Affordable Clean Energy (ACE) Rule
The EPA released the final Affordable Clean Energy (ACE) rule replacing the Obama administration’s Clean Power Plan (which was designed to reduce GHG emissions 32% from 2005 levels by 2030). The final version of the ACE rule contains no binding limits on carbon pollution, leaving it to states to establish standards based on an EPA-selected menu of technologies to improve efficiency inside the fence-line of existing coal-fired power plants. Essentially, it calls for investment in coal plants instead of using fuel shifting to move away from coal in favor of natural gas and renewables as CPP would have done.
Environmental organizations and some states have said they will sue to block the rule (New York's Attorney General has already said she intends to bring a legal challenge). ACE may be vulnerable to legal challenges regarding compliance with the Clean Air Act because it is expected to lead to higher overall CO2 emissions for many plants than if no federal policy was in place. Congressional Democrats may also pursue a Congressional Review Act resolution to nullify the rule, although it is unlikely to pass the GOP-controlled Senate and almost certainly would be subject to a veto from Trump.
Implications for clean energy/energy efficiency:
- The CPP would have allowed states to meet lower emission targets throughout all aspects of the energy cycle, from generation to transmission to end-use consumption (including with home energy efficiency upgrades). In contrast, the ACE rule limits emission reduction measures to efficiency improvements at the source, incentivizing upgrades at aging facilities rather than investment in renewable generation or end-use efficiency.
- Some state regulators might not be willing to allow power companies to pass on the cost of investing in renewable projects or efficiency programs to customers without a federal mandate to cut emissions.
The ACE rule would be implemented in 3 steps:
- EPA identifies technologies in “best system of emission reduction” (BSER) list that states can pick from to require efficiency upgrades at coal-fired power plants.
- States have 3 years to submit a plan to EPA that applies BSER list.
- EPA will have 12 months to approve plans, a timeline similar to rules covering other types of pollution. If a state does not submit a plan, EPA would have two years to write a federal plan for the state.
Not included in the rule: provisions that would have allowed owners of coal-fired power plants to avoid New Source Review permitting requirements (including pollution control systems) before upgrading their facilities. EPA likely will pursue that policy in a separate rulemaking in the coming months.