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Life Without Building Block 4

Posted By Kyle Krone, Monday, October 12, 2015
Updated: Monday, October 12, 2015

Like Without Building Block 4
Energy Efficiency under EPA’s Final Clean Power Plan.

By John Hargrove

Supporters and opponents alike will stake their claims about the final Clean Power Plan (CPP), announced by the U.S. Environmental Protection Agency this past August. Yet, when all the political issues are stripped away, energy efficiency (EE) remains the most cost-effective route to compliance. It continues to yield benefits for existing power plant owners, consumers, the environment, and the overall economy.

Known among policy experts as EPA's 111(d) rule, the CPP is designed to reduce carbon dioxide (CO 2) emissions from existing fossil-fired electric-generating units (EGUs) with a capacity greater than 25 megawatts. The CPP will be implemented through state-based compliance plans. And while each state's emission reduction target varies according to its resource mix and other factors, the CPP is designed to achieve nationwide CO 2 emission reductions totaling 32 percent by 2030, relative to a 2005 baseline.

In the CPP draft rule issued in June 2014, EPA built up state emission reduction targets through four key "building blocks" as part of an emissions reduction strategy:

· Heat Rates. Improving the average generation efficiency, or "heat rate," for coal-fired electric generating units (EGUs) with steam turbines.

· Redispatch. Shifting dispatch of power system resources to existing and under-construction natural gas combined-cycle (NGCC) units.

· Renewables & Nuclear. Greater utilization of zero- and low-emitting power sources, by increasing dispatch of new, cleaner generation, through deployment of new resources employing renewable energy, plus new and existing nuclear generation under construction.

· Energy Efficiency. Increasing the energy-saving impacts of demand-side energy efficiency programs.

In the final rule issued August 3 of this year, EPA narrowed the building block base, and did not include EE in the calculations used to develop state targets. However, EPA and the White House have made it abundantly clear that energy efficiency remains just as viable a compliance option as before. Experts have opined that EPA's move in the final rule was legally motivated. Because EE occurs "outside the fence" of affected generating units, its inclusion as one of the four building blocks would expand the legal framework of the rule and thus could increase the risk of court challenges. EPA apparently wanted to limit legal challenges by keeping its basis for the final rule "inside the fence" as much as possible.

It is important to understand the difference between a "building block" and a compliance option. The building blocks were calculation methods used to project reasonable emission reduction targets; but compliance options are not limited to any of these building blocks. The bottom line is that while efficiency is not a building block in the final rule, it is fully viable as a compliance option.

The final rule also creates a new EE program opportunity through EPA's proposed Clean Energy Incentive Program (CEIP), which would encourage ramped-up deployment of low-income EE programs and renewable energy programs in the two years leading up to 2022, the first compliance year. The CEIP concept has not been finalized, but it does represent an extra vote of confidence from EPA in EE as a CPP compliance resource.


See the full article from Forty Nightly Utilities: 

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