Catagory:Emissions

1
Implications of EPA Emissions Rules for Renewables
2
Australian Government releases draft legislation to implement the Emissions Reduction Fund
3
EPA Survives Challenge to Cross Border Air Pollution Rule
4
Conclusions or Delusions? EU Aims To Set 2030 Renewable Energy Targets
5
Australian Government Releases Further Details of its Direct Action Plan to Reduce Australian Greenhouse Gas Emissions

Implications of EPA Emissions Rules for Renewables

Renewable energy will play a major role in EPA’s latest proposal to cut greenhouse gas emissions from electric generating facilities.   On June 2, 2014, EPA Administrator Gina McCarthy proposed a new regulation for cutting carbon pollution from existing electric generating units (EGUs).  This rule is perhaps the most significant action to date in the President’s Climate Action Plan announced last year.  The rule will require EGUs to reduce their CO2 emissions by 30% by 2030 from 2005 levels.   EPA assigned a CO2 goal for each state but lets states choose how best to meet the goal.   Read More

Australian Government releases draft legislation to implement the Emissions Reduction Fund

The Australian Government recently released draft legislation to implement the Emissions Reduction Fund (Fund), which is the cornerstone of the Government’s Direct Action Plan climate change policy.  The Direct Action Plan centres around the purchase of greenhouse gas emissions reductions by the Government (via the Fund).

The release of the draft Carbon Credits (Carbon Farming Initiative) Amendment Bill 2014 (Cth) (Bill) follows issuance of an Emissions Reduction Fund Green Paper late last year and a subsequent White Paper in April 2014, both regarding the design of the Fund.

The Bill will amend the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth) (CFI Act) and build on the existing Carbon Farming Initiative (CFI) under that Act by providing for the purchase of greenhouse gas emission reductions credits by the Government.  The Bill also makes minor amendments to associated Commonwealth legislation.

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EPA Survives Challenge to Cross Border Air Pollution Rule

Yesterday the U.S. Supreme Court upheld the U.S. Environmental Protection Agency’s (“EPA”) regulation of cross border air pollution.  In a 6-2 ruling,[1] the Supreme Court reversed the D.C. Circuit, holding that EPA’s cross border air pollution rule (the “Transport Rule”)[2] did not violate the Clean Air Act (“CAA”) by establishing a new federal scheme for regulating upwind emissions that drift over state lines.  The decision likely will impact those power plants in “upwind states” that contribute to cross border air pollution by imposing more stringent air emissions limits for those facilities.  However, the decision may also spur an increase in development of renewable energy and lower emission natural gas fired plants.

The Transport Rule establishes good neighbor obligations among 28 states for three primary pollutants: NOX, SO2, and ozone, and EPA has established National Ambient Air Quality Standards (“NAAQS”) for each of these pollutants.[3]  Any state whose ambient air quality exceeds the NAAQS is considered in “non-attainment.”  The CAA requires that upwind states, whose emissions cause or contribute to exceedances of NAAQS standards in downwind states, control their emissions to the extent required to avoid such contribution.  The Transport Rule is made up of two basic components: it quantifies each state’s emissions reduction levels under the good neighbor provision and imposes Federal Implementation Plans (“FIPs”) to implement those reductions at the state level.

EPA calculated the necessary emissions reductions in a two stage approach.  The first stage screens from its requirements all upwind states that contribute less than 1% of any downwind state’s nonattainment.[4]  The second stage applies a multi-factor assessment to set reductions in those upwind states on a cost-per-ton reduction basis (which relied on the costs to install pollution reduction technology) that was distributed across all power plants in the upwind states.[5]  Finally, the Transport Rule proposed to achieve cost-per-ton reductions over multiple years, beginning in 2012 and relying on a maximum budget for each pollutant that a state’s power plants may collectively emit through 2014.[6]  Since EPA found that many State Implementation Plans (“SIPs”) did not properly provide for these emissions budgets, EPA invalidated those SIPs and instead required those states to comply with new state-specific FIPs.  It did so without giving the states an opportunity to correct their SIPs based upon EPA’s objections, and (at least according to some) without giving the states guidance on how to address those objections.

