We Know Where the Carbon Pollution is Coming From - Here is How We Get After It
Posted December 4, 2012
[Updated 12/10/2012 with video from the press conference]
Watch this video about the release of NRDC's report at the National Press Club.
President Obama took a major step forward during his first term by setting carbon pollution standards for the second biggest source in the country—cars and trucks. Those standards will cut carbon emissions from new passenger vehicles in half by 2025. But right now there are no national standards for America’s biggest climate polluters—the 1500 existing power plants which are responsible for 40 percent of U.S. carbon pollution.
Today NRDC released a report showing how the Obama Administration can use the Clean Air Act to take a big bite out of these emissions. The report overturns the conventional wisdom that relying on the Clean Air Act to address climate change has to be expensive and ineffective.
In fact, the analysis described in the report shows that we can achieve big reductions at low cost, using flexible solutions that drive investment in clean energy to reduce emissions, protecting public health and creating benefits that exceed the costs by more than a factor of 6. To reach these conclusions NRDC developed a specific proposal for setting power plant carbon pollution standards and analyzed it using a sophisticated electricity system planning model also used by industry and the EPA. Here are five key take-away numbers from that analysis:
- 560 million tons less carbon pollution in 2020; twice the reductions from the clean car standards
- up to 3,600 lives saved, and thousands of asthma attacks and other health incidents prevented in 2020 alone
- $90 billion in energy efficiency and renewables investments between now and 2020
- only $4 billion in compliance costs in 2020 compared to…
- $25-60 billion value of avoided climate change and health effects in 2020
The key to achieving these benefits is for EPA to set ambitious, fair, and flexible standards to reduce carbon pollution from existing power plants.
EPA has already proposed a standard to limit carbon pollution from new power plants and the Agency should finalize that soon, but new high-emission coal plants are uneconomic and nearly all plans to build them have already fallen by the wayside, so the action is with existing plants. Under the Clean Air Act, EPA is required to issue an emissions guideline document defining emission standards and compliance procedures for these existing sources. The states are then required to develop and implement plans to meet the standards.
To jumpstart this process NRDC has developed and analyzed a specific proposal for EPA and other stakeholders to consider. Our proposal has two key features.
- EPA would set state-specific emissions rate standards (in lbs/MWh), reflecting the diversity of the nation’s electricity sector
- Power plant owners and states would have broad flexibility to meet these standards in the most cost-effective way, through a range of technologies and measures.
For example, a state that now gets 90 percent of its fossil-fueled electricity from coal and 10 percent from gas would be required to reduce its 2020 emissions rate to 1450 lbs/MWh In contrast, a state with 90 percent gas-fired generation would have a target of 1050 lbs/MWh [(10 percent x 1500) +(90 percent x 1000)]. A state starting with a 50:50 ratio of coal and gas generation (which turns out to be Oklahoma) would have a target of 1250 lbs/MWh. The allowable emissions rate would drop further in 2025. So states that currently rely heavily on coal will not have to meet the same target emission rate as cleaner states in 2020 or 2025, but their emission rates will have to get closer to those of cleaner states over this period.
These standards can be met at low cost because of the second key feature of our proposal: Compliance flexibility. Our proposal is designed so that the full range of emission reduction measures count toward compliance, not just retrofitting each individual power plant with pollution controls. These include:
- Shifting generation from high-emitting to lower- or zero-emitting plants. Lower emitting sources such as gas, wind and solar would earn credits that other plants could use, to reduce average emissions rates.
- Expanding energy efficiency. State energy-efficiency programs could earn credits for avoiding power generation and its pollution. Generators could purchase those credits to use toward their emissions targets.
Allowing credit for energy savings will create a powerful incentive for states to strengthen their energy efficiency programs, driving billions of dollars of investments into better lighting, more effective insulation, upgraded motors, and better building management systems. Already state energy efficiency programs are investing almost $7 billion per year, up from less than $3 billion five years ago. Our plan will help ensure that the expansion continues so that by 2020 the average state is achieving what the leading states are achieving today. These investments will create thousands of jobs across the country that can’t be outsourced.
Our analysis assumed that the scope of this flexibility was limited to activities within each state, but we believe that states should be allowed and encouraged to opt into multi-state programs. Importantly states may also adopt alternative programs, such as the ones in place in California, the Northeast and Colorado, as long as they show that these programs achieve equivalent emission reductions from the power sector. This has the potential to reduce costs even further.
What all this means is that we can get big pollution reductions at low cost. Under business as usual, emissions are expected to rise gradually as electricity demand grows, so that emissions return to their 2005 peak levels by 2025. While this is a much better forecast than those from a few years ago, it is not nearly good enough to protect the climate.
Under our proposal, rather than rising, emissions continue to decline as they have in recent years, resulting in a 26% reduction below 2005 levels by 2020 and a 34% reduction by 2025.
Along with the reductions in carbon pollution will come further reductions in other pollutants such as NOx and SOx. These are reductions over and above those expected from implementing other environmental standards such as the Mercury and Air Toxics standards. I was frankly surprised by the size of these benefits because I had thought that the incremental reductions would be very small after accounting for these other standards. But they are in fact very significant, saving as many as 3600 lives and valued at as much as $26 billion in 2020 alone.
Summing it all up, we find that the net compliance costs are only $4 billion on an annualized basis in 2020. This is less than half the estimated cost of the Mercury and Air Toxics Rule. These low costs are possible because of the wide range of compliance options allowed under our proposal. In particular, the investments in energy efficiency result in large reductions in fuel costs and avoid the need for far more expensive investments in new power plants in order to achieve the emission reductions targets.
By contrast the benefits are large—6 to 15 times larger than the costs. This includes both the immediate health benefits from reducing NOx and SOx emissions, estimated using the standard methodology employed by EPA, as well as the value of reducing heat-trapping carbon dioxide emissions, estimated using values developed by both government and independent economists.
I have noted previously that we are closer than you think to meeting President Obama’s goal of reducing global warming pollution 17 percent from 2005 levels by 2020. With emission reductions from power plants equal to those described here we would be at least 80 percent of the way there. The remaining gap could be closed with other existing-law measures, such as tightening down on methane leaks from our oil and gas system and making sure that the chemicals we are using to replace ozone depleting compounds aren’t taking use from the frying pan into the fire.
When he accepted the nomination to run for a second term President Obama said “Climate change is not a hoax. More drought and floods and hurricanes and wildfires are not a joke. They’re a threat to our children’s future. And we can do something about it.”
That’s absolutely right. And the most significant thing President Obama can do about it is to use his authority to set ambitious, fair, and flexible standards for existing power plants along lines described in today’s report.