Implementing EPA climate change rule should be no problem for Oklahoma

Derek Wietelman is an OK Policy summer intern. He is an Oklahoma State University student pursuing a double major in statistics and political science, with minors in economics and environmental economics, politics, and policy.

Last summer, the Environmental Protection Agency issued its proposed Clean Power Plan Rule in an attempt to lower the emissions of carbon dioxide from electric power plants nationwide. A finalized version of the rule is expected to be released in the coming weeks. In late April, Governor Fallin issued an executive order directing state agencies not to prepare for or implement any provisions of the finalized rule. Fallin called the plan a federal overreach and stated that preparing for it would require “untold amounts of financial and time resources”. Given the high level of controversy surrounding the proposed rule, several questions need to be answered.

What would the Clean Power Plan Rule require of Oklahoma?

The end goal of the Clean Power Plan is to reduce carbon dioxide (CO₂) emissions from power utility plants by approximately thirty percent from their 2005 levels by the year 2030. When developing the rule, the EPA decided to craft individual emissions reduction goals for each state rather than mandate a single percentage reduction target across the nation. To determine a state’s emission reduction goal, EPA analyzed how states are already going about reducing carbon emissions and determined feasible goals that each state could meet. If the rule is adopted, Oklahoma would have an interim goal of 931 lbs/MWh (pounds per megawatt hour) of CO₂ emitted on average from 2020 to 2029, and a final goal of 895 lbs/MWh from 2030 onwards. That would be a 35.5 percent reduction from the state’s 2012 emissions of 1,387 lbs/MWh.

How could Oklahoma meet its emissions goals?

The Clean Power Plan gives each state the autonomy to determine how to reach its emissions target. The plan does not mandate specific electric power plants or utilities to lower their emissions by any particular amount. It is ultimately up to each state to decide how their state and the power utilities within the state can best reach the goal that the EPA has set for them.

The EPA has provided a suggested path for Oklahoma to reach that goal. They recommend four steps: (1) improve the efficiency of coal-fired power plants by 6 percent; (2) shift more generation to natural gas combined-cycle plants; (3) increase generation from renewable power sources; and (4) improve the energy efficiency of power consumers by 10 percent. The below chart from the EPA outlines how much emissions could be reduced from each of these changes.

In fact, many of these projects are already in place or in the process of being implemented. In January, the Grand River Dam Authority broke ground on a new combined-cycle gas turbine unit at its generating plant near Chouteau. Combined-cycle gas turbines produce electricity by using natural gas to power an initial generator, with the heat from the first generator being used to power a second generator. It is estimated that the new combined-cycle will be up to sixty percent more efficient than standard coal-generating units. Construction of combined-cycle natural gas plants in addition to efficiency upgrades at existing plants is one of the methods EPA recommends that states use to meet their emissions goals, and given Oklahoma’s prominence as a natural gas producer, combined-cycle gas plants are a feasible and economically beneficial option for the state to consider.

[pullquote]”Many of the projects that could help Oklahoma reach its emissions goal are already in place or in the process of being implemented.”[/pullquote]Another method that the EPA recommends and that Oklahoma already has in place is a renewable energy standard (RES) system. In 2010, the Oklahoma Legislature passed the Oklahoma Energy Security Act, which included a provision for establishing an RES system with a soft goal of having at least fifteen percent of the electricity generated in the state come from renewable energy sources by the year 2015. Oklahoma easily met that goal, and if the RES system was renewed with a new mandated target rather than a soft goal, Oklahoma could continue to cut carbon emissions. Oklahoma Senate Pro Tem Brian Bingman has previously introduced legislation that would update the goal to twenty percent of electricity generated from renewables by the year 2020.

Another option for Oklahoma should come as no surprise to anyone who has traveled through western Oklahoma or spent a Spring day here. Oklahoma is already fourth in the nation in electricity generated from wind power, and the American Wind Energy Association estimates that Oklahoma avoided almost seven million tons of CO₂ emissions in 2014 due to the use of wind-turbine electricity generation. Despite this, the Legislature passed two bills this past session that ended tax incentives for new wind farm construction and hiring. If Oklahoma is to meet its CPP emissions goal, the vast generating capacity that wind power has to offer could go a long way.

Another option that Oklahoma already has in place and could utilize for compliance with the CPP is demand-side management, also known as improving energy efficiency. Rather than increase the amount of electricity generated (supply), demand side management techniques encourage the consumer to use less electricity (demand). The Oklahoma Energy Security Act also included a provision to encourage the development of demand side management techniques. A successful example of demand side management in place already is OG&E’s Smart Hours Program, where consumers are offered financial incentives to reduce their energy consumption during peak usage hours in the late afternoon and early evening. Demand-side management has the benefit of reducing harmful emissions while actually saving money for average Oklahomans.

Is Oklahoma on its own when it comes to compliance?

No. States are encouraged to cooperate with each other to meet their emissions targets. While each state will still be held to its individual state goal, states are encouraged to work together so that successes in one state can be adapted to other states, and programs such as interstate emissions trading schemes can be adopted. Emissions trading schemes like the Regional Greenhouse Gas Initiative in the northeastern United States have proven to be an effective way for states to cooperate across state lines in order to lower CO₂ emissions on a regional scale. While both the political (and meteorological) climate are much different in this region of the country, an emissions trading scheme with other states like Texas, Colorado, New Mexico, Arizona and other southwestern states might be something to be considered in the future.

So, what’s next?

While the EPA is expected to finalize the CPP in the coming weeks, a legal battle could delay it further. However, Oklahoma is unlikely to win that battle, considering that the US Supreme Court has already ruled that the EPA has the authority to regulate carbon emissions and refused to hear Oklahoma’s challenge to a similar EPA regulation of regional haze. The rule would require Oklahoma to submit a compliance plan to the EPA in the Summer of 2016, but if the state continues to refuse to develop a plan, that only means the federal government will create one for us. By refusing to cooperate with the law, all that will be accomplished is Oklahoma officials will have less say in how the emissions goal is reached in our state. On the other hand, Oklahoma is already well on its way to meeting the goals set by the Clean Power Plan, and a good faith effort to cooperate by state leaders would not involve great disruptions or cost to the state.