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Implications of Clean Air Act Section 111(d) Compliance for North Carolina

Since the mid-2000s, North Carolina has increased natural gas generation, reduced coal dependence, established a renewable energy and energy-efficiency portfolio standard, and taken other actions that will assist it in meeting new carbon emissions targets under the U.S. Environmental Protection Agency’s proposed Clean Power Plan (CPP) promulgated under Clean Air Act (CAA) section 111(d). The CPP, as proposed, assigns state-specific emissions rate targets for existing fossil-fueled generators—targets adjusted for levels of renewable generation and energy efficiency measures. This analysis examines possible implications of meeting proposed CPP targets in North Carolina. To achieve those targets, North Carolina will increasingly shift from coal-fired to natural gas-fired electricity generation, incurring a modest rise in resource costs but creating a potentially significant revenue stream, which policy makers must decide how to allocate. Although the CPP will likely drive down overall emissions in North Carolina, the reductions are smaller than might be expected because North Carolina has already made headway in meeting its emissions targets and because new natural gas generation that is not covered under the 111(d) mass-based target will likely be a component of compliance. Alternative compliance measures, such as specific zero-carbon (e.g., nuclear and solar) investments and increased energy efficiency, reduce future natural gas dependence and hedge against natural gas price risk, though potentially at a cost higher than market-based compliance.

Authors: Etan Gumerman, David Hoppock, and Dennis Bartlett

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Climate & Energy

Clean Air Act

Policy and Design

Reports

Apples and Oranges: Assessing the Stringency of EPA’s Clean Power Plan

An accurate assessment of the stringency of state emissions goals under EPA’s proposed Clean Power Plan compares state emissions goals to adjusted state emissions rates that incorporate known and reasonably foreseeable measures that will affect CO2 emissions from existing power plants. These adjusted emissions rates may include projections of actual generation and emissions, which may differ from the building block assumptions used in EPA’s Clean Power Plan. In addition, projections in performance levels can reflect the emissions and generation impacts that compliance measures will have on the electricity system. Consideration of these impacts can lead to a more accurate comparison of a state’s projected CO2 performance level to its final emissions goal under the Clean Power Plan and result in state plans that are optimized for the degree of required emission reduction.

Authors: Jeremy M. Tarr and David Hoppock

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Climate & Energy

Clean Air Act

Policy and Design

Journal Articles

Designing CO2 Performance Standards for a Transitioning Electricity Sector: A Multi-Benefits Framework

A significant transition is under way within the electricity sector due to several market forces, retirement of certain plants, and regulatory pressure. There is notable overlap between available strategies for mitigating electricity sector risks and potential compliance strategies for states under the Clean Power Plan. This overlap presents regulators with an opportunity to pursue strategies that help manage the transition occurring in the electricity sector and achieve greenhouse gas reductions required under the Clean Power Plan, particularly in the areas of end-use energy efficiency and additional renewable power generation.

Authors: Jonas Monast and David Hoppock

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Climate & Energy

Clean Air Act

Policy and Design

Journal Articles

Environmental and Economic Effects of a Regional Renewable Portfolio Standard with Biomass Carve-outs

The unique generation, landownership, and resource attributes of the southeastern United States make the region a ripe and important test bed for implementation of novel renewable energy policy interventions. This study evaluates the environmental and economic implications of one such intervention, a hypothetical region-wide renewable portfolio standard (RPS) with biomass carve-outs. It utilizes the Forest and Agriculture Sector Optimization Model with Greenhouse Gases (FASOMGHG) to assess the multi-sector and interregional allocation of increased harvest activity to meet the RPS. It then uses the Sub-Regional Timber Supply (SRTS) model to assess the intraregional allocation of harvests within the southeastern United States. The analysis finds that forest biomass is the dominant contributor to the regional RPS; national data suggest a substantial reallocation of harvests across both time and space. Existing resource conditions influence the regional distribution of land use and harvest changes, resulting in a spatially and temporally diverse forest carbon response. Net forest carbon in the Southeast is greater in the RPS Scenario than in the No RPS Scenario in all but the final years of the model run. Accounting for displaced fossil emissions yields substantial net greenhouse gas (GHG) reductions in all assessed time periods. Beyond the RPS, both research methodology and findings are applicable to a broader suite of domestic and international policies.

Authors: Christopher S. Galik, Robert C. Abt, Gregory S. Latta, and Tibor Vegh

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Climate & Energy

Bioenergy

Policy and Design

Working Papers

Terminating Links between Emission Trading Programs

Links between emission trading programs are not immutable, as highlighted by New Jersey's exit from the Regional Greenhouse Gas Initiative. This raises the question of what to do with existing permits that are banked for future use—choices that have consequences for market behavior in advance of, or upon speculation about, delinking. We consider two delinking policies. One differentiates banked permits by origin, the other treats banked permits the same. We describe the price behavior and relative cost-effectiveness of each policy. Treating permits differently generally leads to higher costs, and may lead to price divergence, even with only speculation about delinking.

