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What the Clean Power Plan means for Wyoming

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Wyoming arguably lost more than any other state in President Barack Obama's plan to reduce carbon emissions by a third in the next 15 years.

For many states, the immediate focus in the wake of the final plan's unveiling Monday was how much carbon their power plants will need to cut in the coming years. Each state is given a reduction target under the strategy and many of the targets changed between the draft and final versions of the plan. Wyoming, for instance, saw its target double from 19 percent in the draft to 37 to 44 percent in the final. Only Montana and North Dakota saw greater increases.

The changes reflected states' electricity portfolios. Those more reliant on coal generally saw their targets increase while states that have taken action to cut carbon emissions now have easier goals. Almost 90 percent of Wyoming's power was generated by coal in 2013; nationwide that figure was closer to 40 percent. 

And with the largest coal mines in the nation, the implications for Wyoming are even broader than its power plants.

Texas, the biggest consumer of Wyoming coal in 2012, will need to cut less carbon than was proposed in the draft. Missouri, on the other hand, is the third-largest consumer, and will need to cut more. Illinois saw very little change between the first and second versions of the plan. The Land of Lincoln was the second-largest consumer of Powder River Basin coal in 2012, and will now need to cut slightly more carbon than was initially proposed.

"It’s pretty hard to say if it’s going to be a net positive or net negative," said Sherry Orton, an analyst at Doyle Trading Consultants, a research firm that tracks the coal industry. "Yes, Texas is better. But in the big picture I can’t tell you yet."

But focusing solely on state reduction targets obscures some of the changes the U.S. Environmental Protection Agency made to simplify the rule and make it easier to comply with, Orton and other analysts said.

The final version takes a more regional approach, they noted, an acknowledgement that the electric grid often crosses state lines. It divides the country into three regions: east, west and Texas. And it applies a standard emission rate to each type of power plant. A coal plant's rate, for instance, is 1,305 pounds of carbon dioxide per megawatt hour, down from the 2,300 pounds per megawatt hour generally emitted today. It also set a more stringent standard for natural gas at 771 pounds per megawatt hour. An average gas plant today emits between 900 and 1,000 pounds of carbon per megawatt hour. 

The draft rule did not set a standard emission rate for coal, natural gas and oil fired power plants. Plants in each state were given their own emission rates. 

Taken together, the two changes eliminate much of the bureaucratic legwork that would have been required for states to work together under the draft rule, analysts said. Where, say, Utah and Wyoming would have had to set emission rates for their power plants in a regional agreement, in the final edition a multi-state utility can allocate carbon reductions across its system.   

PacifiCorp, Wyoming's largest utility, could be a case in point for how the new system would work. The Portland, Oregon-based power company operates in six states. 

"If they had gas plants in one state and had more allowances than they needed, they could use them in Wyoming if they needed more there," said Gabe Pacyniak, a researcher at the Georgetown Climate Center in Washington, D.C. 

A PacifiCorp spokesman said that the utility is still reviewing the rule, but noted the company supported the draft released by the EPA last year. The utility does not anticipate a significant impact on customer prices as part of a wider shift toward renewables, said Dave Eskelsen.  

Others noted states will be able to lower their emissions rate by using energy efficiency credits. Rocky Mountain Power, a PacifiCorp subsidiary, has achieved efficiencies of 1 percent annually in Utah in recent years, said Howard Geller, executive director of the Southwest Energy Efficiency Project in Boulder, Colorado. Combined over the course of 10 years, such reductions could help states like Wyoming comply with the EPA's target, he said.    

The increased emphasis on regional cooperation should lessen the burden on states like Wyoming, Orton said. Still, she added, "Taken as a whole, it takes Wyoming from being in a somewhat advantageous position relative to other states (in the draft) and puts them in the same boat."

The changes drew praise from two major trade associations representing utilities. Finalization of state compliance plans was delayed two years to 2018 while implementation of those plans will occur in 2022. The final plan also sets lower carbon reduction benchmarks in its early years, allowing utilities to phase in renewables and natural gas at a slower rate. Utilities sought both changes, saying they needed more time to implement the EPA's plan.

"While we are still reviewing and analyzing the rule's specifics and the impacts of the restructured interim goals, the final guidelines appear to contain a range of tools to maintain reliability and better reflect how the interconnected power system works," said the Edison Electric Institute, which represents investor-owned utilities. 

The American Public Power Association, which represents 2,000 nonprofit state- and local-owned utilities, echoed those comments, but said some states face an easier path toward compliance than others. States with greater carbon reduction targets face a more difficult and expensive path to compliance. 

Nearly all analysts said it remained too early to tell how states and utilities will implement the regulations. A coalition of coal state governors, including Matt Mead, of Wyoming, have promised to challenge the rules in court. But if the rule stands, it is nearly certain coal will play a smaller use in America's energy mix. 

By the U.S. Environmental Protection Agency's projections, western coal production will fall from 379 million tons in 2025 to between 293 million tons and 306 million tons by 2030. Wyoming alone produced 396 million tons of coal in 2014. Coal generation, meanwhile, will fall from around 35 percent in 2020 to roughly 27 percent a decade later. Natural gas, meanwhile, will rise from 27 percent of power production in 2020 to 32 percent of American power generation in 2030, while renewables will increase from 9 percent to 12 percent.

The Wyoming Mining Association released a statement Tuesday that captured the mood of many in the state. 

"Regretfully, the rule is specifically designed to eliminate the use of coal -- America’s most reliable, affordable and abundant source of electricity generation," it said. "This will surely have a very negative impact on Wyoming in terms of revenue, jobs and school construction, and will result in higher energy prices for all Americans and businesses."

Follow energy reporter Benjamin Storrow on Twitter @bstorrow.


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