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Obama’s Clean Power Plan Might Be Dead In D.C., But States Are Rebuilding It Themselves

Virginia Governor Terry McAuliffe recently announced that his state will develop its own policy to limit carbon emissions–joining a growing list of state governments across the country uniting in their desire to lower pollution and increase renewables.

Obama’s Clean Power Plan Might Be Dead In D.C., But States Are Rebuilding It Themselves
“One of the most exciting parts of these state-level developments is the opportunity to think about how what you’re building in your own state can become a part of a broader regional or national strategy.” [Photo: RadomanDurkovic/iStock]

On May 16, Virginia Governor Terry McAuliffe signed Executive Directive 11, which mandates that the state’s Department of Environmental Quality (DEQ) begin developing a regulatory framework for reducing carbon emissions from power plants.

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The announcement comes as a thinly veiled rebuke of the president, who in late March signed an executive order on “energy independence,” pledging to make good on his impossible promise of reviving the imploding coal industry, and his misguided promise of rolling back environmental regulations that he falsely claims are hindering the economy. To accomplish this, Trump pledged to stop the implementation of the Clean Power Plan, a strategy introduced by Barack Obama in 2015 to reduce emissions from power plants to 32% below 2005 levels by 2030.

“States are looking to these programs; they don’t want to be missing out on all the benefits.” [Photo: RadomanDurkovic/iStock]
Following his signing of the Virginia executive directive, McAuliffe told the Associated Press that “the news out of this White House is alarming,” adding that “the citizens of our commonwealth want and expect us to confront this issue.”

Before Trump announced his intention to obstruct it, the Clean Power Plan still had not yet come into effect: Multiple lawsuits (including one filed by current Environmental Protection Agency head Scott Pruitt, who brought a case against the plan while serving as attorney general of Oklahoma) stranded the plan in court, and a Supreme Court ruling determined that it could not be implemented while tied up in deliberations. Under the Trump administration, it’s unlikely to resurface as policy.

But as Fast Company has written before, the emissions reductions laid out under the Clean Power Plan are already underway, and the directive from Virginia, says Jordan Stutt, a policy analyst at the clean-energy research nonprofit Acadia Center, “is the first domino in what will be a series of states moving to adopt clean energy policies.”

Following Obama’s introduction of the Clean Power Plan two years ago, “the whole country began preparing to comply with the standards.” [Photo: RadomanDurkovic/iStock]
In issuing the directive to Virginia’s DEQ, McAuliffe instructed that his state’s proposal to limit energy-sector emissions should fall in line with those already in place across the country, and is looking specifically to California and a coalition of nine East Coast states united under the Regional Greenhouse Gas Initiative (RGGI), both of which have successfully implemented cap-and-trade policies to curb carbon dioxide emissions. Stutt says that while cap-and-trade policy implementation has been slow to spread beyond California and the RGGI (pronounced “Reggie”) states, and now Virginia, “the conversation is getting louder.” Following Obama’s introduction of the Clean Power Plan two years ago, “the whole country began preparing to comply with the standards, and most states were looking at how a RGGI model–a cap-and-trade model–might work in their state,” Stutt says.

RGGI was formed in 2008 and is comprised of nine states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont (New Jersey participated until 2011, when Governor Chris Christie pulled his state from the coalition). The participating states set an annual carbon cap for the region, and divide the total allotted emissions for the energy sector into allowances, that power plants purchase through quarterly auctions. If the annual cap is 80 million tons of CO2, RGGI will make 80 million allowances, totaling 1 ton each, available for purchase, Stutt says. The money pulled in through the auction is then divided among the states, which reinvest the funds in local clean energy initiatives and infrastructure needs.

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In the eight years since RGGI was implemented, emissions from the region’s power plants have dropped 40%. While factors like fuel switching to cheap natural gas and the economic downturn have played a roll in driving those emissions down, an analysis from the Duke University Nicholas Institute for Environment Policy Solutions attributed the bulk of the reductions to RGGI. An analysis from Abt Associates also found that the changes in the electricity sector that were driven by RGGI–namely, a switch from more carbon-intensive fuels to cleaner sources–have resulted in $5.7 billion in avoided health impacts in the region. Asthma cases are down, as are cardiac issues and costly emergency room visits. Fewer children are missing school; fewer people are missing days of work.

By putting a strict limit on emissions, and making power plants shell out money to continue carbon-emitting operations, RGGI creates a market incentive for companies to curb their emissions by switching to sustainable energy. Those companies that require fewer carbon allowances save money in the auction process, and if they don’t use up their allowances, they can sell shares on the market for an increased price. Those companies that exceed the emissions allowances they purchase in auctions must pay a penalty, which generates more revenue for the program.

Governor Jerry Brown intends to use cap-and-trade money to finance a high-speed rail link between San Francisco and Los Angeles. [Photo: RadomanDurkovic/iStock]
While RGGI regulates only the energy sector–the largest CO2 emitter in the U.S.–California’s cap-and-trade program, which was passed in 2006, extends to nearly every sector of the state’s economy. It’s funneled billions of dollars into state projects to reduce emissions–Governor Jerry Brown intends to use cap-and-trade money to finance a high-speed rail link between San Francisco and Los Angeles–and is well on its way toward achieving its goal of reducing carbon emissions by 40% below 1990 levels (a much more ambitious goal that the one laid out by the Clean Power Plan).

