States Lean Toward Mass-Based Clean Power Plan Approach
As states continue to evaluate the Clean Power Plan, a support for mass-based implementation approach seems to be gaining momentum. Mass-based approaches can be simpler than rate-based approaches to administer as well as enable more well-known emissions-style trading schemes.
- In August 2015, the U.S. EPA released final rules for the Clean Power Plan, a regulation aimed at reducing carbon emissions from existing power plants
- State implementation plans must comply with the rule by meeting either rate-based or mass-based targets
- Recent conference proceedings reveal a preference for mass-based targets for the following reasons:
- They would be simpler and easier to administer among air regulators, who have established emissions caps for other pollutants and are now responsible for Clean Power Plan compliance
- Coal-dependent states, in particular, could find mass-based approaches attractive because coal plants currently scheduled for retirement could be counted toward compliance
- A mass-based approach also provides a mechanism to value existing clean generation, in particular nuclear
- However, a rate-based approach would more easily accommodate economic development and electricity demand growth. Conference participants have also noted a rate-based approach may make sense for southeastern states where new nuclear generation will lower the pounds of CO2 produced per megawatt hour
- Trading of compliance mechanisms will also be important; states meeting rate-based targets can trade emission reduction credits while states meeting mass-based targets can trade emission allowances
Mass-based compliance approaches provide a familiar framework to air regulators. Their attractiveness could increase if a substantial number of states pursue this compliance option. In this instance, other states could be drawn to lower compliance costs that result from a larger, more efficient trading market.
This report is part of the Clean Tech & Sustainability Minute series. To view all featured Minutes, please click here.
Welcome to ScottMadden!
Sussex Economic Advisors is now part of ScottMadden. We invite you to learn more about our expanded firm. Please use the Contact Us form to request additional information.