The Clean Power Plan: Friend or Foe of California’s Climate Policy?

by Elena Saxonhouse^*

The United States Environmental Protection Agency finalized the Clean Power Plan ("CPP"), the first federal rule to limit carbon dioxide pollution from existing power plants, in October 2015. At the time, California’s Global Warming Solutions Act to reduce greenhouse gases (commonly known as AB32), was already nearly a decade old. As a result, the state is several steps ahead of EPA in regulating climate-changing air pollution. California is in its fourth year administering a cap-and-trade program for heat-trapping gases and on track to meet AB32’s mandate to reduce greenhouse gas pollution to 1990 levels by 2020.

Even while touting the state’s own progress, California’s leaders have emphasized the importance of national and international action on climate change to stave off threats like prolonged drought, increased wildfires, coastal erosion, flooding, and damage to the state’s fruit and nut production.¹ They have sided strongly with EPA in defending the CPP, describing it as a critically important step toward international action to stabilize the climate.² California policymakers and the state’s energy stakeholders also have reason to be optimistic about the effect of the CPP on California’s efforts to implement its climate goals in the state and region. The CPP could put pressure on other states to enact similar programs, increase demand for California’s clean energy technologies and generation sources, and lower costs of compliance for California sources by expanding the market for allowances – all while encouraging ever deeper cuts in greenhouse gases across the region. But the new overlay of federal regulation also poses challenges for California, casting a shadow of uncertainty over that rosy picture.

I. CALIFORNIA’S APPROACH TO GREENHOUSE GAS REGULATION