The reaction was quick and predictable. Murray Energy immediately filed a lawsuit against the administration and the EPA and said it would prevail. Peabody Energy urged further action by courts, Congress, states, consumer groups and industrial/residential electricity customers to turn back the rules. Unprecedented early opposition to the rules has been advanced from members of Congress, governors, legislatures, attorneys general, and business and consumer groups.

The CPP, which was finalized August 3 and applies to existing power plants (those that began construction on or before January 8, 2014), offers a model for states for emissions trading rules. The EPA will establish interim and final CO2 emission performance rates for two subcategories of fossil fuel-fired electric generating units: fossil fuel-fired electric steam generating units (generally, coal- and oil-fired power plants) and natural gas-fired combined cycle generating units.

The EPA is establishing interim and final statewide goals in three forms:

  • A rate-based state goal measured in pounds per megawatt hour (lb/MWh);
  • A mass-based state goal measured in total short tons of CO2; and
  • A mass-based state goal with a new source complement measured in total short tons of CO2.

States then must develop and implement plans that ensure the power plants in their state — either individually, together or in combination with other measures — achieve the interim CO2 emissions performance rates between 2022 and 2029 and the final CO2 emission performance rates, rate-based goals or mass-based goals by 2030.

Citing section 111(d) of the Clean Air Act, the EPA said it will determine the best system of emissions reduction (BSER) that has been demonstrated for a particular pollutant and a particular group of sources by examining technologies and measures already being used. The BSER, according to the EPA, consists of three building blocks:

  • Reducing the carbon intensity of electricity generation by improving the heat rate of existing coal-fired power plants;
  • Substituting increased electricity generation from lower-emitting existing natural gas plants for reduced generation from higher-emitting coal-fired power plants; or
  • Substituting increased electricity generation from new zero-emitting renewable energy sources (like wind and solar) for reduced generation from existing coal-fired power plants.

States will be required to submit a final plan, or an initial submittal with an extension request, by September 6, 2016. Final complete state plans must be submitted no later than September 6, 2018. The final rule provides 15 years for full implementation of all emission reduction measures, with incremental steps for planning and demonstration that will ensure progress is being made in achieving CO2 emission reductions. Each state plan must include provisions that will allow the state to demonstrate that the plan is making progress toward meeting the 2030 goal. In addition to offering three multiyear “step down” goals within the interim period, the final rule also allows states to apply measures in a gradual way that they determine is the most cost-effective and feasible.