EPA's Clean Power Plan: What You Need to Know

EPA’S Clean Power Plan and Proposed Methane Emissions Rule
Client Alert: The Administration’s two new, major environmental initiatives will create new investment opportunities. Mogel and Sweet is monitoring these proposed rules and can help you take advantage of the investment and other opportunities presented and provide an understanding of the new regulations.

Clean Power Plan (CPP)
The CPP, which is 1,560 pages long (plus a 755 page model Federal Plan), is intended to reduce, by 2030, carbon dioxide emitted by U.S. power plants by 32% below 2005 emission levels. For each state, the CPP establishes a target emissions reduction rate which ranges from 7% for some states and up to 47% for other states. Plans must be filed by states as early as September 2016. States that fail to comply or submit non-complying plans will be required to implement EPA’s model Federal Plan. It is anticipated that plans will include trading programs whereby generators can purchase compliance credits that offset carbon emissions. Sellers of credits or allowances may include renewable producers, or entities inside or outside a state.

Proposed Rules to Cut Methane Emissions from Oil and Gas Drilling
EPA has proposed regulations to reduce emissions from drilling by at least 40% over the next 10 years from 2012 levels. According to the EPA, the fracking boom has significantly contributed to methane emissions, which have a warming effect twenty times greater than carbon dioxide. If the proposed regulations become final (estimated to be in 2016), companies will be required to install technology that prevents methane leaks and detects possible leaks. EPA noted that capturing methane can become a new profit center since methane is a primary component of natural gas.

Who are the Winners and Losers?

WINNERS: Natural gas-producers, gathering, midstream, pipelines and distribution systems;
Renewables-wind, solar and independent transmission;
Energy traders; and
Service Companies (including specialists in equipment efficiencies)

LOSERS: Coal, tar sands and nuclear

What to Do? Contact: William A. Mogel, wamogel@mogelsweet.com 301.642.5804; or David J. Muchow, dmuchow@mogelsweet.com, 703.625.4115.