EPA Could Use Clean Air Act Provision to Reduce Electricity Demand

Posted November 13, 2012 at 2:29pm

As the EPA prepares new regulations to limit greenhouse gas emissions at existing power plants, some environmental groups are urging the agency to address the issue by reducing electricity demand through energy efficiency standards that could save ratepayers and utilities money.

Groups pushing the idea say a rarely used provision in the Clean Air Act provides the framework to work with states on such a flexible approach. There has been bipartisan interest in Congress in energy efficiency legislation, so the concept has the potential to at least garner some support from lawmakers who have opposed other EPA clean air rules.

A December 2010 court-approved settlement with states and environmental groups requires the EPA to limit emissions from existing power plants of the gases that contribute to global warming. So far, the EPA — which has been focused primarily on writing rules to cap emissions by new power plants — has been reticent about explaining how and when it will go about regulating existing facilities.

But the agency’s options are limited. Any regulation of existing plants would have to use the “best system of emission reduction” available. That, said Jeff Holmstead, the EPA’s air quality chief during President George W. Bush’s first term, rules out both a mass shutdown of fossil-fuel fired plants and adoption of technology to capture and store carbon dioxide emissions, which is not currently feasible on a commercial scale.

“So they are running into trying to figure out a way to require by rule that people make the efficiency improvements that can be made — and that turns out to be tricky,” said Holmstead, now an attorney with Bracewell & Giuliani who represents utilities.

Many states already administer robust efficiency and renewable energy mandates that could help them easily achieve compliance with a federal standard. Supporters hope the EPA could build on those state efforts.

A demand-focused compliance option could award credits to utilities that support efficiency improvements made by consumers, such as by offering rebates for upgrades to energy efficient appliances.

David Doniger, policy director for the Natural Resources Defense Council’s Climate and Clean Air Program, said the group will unveil a proposal later this month outlining a range of flexible compliance techniques that the EPA can consider when writing greenhouse gas rules for existing power plants.

“It could be a big reduction in carbon pollution and a boost to the economy and a very attractive deal,” Doniger said.

For months, Sens. Jeanne Shaheen, D-N.H., and Rob Portman, R-Ohio, have been urging Senate leaders to take up their energy efficiency bill (S 1000), which includes numerous provisions to improve energy savings in government and commercial buildings and industrial processes. The measure would also promote improvements in building codes and appliance efficiency.

The bill’s $1 billion price tag has hampered efforts to build broader support in the Senate, though some provisions were included in a separate appliance efficiency bill passed before the pre-election recess. A bipartisan companion House bill (HR 4017) has not advanced to a markup.

In addition to efficiency standards, cogeneration — generating both heat and power at a facility — offers opportunities for utilities to reduce overall emissions.

A 2008 Energy Department report found that getting 20 percent of the country’s power through cogeneration could slash carbon emissions by more than 800 million metric tons per year by 2030. In an executive order signed in August, President Barack Obama set a national goal of deploying 40 gigawatts of cogeneration capacity by the end of 2020.

As with efforts to lessen demand through efficiency improvements, the trick will be to ensure that utilities are held accountable for the pollution reductions they claim as a result of cogeneration, said Jennifer Kefer, senior program manager for industrial efficiency at David Gardiner and Associates.

Holmstead said the provision of the Clean Air Act that the EPA would invoke to set standards has only been used to his knowledge in regulating landfill emissions.

“This is not a part of the Clean Air Act that has been used a lot,” said Megan Ceronsky, an attorney with the Environmental Defense Fund.

That raises concerns that the lack of precedent could make whatever the EPA decides more vulnerable to legal challenge.

“The more creative they get, the more likely it is that it gets overturned in court,” Holmstead said.