The ‘If’ Game

By Allen Best

With the federal courts yet to weigh in, the Clean Power Plan consists of a "lot of ifs, maybes, and could-bes," as one energy official puts it. Then there's Donald Trump's boast in May that, if elected president, he will kill this plan for ratcheting down greenhouse gas emissions produced to make electricity. He didn't explain how, as a president, he could overturn a federal law, the 1970 Clean Air Act, which is the premise for the Environmental Protection Agency's carbon-reduction plan.

What can be said is that community planners have a vital role in this gigantic transition to a lowercarbon economy. Their tasks are local, but the challenge is global. Against the backdrop of steadily rising temperatures and escalating warnings from climate scientists, the Clean Power Plan should be seen as a modest effort. The plan is, as Jeremy Richardson of the Union of Concerned Scientists, puts it, "weak compared to the scale of the problem." Burning fossil fuels to produce electricity was responsible for 30 percent of U.S. greenhouse gas emissions as of 2014. There's work beyond the Clean Power Plan, if it survives.

If the plan stands, energy efficiency will get a big push. It's the lowest-cost alternative to reducing emissions. Measurable gains in that arena could mean more money might become available for community efficiency programs. It also provides a strong argument for adopting — and updating — building codes.

Renewable energy will also get a boost, whether in rooftop solar installations, large-scale wind farms, or efforts to extract energy from wastewater treatment plants. It's logical to assume a push for more regional transmission lines. Local jurisdictions will be involved in all these changes even if — there's that wishy-washy word again — exactly how all of this will happen remains unclear.

The EPA has set 2022 intermediate goals for carbon dioxide reduction by states, as well as 2030 goals. The overall goal is to achieve a 32 percent national reduction as compared to 2005. Each state has its own target specified by the EPA. Kentucky, Wyoming, and West Virginia, whose emissions levels are already higher because of their heavy reliance on coal, face larger reductions. Kentucky gets 87 percent of its electricity from coal; it's 88 percent in Wyoming and 95 percent in West Virginia.

Alaska, Hawaii, Guam, and Puerto Rico are excluded from the rule because the EPA says it doesn't have enough information about their power systems. Vermont and Washington, D.C., are excluded because they don't have power plants that would be considered under the EPA's framework.

An easier time of meeting targets will be had by the 29 states with renewable energy standards and other carrots and sticks to induce energy efficiency. Foremost is California. Analysts expect it to easily meet the EPA's 2022 interim target. As Natural Resources Defense Council's Alex Jackson told a Southern California Public Radio reporter, "California's own ambition on clean energy will continue to shape the national story, not the other way around."

The nine Northeast and mid-Atlantic states that in 2009 created the emissions trading marketplace under the Regional Greenhouse Gas Initiative also can breathe easier. Other states, such as Minnesota and Texas, have also taken giant steps.

Rows of solar panels cover a former agricultural plot in California's Central Valley. Photo Damon Winter / The New York Times.

Tectonic shifts

The Clean Power Plan can best be understood as dipping a pair of new oars into an existing strong river current. We are rapidly changing how we produce and consume electricity. Coal has been faltering, energy efficiency gaining, and new technologies emerging. All of this is without the Clean Power Plan being executed. One analyst calls it a "foundational, even tectonic shift."

Coal's swift decline is remarkable. In 2005, it was responsible for 50 percent of U.S. electrical generation. Last year, it had slid to 34 percent, tied with now abundant and inexpensive natural gas.

Emissions of nitrous oxide, sulfur dioxide, and mercury from coal plants run afoul of federal regulations designed to abate ozone, regional haze, and other environmental harms. In response, utilities have been closing the older, smaller, and less efficient coal plants. According to the Energy Information Administration, plants retired last year were on average 54 years old and produced 133 megawatts, compared to 38 years old and with 278 megawatts capacity in remaining units. The older and less efficient the coal plant, the greater the emissions of these toxins per megawatt of generation — and carbon dioxide, too. The Clean Power Plan works in concert with these other regulations.

As coal generation has shrunk, non-hydro renewables have come on — they're now responsible for seven percent of generation. And they've gotten cheaper. Electricity prices from giant wind farms on the Great Plains have edged below natural gas plants, both of them underbidding coal. Solar prices from utility-scale farms such as those in the Mojave Desert and for rooftop or community solar gardens have also tumbled. In March, the Energy Information Agency said it expected solar to surpass wind and natural gas in new generating capacity in 2016 for the first time ever.

