Will ACE Prove More Resilient than the CPP?

By Terry M. Jarrett, Healy Law Offices, LLC

The controversy continues over the Environmental Protection Agency’s (EPA) years-long attempt to regulate carbon dioxide (CO2) emissions from coal-fired power plants. The question is, can the agency’s latest effort withstand legal scrutiny?

The EPA’s quest to regulate CO2 emissions from coal plants began with the Obama administration’s Climate Action Plan to address climate change. In 2015, the EPA rolled out the Clean Power Plan (CPP) with much fanfare. The CPP was an ambitious plan to reduce carbon emissions from power plants 32 percent by 2030.

Almost immediately, the CPP generated a host of legal concerns, including that it overturned decades of agency precedent and dramatically exceeded the EPA’s authority under the Clean Air Act. There are 150 entities – including 27 states – that have filed 15 lawsuits challenging the CPP. The CPP was of such dubious legality that the United States Supreme Court took the unprecedented step of staying implementation of the rule while the court cases were pending. As a result, the CPP never took effect.

Donald Trump became President in January 2017. During the campaign, he had promised to end the war on coal. One of his targets was repealing the CPP.

On Aug. 21, 2018, the EPA announced the replacement for the CPP. Called the Affordable Clean Energy (ACE) rule, its goal is to reduce power sector CO2 emissions similar to the CPP. Beyond that, the two plans are quite different.

The scope of the two proposals is one important difference. The CPP was an extremely expansive plan to regulate the entire energy sector, not just individual power plants. This novel approach would have required actions “outside the fence” of existing coal plants, such as building new renewable generation to replace coal, resulting in a fundamental restructuring of the power grid and energy markets. With the CPP, the EPA expanded beyond environmental policy and into energy policy.

By contrast, the ACE rule is a scaled-back proposal focusing on making coal-fired power plants more efficient. Because every 1-percent increase in heat rate efficiency reduces CO2 emissions by 2- to 3 percent, the EPA believes similar reductions as targeted under the CPP can be achieved. This “inside the fence” approach to regulate only individual coal plants is more consistent with the Clean Air Act. It keeps the EPA concentrating on its traditional role – environmental policy – and does not interfere with the power grid or energy markets.