On June 25, 2013, President Obama issued a Presidential Memorandum directing the U.S. EPA to “issue carbon pollution standards, regulations, or guidelines, as appropriate, for modified, reconstructed and existing power plants.” Under the directive, the EPA must issue proposed standards or guidelines by June 1, 2014 and final standards or guidelines by June 1, 2015. The directive is based on the authority provided in Section 111(d) of the Clean Air Act.
The Memorandum also directs the EPA to require that States submit plans for implementing the carbon emissions standards, and that the regulations require such plans be submitted no later than June 30, 2016. Furthermore, the Memorandum directs the EPA to engage with states and other stakeholders, tailor regulations and guidelines to reduce costs, develop approaches that allow regulatory flexibility, and support continued development and deployment of cleaner technologies and energy efficiency.
Assuming the EPA moves forward with issuing carbon emissions standards or guidelines that apply state-by-state and then trigger state plans, the question arises as to how the standards or guidelines can best support and give appropriate credit for efforts that utilities, states and other entities take to increase the efficiency of electricity use and thereby reduce future electricity consumption. This is important because it is widely recognized that energy efficiency improvement is the lowest cost utility resource, with utility energy efficiency programs typically costing two to three cents per kWh saved (utility cost only), compared to costs of six cents per kWh or greater for new sources of electricity supply whether fossil fuel-based, nuclear power or renewable energy resources. In addition, increasing the efficiency of electricity use provides a wide range of environmental benefits, not just reduced carbon emissions. Energy efficiency improvements support job creation and economic growth, enhance the reliability of the electric grid, improve public health and reduce power sector risks. Thus, it makes eminent good sense for EPA to strongly support and give appropriate credit for a wide range of cost-effective energy efficiency initiatives as part of the forthcoming carbon emissions standards.