U.S. coal production in 2016 reached its lowest level since 1978. However, in its Annual Energy Outlook published in February 2017, the U.S. Energy Information Administration (EIA) expects coal-fired power to regain its place at the top of the U.S. power generation mix in 2019 and hold that position into the 2030s, if the Obama-era Environmental Protection Agency’s (EPA’s) Clean Power Plan (CPP) is repealed.
Given the Supreme Court ruling in February 2016 that stayed its implementation, President Trump’s promise to repeal it, and the confirmation of Scott Pruitt as the new administrator of the EPA, the CPP appears doomed. The death of the CPP would drastically impact federal government incentives to switch to cleaner energy. However, if states, utilities, and the largest energy users maintain their own clean energy goals, the spirit and aims of the CPP will be met with or without its actual implementation.
The CPP tracks the U.S.’s commitment as part of the historic Paris climate deal by requiring states to develop plans to reduce carbon emissions from existing generating units that use fossil fuels and encouraging states to reach a specific carbon reduction target. Implementation of the CPP would ensure U.S. coal consumption for power production decreases from its present level, unless utilities invest more money to upgrade existing plants. However, even if the CPP survives, states are not required to start meeting lower carbon-emissions levels until 2022.
The CPP is a prime example of how federal regulations for existing power plants could significantly contribute to lowering carbon emissions. If the CPP is implemented, coal generation would likely decline steadily through the 2030s and it would greatly reduce carbon emissions and coal plant pollution. Conversely, without the CPP, the EIA noted “there is less incentive to switch from carbon-intensive coal to less carbon-intensive natural gas or carbon-free fuels such as wind and solar.”
States Moving to Take the Lead
However, the Obama-era EPA was not the only regulatory body aiming to reduce carbon emissions in the U.S., and the death of the CPP does not mark the end of the country’s clean energy future. Many states have already begun to create their own carbon emission-reduction targets and plans, thus fulfilling the aims of the CPP on their own terms.
For example, legislation has been introduced in the California Assembly to cap the amount of coal-generated electricity the state uses. Under the current version of the bill, California would entirely eliminate in-state use of electricity from coal by 2026. The bill is largely symbolic because the amount that California uses—about 6% at the end of 2016—is already small.
Though symbolic, the bill would codify into law California’s commitment to address climate change by eliminating coal-fired energy sources entirely from the state’s grid. It would also serve as statutory protection against any future reversion to high-polluting energy sources during unexpected service interruptions or to accommodate electric demand growth that could occur with the rapid expansion of the electric transportation industry.
Similarly, New York has continued with its plans to reduce carbon pollution, investing in solar, smart power grids, electric car charging stations, and offshore wind farms in an effort to eventually reach a 100% renewable energy goal. New York already receives 25% of its power from renewable energy sources.
Even Michigan—which is one of the 10 most coal-dependent states in the country—has achieved some renewable energy objectives. The Michigan Public Service Commission recently found that all electric service providers in the state met renewable portfolio targets of 10% by 2015.
The Role of Utilities
Similarly, the nation’s largest energy users and electric utilities are not waiting for closure on the CPP as they move forward with reducing emissions. More than two-thirds of Fortune 100 companies and more than half of Fortune 500 companies have renewable power or sustainability targets.
Furthermore, utilities and the largest energy users are directing new investments towards natural gas and renewable-based power production due to the low cost of natural gas and the tax credits provided to produce more electricity from solar and wind. In fact, many electric utilities anticipate that even if the CPP is rescinded, stricter climate standards are likely at the state level and under possible future federal administrations. Thus, many utilities will continue to focus on cutting carbon emissions.
Regardless of the fate of the CPP, we will likely continue to see states, utilities, and large energy users collectively reduce the nation’s carbon footprint and achieve greater renewable energy targets, despite any near-term federal obstacles created. ■
—Tahiya Sultan is an associate with Davis Wright Tremaine in the firm’s San Francisco office.