The Clean Power Plan Will Serve As A Major Driver of Clean Energy Development


Want to know some even more good news about the Clean Power Plan to cut dangerous carbon pollution from the nation's power plants that President Obama announced on Monday?

Thanks to the fast-dropping price of wind and solar power, and some smart ideas about how to further jumpstart clean energy development here in the US, the plan will bring online much more clean energy than the EPA originally projected in the draft plan it released last summer. That draft had already set the CPP up to be a major driver of clean energy development across the United States. Now, it's poised to do even more, and, importantly, to prioritize clean energy over polluting natural gas. In fact, in 2030, the final plan will likely result in as many as 207,000 gigawatt hours of clean power from sources like wind, solar, and geothermal, above today's levels. That's enough to power 19 million homes. Of course, with more clean energy comes more good jobs, cleaner air for our kids to breathe, and lower energy bills for families and businesses. So, really, on top of the climate protection, there's a lot to like.

The Clean Power Plan will serve as a major driver of clean-energy development, helping to create hundreds of thousands of new jobs, like these in the fast-growing solar sector. (Photo Credit: Lexey Swall)

How are these big numbers possible? Well, as we've already seen in states and cities buttressed by renewable energy standards and other clean-energy goals, putting the right policies in place gives investors and project developers the confidence they need to move forward with zero-emissions electricity projects. Many of those projects, in turn, are delivering electricity at eye-poppingly low prices--lower even than natural-gas--meaning clean power can further help consumers save money on our energy bills. (A new Nevada solar project, for instance, will sell electricity to a local utility for a mind-blowing 3.87 cents a kilowatt hour.)

The Clean Power Plan won't just boost the amount of clean energy we generate in the United States. The final standard will also bring more wind and solar power online faster, even before the CPP compliance period begins in 2022, thanks to the Clean Energy Incentive Program included in the final plan. The CEIP is specifically designed to reward an early transition to wind and solar power and, importantly, to promote energy efficiency in low-income communities. By the way, lest anyone think the EPA is mandating that states or utilities to use cost-effective clean energy to meet their emissions-reduction targets, it's worth noting that the program is entirely voluntary.

How does it all work?

Well, the effort depends largely on a market mechanism that states can opt into--again, if they want to. Once states that choose to participate file their final state implementation plans, due in September 2018, new renewable energy projects that begin construction after the plan is filed and deliver power in 2020 and 2021 can participate. They'll earn tradable Emission Rate Credits, which they can in turn sell to power plants or utilities to use meet compliance standards from 2022 through 2030. For each megawatt hour of renewable energy generated, developers will earn one credit. These credits are also bankable, so developers can use them to help power plants meet pollution limits any time they want to during the 2022-2030 compliance period. (Low-income efficiency projects that go into operation after the filing and deliver energy savings in 2020 or 2021 can get 2 credits for every megawatt hour of avoided generation.)

If all that wonky stuff makes your eyes glaze over, just remember this: The market mechanism in the CEIP will generate billions of dollars of additional support that developers can use to build clean energy projects. And that, in turn, can help further drive down the already low costs of clean energy, by speeding economies of scale and spurring investment in new technologies.

Of course, we can help make clean energy an even more attractive compliance option by urging our representatives in Congress to extend several vital policies that have driven clean energy growth and all the good stuff that comes with it. These include the now-expired Production Tax Credit for wind power and the Investment Tax Credit for offshore wind power, along with the 30 percent federal investment tax credit for solar power, which will drop to 10 percent at the end of 2016.

We can also encourage our state leaders to support the use of clean energy in meeting pollution standards. These options, which create new jobs, protect our health, and save us money on our energy bills, are a bullseye, to be sure.

Now, a quick observation about the use of biomass to meet CPP standards. It's worth noting that the CEIP specifically supports wind and solar power, and doesn't apply to more complicated and potentially problematic sources like biomass. While the CPP biomass standards offer some safeguards that forests won't be used as fuel in ways that are dangerous both to our climate and to the valuable forest ecosystems on which we all depend, the standards are more of a mixed bag. My colleague Sami Yassa will write more about them soon.