Thursday is the deadline for public comments on EPA’s proposed Federal Plan for the Clean Power Plan. As we have been preparing our own comments for submission (which will be available later this week at www.rff.org/cleanairact), we have also developed a technical background document, Approaches to Address Potential CO2 Emissions Leakage to New Sources under the Clean Power Plan (Editor's note: file updated Jan. 21, 2016), to support others in preparing their comments. We hope you find it useful.
Below is an overview of our research included in the technical document:
“EPA’s proposed approach would distribute allowances based on recent information about [a generator’s share of total] electricity generation (output) and update that information over time. Previous research indicates that this approach can provide an incentive that changes the utilization of facilities and affects the environmental outcome.
This research examines the expected performance of EPA’s proposal and several alternatives using a highly parameterized capacity planning and operation model of the electricity system called Haiku.
We evaluate EPA’s dual-rate emissions rate standard, the mass-based approach that covers all sources and includes the New Source Complements, and a representation of the Proposed Model Rule with updating distribution to new renewable sources and existing natural gas combined cycle (NGCC) units.
We also evaluate several variations of updating allocation, including expanding the portion of allowances allocated on an updating basis, pooling the set-asides for new renewables with the allocation for NGCC, applying various weights other than uniform across eligible technologies, expanding the set of eligible technologies to include coal and existing non-emitting units, and other special issues.”
Our main findings:
- A mass policy covering all sources and including the new source complements yields emissions that are less than the options we consider for mass-based approaches that cover only existing sources.
- Updating allocation is a potent approach to reducing total emissions when new sources are not covered under a mass-based emissions cap. EPA should consider expanding the portion of allowances allocated on an updating basis and the technologies eligible to earn them.
- Designating all affected units (including coal) as eligible to receive updating allocation can be nearly as effective at reducing leakage to uncovered new fossil units as excluding coal from eligibility. This may have a policy or legal advantage in treating all affected sources symmetrically. In contrast, eligibility for existing non-emitting generators is not an effective leakage remedy.
- Some aspects of the model framework may amplify the leakage we identify. If newly constructed units were expected to be designated as existing units at a future date this would narrow the gap. Effective programmatic energy efficiency also would narrow the gap.