In a speech this afternoon at Georgetown University, President Obama formally announced the Climate Action Plan for his second term. The Climate Action Plan (CAP or Plan) includes three key goals: (1) reducing domestic carbon dioxide emissions by 17 percent between 2005 and 2020; (2) preparing the United States to adapt to the impacts of climate change; and (3) taking a leadership role in international efforts to respond to climate change. While few concrete details were offered, the Plan addresses a wide range of issues, including a commitment to reduce carbon emissions from new and existing utilities, government purchase and installation of renewable energy, incentives and guarantees for renewable energy, and investments in infrastructure for adaptation. Below are five key highlights from the CAP.
1. A New Proposal on Carbon Limits for New Power Plants
President Obama today signed a Presidential Memorandum entitled “Power Sector Carbon Pollution Standards,” directing the U.S. Environmental Protection Agency (EPA) to work expeditiously to complete carbon emission standards for new and existing power plants. The Memorandum directs EPA to issue a new proposal for carbon emissions standards for new power plants under Clean Air Act Section 111’s New Source Performance Standards (NSPS) program by September 20, 2013. EPA already proposed carbon standards for new power plants under NSPS in April 2012, and this existing proposal, which already is in effect, in particular has blocked the construction of new coal-fired power plants since that time. The Memorandum indicates that EPA seeks to now issue a second or “new proposal” in light of more than two million comments received and directs EPA to do so by September 20, 2013, and to issue a final rule “in a timely fashion” following public comment. Although the existing proposed rule combined coal and natural gas facilities into a single sector, the new proposal may break the two categories apart and set distinct standards. As a practical matter, the President’s Memorandum signals that the Administration is committed to finalizing the NSPS for new sources in the next twelve months while providing EPA an opportunity to re-propose a revised rule, presumably to attempt to increase the legal defensibility of the existing vulnerable rule from court challenge.
2. A Timeline for Controlling Carbon from Existing Power Plants
The most significant announcement is the commitment to regulate carbon emissions from existing power plants under the same NSPS program EPA is employing for new power plants, presumably by 2016. The President’s Memorandum directs EPA to propose carbon emission “standards, regulations, or guidelines” for emissions from existing, modified, and reconstructed power plants by June 1, 2014, and to finalize the standards by June 2015. This is the strongest signal yet that the Obama Administration intends to extend the EPA’s and Clean Air Act’s regulatory reach over the nation’s fleet of existing coal and natural gas power plants before the end of the Administration. Unlike new facilities, states are given the primary responsibility for implementing emission reductions from existing facilities, but EPA is responsible first for issuing direction to the states. Importantly, the Memorandum specifies the deadline for states to submit implementation plans to EPA for applying the standards, regulation, or guidelines to existing power plants in their states: June 30, 2016. The Memorandum also specifies that EPA is to consult with states, industry, and other leaders in establishing the standards and that such standards can employ “market-based instruments, performance standards, or other regulatory flexibilities” to ensure continued reliable and affordable energy. Although this demonstrates a definitive path to regulating existing power plants, and thus was the most significant announcement of the day, notably the announcement and Memorandum lacked any details regarding the substance of how EPA intends to realize reductions from existing facilities, and whether it will pursue a cap and trade program, a numeric limit, a technology standard, or a combination of options.
3. The Absence of Other Sectors
Despite the President’s aggressive goals regarding carbon emissions reduction, the CAP focuses entirely on the utility sector. Although other sectors at times have been in the spotlight for greenhouse gas regulation under NSPS--such as refineries, Portland cement manufacturers, and other industrial sectors--the CAP does not mention any other sectors. At the same time, despite the absence of any reference to other sectors, environmental organizations may attempt to force carbon regulation under NSPS for other source categories through settlement agreements with EPA or in the courts.
4. Quiet on National Environmental Policy Act and Endangered Species Act Fronts
The President announced aggressive plans to expand renewable energy projects on federal lands. At the same time, the President’s Plan does not include a proposal to streamline permitting requirements associated with the National Environmental Policy Act (NEPA) and the Endangered Species Act (ESA), which include strict procedural requirements for federal actions, including renewable energy projects. Furthermore, the Plan does not make reference to next steps regarding the Administration’s draft NEPA Guidance on Consideration of the Effects of Climate Change and Greenhouse Gas Emissions issued on February 18, 2010. The purpose of the draft Guidance was “intended to help explain how agencies of the federal government should analyze the environmental effects of GHG emissions and climate change when they describe the environmental effects of a proposed agency action” under NEPA. Despite its absence from the CAP, the Administration may still finalize the draft NEPA Guidance in the near term and provide an explicit framework for federal agencies in considering climate risks and greenhouse gas emissions associated with federal approval of energy projects.
5. Waking up the International Arena
After a global lull in climate discussions following summits in Copenhagen and Durban, President Obama committed to taking a leading role in the next international climate conference in 2015. President Obama stated that developing countries must participate in any agreement and asserted that “all countries must step up and play their part.” At the same time, he acknowledged that any agreement would have to be flexible to address the responsibilities and needs of differently situated countries. This international commitment signals a renewed effort to attempt to reach an international agreement before the end of the President’s term, but is unlikely to impact the domestic aspects of the CAP.
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