Researchers are now hard at work on what is described as the holy grail of renewables: cost effective battery storage. It won't matter if the sun isn't shinning on your rooftop panels at night, because you can draw from batteries in your basement. Utilities already are beginning to explore this new frontier. Homes at Denver's Stapleton neighborhood are part of that movement: 18 percent have solar panels.

Energy efficiency is another of these foundational shifts. Until relatively recently, economic growth was connected at the hip with increased energy consumption and accelerated greenhouse gas emissions. No more.

From 2005 to 2015, U.S. utility-scale generation of electricity grew by only 0.79 percent even as the gross domestic product grew by 14.41 percent. This was despite the continued growth of electronic gadgets in everyday life and the beginning of vehicle electrification. "The economy grew, and new technologies enriched our lives, but utility-scale electric generation remained flat," wrote John Shenot, senior associate with The Regulatory Assistance Project, in an April blog post.

All of this has been accompanied by a 21 percent drop in greenhouse gas emissions in the last decade, according to the EIA: "These facts alone fit the description of a tectonic shift," says Shenot. There was not, he adds, any of the chaos that had been predicted. Nor, he stresses, has energy efficiency been exhausted — as the EPA clearly understands.

The Power Breakdown

As the use of natural gas (red on map) and renewables in energy production rise, coal (gray) is on the decline. As recently as a decade ago, coal accounted for half of all utility-scale generating units in the U.S. It now makes up just a third.

Sources: EPA; U.S. Energy Information Administration

Finally: a climate plan

The Clean Power Plan — officially known as Carbon Pollution Standards for Existing Power Plants — was created in response to Massachusetts v. EPA. In 2007, the Supreme Court agreed with Massachusetts that the agency had authority under the Clean Air Act to regulate carbon dioxide and other greenhouse gas emissions if it found that they endangered public health or the environment. "Presto," said one climate activist at the time. "We now have a climate plan."

But this plan was in the oven for a while. The EPA in 2009 found six greenhouse gases "in the atmosphere may reasonably be anticipated both to endanger public health and to endanger public welfare." Then came the Clean Power Plan, including the final rule issued last October.

It gives states and the several tribes with fossil fuel plants great flexibility in how they reduce carbon dioxide emissions from existing plants. (A separate rule applies to new plants). The nexus of authority lies in state governments, particularly the air quality agencies, the energy offices, public utility commissions, and ultimately, general assemblies.

The plan gives states the option to regulate emissions from power plants in two ways. It can choose a rate basis, where a certain rate of emissions in pounds per megawatt-hour generated must be met on average by regulated plants across the state. Or it can choose a mass basis, which caps total tons of emissions allowed from those plants.

What planners should understand is that both approaches envision the potential to monetize avoided emissions. Cleaner generation or improved energy efficiency could translate to emission rate credits (under rate basis) or emission allowances (under mass basis) that could be sold to power producers to help fund local projects.

Here's one hypothetical example. Montana must reduce its emissions by 47 percent by 2030. Shut down coal plants? Maybe, if they're old enough. But a utility might instead buy credits or allowances (depends upon whether rate or mass based) for emissions avoided elsewhere.

That could be in Montana or possibly even another state, if Montana chooses to participate in interstate trading regimes. Most states have indicated an interest. Suppose Montana and Iowa are in the same trading market, and a city in Iowa wants to make its wastewater treatment plant more efficient and, while it's at it, extracts energy through a combined- heat-and-power retrofit, reducing demand for electricity from the utility serving the plant.

"Depending upon how the state does its compliance plan, there may be opportunities for localities to directly or indirectly get credit for emissions reductions due to energy efficiency and renewable energy measures undertaken in their locality," says Rodney Sobin, senior program director for the National Association of State Energy Officials. "The devil is in the details."

Another example might be energy-efficiency measures, such as retrofitting an older gymnasium or school, through the aid of a third-party energy services contractor. That retrofit again reduces the amount of electricity that must be generated — and if you're in New Jersey, it might be worth something to somebody in coal-heavy Pennsylvania.

These market mechanisms for air pollution reductions have been used before. The 1990 Clean Air Act revisions, designed to reduce effects of acid rain, created a market system. More recently, the states participating in the Regional Greenhouse Gas Initiative began conducting auctions of allowances in 2009, again creating a market for these verified good deeds. California is also adopting a cap-andtrade system to stimulate deep reductions in carbon emissions. As a mass-based approach is essentially a cap-and-trade system, other Western states are also talking about a mass-based approach, to more effectively work with California's massive market.

