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We Need a Legislative Path to Power Plant Emissions Cuts

Electricity is increasingly central to Americans — powering not only our homes and businesses, but also our cars, our digital devices and countless other essential aspects of modern life. The grid that delivers electricity to virtually every household is one of the greatest engineering accomplishments in history.

It is also a significant source of greenhouse gas emissions, so any effort to decarbonize the economy must rest upon a foundation of clean power. Yet five successive presidential administrations have failed to meet the challenge of regulating power plant emissions.

The Biden administration is the latest to prefer implausible promises to practical plans. And the US Environmental Protection Agency’s new regulation targeting carbon emissions from coal- and gas-fired power plants, finalized on April 25, is almost certain to meet the same fate as its predecessors: rejection in court or political retreat, whichever comes first.

If that’s the case, the rule’s only real effect will have been to provide Congress and the administration with an excuse for legislative inaction. Why do they need the excuse when climate change is such a priority? Because legislation requires compromise — a dirty word on Capitol Hill these days — and both sides have convinced themselves that there is no mutually acceptable path.

This delusion derives from a historical truth: When energy technologies are immature and regulations are rigid, then emissions reductions are a zero-sum struggle between cost and environmental performance. Forcing rapid adoption of high-cost energy sources is inevitably expensive.

Those are the circumstances that defined the decarbonization debate — choose clean or cheap — when it began in the 1990s. But since the early 2000s, the facts have changed faster than perceptions.

The potential cost of reducing carbon emissions is falling significantly because of developments in technology; what remains uncertain is the regulatory framework. Well-designed legislation could shape an energy transition that preserves the affordability, reliability and security of electric power, while substantially decarbonizing the sector by midcentury.

Without such legislation, we will stumble and lurch from one regulation to the next court decision — a game of regulatory ping pong that can benefit only litigators and activists, not our economy and environment.

Unfortunately, the Clean Air Act’s authority over power plant greenhouse gas emissions is weak, contested and highly inefficient, relying on antiquated command-and-control mechanisms rather than the kind of efficient and flexible market-based mechanisms that were adopted for other pollutants in the 1990 Clean Air Act amendments. And the US Supreme Court’s 2022 decision in West Virginia v. EPA raised several issues that remain highly relevant to the latest rule.

President Joe Biden’s EPA tried to avoid one of the problematic elements of President Barack Obama’s Clean Power Plan — mandating a shift from coal-fired generation to renewables. But other aspects of the EPA’s new final rule — chiefly, its assertion that carbon capture technologies have been “adequately demonstrated,” and its probable collision with the major questions doctrine articulated in West Virginia v. EPA — are likely to be fatal flaws.

With the court now poised to modify the long-standing Chevron doctrine in the coming months, deference to the EPA on these issues seems implausible.

Both parties would like to believe they’re winning, but the opposite is true: On our current trajectory, electricity in America will be less abundant, less reliable, more expensive and more generative of emissions than necessary. Well-designed, bipartisan legislation could enable a more efficient, more reliable modernization of the sector that would serve the broad range of shared energy policy goals.

Skepticism about the prospects for rational, nonpartisan policymaking is understandable. Gridlock is real — but it need not be permanent. Between 2020 and 2022, several bills to establish a clean energy standard were introduced in Congress, including proposals from Rep. Frank Pallone, D-N.J., Rep. Diane DeGette, D-Colo., Rep. Ben Ray Lujan, D-N.M., and Sen. Tina Smith, D-Minn.

These efforts were abandoned when Democrats shifted their focus to passing the Inflation Reduction Act — which, as a budgetary measure, could not establish new regulatory standards. The post-enactment flush of enthusiasm for the IRA meant that the need for emissions standards was soon forgotten.

But two years later, with the push for permitting reform stalled and projections for deep emissions reductions looking doubtful, it’s time to revisit these questions.

With divided government or, at a minimum, the filibuster’s constraint on the horizon in the coming years, it’s worth considering a bipartisan clean energy standard proposal, the Clean Energy Future through Innovation Act, cosponsored by Reps. David McKinley, R-W.Va., and Kurt Schrader, D-Ore., in 2021.

This proposal had some unique features that gave it bipartisan appeal. It gave utilities sufficient lead time and an aggressive but economically feasible pathway for reducing emissions, and it included features, such as a safety valve price for credits, that would control costs.[1]

It also provided relief from redundant regulations, whereas other clean energy standard proposals left the federal code cluttered with duplicative, inefficient regulatory tools. In fact, the prospect of regulatory relief from the cumbersome, inefficient Clean Air Act programs should be sufficient incentive for states to participate in a federal clean energy standard program — especially if it provides access to expedited permitting for compliant projects.

Enacting a clean energy standard with a structure that allows states to choose between the new regulatory regime or the old one would be a way of preserving the traditional federalist structure of our national energy policy, while also fast-tracking the energy transition for everyone who likes the idea of abundant, affordable clean energy.

The old model for power plant regulations hasn’t worked. It is time to find a new approach that can succeed.

[1] https://innovationreform.org/eirp-working-paper-clean-energy-standards/.

Co-author Samuel Thernstrom is the founder at the Energy Innovation Reform Project.

Article originally published by Law360 on May 24, 2024.