Full Title: Approaches to Address Potential CO2 Emissions Leakage to New Sources under the Clean Power Plan
Author(s): Resources for the Future (RFF)
Publisher(s): Resources for the Future (RFF)
Publication Date: 01/2016

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Description (excerpt):

To guide state implementation of the Clean Power Plan, EPA has proposed a model rule for states that regulates only existing affected generating units on a mass basis. The model rule also is expected to form the basis for a federal plan. The model rule, when finalized, would be presumptively approvable for states.

Our comments are presented as 10 recommendations that are organized in three groups:

 Allowance Allocation
 Requirements for State Compliance Plans
 EPA Implementation of the Clean Power Plan

We summarize the recommendations in this introduction.
Our comments focus on the emissions outcome that can be achieved under the mass-based proposed model rule and the cost of achieving those emissions reductions. A state’s choosing an emissions cap that covers only existing sources raises generation costs relative to costs of new sources that are excluded from the cap. This may cause generation to shift from existing to new sources with an associated increase in emissions outside the emissions cap. This emissions leakage can be reduced by lowering the costs for existing sources so they are more competitive with new sources. Greater utilization of existing sources will reduce the use of new sources and help reduce leakage.