The Clean Power Plan and Existing Emissions Trading Programs: Aligning National Goals with the Regional Greenhouse Gas Initiative and California’s Cap-and-Trade Program

On August 3, 2015, the Environmental Protection Agency (EPA) released the final Clean Power Plan, a regulation on carbon dioxide (CO₂) emissions from existing power plants. Although the U.S. Supreme Court has stayed the rule, many states are continuing to prepare for the Clean Power Plan, including developing a compliance plan to implement the rule in their state. These plans will reflect a number of critical state decisions, such as the type of standard to adopt, the timeline to require reductions, the emissions reduction technologies and mechanisms to pursue in order to reach targets, whether to join with other states and allow trading, and much more. Some states will need to incorporate one other factor into their planning: how to align their Clean Power Plan compliance programs with existing greenhouse gas (GHG) emissions trading programs, including the northeast's Regional Greenhouse Gas Initiative (RGGI) and California's statewide cap-and-trade program. Both programs establish caps on emissions through 2020 and have plans to extend them post-2020 such that they would be in place for the duration of the Clean Power Plan’s initial program period through 2029, and likely beyond. This paper provides a general overview of the RGGI and California cap-and-trade programs and these states’ general Clean Power Plan compliance options, and then identifies several key issues and questions that these states will need to consider in aligning their existing mass-based GHG trading programs with the Clean Power Plan.