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Coal Country Plans for Carbon Trading

Major electricity providers and some government officials in West Virginia, the state leading the charge against federal climate change regulations, want to use carbon trading to meet their greenhouse gas reduction targets, according to public records obtained by ClimateWire.

More than a dozen documents reveal for the first time that despite political pushback against U.S. EPA's Clean Power Plan, key interests in the state are searching for ways to comply in case legal challenges fail.

West Virginia's politicians are among the loudest critics of the climate regulation. The state attorney general, Patrick Morrisey (R), is leading a 24-state lawsuit to kill it, and the state Legislature last year passed a law that limits the kind of plan that the state's environment agency, the Department of Environmental Protection (DEP), can write to meet federal goals.

But comments filed to the agency show that important players in West Virginia—including utilities and a member of the governor's Cabinet—want the flexibility to use carbon trading to comply. They say trading is the cheapest option for companies and consumers, and argue that they cannot meet EPA's goals under the current state law.

'We just can't get there'
The missives come as West Virginia, many other states and numerous trade groups are fighting in court to stall or nix the Clean Power Plan. They show how companies affected by the rule are encouraging entrenched opponents of EPA to make backup plans to comply in case legal attacks don't succeed.

"If the [Clean Power Plan] is implemented in West Virginia, credits or allowances will be required for coal plants to continue to operate," said Longview Power LLC, which boasts it owns the cleanest coal plant in the state, during a December presentation.

Longview Power CEO Jeff Keffer said in an interview that feedback the environment agency has received from power companies likely reflects broad agreement from the power sector that the state can't meet EPA's targets without legislative changes.

"The first step DEP has is to develop a feasibility study," said Keffer. "I suspect that feasibility study will highlight the conflicts between the preparation of a [state compliance plan] and that state statute and the limitations that they have enacted."

EPA requires states to cut their power plant carbon dioxide emissions rates by varying amounts by 2030. West Virginia—which relies almost entirely on coal power and also depends on mining to drive the state's economy—must make a reduction of 37 percent.

EPA's rule allows states to ramp up renewable energy and natural gas usage to reach goals. It also lays out guidelines for carbon trading, which lets power generators buy allowances or credits from cleaner electricity sources to meet required CO2 levels. Power companies in many states are looking to use carbon trading to comply (ClimateWire, Jan. 19).

But opponents, including Morrisey and members of West Virginia's Legislature who crafted H.B. 2004, argue that EPA legally can only require specific changes to make coal plants run more efficiently. The law restricts West Virginia's environment agency to writing a carbon-cutting plan based on efficiency improvements that can be made at plants. It calls on DEP to analyze the Clean Power Plan and tell legislators whether the standards are feasible in light of the law's restrictions. DEP finished collecting comments late last month to conduct that analysis.

Inspired by the American Legislative Exchange Council, the law also requires the Legislature to approve any plan before state officials send it to EPA (ClimateWire, March 5, 2015).

Asked if West Virginia's coal units can meet EPA's carbon targets under the state law, DEP senior policy adviser and counsel Thomas Clarke said, "We just can't get there."

"Other than capturing carbon, which has yet to be shown to be feasible ... there's really not anything else you can do at the unit," Clarke said.

West Virginia's power companies agreed. Utility American Electric Power said "the obvious conclusion" is that developing a state plan to meet EPA standards is "not feasible given the constraints imposed by H.B. 2004."

"The legislation limits West Virginia's ability to craft an implementation plan that would meet the targets in the Clean Power Plan and be approved by the EPA," AEP spokeswoman Tammy Ridout said in an emailed statement.

"The state could then be subjected to a federal plan, which if finalized as proposed, would take a 'one size fits all' approach that will not be tailored to the unique infrastructure, economic needs or policy objectives of individual states."

Source: Scientific American