Clean Power Plan will prompt industry to be more energy efficient

August 4, 2015
, Washington, DC

Despite last-minute policy changes, EPA’s final rule for U.S. power plants to reduce their CO2 emissions will ultimately help industry to become more energy efficient, says policy expert, Dr. Bruce Hedman from the Institute for Industrial Productivity (IIP).

“The Administration has reaffirmed the importance of energy efficiency in the Clean Power Plan. While EPA removed the role of energy efficiency for the purposes of establishing the standard, it appears to have strengthened it as a compliance option for regulated entities,” says Dr. Hedman, IIP’s Technical Director.

In the final rule, EPA underscored that ‘demand‐side energy efficiency is an important, cost‐effective, proven strategy that states are already widely using and which can substantially and cost‐effectively lower CO2 emissions from the power sector’.

“EPA created a structure that should encourage states to adopt a wide range of flexible measures – including emissions reductions created by energy efficiency projects. The rule establishes firm emission standards for all coal, natural gas and oil electricity generation units (EGUs). States can provide flexibility to affected EGUs by adopting a ’State Measures Plan’, which would allow emissions reductions from demand-side energy efficiency to be used for compliance. Some of the key measures we can expect to see advanced under this rule will be the use of individual industrial energy efficiency projects as well as broad efficiency deployment programs administered by electric utilities, state entities or other private and non-profit entities.”

“This is an extremely positive step for industrial efficiency. By supporting the inclusion of these types of projects, the Clean Power Plan could significantly accelerate demand for industrial energy efficiency. In turn, this would result in more rapid reductions of greenhouse emissions than would have otherwise occurred. Greater uptake of industrial energy efficiency could also delay, or entirely displace, the need for some of the most expensive 111(d) compliance actions and reduce the overall costs of implementation.”

Combined heat and power (CHP) – which efficiently produces both thermal energy and electricity from a single fuel source at the point of use – will also be one of the most important industrial efficiency options for states to consider. The final rule has provided much needed clarification on how to measure and account for the emissions reductions resulting from CHP projects implemented at factories and businesses,” Dr. Hedman says.

CHP holds immense potential. Existing industrial and commercial facilities could generate up to 130 GW of new efficient generating capacity from CHP, which is equivalent to more than a third of U.S. coal-generating capacity, or more than the net summer electric generating capacity of both California and Florida.

The U.S. currently ranks second in the world for its CO2 emissions, with industry accounting for almost a third of the country’s emissions. The Clean Power Plan, authorized under section 111(d) of the Clean Air Act, aims to cut CO2 emissions in the power generation sector by 32 percent by 2030 (based on 2005 levels).

For more information, please contact IIP’s Senior Partnership Manager, Meaghan Phelan: meaghan.phelan@iipnetwork.org or call +1 202 957-9040.