American Oil and Gas Reporter - September 2018 - 28

Executive Actions

Trump Revises GHG, CAFE Standards
WASHINGTON-The Trump administration has unveiled its plans to relax
pollution limits from coal-fired electric
generating plants. The U.S. Environmental
Protection Agency says its Affordable
Clean Energy (ACE) Rule establishes
guidelines for states to use when developing plans to limit greenhouse gas emissions from power plants.
In other Washington news, EPA and
the Department of Transportation's National Highway Traffic Safety Administration propose to rewrite corporate fuel
efficiency standards for passenger cars
and light trucks, while federal agencies
prepare their responses to China's announced retaliatory tariffs on U.S. liquefied
natural gas imports.
The ACE rule replaces the Clean Power
Plan advanced by President Obama, which
was stayed by the U.S. Supreme Court
and never implemented. EPA says the
new rule "empowers states, promotes energy independence and facilitates economic growth and job creation." According
to the agency, many people believed the
Obama regulation exceeded EPA authority
under the Clean Air Act, which is why
27 states, 24 trade associations, 37 rural
electric cooperatives and three labor
unions challenged it.
"The ACE rule would restore the rule
of law and empower states to reduce
GHG emissions and provide modern, reliable and affordable energy for all Americans," says EPA Acting Administrator
Andrew Wheeler. "Today's proposal provides the states and regulated community
the certainty they need to continue environmental progress while fulfilling President Trump's goal of energy dominance."
According to EPA, the proposal will
reduce GHG emissions by:
* Defining the "best system of emission reduction" for existing power plants
as on-site, heat-rate efficiency improvements;
* Providing states with a list of "candidate technologies" that can be used to
establish performance standards and incorporated in their state plans, with the
states authorized to determine which technologies are appropriate for each plant
and establish a standard of performance
that reflects the degree of emission reduction from their application;
* Updating the New Source Review
permitting program to further encourage
efficiency improvements at power plants
by revising the program to give states the
option to adopt an hourly emissions in28 THE AMERICAN OIL & GAS REPORTER

crease test for such projects, with only
projects that increase a plant's hourly
rate required to undergo a full NSR
review; and
* Aligning regulations under the CAA
Section 111(d) to give states adequate time
and flexibility to develop their state plans.
Providing Flexibility
The regulatory impact analysis for
this proposal includes a variety of scenarios. EPA says those are illustrative
because the statute gives states sufficient
flexibility to consider unit-specific factors-including a particular unit's remaining
useful life-when it comes to standards
of performance. Key findings include the
following:
* The agency projects that replacing
the CPP with the proposal could provide
$400 million in annual net benefits.
* The ACE rule would reduce the
compliance burden by as much as $6.4
billion when compared with the CPP.
* All four scenarios find that the proposal will reduce carbon dioxide emissions
from their current level.
EPA estimates that the ACE rule may
reduce 2030 CO2 emissions by as much
as 1.5 percent from projected levels without the CPP, the equivalent of taking 5.3
million cars off the road. Further, it says
the illustrative scenarios suggest that
when states have implemented the proposal
fully, U.S. power sector CO2 emissions
may be 33-34 percent below 2005 levels,
higher than the projected CO2 emission
reductions from the Clean Power Plan.
Opponents of the CPP, such as the Institute for Energy Research, applaud
EPA's move as a correction to a rule that
they deem an unprecedented and harmful
power grab, and say the ACE rule corrects
some of the earlier plan's flaws.
"By reining-in the EPA, the ACE rule
limits the negative economic impacts a
backdoor federal renewable mandate
would have on American families. However, we still maintain that only a full
repeal of the Obama-era regulation will
fully protect ratepayers," says IER President Thomas J. Pyle.
Fuel Efficiency
EPA says revisions to vehicle corporate
average fuel efficiency (CAFE) regulations
established under the Obama administration
will "correct the national automobile fuel
economy and greenhouse gas emissions
standards to give the American people
greater access to safer, more affordable ve-

hicles that are cleaner for the environment."
The two agencies have released a
notice of proposed rule making, the Safer
Affordable Fuel-Efficient Vehicles Rule
for Model Years 2021-2026 Passenger
Cars and Light Trucks rule, the first step
in setting future fuel efficiency standards
for automakers. According to the notice,
the rule will establish fuel economy and
tailpipe carbon dioxide emissions standards
for cars and light trucks for all 50 states.
The agencies indicate the proposal
aims for a 37.0 miles per gallon projected
overall industry average required fuel
economy in model years 2021-2026 compared with a 46.7 mpg projected requirement in 2025 models under the standards
issued in 2012.
The notice states NHTSA is proposing
the new CAFE standards because it deems
the existing ones no longer feasible. EPA
reports it is proposing to amend its CO2
standards for model years 2021-25 because
they no longer are appropriate and reasonable, in addition to establishing new
standards for model year 2026. The agencies say their preferred alternative is to
retain the model year 2020 standards
(specifically the footprint target curves
for passenger cars and light trucks) for
both programs through model year 2026.
"We are delivering on President
Trump's promise to the American public
that his administration would address and
fix the current fuel economy and greenhouse gas emissions standards," says
EPA's Wheeler. "Our proposal aims to
strike the right regulatory balance based
on the most recent information and create
a 50-state solution that will enable more
Americans to afford newer, safer vehicles
that pollute less. Most realistic standards
can save lives while continuing to improve
the environment."
EPA says the standards written under
President Obama have been a factor in
increasing the costs of new automobiles
to $35,000 or more. "Indeed, compared
with the preferred alternative in the proposal, keeping in place the standards finalized in 2012 would add $2,340 to the
cost of owning a new car, and impose
more than $500 billion in societal costs
on the U.S. economy over the next 50
years," the agency writes.
The American Energy Alliance applauds the federal agencies for "righting
a wrong of the previous administration"
and for seeking to eliminate California's
waiver to impose its own vehicle GHG
emissions standards.
American Oil and Gas Reporter - September 2018

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