Survival of the Clean Power Plan remains as hazy as a summer day in Los Angeles. Still, the takeaway is the need for local communities to measure, verify, and track their energy-efficiency progress. Gains that might be monetized someday under a market created by the CPP. Various verification protocols exist and others are being developed.

Six states — Georgia, Michigan, Minnesota, Oregon, Pennsylvania, and Tennessee — are working with the Climate Registry to create an energy efficiency registry that can support tracking and trading of energy savings under the Clean Power Plan as well as for other purposes.

In Shreveport, Louisiana, energy efficiency has already been taking hold. A program launched five years ago provides reduced-cost energy audits of both homes and commercial buildings, along with rebates for more efficient heating and air conditioning systems. "The conversation has changed," says Tracey Graham, energy efficiency program manager. "People are looking at the benefits of this in terms of long-term costs." The Clean Power Plan seeks to push along this thinking.

Cap and Trade in Action

The multistate Regional Greenhouse Gas Initiative is the first cap-and-trade program in the U.S. aimed at reducing carbon dioxide emissions from the power sector. The cap — which started in 2009 at 188 million tons — dropped to 165 million tons after the first control period, when New Jersey exited the program. It was dropped again in 2014 following a comprehensive review. Caps are set to be decreased by 2.5 percent annually through 2020.

Source: Rggi, Allowance Allocation

Building codes and energy efficiency

Adopting current building codes can also deliver robust returns, both in long-term savings for local communities and in greenhouse gas reductions. The most common code is developed by the International Code Council, which updates the International Energy Conservation Code every three years. The 2015 code, for example, requires 2 x 6 wall construction, providing an additional two inches for insulation, which helps to reduce need for air conditioning. For commercial buildings, the federal government recognizes the ASHRAE Standard 90.1.

The American Council for an Energy Efficient Economy says tightening codes have dramatically advanced energy savings in new and remodeled buildings. Between 2008 and 2012, energy use covered under the residential model code dropped 32 percent. Between 2003 and 2013, total energy use for a building that meets the commercial model code dropped 37 percent, says Lowell Ungar, senior policy advisor for ACEEE.

ACEEE estimates that about 20 percent of the Clean Power Plan carbon reduction goal could be achieved just by consistently updating and enforcing national model building codes. Contractors can adjust, says the group's Sara Hayes, senior manager and researcher, air and climate policy. She urges efficiency as the first instinct when considering building or other retrofits. "Even if you want to be all solar, if you do efficiency first, then you spend less money on solar, because you won't need as much," she says.

While details remain devilish, it's possible that Oregon, Washington, and other states that have already invested in energy efficiency might be able to make money from states now trying to catch up.

Southern states should also look to energy efficiency to be the most economical way to reduce emissions. Updated building codes help achieve that by reducing need for air conditioning.

Some jurisdictions have pushed beyond the nationwide codes. San Francisco this year passed a law requiring that new construction be solar ready. Some jurisdictions in the Rocky Mountain states require large homes to offset their large energy budget with on-site renewable energy or in-lieu payments to use for community renewable or energy-efficient programs.

A useful tool from the Department of Energy for communities seeking technical assistance and recognition for expanding community solar penetration is called SPARC, for Solar Powering America by Recognizing Communities. But communities should also consider swapping out older streetlights with newer LEDs, which can reduce electricity use by 60 percent while improving the quality of light, says Ann Livingston, a program manager with the Southwest Energy Efficiency Project. She also advises local planners to consider how new buildings will sit on lots, to better take advantage of natural lighting and heating during winter.

Environmental justice is also a component of the EPA's thinking. The Clean Energy Incentive Program offers incentives for early investments that generate wind and solar power or reduce energy demand in low-income communities during 2020, 2021, or both.

Minneapolis planners are paying rapt attention to the program. "That's where cities will want to be engaged," says Gayle Prest, sustainability director for the city of Minneapolis. She expects guidance documents to be issued by the EPA this summer after review from the Office of Management and Budget. When that happens, local planners with affordable housing projects in their queues should act quickly to take advantage of potential double credits.

