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In August, President Obama presented his plan to address global warming due to power plants – the single largest source of carbon emissions that contribute to climate change.
What are the details and how will it affect cleantech and utilities? Read on for our synopsis of the major issues.
What is it?
The Environmental Protection Agency (EPA) has set nationwide standards to end the unlimited release of carbon dioxide from energy generators in a plan called the Clean Power Plan. Its goal is to cut greenhouse gas emissions from power plants by 32 percent by 2030 (as compared to emissions from 2005). Furthermore, this new legislation is flexible and can be adapted to different states so that they can make their own plans to meet the target based on the region’s energy mix and current emissions levels.
It will protect our health.
The White House has announced that this plan will increase public health by reducing harmful components in the air and save lives. The numbers reported claim that the new emissions standards will lead to 3,600 fewer premature deaths, 90,000 fewer asthma attacks for children, and 1,700 fewer non-fatal heart attacks. It will also help prevent 300,000 missed workdays and schooldays due to respiratory concerns.
How will it affect utilities?
Increased efficiency standards and the proliferation of rooftop solar installations that reduce electricity sales may lead to higher operating costs, a leading reason why utilities filed suit against the EPA in several states. With most challenges not expected to succeed, utilities may begin to look at changes in their business model, shifting from metered sales to more service related offerings.
What does it mean for the cleantech industry?
The EPA action is a strong market signal for businesses and investors. It will encourage the continued growth of cutting edge energy technologies. In fact, the cleantech market reached $199.5 billion in 2014 and is actually growing five times faster than the overall US economy despite a few high-profile failures the last few years.
However, states do not have to submit their plans on how they will reduce their emissions until 2018, and they won’t have to make cuts until 2022, which could slow down clean energy projects. Yet the plan has incentive plans in place to encourage early adopters to cut their emissions earlier than required in the plan, even going so far as to provide support to those that get involved in establishing advanced technology energy projects in low income communities.
Finally, the Clean Power Plan is designed to develop 30 percent more renewable energy generation, create tens of thousands of jobs, lower the costs of renewable energy, and is also expected to cause the retirement of about 50 gigawatts of coal-fired power plants.
Obama stated this plan is “the biggest, most important step that we have ever taken to combat climate change,” and it will definitely go a long way to accelerate current trends. In fact, CO2 emissions from power plants already fell 15% between 2005 and 2013, meaning the nation’s utilities are already halfway there for the latest goals. Taking a leadership role on addressing climate change is important for the US since it is the world’s second biggest carbon emitter behind China after all.
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