States may be suing the Obama administration over a new effort to slash the carbon dioxide emissions from power plants, but as Governing anticipated, they’re also exploring the most efficient ways to comply with a rule that will accelerate the displacement of coal and alter the energy sources of utilities. One major theme that’s emerging: finding ways to work across state lines.
Across the country, research groups and other organizations have been organizing talks between state regulators, power companies and environmental groups about how to comply. At the same time, they’re producing blueprints and letters to the Environmental Protection Agency (EPA) that emphasize interstate cooperation like trading credits or allowances for carbon emissions.
“We’re seeing the most extensive level of interstate cooperation in implementing this rule than we’ve seen in the history of Clean Air Act implementation,” said Bill Becker, executive director of the National Association of Clean Air Agencies.
But the cooperation will have limits: While the EPA allows states to formally band together in multi-state plans under a single reduction target, the regional discussions often emphasize a landscape where states operate alone but agree to some level of interstate cooperation. Although it's still early and the situation could change, there’s been no public discussion about more states joining the Regional Greenhouse Gas Initiative, a cap-and-trade system in the Northeast and mid-Atlantic, or California’s cap-and-trade system.
“It’s just politically very challenging once you go beyond the regulators within your own state,” said Brad Crabtree, vice president for fossil energy at the Great Plains Institute, which has brought together many states across the Midwest and Southeast.
The EPA rule requires states to collectively reduce carbon dioxide emissions in their power sectors to 30 percent below 2005 levels by 2030. The actual target for each state varies, though, from 10.6 percent in North Dakota to 71.6 percent in Washington state. Each state has to put together a plan by 2016 to reach its target. The EPA has taken comments from states and the public since releasing the rule last June. The targets could change before the agency finalizes the rule sometime this summer.
Union members, led by the United Mine Workers of America, protest the new rules. (AP/Gene J. Puskar)
Fifteen states sued in a long-shot bid to halt a federal rule before it was finalized, but a federal court ruled last week that the challenge was premature. Many of those same states and others are likely to try again once the power plant rule goes into effect. Some of those same states, including coal-rich Kentucky and Wyoming, are at least taking part in regional talks about compliance. The Great Plains Institute, which is leading in the middle part of the country, counts 41 states participating in talks held by the Center for the New Energy Economy in the West, the Nicholas Institute for Environmental Policy Solutions in the Southeast and the Regional Greenhouse Gas Initiative in the Northeast.
As an observer-status state, Kentucky signed onto a recent letter from Midwestern states recommending steps the EPA could take to make interstate trading easier. Trading allows a power plant or state government that has exceeded an emissions target to purchase credit or allowances from states or power plants with credits to sell. The Midwestern states -- Illinois, Michigan, Minnesota, Missouri and Wisconsin as observers -- asked the EPA to make it clear in its final rule that states can trade carbon credits or allowances without formal agreements in place between state governments and to set basic parameters for doing it.
They also want the EPA to either provide tracking systems for trading or to allow states to develop their own systems. States would have to be use the same methodology for measuring their carbon dioxide emissions: either a rate-based system of carbon per unit of electricity or a mass-based system of overall tons of carbon the whole sector produces. Here's a good explainer of the differences between the two.
The idea of interstate trading without a formal agreement between states isn’t new. The Acid Rain Program, launched in 1990, allows states to trade sulfur dioxide and nitrogen oxides through an EPA-run system. That program ended up costing significantly less than what was originally expected -- a fact that state regulators, even in places that are hostile to the new EPA rules, likely haven’t forgotten.
“There may be a good compromise between states officially banning together where the politics or organizational components of such a system don’t lend themselves to that but there are efficiencies to be gained by working with other states and their inventories, the metrics of a trading program and sharing a lot of details,” said Becker.