Biden moves past Clean Power Plan, with an eye to a clean electricity standard

The US Environmental Protection Agency will not seek to resurrect the Obama-era Clean Power Plan to reduce carbon emissions from power plants, a move that follows recent signals from a high-level Biden administration official indicating the administration may pursue some form of carbon pricing to achieve emissions reductions.

The EPA sent a memo 12 February to its regional offices in which a senior agency official noted that reinstating the 2015 Clean Power Plan (CPP) in response to a federal appeals court ruling in January would be pointless because utilities already had met that rule's goal of reducing power plant emissions by 32% compared with 2005 levels by 2030.

The memo responds to the January ruling by the US Court of Appeals for the District of Columbia Circuit (DC Circuit), which vacated the 2019 Affordable Clean Energy rule (ACE), a Trump administration replacement for CPP that set no carbon limits on power plants.

Although the DC Circuit remanded the ACE rule back to EPA for a certain death under the Biden administration, Goffman said the court did not "expressly reinstate the CPP."

Since the DC Circuit's ruling, EPA's regional offices have received inquiries from states wanting to know what their remaining obligations were, if any, under the ACE rule.

At least 18 states including Ohio, West Virginia, Kentucky, and Texas told IHS Markit in January they were in the process of writing plans to comply with the ACE deadline of July 2022, which is now defunct. The court's decision leaves states in limbo, which Goffman's memo attempts to clarify.

New Opportunity

As for the current administration's plans going forward, Michael Regan, Biden's nominee to lead EPA, said the agency would initially review the details of the CPP and ACE rules before setting a policy course that he suggested would be a "significant opportu­nity" for new emissions reduction strategies.

"It's my understanding that we have to take a look at what was the plan for the [CPP] and what were the plans for the ACE rule," he told lawmakers at his February 3 Senate confirmation hearing. "The reality is that it presents a significant opportunity for the [EPA] to take a clean slate and look at how do we best move forward."

But West Virginia Attorney General Patrick Morrisey and other Republican attorneys general last month wrote Biden to warn they would be closely watching the new administration for any sign of regulatory overreach.

Biden's goal of decarbonizing the power sector by 2035 means that whatever proposal he puts forth will need to be significantly more ambitious than the CPP. But whether the next plan will be another set of regulations, a legislatively approved clean electricity standard (CES), tax policies, a national emissions cap-and-trade system-or all of the above-remains to be seen.

Notably, some conservative and energy industry groups-including the American Petroleum Institute-have expressed vague support for a carbon pricing plan, but that approach appears politically problematic in Congress.

Reviving clean electricity standard

The Democrat leaders of the US House of Representatives' Energy and Commerce Committee floated, but never formally introduced, a national CES as a centerpiece of climate legislation known as the Clean Future Act. But that package went nowhere and the CES was criticized by some Republicans. However, the CES could be one of the most effective ways to transition the utility sector away from fossil fuels, say some environmentalists and researchers who insist it must be part of the solution.

During an 18 February hearing on clean energy pathways for the US, Energy and Commerce Committee Chairman Frank Pallone, Democrat-New Jersey, said he plans to introduce the legislation in the coming weeks. This bill will not only set a national CES, but also will underscore the "importance of prioritizing clean and resilient energy infrastructure."

Environmental groups already have floated the possibility of using the congressional budget reconciliation process to push through passage of a CES. That approach would require only a simple majority vote in the Senate to pass legislation, as opposed to the 60-vote bar that Democrats otherwise would have to clear to overcome a likely filibuster by Senate Republicans.

In a February 4 report, researchers at the University of California Santa Barbara and the think tank Evergreen Collaborative outlined three ways by which carbon legislation could meet legal requirements for use of the budget reconciliation process. The report said acceptable legislation could include block grants to states for 100% clean energy; a tax code-based clean power policy; or a federal carbon intensity standard for electricity.

There has been speculation that Biden may seek to use the budget reconciliation process to pass an infrastructure bill that might prove a popular legislative vehicle that could carry carbon proposals.

However, Democratic leaders in US Congress have made COVID-19 relief a priority. Given the tenuous 50-50 power sharing arrangement in the US Senate, it remains unclear the extent to which Democrats will push for the CES at the expense of a potential agreement on the relief package.

--Original reporting by George Lobsenz. Contribution by Amena Saiyid.