Legal & Regulatory

Despite Stay, EPA Proposes Details of Clean Power Plan Voluntary Incentive Program


The Environmental Protection Agency (EPA) has unveiled details of the Clean Energy Incentive Program (CEIP), a voluntary measure central to the judicially stalled Clean Power Plan that seeks to provide guidance to states and tribes that want to meet goals under the plan when it becomes effective.

The final Clean Power Plan, finalized in August 2015, included the CEIP, which was designed to help states and tribes with affected power plants meet goals by removing barriers to investment in energy efficiency and solar measures in low-income communities. It also encouraged early investment of renewable generation.

A state or tribe that chooses to opt-in to the CEIP may allocate allowances (under a mass-based plan) or issue emission rate credits (ERCs, under a rate-based plan) to eligible CEIP projects for energy generation or savings that occur over 2020 through 2021. The CEIP-eligible project that receives allowances or ERCs (and, in the process, gains a matching award from the EPA) may then sell or transfer them to affected power plants. Those plants may then use them for compliance with an emission standard under the Clean Power Plan.

A Voluntary Proposal

The design details of the CEIP proposed on June 16 were formulated with extensive outreach and more than 5,000 public comments, the EPA said in a statement.

Among the proposal’s key provisions are more details on how the EPA matching pool of allowances and ERCs (equivalent to 300 million short tons of carbon dioxide emissions) will be made available to states and tribes that choose to participate in the CEIP. The agency proposed that the matching pool be divided evenly between two reserves, with 50% made available for low-income community projects and 50% in a reserve for renewable energy projects.

The proposal also expands the types of projects that are eligible for the CEIP and clarifies that they will be eligible once they commence operation. For low-income community projects, both demand-side energy efficiency and solar projects will be eligible. For renewables projects, the CEIP-eligible technologies that were originally limited to solar and wind will now include geothermal and hydropower.

The EPA also re-proposed an optional example of regulatory text specific to the CEIP that a state or tribe may choose to incorporate into its plan.

Public comment on the proposal will be open for 60 days, and the agency will conduct a hearing on the design details in Chicago on August 3.

EPA: CEIP Work Not in Defiance of SCOTUS Clean Power Plan Stay

The agency has continued work on the CEIP, despite arguments from the states contesting the Clean Power Plan’s legality that the EPA’s actions defy the U.S. Supreme Court’s February 9 stay pending review on the merits of the rule by the D.C. Court.

Last week, a key witness testified before the U.S. Senate Committee on Environment and Public Works that states and regulated entities may be granted additional time to comply with the Clean Power Plan, if the rule is ultimately found to be lawful.

The EPA, too, has said it “firmly believes” the Clean Power Plan will be upheld when the merits are considered, “because the rule rests on strong scientific and legal foundations.” It has actively encouraged states that want to continue slashing carbon emissions from power plants to seek the agency’s guidance.

But the measure hasn’t been without controversy. In April, the attorneys general of Texas and West Virginia called on the EPA to halt efforts that “spend taxpayer dollars” to help other states with planning for compliance with the rule. They specifically urged the EPA to cease action on the CEIP and non-final model carbon trading rules.

“Because the CEIP and the carbon trading rules have no legal significance without a legally effective Power Plan, efforts to push these programs forward at this time can only be understood as an attempt to make the Power Plan a fait accompli and to undermine the Supreme Court’s order,” they said.

The EPA then told POWER that its work on the proposal was a “routine step” that is consistent with the Supreme Court stay of the Clean Power Plan. On June 16, it stressed that while the courts review the plan, no state is required to comply with the Clean Power Plan during the stay.

“Many states and tribes have indicated that they plan to move forward voluntarily in cutting carbon pollution from power plants and have asked the agency to continue providing support and developing tools that may support those efforts, including the CEIP,” the agency said.

“EPA is responding to these requests and is following through on our commitment to provide states with additional information on the CEIP, consistent with the stay. This work will provide states with additional clarity, which will help them make timely decisions regarding options for plan development when the stay is lifted.”

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)


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