The EPA’s Clean Power Plan means good news for renewable energy companies
The EPA’s Clean Power Plan will not only establish emission reduction standards for fossil fuel-fired power plants, but the rule also contains provisions that will “expand the capacity for zero- and low- emitting power plants” by providing incentives for renewable energy usage and efficiency measures. This will likely lead to an increased demand for electricity generated by wind, solar, and other renewable resources; expanding the market for new and existing renewable energy companies.
Great News for Renewable Energy Companies
In opposition to the flawed, industry-backed reports that claim this new rule will “kill jobs,” neutral analysis by economists at the University of Maryland and Industrial Economics, Inc. predict a net creation of 74,000 – 273,000 new jobs by 2030 in renewable energy, energy efficiency, and other benefiting sectors. This projected job growth will be a result of two provisions within the Clean Power Plan.
Each state has been given a specific emissions reduction target by the EPA and will be able to choose one of two ways to achieve its reductions: 1.) Emissions Standards Plan (source-specific requirements only) – The state’s reduction requirements will be achieved entirely by ensuring that all of its affected power plants meet the federally enforceable emissions standards, or 2.) State Measures Plan (mixture of measures) – The state designs a plan to achieve its reduction requirements through some combination of both addressing the performance rates of existing plants and increasing renewable energy and efficiency measures. Every state is required to submit its plan by September 6, 2016; and the EPA has the authority under the Clean Air Act to establish a federal plan for any state that either fails to submit a plan by the deadline, or submits a plan that’s not approved by the agency. All states will need to reduce their carbon emissions…even the states that are actively prohibiting their environmental agencies from complying, like Oklahoma.
This is not an unusual approach for rules under the Clean Air Act; in fact, all CAA rules follow this format because the statute uses a “cooperative federalism” approach – the federal government establishes and mandates the standards that need to be met, but allows each state to determine the best way to achieve said standards within its borders. What is unique about this provision in the Clean Power Plan is that it allows other options for achieving the mandated standards, rather than only addressing source-specific emissions. In other words, the EPA is saying to the states (especially those that are heavily-reliant on coal-fired plants): “Instead of telling you that all of your power plants have to meet our standards by 2022, we’re going to give you another option – you can meet some or all of your reduction requirements by increasing the electricity generated from renewable resources and by improving the efficiency of homes and public buildings. But if you fail to meet your requirements, then we’re going to regulate the performance standards of your power plants.” This is very, very good news for renewable energy companies.
And more good news for renewable energy companies comes in the form of another provision within the Clean Power Plan. The EPA has created a Clean Energy Incentive Program (CEIP) that will reward states for early investments in renewable energy measures. This optional program will give Emission Rate Credits (ERCs) in 2020 and 2021 for electricity that’s generated from wind or solar, and efficiency projects implemented in low-income communities. The credits are tradeable between states, which creates an economic incentive for investment in renewables. Additionally, the CEIP will encourage widespread expansion of wind and solar power, and begin fostering job growth prior to the start of the compliance period in 2022. Starting to see why the market will be prime for existing and emerging renewable energy companies?
Other businesses can benefit too
Renewable energy companies are not the only businesses that can benefit from the Clean Power Plan – so can other businesses that rely on energy to operate…so basically, all businesses. Renewable energy and energy efficiency measures not only reduce greenhouse gases, but they also cut costs for other businesses and improve corporate performance. If you are part of a business who would like to see expanded options for renewables, the best action you can take at this time is to urge the Governor of your state to comply with the Clean Power Plan, and encourage him/her to incorporate renewable energy and efficiency measures into the state plan. The reasons for doing so are said best by the 365 American companies that sent letters to 29 Governors on July 31, 2015:
“We are already experiencing increased frequency and intensity of storms, warmer temperatures, extreme precipitation, and changes in weather patterns that will continue to put trillions of dollars of institutional investors’ assets at risk and require companies to be innovative at adapting to these changes. From our positions as employers and fiduciaries, we seek a greater degree of policy certainty in order to better manage these risks in our operations, supply chains, and portfolios.”