The U.S. Environmental Protection Agency announced today its Clean Power Plan proposed rule to reduce carbon emissions from the nation's power plants by 30 percent below 2005 levels by 2030. Acting under Section 111(d) of the Clean Air Act, EPA's proposal would impose a federal carbon emissions rate (stated in pounds of carbon emitted per megawatt-hour of electric energy generated) for each state. EPA would set each state's limit based on a case-by-case evaluation of each state's portfolio of generation resources and EPA's evaluation of its opportunities to reduce carbon emissions. However, states will have the flexibility to determine how to meet the set limits. States will be free, on their own or in collaboration with other states, to design a program to achieve those rates in a way that makes the most sense for their unique situation. Each state's solution could combine diverse fuels, energy efficiency, and demand-side management.

This proposal is a key element of President Obama's Climate Action Plan, aimed at curbing emissions from the power sector which, according to the EPA, is responsible for 40 percent of the United States' carbon dioxide emissions. Further, it will reduce pollutants such as soot and lead by approximately 25 percent. In announcing the Climate Action Plan, EPA Administrator Gina McCarthy discussed how emissions limits are critical for improving human health (1 in 10 children in the United States currently suffer from asthma) and to address risks posed by global climate change. McCarthy outlined that not only will rising temperatures cause more smog, asthma, and longer allergy seasons, but extreme weather events will impact economic productivity, raise insurance premiums, and threaten jobs.

The rule is now out for public comment through the summer, with EPA projecting a final rule by June 2015. However, given that this proposed rule directly impacts the nation's coal industry, legal challenges will likely be quickly mounted by coal companies and other power generators opposed to this climate-oriented regulation.

For more information regarding how EPA's Clean Power Plan may impact your industry, please contact Anthony Buxton, David Van Slyke, or Todd Griset in Preti Flaherty's Climate Strategy, Energy, and Environmental groups, at 791-3000.