tonnes per year, will lead to climate and health benefits worth an estimated $55 billion to $93 billion per year, and will reduce pollutants that contribute to soot and smog by over 25%.

Critics of the two proposed power plant rules claim the Obama Administration’s aim is to phase out use of coal as a fuel for power plants. In fact, Senator Mitch McConnell of Kentucky introduced legislation in the Senate on Tuesday aimed at blocking EPA’s ability to implement the Plan unless proof was provided that the regulations will not threaten electric reliability, raise electricity prices, or cost U.S. jobs. Senator McConnell called for an “immediate vote” on his legislation, saying the Plan would be a “dagger in the heart of the American middle class.”

The U.S. Chamber of Commerce (Chamber) is also questioning the Plan’s benefits. Before the Plan was released Monday, the Chamber’s Institute for 21st Century Energy (Energy Institute) commissioned a report which examined the expected impacts of the Plan on the electricity sector and the economy as a whole and found the Plan may suppress average U.S. Gross Domestic Product by $51 billion per year and may lead to an average of 224,000 fewer U.S. jobs every year through 2030.

EPA uses authority granted under Section 111(d) of the Clean Air Act to hand responsibility for achieving the stated goals to individual state environmental agencies. The Plan lets each state determine how individual generating units will be regulated, allowing states to choose from a list of options to reduce carbon dioxide emissions across the entire energy sector including: creating or joining cap-and-trade programs (state and regional), increasing use of alternative fuels and renewable energy for generation, or imposition of strict energy efficiency measures within the state.

EPA did not randomly pull these options from out of a hat. The cap-and-trade option in the Plan is based on state programs already in place in California, Arizona, and other Western States. In fact, Time Magazine thought California’s cap-and-trade program was one of the Top 10 Green Stories of 2013. Suggesting the use of renewable energy for generation may seem to some as unrealistic because people may think it will be difficult to replace a coal-fired generating unit with a solar powered plant. However, solar power, especially when generated through the use of photovoltaic cells, is becoming more and more efficient. A recent Scientific American article detailed a new photovoltaic solar plant that recently opened in the Arizona desert with a 290 megawatt generation capacity. Even more powerful solar plants are set to open in the near future with one planned plant in Southeastern California capable of producing 579 megawatts when it is complete in 2015.

Many think the President and EPA are using the two new proposed power plant rules to aggressively bolster the United States’ position for negotiating world-wide cuts in carbon dioxide and greenhouse gas emissions. By showing the United States is willing to be a leader in reducing greenhouse gas emissions through drastic cuts, the President is signaling to the rest of the world that it is time to get on board to slow greenhouse gas-induced climate change. In fact, on Tuesday, Reuters reported that China may be considering a “hard cap” on carbon dioxide emissions to be implemented in its next five-year plan.

Finally, because EPA has been very active in regulation of carbon dioxide emissions over the past several years, many are wondering what EPA will do next. Will they regulate other industries? Will the EPA put limits on carbon dioxide emissions from industrial sources such as cement plants, refineries, or chemical manufacturers? It is not entirely clear how far EPA will take regulation of carbon dioxide emissions, but from the President’s constant promotion of his Climate Action Plan and the clear direction EPA has taken recently regarding regulating activities that contribute to climate change, it seems likely we will see more regulation in the future.

EPA will accept public comment on the Plan for 120 days after publication in the Federal Register. The Agency also plans to hold four public hearings across the country during the week of July 28, 2014. The President has directed EPA to issue the final rule by June 2015.

In the unlikely event EPA’s Clean Power Plan goes into effect without challenge, each covered state must submit their implementation plans to EPA by June 30, 2016.