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What is the Clean Power Plan’s projected impact on the Northeast region?

October 15, 2015

Green Building Worldwide has been committed to the study and analysis of the sustainability, resilience and climate change area for the last half decade and will continue to do so by reporting the latest developments regarding the CPP and the impact that this plan will have on the U.S.’ Northeastern region. The CPP is a program designed to bring clean power to communities across the U.S., create jobs, reduce electricity bills for households and businesses and protect and improve public health (White House 2015). The principal goal that has been outlined by this plan is the one of increasing the regulation of greenhouse gas emissions with special focus on CO2 emissions directly from existing generation sources (EPA 2015). In order to properly understand the impact that the CPP will have on the Northeast region, it is fundamental to examine the foundation of this strategy: the Best System of Emissions Reduction (BSER). This report will therefore firstly examine the BSER’s pillars since these will determine the strategies that states will use in their compliance plans. This report will then advance in perspective to assess both the possible issues and benefits that will be brought up by this strategy, which will in turn determine the impact that the CPP will have on the Northeast region. In other words, this report will draw from the criticism, compliance and acceptance that the CPP has received since it was released last August to assess and determine a) the Northeast capacity and preparedness to comply with CPP’s targets and b) whether this plan will have a positive or negative effect in this region. The CPP is primarily composed of the ‘Best System of Emission Reduction’ (BSER), a mechanism divided into four strategies designed to provide states and businesses with flexible and diverse strategies that these can pick and choose from to better suit their context (see Figure. 1) (White House 2015). The BSER mechanism will enable states to successfully meet the goals assigned to them by the CPP due to the flexibility and adaptability that this strategy offers. The BSER’s main point of focus is to inform the stakeholders affected by this plan about the economic benefits that the implementation of CPP’s strategies and goals will bring to fruition, which will largely be a factor of this strategy’s specialized modus operandi. The BSER has outlined four mechanisms of action that states and businesses can use in their plans of action to reduce their greenhouse gas emissions. The BSER strategy provides stakeholders with the freedom to build from, alter or change these mechanisms to better fit their context, which will in turn make these stakeholders more likely to reach their targets (MacCracken et al. 2015). The first mechanism is the one of heat rate improvement, which is designed to reduce the emission rates of coal generation facilities. This mechanism is intended to mandate utility companies to produce energy at lower CO2 emission rates, which can be achieved through the implementation of energy efficiency strategies at these companies’ operational facilities. The second mechanism has to do with fuel switching, or system redispatch from coal to natural gas. If states decide to utilize this strategy they will have to make sure that their primary utility companies provide businesses and households with the option to shift their energy source from coal to natural gas but more importantly states will have to ensure that natural gas is posed as an attractive and inexpensive alternative to coal to the general population. The third mechanism devised by the BSER is related to the goal of increasing generation from renewable sources and preserving generation from nuclear units. This mechanism relates to two of the CPP’s primary targets: the target to displace coal and oil power plants and to stimulate the growth and expansion of green power plants to the point where these become America’s main source of (non­-emitting) energy. Lastly, the BSER has outlined the importance for states to encourage and incentivize the growth of the energy efficiency industry in order to displace polluting energy generation sources. The CPP will strive to make states follow and continue the example that large cities like New York, Los Angeles, and Chicago have set in increasing the energy efficiency of its built structures in inner and suburban areas. The publication of the CPP was met in the Northeastern region of the United States with mixed responses ranging from compliant to highly critical when it was released this past August (AEE 2015). This is because while the Northeastern region received less severe reduction targets than for instance its southern counterparts, mainly due to the consistent and extensive efforts that this region has made to reduce its emissions for the last decade, the specific strategies that were assigned to the Northeast for the reduction of its CO2 emissions have the potential to negatively affect different types of stakeholders such as the general public, utility companies and the corporate sector (NAERC 2015). The criticism that the CPP received was mainly related to concerns that different stakeholders have about potential increases in energy prices, the possible displacement of nuclear plants and this strategy’s capacity to provide America with sufficient infrastructure and appropriate grid reliability to meet future energy demands (AEE 2015; NAERC 2015). Reports from America’s Coalition for Clean Coal Electricity (ACCCE), the NERA Economic Consulting and America’s Coalition for Clean Coal energy claim that the CPP will undermine Americans’ access to affordable power and will cause electricity prices to increase dramatically (ACCCE 2015; NERC 2015). More specifically these two sources claim that consumers will have to bear the rising costs of electricity, which could potentially double in 43 