North Carolina’s curious response to EPA’s Clean Power Plan

By Robin Smith - Contributing Columnist

In one way, the new U.S. Environmental Protection Agency (EPA) rule to limit carbon dioxide (CO2) emissions from power plants released on Monday looks like a typical air quality rule. The Clean Power Plan rule sets state by state reduction goals for a pollutant (CO2) from a particular set of sources (electric generating facilities).

But the rule takes an unusual and innovative approach to meeting those goals. The rule identifies three components (or “building blocks” in EPA rule-speak) of a plan to reduce CO2 emissions associated with power generation: 1. reducing power plant CO2 emissions (the traditional Clean Air Act approach); 2. increased electric generation from renewable energy sources; and 3. transition of electric generation facilities from coal to natural gas.

In effect, the rule aims to lower CO2 emissions per kilowatt hour used and allows the states to take credit for CO2 emissions avoided by shifting electric generation to energy sources with low or no CO2 emissions. EPA set state CO2 reduction goals by estimating how much each state could lower CO2 emissions using the three basic building blocks. (The earlier draft EPA rule used energy efficiency as a fourth “building block” in setting state CO2 reduction goals; the final rule does not, but still allows a state to use energy efficiency measures to meet its reduction goal.)

The proposed EPA rule requires each state to submit a plan for meeting its CO2 reduction target by June 30, 2016. The state plan can rely on any or all of the three “building blocks” in the EPA rule; it can also include measures that fall outside those categories – including increased energy efficiency — as long as the plan achieves the CO2 reduction target for regulated electric generation facilities. If a state fails to develop a plan, EPA can create a federal plan for the state.

The McCrory administration has opposed the Clean Power Plan rule — in written comments, in testimony before Congressional committees and in a statement released on Monday. In part, the administration has argued that the Clean Air Act does not authorize EPA to issue a rule that relies on measures — such as increased reliance on renewable energy — that go beyond limiting pollutant emissions from regulated power plants.

Last week, the practical implications of that position became clearer when DENR Secretary Donald van der Vaart told a Senate committee that the McCrory administration intends to resist the flexibility offered under the federal rule and submit a CO2 reduction plan based entirely on requiring additional CO2 emission reductions at power plants.

The Secretary’s comments came as a state Senate committee debated House Bill 571, which requires DENR to develop a state CO2 reduction plan with the participation of the public and the electric utilities. DENR did not support House Bill 571, but the bill passed the House with a bipartisan majority and the support of the state’s major electric utilities and environmental organizations.

Last Wednesday, the Senate Agriculture and Environment Committee adopted a substitute draft of H 571 that would prohibit DENR from taking any action or expending any state resources on development of a CO2 reduction plan until all legal challenges to the federal rule had been resolved or until July 1, 2016 (whichever came later). Asked to comment on the proposed substitute bill, Secretary van der Vaart indicated that DENR would prefer to submit a CO2 reduction plan by June 30, 2016 as required under the federal rule — but a plan based entirely on reducing power plant emissions. (Note: The bill has not yet gone to the floor for a vote and discussions between the Senate and DENR are apparently ongoing.)

Most states have started planning to meet the CO2 reduction targets. Even in coal-producing states where political opposition to the EPA rule tends to be highest, state air quality agencies have begun sketching out CO2 reduction scenarios in case the rule survives the expected legal challenges. Only one state — Oklahoma — has prohibited its environmental agency from developing a plan. A recent Washington Post story reported that even coal-dominated states like Kentucky seem confident of meeting the CO2 reduction target thanks in part to recent investments in renewable energy generation. It isn’t clear that any state other than North Carolina has decided to develop a plan based solely on CO2 reductions at coal-fired power plants.

All of which leaves something of a public policy mystery.

A state with significant advantages in renewable energy, energy efficiency and already on the road to transitioning power plants from coal to natural gas seems to have settled on a policy that throws those advantages away. Instead of working with electric utilities, consumers and environmental organizations to develop the most cost-effective CO2 reduction plan for the state, DENR intends to unilaterally develop a plan based entirely on reducing power plant emissions.

Moreover, it isn’t clear why or what that policy choice could cost the state.

Robin Smith is a lawyer with more than 25 years of experience in environmental law and policy and a former Assistant Secretary for Environment at the North Carolina Department of Environment and Natural Resources. She blogs at

By Robin Smith

Contributing Columnist

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