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EPA’s Proposed Rule on Reducing Carbon Dioxide Emissions and the Effects on Nebraska

on Thursday, 5 June 2014 in Dirt Alert: David C. Levy, Editor

On June 2, 2014, the United States Environmental Protection Agency issued a proposed rule to reduce carbon dioxide emissions from the generation of electricity. The EPA’s Clean Power Plan proposes to reduce emissions nationwide by 30 percent of 2005 levels, by 2030. The proposal’s two main elements are state specific goals for CO2 emissions reductions from power plants, and guidelines for states to follow to achieve those goals. Nebraska’s state-specific goal, for example, is to reduce its 2005 CO2 emissions levels by 26 percent. Some states’ goals are as high as 44 percent.

Although each state must meet its specific rate for CO2 reductions, the guidelines provide states with flexibility to determine how to achieve those rates through a combination of four “building blocks.” Those building blocks are: (1) supply-side energy efficiency, such as equipment upgrades at power plants; (2) substituting lower-carbon fuels, such as natural gas, for higher carbon fuels, such as coal; (3) substituting renewable and nuclear energy facilities for coal plants; and (4) demand-side energy efficiency, for example, building energy codes, state appliance standards, and tax credits.

If the proposed rule becomes law, it will have dramatic impacts on Nebraska. One of the primary goals of the proposed rule is to reduce emissions from existing stationary energy sources, such as coal-burning power stations. Coal currently is Nebraska’s primary source of energy. In 2011, coal accounted for approximately 72 percent of Nebraska’s electricity, and Nebraska is the home of seven coal-burning power stations, which employ approximately 840 people (out of a statewide labor force of approximately 850,000). Nebraska is also a major hub of coal transportation in the United States. The coal related transportation industry, however, serves more than just Nebraska’s coal plants.

Base load power plants burning coal and natural gas will remain, and indeed, the proposed rule does not require their elimination. Many states and utilities, however, have already begun shutting down coal plants or converting them to using natural gas as the fuel source. The U.S. Energy Information Administration reports the retirement of approximately 60 gigawatts of coal fired generation capacity by 2018, nearly 50 percent more than originally anticipated. That prediction predates the proposed Clean Power Plan rule.

The proposed rule also provides Nebraska with significant opportunities. Nebraska ranks fourth in the nation in wind-energy resources, but does not rank in the top 20 in wind-energy production. The National Renewable Energy Laboratory estimated that nearly 92 percent of Nebraska has conditions suitable for wind-powered electricity generation. In 2013, wind power generated approximately five percent of Nebraska’s energy. Nebraska has 422 operational wind turbines operating at 13 sites with two more sites under construction.

Wind energy is already a billion-dollar industry in Nebraska, and the potential for growth is tremendous. Additional wind energy facilities built in Nebraska would help replace coal-powered electricity, and not just in Nebraska, but in other states where Nebraska could export wind-generated electricity. Wind-energy facilities can boost local property taxes by approximately 10 to 40 percent, depending on the county, and they directly and indirectly employ a significant number of people. By increasing the demand for electricity generated by renewable resources, the proposed rule expands the market for Nebraska’s wind-generated electricity.

More generally, the proposed rule, by directing each state to devise a compliance plan, rather than targeting specific utilities, provides an opportunity and impetus for Nebraska to adopt and implement a new comprehensive statewide energy plan. Nebraska developed such a plan in 2011, but the plan emphasizes the maximization of coal generated electricity and is outdated with respect to wind energy, regional transmission infrastructure, and other matters. It is also out of step with existing federal law. A comprehensive statewide outlook for the next 10 to 15 years that considers economic development and environmental sustainability, in addition to responding to the 59 percent increase in electric rates in Nebraska since 2001, would benefit all Nebraskans.

The proposed rule is not yet law, however. The issuance of the proposed rule triggered a 120 day comment period, during which the EPA will accept public comments on the proposed rule. During that time, the EPA will also convene four public hearings in Atlanta, Denver, Pittsburgh, and Washington, DC, where proponents and opponents will have the opportunity to present data and arguments concerning the rule. The EPA will consider the comments it receives, make any revisions to the proposed rule, and then issue a final rule. Once the rule becomes final, the government will add it to the Code of Federal Regulations, and it will have the force of law.

If the rule becomes law, each state must submit a plan to reduce CO2 emissions to the EPA by June 30, 2016. States participating in multistate plans, however, may submit one joint plan. If a state needs additional time, it must submit an initial plan by June 30, 2016, which documents why the state needs more time, and includes steps to ensure the state submits a complete plan by June 30, 2017, if the plan is limited to that state in geographic scope, or June 30, 2018, if the plan proposes a multistate approach. The EPA then proposes a 12-month period for it to review the plans for approvability.

The proposed rule provides alternative options regarding the timing for states to comply with emissions requirements. Under one option, states must begin reducing emissions by 2020, and achieve full compliance by 2030. The alternate option proposes less stringent requirements in terms of a state’s use of each of the building blocks, but a shorter implementation period, with final goals achievable by 2025.

The rule’s hallmarks are ambitious CO2 reduction requirements and flexibility in how and when a state reduces its emissions. Reducing carbon emissions from power generation would have a substantial effect on Nebraska’s coal-based power plants.

The proposed rule also provides Nebraska with an opportunity to overhaul its statewide energy plan and offset any reduction in coal-related economic activity, wages, jobs, and taxes by capitalizing on its renewable energy resources and opportunities.


David C. Levy & Anthony D. Todero

1700 Farnam Street | Suite 1500 | Omaha, NE 68102 | 402.344.0500