“States are looking to these programs; they don’t want to be missing out on all the benefits the RGGI states and California have been seeing for revenue to be reinvested in clean energy initiatives and infrastructure needs,” Stutt says.

While cap-and-trade has proven effective in the RGGI states and California, and it’s likely to be the model that Virginia pursues (Stutt met with legislators in the state as far back as two years ago, as they were gauging the possibility of Virginia becoming part of RGGI), NextGen Climate founder and philanthropist Tom Steyer–who has considered running for governor of California–tells Fast Company that “there is no one magic bullet” that will dictate how states drive clean energy policies going forward. “The unending increase in the efficiency and effectiveness of technology is driving down the cost of renewable energy sources like wind and solar dramatically,” Steyer says. Unlike coal, whose price continues to rise as its supply constricts, renewable generation can proliferate with no harm to society, and states on both sides of the political divide are responding to the favorable market conditions.

“This is the first domino in what will be a series of states moving to adopt clean energy policies.” [Photo: RadomanDurkovic/iStock]
In 2016 alone, Illinois governor Bruce Rauner, a Republican, enacted a comprehensive new energy bill that will double the state’s energy efficiency portfolio by allowing for 4,300 megawatts of new wind and solar power, which is expected to reduce carbon emissions 56% by 2030, far beyond that which was mandated by the Clean Power Plan. Jay Inslee, the Democratic governor of Washington, in December proposed the U.S.’s first-ever state-level carbon tax of $25 per metric ton of carbon emissions, which would support the state’s Clean Air Rule, adopted in September 2016, which caps emissions from public and private sector parties. While Inslee’s carbon tax–along with another carbon tax proposed in January by a Democratic state representative–is facing opposition as the state legislature assembles its budget, it’s not completely off the table. In late November, Oregon began to investigate a way to attach the state’s carbon-reduction policies to California’s cap-and-trade program.

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“One of the most exciting parts of these state-level developments is the opportunity to think about how what you’re building in your own state can become a part of a broader regional or national strategy, and acknowledging that there are increased efficiencies and flexibility that comes from a larger market,” says Pam Kiely, the senior director of regulatory strategy at the Environmental Defense Fund. With Virginia perhaps looking to join RGGI or develop a similar program, and Oregon taking steps to develop a policy that would be compatible with California’s cap-and-trade initiative, the benefits of collaboration and cooperation in developing these policies is clear.

And while there’s a great deal of potential for states to drive emissions-reduction targets beyond those which were mandated through the Clean Power Plan, the slow cohesion of state policies, to Kiely, underscores what will be lost should the national plan be scrapped. “The Clean Power Plan was and remains critically important to ensuring that there is certainty about the pace and scope of emissions reductions that are going to be achieved across the country,” Kiely tells Fast Company. “It’s critical to provide that level of confidence around the ambition for those reductions, and what this sector in the U.S. is going to be able to accomplish.”

What needs to happen now “is for existing programs to figure out how to accommodate new participants.” [Photo: RadomanDurkovic/iStock]
While currently, those states most aggressively pursuing cap-and-trade and other carbon-reduction policies are blue states, both Kiely and Stutt emphasize that support for clean energy policies extends across political divides. RGGI was proposed by a Republican, former New York governor George E. Pataki, and John Kasich, the Republican governor of Ohio, vetoed an attempt by the state legislature in December to make the state’s renewable energy standards voluntary, saying to roll back the renewable energy policy would hurt Ohio’s economy (the legislature is continuing to fight the veto). And some of the strongest supporters of wind energy come from states like Iowa and Texas, where the availability of natural resources has driven the cost of renewables down. In Iowa, the cost is so dramatically lower that to do anything other than integrate wind into the energy landscape would put the state at an economic disadvantage–and powerful Iowa Republican Senator Chuck Grassley is strongly in support of increasing the amount of wind power the state produces.

While directives like the recent one out of Virginia signal that the states will not be abandoning climate regulation under Trump, it’s crucial that whatever policies the states implement will have designed into them mechanism that allow them to adapt and cooperate with other state programs as they develop, Kiely says. The programs that are effective, or will prove to be in the future, follow roughly the same formula of a clean energy goal and an incentive program to reduce emissions; what needs to happen now, Kiely says, “is for existing programs to figure out how to accommodate new participants, and for new programs and players to think ahead about what types of design features are going to be necessary in order to take advantage of a broader market down the line.”

In place of a sweeping Clean Power Plan, we could be looking at a future of interconnected, state-led emissions-reduction programs, and experts like Kiely are hopeful that this flexible structure could lead to more innovation, a more rapid rollback on our carbon dependence–and a firm state-by-state refutation of Trump’s anti-climate warpath.

About the author

Eillie Anzilotti is an assistant editor for Fast Company's Ideas section, covering sustainability, social good, and alternative economies. Previously, she wrote for CityLab.

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