As states continue to evaluate the Clean Power Plan, a support for mass-based implementation approach seems to be gaining momentum. Mass-based approaches can be simpler than rate-based approaches to administer as well as enable more well-known emissions-style trading schemes.

Key Details

• In August 2015, the U.S. EPA released final rules for the Clean Power Plan, a regulation aimed at reducing carbon emissions from existing power plants
• State implementation plans must comply with the rule by meeting either rate-based or mass-based targets
• Recent conference proceedings reveal a preference for mass-based targets for the following reasons:
• They would be simpler and easier to administer among air regulators, who have established emissions caps for other pollutants and are now responsible for Clean Power Plan compliance
• Coal-dependent states, in particular, could find mass-based approaches attractive because coal plants currently scheduled for retirement could be counted toward compliance
• A mass-based approach also provides a mechanism to value existing clean generation, in particular nuclear
• However, a rate-based approach would more easily accommodate economic development and electricity demand growth. Conference participants have also noted a rate-based approach may make sense for southeastern states where new nuclear generation will lower the pounds of CO2 produced per megawatt hour
• Trading of compliance mechanisms will also be important; states meeting rate-based targets can trade emission reduction credits while states meeting mass-based targets can trade emission allowances

Implications

Mass-based compliance approaches provide a familiar framework to air regulators. Their attractiveness could increase if a substantial number of states pursue this compliance option. In this instance, other states could be drawn to lower compliance costs that result from a larger, more efficient trading market.

More Information

Utility Dive: NARUC 2015: How the Clean Power Plan is transforming ‘baseload’ generation

Utility Dive: States leaning toward mass-based CPP compliance, regional cooperation

E&E Publishing: State regulators, utilities see advantages in mass-based approach to EPA rule

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