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With Or Without You

By Chuck Ross | Apr 15, 2016
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When the Supreme Court put President Barack Obama’s Clean Power Plan (CPP) on hold in February, pending a federal appeals court case scheduled for June, clean-energy advocates feared this move would jeopardize national efforts to reduce carbon emissions. However, a closer look at current progress, and at market forces likely to support natural gas and renewable-electricity generation, raises a question—does the CPP really matter?


The plan certainly isn’t dead. Regardless of how the appeals court rules on West Virginia, et al. v. EPA, et al., the losing side is almost guaranteed to bring an appeal to the Supreme Court as soon as this fall. However, the justices likely won’t announce their decision—which could be a 4–4 tie if Antonin Scalia hasn’t been replaced—until June 2017 at the earliest. With a new president, who might oppose the plan—and a possibility the Supreme Court could order a rehearing of the case with a full bench in the case of a previous tie—legal battles could delay the issue for several years.


In the meantime, some states are continuing to develop plans to reach CPP targets. The plan requires states to prepare and submit their plans to the U.S. Environmental Protection Agency (EPA) between 2016 and 2018, and 21 states have committed to meeting that deadline. Beyond such commitments, though, ongoing market forces might end up taking the United States much closer to CPP goals than previously thought possible, thanks in large part to the low pricing of natural gas fuel supplies and falling solar- and wind-power costs. 


At a high level, the CPP sets a national goal to reduce electricity-generation-related carbon emissions by 32 percent over 2005 levels by 2030. This goal is ambitious, but the good news is we’re already almost halfway toward meeting it. As of the end of 2014, the latest year for which the U.S. Energy Information Administration has figures, emissions had fallen by 15 percent over 2005. Coal is the biggest source of carbon emissions among fossil fuels, and now it accounts for 34 percent of U.S. electricity generation, down from a high of 50 percent in 2005. Also, coal use hit a 35-year monthly low in November 2015, according to the Business Council on Sustainable Energy.


At the state level, data appears equally promising, according to research done by the Union of Concerned Scientists. The group’s August 2015 report, “States of Progress,” offers the following observations:


• At least 31 states are on track to be more than halfway to their 2022 targets (the CPP sets intermediate state-level emission-reduction goals between 2016 and 2030).


• At least 21 states (including several that are now part of the CPP lawsuit) are on track to surpass their 2022 emissions-reduction targets.


• At least 16 states are on track to achieve their 2030 targets based on existing clean-energy commitments.


Factors behind these significant emissions reductions include the Mercury and Air Toxics Standards (MATS) that took effect April 2015. These standards require noncompliant generating plants to install pollution-control equipment. These standards are tied up in a lawsuit that the Supreme Court recently bounced back to a federal appeals court, Michigan v. EPA. Many plant owners have decided to shut them down rather than wait for a final verdict. A September 2015 report from SNL Energy anticipated a total of 14.6 gigawatts of coal-generation capacity would be shuttered by the end of 2015.


In addition to the continued pressure of inexpensive natural gas as a cleaner-burning alternative, coal-plant operators also are seeing utility-scale wind and solar plants becoming more cost-competitive. Nationally, the levelized cost of electricity (a figure that incorporates upfront capital and development expenses, along with financing and maintenance fees) produced by onshore wind remains higher than that for natural gas and coal, but the gap is quickly closing, according to Bloomberg New Energy Finance. In some wind-rich regions, such as Texas and Iowa, wind-power costs are actually lower.


Neither coal’s decreasing influence nor the increased importance and affordability of natural gas and renewables are trends that will reverse soon, if ever. In fact, renewables have plenty of room for growth. In 2015, wind and solar power surpassed natural gas in terms of new generation capacity installed. Even state-level renewable portfolio mandates are becoming less important for electric utilities. A GTM Research report found that more than half of utility-scale solar capacity planned for development this year will fall outside of the requirements set by state renewable portfolio standards.


One major driver for the CPP was the statement it made to the international community regarding the United States’ commitment to reducing emissions, especially as a follow-up to the Paris climate talks held late last year. Some nations could certainly see the current court battles as a repudiation of any such commitment. However, market forces appear likely to succeed where legal mandates might fail, which could prove much more significant than any single political statement to the larger world goal of addressing climate change.

About The Author

ROSS has covered building and energy technologies and electric-utility business issues for more than 25 years. Contact him at [email protected].

 

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