Moving to address state and utility concerns about compliance deadlines in the proposed version of his Clean Power Plan (CPP), President Obama Monday unveiled final Clean Air Act regulations that give states an additional two years to begin reducing carbon emissions from power plants compared to the proposed rule, but also require steeper emissions cuts by the rule's final compliance deadline of 2030.

The final Clean Power Plan rule includes a welter of other changes from the Environmental Protection Agency's June 2014 proposed rules for the climate change initiative. The changes include new language aimed at encouraging earlier and more extensive deployment of renewables and energy efficiency; helping states to conduct carbon dioxide (CO2) emissions trades with other states to reduce compliance costs; allowing states to count emission reductions provided by nuclear plants under construction in their compliance plans; and addressing reliability concerns about coal plant retirements forced by the CPP.

Overall, the CPP establishes broad carbon dioxide emission targets for coal- and natural gas-fired plants in each participating state-Vermont and the District of Columbia are exempt because they have no power plants subject to the rule-and offers states a range of flexible approaches for compliance.

Notably, the final CPP requires states to submit compliance plans to EPA by 2016-the same deadline as in the proposed rule-but allows states to request up to two more years to submit their plans for EPA approval. Additionally, states will have to begin demonstrating compliance in 2022-two years later than in the proposed rule.

The proposed plan required states to achieve an interim target averaged across the decade of 2020-2029, and a final target in 2030. Some states complained that because of the mix of generation within their borders and other factors, the proposed rule would have required them to make the lion's share of the required interim reductions in the early years of the decade. States argued that timetable threatened electric reliability because it gave them too little time to build the infrastructure necessary to achieve their 2020 targets.

In response to those concerns, EPA in the final CPP is allowing states to phase in increasingly tighter emission cuts through the period 2022-2029, which the agency said would reduce threats to reliability while giving states more compliance flexibility.

However, the final CPP would result in a national average 32 percent reduction in CO2 emissions below 2005 levels by 2030, nearly 9.4 percent more ambitious than the 30 percent final target in the proposed rule, EPA said. Read the rest of this article on IHS The Energy Daily.

5 August 2015 by Chris Holly

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This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.