A New, Better, and Legal Path for Power Plant Emissions Reductions

Electricity is increasingly central to Americans, powering not only our homes and businesses but also our cars, our digital life, and countless other essential aspects of modern life. The grid that delivers electricity to virtually every household is one of the greatest engineering accomplishments in history.

Compromise on power plant emissions is difficult

It is also a significant source of greenhouse gas emissions, so any effort to decarbonize the economy must rest upon a foundation of clean power. Yet five successive presidential administrations have failed to meet the challenge of regulating power plant emissions. The Biden Administration is the latest to prefer implausible promises to practical plans, and EPA’s new regulation targeting carbon emissions from coal- and gas-fired power plants, finalized on April 25th, is almost certain to meet the same fate as its predecessors: rejection in court or political retreat, whichever comes first.

If that’s the case, the rule’s only real effect will have been to provide Congress and the Administration with an excuse for legislative inaction. Why do they need the excuse when climate change is such a priority? Because legislation requires compromise—a dirty word on Capitol Hill these days — and both sides have convinced themselves that there is no mutually acceptable path. This delusion derives from a historical truth: When energy technologies are immature and regulations are rigid, then emissions reductions are a zero-sum struggle between cost and environmental performance. Forcing rapid adoption of high-cost energy sources is inevitably expensive.

New laws are necessary

Those are the circumstances that defined the decarbonization debate—choose clean or cheap—when it began in the 1990s. But since the early 2000s, the facts have changed faster than perceptions. The potential cost of reducing carbon emissions is falling significantly because of developments in technology; what remains uncertain is the regulatory framework. Well-designed legislation could shape an energy transition that preserves the affordability, reliability, and security of electric power while substantially decarbonizing the sector by mid-century. Without such legislation, we will stumble and lurch from one regulation to the next court decision, a game of regulatory ping pong that can benefit only litigators and activists, not our economy and environment.

The Supreme Court will not allow agency rule-making alone

Unfortunately, the Clean Air Act’s authority over power plant greenhouse gas emissions is weak, contested, and highly inefficient, relying on antiquated command-and-control mechanisms rather than the kind of efficient and flexible market-based mechanisms that were adopted for other pollutants in the 1990 Clean Air Amendments. The Supreme Court’s 2022 decision in West Virginia v. EPA raised several issues that remain highly relevant to the latest rule. While Biden’s EPA tried to avoid one of the problematic elements of Obama’s Clean Power Plan (mandating a shift from coal-fired generation to renewables) other aspects of EPA’s final rule—chiefly, its assertion that carbon capture technologies have been “adequately demonstrated,” as well as its implications for the “major questions” doctrine articulated in West Virginia—are likely to be fatal flaws. With the Court poised to also modify the longstanding Chevron doctrine in the coming months, deference to EPA on these questions seems unlikely.

Both parties would like to believe they’re winning, but the opposite is true: On our current trajectory, electricity in America will be less abundant, less reliable, more expensive, and higher-emitting than necessary. Well-designed, bipartisan legislation could enable a more efficient, more reliable modernization of the sector that would serve the broad range of shared energy policy goals.

A bipartisan proposal on power plant emissions

Skepticism about the prospects for rational, nonpartisan policymaking is understandable; gridlock is real—but it need not be permanent. In 2020-22, several bills to establish a clean energy standard were introduced in Congress, including proposals from Rep. Frank Pallone, Rep. Diane DeGette, Rep. Ben Ray Lujan, and Senator Tina Smith. These efforts were abandoned when Democrats shifted their focus to passing the Inflation Reduction Act (which, as a budgetary measure, could not establish new regulatory standards). The post-enactment flush of enthusiasm for the IRA meant that the need for emissions standards was soon forgotten. But two years later, with the push for permitting reform stalled and projections for deep emissions reductions looking doubtful, A new white paper released last week shows that it is time to revisit these questions.

With divided government or, at a minimum, the filibuster’s constraint on the horizon in the coming years, it’s worth considering a bipartisan clean energy standard proposal, the Clean Energy Future through Innovation Act (CEFTIA) of 2021, cosponsored by Reps. David McKinley (R-WVA) and Kurt Schrader (D-OR). The CEFTIA proposal had some unique features that gave it bipartisan appeal: It gave utilities sufficient lead time and an aggressive but economically feasible pathway for reducing emissions, and it included features, such as a “safety valve” price for credits, that would control costs. It also provided relief from redundant regulations, whereas other CES proposals left the federal code cluttered with duplicative, inefficient regulatory tools.

Finding a new model

In fact, the prospect of regulatory relief from the cumbersome, inefficient Clean Air Act programs should be sufficient incentive for states to participate in a federal clean energy standard program, especially if it provided access to expedited permitting for CES-compliant projects. Enacting a CES with a structure that allows states to choose between the new regulatory regime or the old one would be a way of preserving the traditional federalist structure of our national energy policy while also fast-tracking the energy transition for everyone who likes the idea of abundant, affordable clean energy.

The old model for power plant regulations hasn’t worked. It is time to find a new approach that can succeed.

This article was originally published by RealClearEnergy and made available via RealClearWire.