The U.S. Environmental Protection Agency (EPA) announced it has formally replaced the prior administration’s Clean Power Plan (CPP) with the Affordable Clean Energy (ACE) rule, which EPA proposed as a CPP replacement last August.
CPP was the centerpiece of President Barack Obama’s climate change policies, requiring states to reduce carbon dioxide emissions from power plants by 32 percent below 2005 levels by 2030, on average.
Under CPP, states would have had to force utilities to shutter dozens of coal-powered electricity plants prematurely and replace them primarily with wind and solar power generating facilities. The Energy Information Administration had projected CPP would result in $1.23 trillion in lost GDP (in 2014 dollars) between 2020 and 2030. Estimates indicated CPP would have increased electricity prices by 11 to 14 percent per year.
Successful Legal Challenges
CPP was beset by legal challenges from its introduction.
Twenty-seven states and dozens of business, consumer, labor, and public-interest groups sued to block the rule, arguing its limited benefits did not justify its high costs and that the rule violated states’ long-established authority under the U.S. Constitution to design and administer the electric power supply within their borders.
Legal scholars sided with the states, arguing CPP was illegal because the 1970 Clean Air Act (CAA) did not grant EPA authority to regulate “outside the fence” by dictating states’ electric power mixes, and unconstitutional because it ignored Fifth Amendment protections of property rights against unlawful takings and violated states’ and utilities’ rights to due process.
The CPP never went into effect. In a highly unusual move, the U.S. Supreme Court stayed the rule in February 2016, indicating the Court believed the legal challenge brought by the states was likely to be successful and the justices did not want to allow a regulation that could have such a profound effect on the economy to go forward until all legal proceedings were completed.
In October 2017, the Trump administration announced it would rescind CPP.
Focusing on Best Technologies
In August 2018, EPA unveiled the draft of its replacement for CPP, ACE, opening the plan up for public comment.
After some minor revisions, the agency finalized the rule on June 19.
Consistent with the CAA, ACE regulates inside the fence, setting unit-specific carbon dioxide emission goals which can be met through a flexible suite of six sets of technologies EPA has concluded are the Best System Emission Reduction (BSER) technologies.
ACE directs states to work with the operators of coal-fueled power plants to establish the best technologies based on site-specific needs and conditions, to improve efficiency by increasing generating units’ heat rates, the amount of energy required to generate a unit of electricity. Improving a power plant’s heat rate reduces the amount of emissions for each unit of electricity generated.
ACE gives states three years to develop their implementation plans.
‘Affordable, Reliable Energy’
ACE keeps President Donald Trump’s promise to ensure the lowest-cost power while still protecting the environment, Wheeler said at the press event announcing the finalization of the ACE.
“Today, we are delivering on one of President Trump’s core priorities: ensuring the American public has access to affordable, reliable energy in a manner that continues our nation’s environmental progress,” said Wheeler. “Unlike the Clean Power Plan, ACE adheres to the Clean Air Act and gives states the regulatory certainty they need to continue to reduce emissions and provide a dependable, diverse supply of electricity that all Americans can afford.”
The Trump administration estimates ACE will result in energy, environmental, and public health benefits of $120 million to $730 million per year, when fully implemented.
Lawmakers Praise Change
ACE respects states’ expertise and provides flexibility CPP lacked, said Sen. Mike Enzi (R-WY), chairman of the Senate Committee on Budget, in a joint EPA press release.
“I am glad the EPA is replacing the Clean Power Plan, which was designed to put coal out of business,” said Enzi. “States, not the federal government, are in the best position to set energy policies that work best for them.
“This rule helps to empower states and provide needed flexibility to move toward better energy production without causing economic harm,” Enzi said.
In the same press release, Nebraska Gov. Pete Ricketts thanked Trump for “rolling back the job killing” CPP which ignored progress his state has made in cleaning the air.
“The so-called Clean Power Plan … gave Nebraska zero credit for innovative projects we already have in the pipeline, and it would have burdened Nebraska families and Main Street with budget-crushing power rate increases,” said Ricketts.
ACE follows the law and protects the energy supply, Rep. Louie Gohmert (TX-R) said in EPA’s press release.
“Today the EPA restored the rule of law by repealing the overreaching CPP and replacing it with the ACE Rule,” said Gohmert. “The Trump EPA rule that tracks the law will actually allow cheaper energy for the nation’s working poor while cleaning up the air and water to levels not experienced in many decades.”
Inexpensive energy helps people live better, and ACE will help ensure they continue to have it, says Tim Benson, a policy analyst with The Heartland Institute, which publishes Environment & Climate News.
“Affordable energy is the key to the production of virtually all goods and services,” said Benson. “This finalized ACE ruling is a vast improvement over the CPP and by replacing it will save Americans around $400 million a year, making people’s lives easier.”
ACE maintains states’ authority over their electric grids while helping them improve the environment, says Hal Quinn, president of the National Mining Association, in EPA’s press release.
“In this rule, the EPA has accomplished what eluded the prior administration: providing a clear, legal pathway to reduce emissions while preserving states’ authority over their own grids,” said Quinn.
H. Sterling Burnett, Ph.D. ([email protected]) is a research fellow at The Heartland Institute.
James Taylor et al., “Comment, Submitted to the EPA, on the Affordable Clean Energy (ACE) Rule,” The Heartland Institute, October 31, 2019: https://heartland.org/publications-resources/publications/the-heartland-institutes-comment-submitted-to-the-epa-on-the-affordable-clean-energy-ace-rule