states. Nonetheless, projections from a recent report produced by the ICF suggest that the shift in future energy prices depends on the approach that states adopt, which can lead to the increase or decrease of electricity prices (McCracken et al. 2015). Moreover, this report advanced in perspective to explain that the most favorable scenario in terms of energy prices for different states would be one that supports and incentivizes different types of energy production (i.e. wind, solar, natural gas, etc) in order to prevent scenarios in which rising energy demands put excessive pressure on one particular energy sector and lead to volatility in energy prices (McCracken et al. 2015). Critics of the CPP have also accused this plan to be biased against nuclear power plants, which make up almost two thirds of zero-carbon electricity (Nuclear Energy Institute 2015). This is because while the CPP will provide limited incentives assigned exclusively to new power plants, it will provide extensive support and funding to the development and expansion of green technologies (Bracewell and Giulianni 2015). Therefore, this decision has the potential to increase the competitiveness of other green technologies, which could in turn have a negative effect on the nuclear power industry (AEE Institute 2015). Reports like the one produced by NERC and the AEE have also claimed that the CPP fails to a) identify both the geographic areas where there’s a need for the introduction and expansion of green energy infrastructure and the strategies that these areas can potentially use to accelerate the expansion of their green energy network and b) to outline in a detailed manner how the CPP will ensure future grid reliability (NERC 2015; AEE 2015). However, the Advanced Energy Association (AEE), the DoE (Department of Energy) and the EPA have claimed that while it is important for Northeastern states to continue to stimulate the growth and expansion of the green energy sector, both the advancements made in this area by the Northeastern Regional Greenhouse Gas Initiative (RGGI) and the extensive investment that has been directed towards the natural gas industry for the last decade have placed the Northeastern region on the right track to provide its population with the appropriate infrastructure and grid reliability that is needed to meet future energy demands. Similarly, several mainstream newspapers like the New York Times and organizations such as the American Energy Efficiency Agency, American Wind Energy Organization, North American Electric Reliability Corporation and the Union of Concerned Scientists among others have released writing pieces that offered a positive outlook that outlined the benefits that will be brought up by the CPP in the Northeastern region (AEE 2015; AWEO 2015; NERC 2015; UCS 2015). The Northeastern region will draw from the progress that has been achieved by the RGGI for the past decade, a period in which this organization has managed to reduce this area’s greenhouse gas emissions, accelerate the process of introducing and expanding the green energy sector and increase green technologies accessibility to the wider population and to low-income households (RGGI 2015a). In other words the significant progress that has been made in the Northeastern region for the past few years will enable this area to meet the goals set by the CPP (RGGI 2015b; RGGI 2015c). This is because over the last decade the RGGI has raised over $900 million dollars from auction proceeds that have been invested in hundreds of green projects (including energy efficiency, clean and renewable energy, greenhouse gas abatement programs) aimed at reducing this area’s energy use and greenhouse gas emissions (see Figure 2). It is these projects that will serve as the foundation and lead the way for future green programs, which will strive to cut greenhouse gas emissions directly from power plants, result in the proliferation of the energy efficiency sector in urban and rural areas, stimulate the growth and expansion of green technologies, lead to the displacement of oil and coal power plants and more importantly lead to economic growth of the Northeastern economy (see Figure 3) (RGGI 2015d). Moreover, this initiative has strived to support vulnerable and low-income communities within the Northeastern region. This initiative has done so by increasing these communities’ access to energy efficiency strategies and renewable energy technologies such as solar panels and by implementing energy-saving measures that resulted in direct environmental, health and economic benefits such as the reduction of impoverished families’ energy bills) (RGGI 2015a; RGGI 2015b) In conclusion this report examined the BSER’s pillars to determine what will be the strategies that states will use in their compliance plans. This report then assessed both the possible issues and benefits that will be brought up by this strategy and that will in turn determine the impact that the CPP will have on the Northeast region. In other words, this report drew from the criticism, compliance and acceptance that the CPP has received since it was released last August to assess and determine a) the Northeast capacity and preparedness to comply with CPP’s targets and b) whether this plan will have a positive or negative effect in this region. Lastly, this report concluded that while the Northeastern region needs to produce compliance plans that address issues of grid reliability and energy infrastructure, the significant achievements and progress made by the RGGI will facilitate this regions future efforts to meet their respective CPP’s targets. Moreover, reports produced by the RGGI have also shown that contrary to the widespread opinion shared by several research institutes and mass media the CPP can build from the progress made by the RGGI, which has led to the growth of the Northeastern community and to the financial support and empowerment of low-income and vulnerable communities.

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