The U.S. Environmental Protection Agency (EPA) has finalized the 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 Clean Power Plan in 2016.
The newly finalized 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 six “candidate technologies” for states to incorporate in their plans.
The ACE rule also defines 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.
With the implementation of the new regulations, EPA expects CO2 emissions to decrease by as much as 35 percent below 2005 levels, according to the press release. The agency estimates the ACE rule will result in annual benefits of $120 million to $730 million including costs, climate benefits, and health benefits. A previous regulatory impact analysis from EPA estimated that the ACE rule would reduce compliance costs alone by up to $400 million annually compared to the Clean Power Plan.
The final rule does not take action on updates to New Source Review permitting program, which monitors major modifications to emissions-generating facilities. The proposed rule had included provisions 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. While this provision was not included in the final ACE rule, EPA plans to take action on the proposed New Source Review reforms at a later date.