Multi-State Responses to GHG Regulation Under Section 111(d) of the Clean Air Act

Multi-state plans have the potential to provide significant benefits to states as they explore compliance options for existing power plants under section 111(d) of the Clean Air Act. As EPA designs the federal program under 111(d) and as states consider compliance and coordination with other states, it will be important to avoid creating market distortions that could reduce the cost effectiveness and environmental benefit of the program. Multi-state plans have the potential to mitigate some of the interstate dynamics and market inefficiencies that could result if states take different regulatory approaches under section 111(d). Coordinating compliance plans can help minimize economic distortions that will interfere with the clear and consistent price signals necessary to drive cost-effective compliance solutions. This discussion paper explores multi-state responses to section 111(d) regulation, including why states may want to consider collaborating and how such compliance could work under section 111(d) of the Act.