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Obama releases his most ambitious climate policy yet — the Clean Power Plan

The Bergen Generating Station of the Public Service Electric and Gas Company in Ridgefield, New Jersey.
The Bergen Generating Station of the Public Service Electric and Gas Company in Ridgefield, New Jersey.
Joseph Sohm /

On Monday afternoon, President Obama released the final version of his most ambitious climate policy to date — an EPA program to cut carbon dioxide emissions from the nation's power plants. The final version of the Clean Power Plan turns out to be slightly stronger than the draft proposal released last summer.

So how big a deal is this rule, anyway? You can look at it in a few different ways. Optimistically, the program has the potential to transform the US electricity industry, pushing utilities in every state to take cleaner energy much more seriously. The administration is also hoping this new rule will give a much-needed jolt to global climate talks, spurring other countries to respond with further actions.

Or you could take the dour view: This is a jury-rigged, legally vulnerable plan that's still only a small piece of what's necessary to slow the pace of global warming. (By my calculations, this rule amounts to a 6 percent cut in current US greenhouse gas emissions by 2030 — so think of it as just one part of Obama's broader climate plan.)

You can make a solid argument for each of these views. The truth is it will take years to see how this policy pans out. The success or failure of this plan will depend on how states react, whether courts uphold it, how future presidents implement it, and how other countries respond. In the meantime, here are 14 key points to keep in mind:

1) The basics of the Clean Power Plan are fairly simple. The EPA is giving each state an individualized goal for reducing emissions from their electric power plants. States can then decide for themselves how to get there. They can switch from coal to natural gas, boost renewables, set up programs to boost energy efficiency in homes, enact cap-and-trade systems ... it's up to them. States will have to submit plans by 2016-2018, start cutting by 2022 at the latest, and then keep cutting through 2030. If states refuse to submit a plan, the EPA will impose its own federal plan.

2) Some details have changed since the EPA's initial draft proposal last summer. For instance, the agency has tweaked the formula it uses to set individual state goals. States will now have until 2022 rather than 2020 before they have to start cutting. These tweaks will get lots of press attention, and they're of keen interest to policymakers and utilities. The EPA also hopes they'll solidify the rule against legal challenges. But they don't significantly alter the big picture.

3) If you add up all the state goals, the EPA expects that carbon dioxide emissions from US power plants will be roughly 32 percent lower in 2030 than they were in 2005. This is not a hard requirement, as some outlets have suggested — it's just the EPA's estimate of what will happen if all goes according to plan. It's also slightly more ambitious than the 30 percent reduction projected in last year's proposal.

4) That sounds like a huge cut, but it's smaller than it first sounds. Power plant emissions have already dropped 15 percent between 2005 and 2013, due to a brutal recession, cheap natural gas pushing out coal, the rise of wind power, and improved efficiency. So with this new plan, EPA is expecting a further 20 percent cut in power plant emissions from 2013 levels by 2030.

5) How does that fit into the bigger climate picture? Power plants were responsible for 31 percent of overall US greenhouse gas emissions in 2013 — the biggest single source. (Other major sources include carbon dioxide from cars, trucks, and industrial emitters, methane from oil and gas wells, nitrous oxide from agriculture, etc.) So if all goes as planned, the Clean Power Plan amounts to a 6 percentage point cut in current US greenhouse gas emissions by 2030.

6) To put that number in context, the Obama administration has pledged that overall US greenhouse gas emissions will decline at least 26 percent below 2005 levels by 2025. Adjusting for baselines, the Clean Power Plan can be expected to supply around one-quarter of those cuts. It's an important climate policy, although far from the whole story:

(<a href="">Tax Policy Center</a>)

(Tax Policy Center)

7) Think of the Clean Power Plan, then, as just one component of a much broader Obama climate agenda. The administration has also been tightening fuel economy rules for cars and trucks (which, together, could end up cutting as much CO2 as the power plant rule does). It's upgrading efficiency standards for household appliances. It's cracking down on methane leaks from oil and gas wells. And so on. This is a "kitchen-sink" approach to climate change — throwing a barrage of executive-branch actions at the problem, trying to push down emissions piece by piece.

8) There are, however, two big reasons the Clean Power Plan could have an outsize impact, according to its backers. First, as EPA Administrator Gina McCarthy told me, the Obama administration hopes this plan will bolster ongoing UN talks over a global climate agreement. This year, we've already seen China respond with its own pledge to restrain greenhouse gas emissions by 2030. The idea here is that US action will inspire other countries to take stronger steps in turn. It's hardly a surefire plan, but see this interview with political scientist David Victor for more on the logic of this approach.

9) Second, there's an argument that this rule could spur a major shift in mindset among US electric utilities. For decades, utilities have largely focused on building more power plants — primarily fossil fuel plants — to satisfy ever-rising electricity demand. Now utilities in 49 states will have to start thinking more creatively about how to accommodate variable renewable energy, how best to boost energy efficiency, and so on. In our interview, McCarthy implied that this change in mindset could be just as important as the plan's specific emissions targets — and create momentum for further action on clean energy.

10) Some opponents of the Clean Power Plan are warning that states will struggle to meet the EPA's targets; that utilities will have to close too many coal plants, threatening grid reliability; and that electric bills will soar. Any rule this complex will inevitably have problems, but it's worth taking doomsday claims with a big grain of salt. The EPA has been regulating the power sector for a long time, and industry claims of disaster rarely pan out. What's more, many states — like Kentucky — were already planning to shutter some of their coal plants anyway, in response to low natural gas prices. A number of states will be able to meet EPA's targets with relatively low effort.

11) On the opposite side, Michael Grunwald argues that the Clean Power Plan isn't a big deal at all. After all, he says, power-plant emissions already fell 15 percent between 2005 and 2013, and this plan just continues that pace. But that argument seems equally overstated. As various studies have found, US power plant emissions aren't destined to keep plunging without further policy. One big reason for last decade's drop was the massive recession, which hopefully won't repeat itself anytime soon. What's more, thanks to the shale gas boom, most of the "easy" cuts have already been made — as utilities retired their oldest plants and switched from natural gas. The harder cuts are yet to come, including making greater use of renewable power. That's what this plan aims to do, and it's a departure from business as usual.

12) A more immediate question is whether this plan will hold up in court. The EPA does have authority to regulate greenhouse gases — the Supreme Court has said so quite clearly. But the Clean Power Plan is an unprecedented regulation being done under Section 111(d) of the Clean Air Act, a rarely used provision. Industry groups are certain to challenge it in court. See Nathan Richardson for a rundown of the legal risks.

13) Another key question: How will the next president deal with the Clean Power Plan? After all, states don't submit implementation plans for cutting emissions until between 2016 and 2018, when Obama will be out of office. Whoever wins the White House next year could have a lot of leeway to approve those plans. A president hostile to climate policy could allow skeptical states like Texas to submit weaker plans, for instance. Every presidential candidate should be asked about this.

14) Granted, this is true of all of Obama's entire climate agenda. Whether US greenhouse gas emissions keep falling will depend on whether the next president continues to cut emissions or dismantles his climate policies (and on whether Congress decides to step up). Likewise, the ultimate trajectory of global warming will depend on how other countries respond, on whether clean energy keeps growing, on various technological developments. No matter how you feel about the Clean Power Plan, it's only one part of a much larger climate picture.

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