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Changes Ahead: How the president’s Climate Action Plan will impact the energy industry

On June 25, 2013, President Barack Obama unveiled a plan he stated will reduce carbon emissions and begin to slow the effects of climate change. His Climate Action Plan is based on three key aspects: 1) cut carbon pollution in America; 2) prepare the United States for the impact of climate change; and 3) lead international efforts to combat global climate change and prepare for its impacts. Regarding carbon reduction, the power sector can expect to see Environmental Protection Agency regulatory action as early as September of this year.

Carbon reduction by power plants

The president’s plan and a memorandum issued to the EPA, also on June 25, set out the regulatory steps that the industry can expect to see in the coming months to reduce carbon emissions from power plants. The president directed the EPA to:

  • Issue new proposed greenhouse gas regulations for new power plants by Sept. 20, 2013, as the EPA has indicated its intent to reissue proposed regulations in light of more than 2 million comments received on its April 13, 2012 proposal.
  • Issue proposed “carbon pollution standards, regulations, or guidelines, as appropriate” for modified, reconstructed and existing power plants by June 1, 2014; issue final rules by June 1, 2015; and require state implementation plans to be submitted to the EPA by June 30, 2016.

With regard to the existing source standards, the president directed:

  • The rulemaking is to directly engage states, “as they will play a central role in establishing and implementing standards for existing power plants.” The agency is also directed to involve the power sector, labor leaders and non-governmental groups as well as the public.
  • The regulations should be tailored to reduce costs and should develop approaches that allow the use of market-based instruments, performance standards and other regulatory flexibilities.
  • The EPA is to ensure continued reliable and affordable electric power and work with the Department of Energy and other agencies to “promote the reliable and affordable provision of electric power through the continued development and deployment of cleaner technologies and by increasing energy efficiency, including through stronger appliance efficiency standards and other measures.”

On July 30, 2013, in her first speech as confirmed EPA Administrator, Gina McCarthy remarked that almost a dozen states have already begun market-based greenhouse gas programs as well as renewable and energy efficiency programs. She indicated that the upcoming EPA rules would respect the work already done by those states.

The president’s Climate Action Plan can be found here.

If you have questions about how these changes may affect you or your business, please contact a member of the Environmental and Natural Resources group at Bingham Greenebaum Doll LLP.

DISCLOSURE REQUIRED BY CIRCULAR 230. This Disclosure may be required by Circular 230 issued by the Department of Treasury and the Internal Revenue Service. If this article, including any attachments, contains any federal tax advice, such advice is not intended or written by the practitioner to be used, and it may not be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. Furthermore, any federal tax advice herein (including any attachment hereto) may not be used or referred to in promoting, marketing or recommending a transaction or arrangement to another party. Further information concerning this disclosure, and the reasons for such disclosure, may be obtained upon request from the author of this article. Thank you.

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