Author(s): William Pizer and Andrew Yates

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Climate & Energy

Environmental Economics

Climate Change Policy

Energy Sector

National

Working Papers

Completing the Energy Innovation Cycle: The View from the Public Utility Commission

Achieving a widespread adoption of innovative electricity generation technologies involves a complex system of research, development, demonstration, and deployment, with each phase then informing future developments. Despite a number of non-regulatory programs at the federal level to support this process, the innovation premium—the increased cost and technology risk often associated with innovative generation technologies—creates hurdles in the state public utility commission (PUC) process. This article in the Hastings Law Journal examines how and why innovative energy technologies face challenges in the PUC process, focusing on case studies where PUCs have approved or denied utility proposals to deploy high cost, first-generation energy technologies. It concludes with an outline of possible strategies to address PUC concerns by allocating the innovation premium beyond a single utility's ratepayers.

Author(s): Jonas Monast and Sarah Adair 

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Climate & Energy

Policy and Design

State Utility Regulation

Environmental Economics

Climate Change Policy

Energy Sector

States & Regions

State Policy

Journal Articles

Synthesis and Review: Advancing Agricultural Greenhouse Gas Quantification

Reducing emissions of agricultural greenhouse gases (GHGs), such as methane and nitrous oxide, and sequestering carbon in the soil or in living biomass can help reduce the impact of agriculture on climate change while imporving productivity. A new article in a special focus issue of Environmental Research Letters synthesizes the current findings on the state of the capacity for agricultural GHG quantification. It concludes that strategic investment in quantification can lead to significant global improvement in agricultural GHG estimation in the near term.

Author(s): Lydia P. Olander, Eva Wollenberg, Francesco N. Tubiello, and Martin Herold

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Climate & Energy

Agriculture

Ecosystem Services

T-AGG

T-AGG International

Environmental Economics

National

Journal Articles

Regulating Greenhouse Gases Sector by Sector under the Clean Air Act: How Well Does the Electric-Generating Unit Experience Translate to Petroleum Refineries?

The Environmental Protection Agency is developing performance standards to limit CO2 emissions from the electric power sector, and refineries may one day face similar regulations. If so, some of the policies for regulating carbon emissions from electric-generating units might be translatable to a greenhouse gas (GHG) performance standard for refineries. However, differences between the electric power and petroleum refining industries may be substantial enough to warrant a re-examination of key regulatory decisions in the power plant rule. This policy brief identifies the key differences and highlights their possible significance for a GHG rulemaking for petroleum refineries under the Clean Air Act. A companion working paper—Regulating Greenhouse Gas Emissions under Section 111(D) of the Clean Air Act: Implications for Petroleum Refineries—discusses the three major steps for rulemaking, policy design questions, potential responses, and their implications as well as examines options for tailoring discussions from power plant regulation, maximizing cost effectiveness, taking into account differences among refineries, and formatting regulation in a way that may best fit them.

Author(s): Kristie Beaudoin, Allison Donnelly, Sarah K. Adair, Brian Murray, William A. Pizer, Tim Profeta

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Climate & Energy

Clean Air Act

Policy and Design

Climate Change Policy

Energy Sector

Policy Briefs

Regulating Greenhouse Gas Emissions under Section 111(D) of the Clean Air Act: Implications for Petroleum Refineries

The Environmental Protection Agency is developing performance standards to limit CO2 emissions from the electric power sector, and refineries may one day face similar regulations. This paper describes the structure of the refining industry as well as the Environmental Protection Agency’s proposed authority to regulate the industry’s emissions under section 111(d) of the Clean Air Act. It discusses the three major steps for rulemaking, policy design questions that arise at each step, potential responses, and implications for environmental outcomes, equity, and cost effectiveness. The paper concludes by highlighting key considerations for refineries, including options for tailoring discussions from power plant regulation, maximizing cost effectiveness, taking into account differences among refineries, and—given the industry’s characteristics—formatting regulation in a way that may best fit them. A companion policy brief—Regulating Greenhouse Gases Sector by Sector under the Clean Air Act: How Well Does the Electric-Generating Unit Experience Translate to Petroleum Refineries?—highlights differences between the electric power industry and the petroleum refinery industry and highlights their significance for rulemaking for the latter.

Author(s): Allison Donnelly, Kristie Beaudoin, Sarah K. Adair, Brian Murray, William A. Pizer, Tim Profeta

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Climate & Energy

Clean Air Act

Policy and Design

Working Papers

Land Use in a Future Climate Agreement

The second options assessment report, Land Use in a Future Climate Agreement, is in support of the ADP negotiations on a post-2020 agreement and focuses specifically on the role of emissions and removals from land use. It is part of a series of option reports funded by the U.S. Department of State but is not in support of, or reflecting, U.S. Government positions and is the sole work of an independent author team. 

Author(s): Manuel Estrada, Donna Lee, Brian Murray, Robert O'Sullivan, Jim Penman, and Charlotte Streck

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Climate & Energy

Policy and Design

Land

Environmental Economics

International

REDD

Reports

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