The Environmental Protection Agency's proposal is one of the most
significant environmental rules proposed by the United States, and
could transform the power sector, which relies on coal for nearly 38
percent of electricity.
The plan has come under pre-emptive attack from business groups and
many Republican lawmakers as well as Democrats from coal-heavy
states like West Virginia. But as details leaked out on Sunday, it
looked less restrictive than some had feared, with targets arguably
easier to reach.
The Environmental Protection Agency (EPA) is expected to set
separate targets for each state to hit, first in 2020 and then in
2030, with different starting points based on their current
electricity generation mix and other considerations.
"The sum of all the emissions when sources meet the state targets
(in 2020) works out to 26 percent less than the power sector
emissions in 2005," said one person who was briefed on the proposal.
By 2030, carbon emissions from power plans should have fallen by 30
States will be given several ways to achieve their emission targets.
Those include improving power plant heat rates; using more natural
gas plants to replace coal plants; ramping up zero-carbon energy,
such as solar; and increasing energy efficiency, said sources
briefed on the proposal.
States will also be given an option to use measures such as carbon
cap-and-trade systems as a way to meet their goals.
Share prices for major U.S. coal producers like Arch Coal, Peabody
Energy and Alpha Natural Resources were near multi-year lows ahead
of the EPA rules.
A LEGACY ISSUE
Monday's rules cap months of outreach by the EPA and White House
officials to an array of interests groups.
The country's more than 1,000 power plants, which account for nearly
40 percent of U.S. carbon emissions, will face limits on carbon
pollution for the first time.
Climate change is a legacy issue for Obama, who has struggled to
make headway on foreign and domestic policy goals since his
But major hurdles remain. The EPA's rules are expected to stir legal
challenges on whether the agency has overstepped its authority. In
the first instance a public comment period will follow the rules'
Last week the U.S. Chamber of Commerce warned the rules could cost
consumers $289 billion more for electricity through 2030 and crimp
the economy by $50 billion a year.
That assessment keyed off a more stringent proposal by the Natural
Resources Defense Council, an influential environmental group. The
NRDC had proposed cutting emissions by at least 30 percent from a
2012 baseline by 2020.
Using the 2005 starting point should make the target easier to hit,
though, since emissions by 2013 were already slightly more than 10
percent below 2005 levels, according to the Energy Information
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A shift toward cleaner-burning natural gas away from coal-fired
plants, and the severe economic downturn of 2008-09 helped cut
Obama countered criticism of the rules in his weekly
radio address on Saturday.
"Special interests and their allies in Congress will claim that
these guidelines will kill jobs and crush the economy. Let's face
it, that's what they always say," Obama said.
Sources briefed on the proposal were told that an economic impact
study by the EPA concluded that the health and environmental
benefits of the plan outweighed costs anywhere from $8 to $1 to $12
to $1 by 2030.
The rules, when finalized, are expected to have an impact that
extends far beyond the United States.
The failure to pass "cap and trade" legislation in Obama's first
term raised questions about how the United States would meet
commitments the president made to reduce U.S. greenhouse gas
emissions roughly 17 percent by 2020 compared to 2005 levels.
The new EPA caps are meant to answer those questions.
They could also give Washington legitimacy in international talks
next year to develop a framework for fighting climate change. The
United States is eager for emerging industrial economies such as
China and India to do more to reduce their emissions, too.
"I fully expect action by the United States to spur others in taking
concrete action," UN climate chief Christiana Figueres said in a
Chinese and Indian negotiators have often argued that the United
States needs to make a more significant emission reduction because
of its historical contribution to climate change.
EPA Administrator Gina McCarthy will introduce the power plant
guidelines Monday morning at the agency's headquarters. Later, Obama
will hold a conference call with health professionals hosted by the
American Lung Association.
(Reporting By Valerie Volcovici and Jeff Mason; Editing by Ros
Krasny and Himani Sarkar)
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