Prest sees the Clean Power Plan as a valuable tool for cities to meet their climate mitigation goals even as they begin to formulate adaptations to the changing climate. In Minneapolis, she's working on adaptations to rising summer heat, which can cause worsened asthma and cardiovascular disease, and the potential for more ferocious storms overwhelming stormwater sewers.

Potential Efficiency Wins

The EPA has finalized state-specific limits on greenhouse gas emissions for the power sector. Some states can reach those targets by curbing energy waste in buildings — while also reducing utility costs for homes and businesses — according to analyses by the American Council for an Energy-Efficient Economy. The states below show notable promise in using energy efficiency measures to meet the goals.

Source: ACEEE

States push ahead

In some states, community planners may also help shape state implementation plans. Virginia continues its planning, with Arlington County at the table. The county of 222,000, which is located within the Washington, D.C., beltway, has an energy plan embedded within the county's comprehensive plan.

John Morrill, CEM, energy manager of the Arlington Initiative to Rethink Energy, is an apostle for energy efficiency and renewables. Even without the Clean Power Plan, he says, much is already happening. The EPA's nudge is useful, though. "I hope that once 2030 comes around, we will think back and say, 'Well, of course we had to do this.' But this is a very helpful push down the road."

Others also actively continue their work. California expects to submit its plan next spring.

But Wyoming and Colorado, among others, have shelved planning until judicial uncertainty is removed. The U.S. Circuit Court of Appeals for the D. C. Circuit is scheduled to hear oral arguments in the lawsuit on September 27. Everybody expects that court's decision to be appealed to the Supreme Court.

Idaho continues high-level planning but will not consult community planners until the Supreme Court has acted, says John Chatburn, who heads the state's energy office. But high-level planning continues, he reports, because changes are occurring regardless of the Clean Power Plan. Idaho has no fossil fuel plants of its own, but it depends upon coal burned in other states.

Idaho is also tied into the Western electric grid, which is being strongly influenced by other states' mandates: California's aggressive renewable portfolio standard, Oregon's new law prohibiting importation of coal-fired power, and Washington's discussion of a carbon tax. Even in Wyoming, Warren Buffet's PacifiCorp plans to retire an aging coal-fired power plant that helps provide Idaho's electricity.

"Regardless of the Clean Power Plan, we will have to have those discussions: How do we maintain the reliability of the grid in the western interconnection with an ever-increasing penetration of intermittent renewable and energy resources?" Chatburn says.

The EPA, while blocked from implementing the plan, urges community planners to "participate in their states' public engagement processes to help ensure that state officials are aware of local GHG emissions reduction efforts and the priorities and concerns of their community members."

In a response to questions from Planning, an EPA spokesperson points to the role of local communities in developing and road-testing innovative solutions for reducing GHG emissions. Communities' work influences energy, transportation, waste management, and land use and community design. Much of the change now occurring in buildings and operations has been from the grassroots. Municipal utilities, as those in Austin and Sacramento have demonstrated, can have a direct role in moving their states forward, because of their experience in energy efficiency and renewable energy programs.

Given the accumulating science about climate change, the Clean Power Plan would seem to aim too low. Looking at the magnitude of change needed in the next 15 to 25 years, it's possible to despair.

But if the plan is affirmed in whole or even large part by the Supreme Court, it will provide a platform for broader action as we expand carbon reduction to our transportation and other sectors.

And then there's this: A decade ago, very little seemed to be happening. Now, the current in this river of change is strong and quickening. Congress may be deadlocked, but from Massachusetts to California, from Houston to Seattle, remarkable action has been occurring.

Those Mt. Rainier-high goals specified by the Clean Power Plan for some coal-heavy states? By 2030, they'll probably look like small bumps in the rear-view mirror.

Allen Best writes about energy, water, and transportation from Denver. He is a frequent contributor to Planning magazine.

Resources

For resources from the EPA on the Clean Power Plan, including a community page, toolbox for states, and videos that help tell the story, go to epa.gov/cleanpowerplan.

EPA's Clean Energy Incentive Program: tinyurl.com/z5um8yf

Climate Registry's National Energy Efficiency Registry: tinyurl.com/goyaom2

DOE's Solar Powering America by Recognizing Communities: tinyurl.com/jarymyj

American Council for Energy-Efficient Economy: aceee.org/topics/clean-power-plan

Center for the New Energy Economy (Western states): westernstate111dplans.com

Duke University's Nicholas Institute: tinyurl.com/jnqax5g

Virginia's progress: tinyurl.com/zwoojkq