Assessing the EPA’s Clean Power Plan

On August 3, 2015, the US Environmental Protection Agency (EPA) released the final version of its Clean Power Plan rule, which sets national standards to limit carbon pollution from power plants by reducing CO₂ emissions by 32 percent from 2005 levels by 2030.

A team from Analysis Group – including Senior Advisor Susan Tierney, Managing Principals Andrea Okie and Pavel Darling, and Principal Paul Hibbard – has conducted extensive research on the EPA rule and the implications for states arising from implementation strategies and market design considerations. As part of this work, the team issued a series of reports on the Clean Power Plan and its economic and reliability impacts on states, independent system operators (ISOs), and other key stakeholders.

Ultimately, the team found that the design and implementation of the Clean Power Plan will not jeopardize or compromise the electric system’s reliability, and that several states and ISOs – including the mid-Atlantic PJM Interconnection region and the Midwestern MISO region – are already taking reasonable and appropriate steps to comply.

One organization of states that is regulating carbon emissions from power plants through market-based mechanisms is the Regional Greenhouse Gas Initiative (RGGI). According to research conducted by Analysis Group, the nine states in the northeastern United States participating in RGGI have found that carbon emission regulations can generate economic benefits. Specifically, implementing RGGI from 2012 to 2014 added $1.3 billion in economic value to the region; led to the creation of more than 14,000 new jobs; and cut electricity and heating bills, saving consumers $460 million.

Findings from the report – the second in a series of RGGI research dating back to 2009 – provide valuable lessons for states across the country now evaluating their options under the Clean Power Plan. ■