The Supreme Court reviewed the D.C. Circuit Court’s conclusion that the Transport Rule exceeded EPA’s statutory authority to impose more stringent air quality requirements through the good neighbor provisions of the CAA.  First, the D.C. Circuit Court determined that the Transport Rule exceeded CAA authority because the good neighbor provision could impose emissions reductions on upwind states that could go beyond those states’ significant contribution to downwind air pollution in other states.  Second, the D.C. Circuit concluded that the Transport Rule failed to provide states with the first opportunity to implement the good neighbor reductions through their own SIPs.  Instead, EPA quantified the states’ good neighbor reductions and simultaneously set forth EPA-designed FIPs to implement those obligations at the state level without first providing the states an opportunity to correct their SIPs.

The Supreme Court overturned the D.C. Circuit Court decision, concluding that EPA reasonably interpreted the good neighbor provision and that the CAA did not required EPA to give states  a grace period to file revised SIPs.

It is still uncertain how the Supreme Court’s decision will ultimately affect the implementation of and reductions required under the Transport Rule.  Significant issues lie ahead for EPA related to regulatory impacts and the legal implications for the Transport Rule.  For example, since EPA is already several years behind the start date for the rule—January 1, 2012—the agency will likely have to issue new regulations to modify implementation dates.  Likewise, EPA may need to adjust the Transport Rule to address revisions and updates to air quality standards for ozone and particulate matter.  And finally, EPA may face further litigation that was stayed since the D.C. Circuit decision, or litigation related to technical revisions to the Transport Rule during the stay.[7]

Despite these issues, the Supreme Court decision presents two significant implications. First, by agreeing that EPA may foreclose a state’s ability to determine how emission reductions are to be achieved and allocated among sources, the decision may have changed the fundamental federal/state regulatory relationship under the CAA.  Second, the decision demonstrates the broad deference to EPA on substantive and technical issues, and reaffirms the Court’s view that when reasonable minds differ on technical issues, EPA’s interpretation will prevail as long as it is rational and supported by the record. Both points support EPA’s continuing efforts to impose greater regulation on the fossil fuel industry, which may accelerate the adoption of new pollution control technologies or the replacement of fossil fuel energy production with alternatives that do not emit, or emit less of, these criteria pollutants.

For additional information on the decision underlying the Supreme Court’s decision, see:


[1] Justice Alito did not participate.  Justices Scalia and Thomas joined in dissent.

[2] Federal Implementation Plans: Interstate Transport of Fine Particulate Matter and Ozone and Correction of SIP Approvals, 76 Fed. Reg. 48,208 (Aug. 8, 2011).

[3] For additional details on the regulated pollutants, see 76 Fed. Reg. 48,208.

[4] EME Homer City Generation LP v. EPA, 696 F.3d 7, 11 (D.C. Cir. Aug. 21, 2012).

[5] Id. at 11-12.

[6] Id. at 12.

[7] Utility Air Regulatory Group v. EPA, D.C. Cir., No. 12-1346, 9/27/12; Wisconsin Public Service Corp. v. EPA, D.C. Cir., No. 12-1163, 4/6/12.

Conclusions or Delusions? EU Aims To Set 2030 Renewable Energy Targets

In an announcement awaited by industry, the European Commission has proposed the non-binding objective of increasing the share of renewable energy to 27% of the EU’s energy consumption in 2030. However, at the same time, an ambitious and binding target emerged: for the EU to reduce by 2030 domestic greenhouse gas emissions by 40% below the 1990 level. An extraordinary target or a disappointment?

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Australian Government Releases Further Details of its Direct Action Plan to Reduce Australian Greenhouse Gas Emissions

The Australian Federal Government (Government) released a Green Paper on Friday 20 December as part of its Direct Action Plan on climate change policy. The Green Paper outlines the Government’s preferred design for an Emissions Reduction Fund and invites further input from business and the community on the design elements outlined in the Green Paper by 21 February 2014, before a White Paper is released in early 2014.  To read the full alert, click here.

 

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