trending Market Intelligence /marketintelligence/en/news-insights/trending/fflwbaravxvhc8tmfmj9xq2 content esgSubNav
In This List

Kentucky, others seek carbon rule repeal despite 'steeply declining' emissions

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


Kentucky, others seek carbon rule repeal despite 'steeply declining' emissions

Environmental groups and officials from Kentucky appear to have come to a rare agreement on the Clean Power Plan: much of the country is already meeting the goals of the 2015 rule.

That includes Kentucky, which was among the dozens of states that fought the controversial and divisive rule in the courts. Where the parties split, however, is in what that means for the future of the rule. Should the U.S. Environmental Protection Agency ditch it, replace it or strengthen it?

Kentucky's comments, along with others made by a conservative-leaning group in the Clean Power Plan repeal docket, suggest a changing narrative around opposition to the Clean Power Plan and a recognition that market forces are causing coal-fired generation to be replaced with that fueled by natural gas.

The EPA is accepting feedback on its plan to repeal the Clean Power Plan until April 26, after extending the comment period to accommodate the addition of three public hearings that will take place Feb. 21 in Kansas City, Mo., Feb. 28 in San Francisco and March 27 in Gillette, Wyo. More than 400,000 comments already had been received by the original Jan. 16 deadline, including those submitted by Kentucky. Approximately 16,000 of those comments have been made available on the Clean Power Plan repeal docket.

Comments submitted by the Kentucky Energy and Environment Cabinet generally urged the EPA to repeal and not replace the Clean Power Plan. But the Cabinet, which says its mission is protecting and enhancing the state's environment, also cited the gains made by the U.S. in lowering carbon emissions and said that same trend is evident in Kentucky's power industry.

EPA Secretary Scott Pruitt also has often touted U.S. gains in reducing carbon in public appearances defending decisions to back away from regulating those emissions. In defending his decision to advise the president to leave the Paris Agreement on climate change, Pruitt told Reuters that U.S. carbon emissions have dropped to pre-1994 levels and the nation has reduced its carbon footprint by 18% or more.

"That's better than others across the globe. When people really want action and meaningful outcomes with regards to this, we are doing it. We are at pre-1994 levels," Pruitt said. Those reductions have happened as a result of "technology and innovation, not a government mandate."

SNL Image

In a letter attached to the Kentucky Cabinet's comments, Cabinet Secretary Charles Snavely reported that carbon emissions from Kentucky electric generating units "are steeply declining and on the path to meet the goals set by the CPP."

Acknowledging that "market forces" are responsible for the decline in carbon emissions, Snavely said the Clean Power Plan is not needed and the unintended consequences the rule would have "are unnecessary and should be avoided."

The Kentucky Cabinet said that when the EPA released the Clean Power Plan, the agency said the rule was simply supporting a trend toward cleaner generation resources. "The goal then was to lock in these changes and prevent a reversal if market conditions were to change," the Cabinet wrote. "In other words, the trend toward increasing natural gas would have been cemented in such a way that consumers would have had to pay more as natural gas prices increased."

While the Cabinet acknowledged that power market conditions are changing rapidly, it said those changes will occur with or without the Clean Power Plan. Without a repeal of the rule, the Cabinet said, Kentucky and other states will be "precluded from being able to make prudent decisions about electricity generation and energy policy in a manner that ensures affordability, price stability and reliability."

Environmental groups such as the Sierra Club and Natural Resources Defense Council have maintained that a decline in carbon emissions is a reason to double down on the Clean Power Plan rather than repeal it. In response to the release of an EPA December 2017 inquiry into possibly replacing the Clean Power Plan, the Sierra Club said recent evidence shows that the nation's power generators are capable of even more significant emissions cuts than those required under the plan. The group has also said the rule was intended to be a framework for future administrations to tweak and strengthen.

Market forces

Joining Kentucky in supporting a repeal of the Clean Power Plan is the conservative free-market advocacy group The Heartland Institute. The group alleged in its comments that the Obama administration "inflicted intentional, serious damage" on the country's ability to generate electricity and the coal industry has been "the principal target of the assault."

Heartland expressed hope that former President Barack Obama's policies, specifically the Clean Power Plan, can be reversed and the nation's power markets restored to better meet consumer needs and preserve the coal-fired electricity fleet. Coal generation retirements are being driven by the EPA's regulation of carbon dioxide, national and state policies that mandate and subsidize renewable energy sources, and competition from low-cost natural gas, in that order, according to the group.

While all three of those factors were identified in a 2017 study of the power grid by the U.S. Department of Energy, that grid reliability study said competition from natural gas is the most significant factor behind the decline of coal generation.

Heartland agreed that the rise in hydraulic fracturing has led to an influx of natural gas, which has been beneficial to customers and businesses, but it said the EPA's regulation of carbon, mercury, ozone and small particulate matter, as well as "market-distorting subsidies and mandates for renewable energy at the state and national level," have provided "zero measurable economic or environmental benefits." The group said regulations threaten the reliability and affordability of the U.S. energy supply.

Regarding the Clean Power Plan's benefits, estimating the cost and benefit of any federal regulation is an imprecise and often controversial science. But Pruitt's EPA, in its proposal to repeal the Clean Power Plan, estimated that keeping the rule in place would prevent 1,900 to 4,500 premature deaths by 2030 by cutting carbon emissions.

In its comments, the Ute Mountain Tribe opposed the EPA's plan to repeal the Clean Power Plan unless it is replaced. Two coal-fired power plants sit within 15 miles of the tribe's territory, which extends across southwestern Colorado, southeastern Utah and northwestern New Mexico. Those facilities would have been subject to the Clean Power Plan, and the tribe said they are responsible for emitting 3.5 million tons of carbon annually.

The tribe said renewable energy development such as wind and solar is a major economic development opportunity for Indian Country in the U.S., and the Clean Power Plan would have encouraged investments in those technologies.

"The CPP was helping make those opportunities come to fruition, and its repeal may hinder the market forces at play now — when the Earth needs it immediately," Ute Mountain Tribe Environmental Programs Department Chairman Harold Cuthair wrote in a letter to Pruitt providing the tribe's comments.