The U.S. Environmental Protection Agency (EPA) has released the proposed Affordable Clean Energy (ACE) Rule, which replaces the 2015 Clean Power Plan.

A rule promulgated during the previous administration, the Clean Power Plan imposed costly regulatory burdens on power plants in an effort to reduce greenhouse gas emissions. EPA proposed repealing the Clean Power Plan in 2017 after determining the rule exceeds EPA’s statutory authority and is inconsistent with the Clean Air Act. The U.S. Supreme Court issued a stay of the rule in 2016.

The ACE rule provides states guidelines to develop plans to reduce greenhouse gas emissions from power plants. Whereas the Clean Power Plan forced states to comply with a single federal standard, the ACE rule gives states flexibility to set their own standards within the boundaries of the federal guideline. The proposed rule gives states three years to develop plans and provides a list of seven “candidate technologies” for states to incorporate in their plans. States must report to EPA on plan enforcement annually.  EPA can mandate a federal plan within two years to states whose plans are not approved.

Other provisions of the proposed ACE rule include:

• Defining the “best system of emission reduction” for existing power plants as on-site heat efficiency improvements. The best system of emission reduction is used in setting the standard of performance under the Clean Air Act.
• Updating the emissions testing process for New Source Review applicability to an hourly rate calculation instead of the current annual test. This update would help ensure efficiency projects do not trigger additional New Source Review requirements. The New Source Review permitting program monitors major modifications to emissions-generating facilities.

EPA’s regulatory impact analysis estimates that the ACE rule would reduce compliance costs by up to $400 million annually compared to the Clean Power Plan while still reducing CO2 emissions.