White Papers

The Clean Power Plan: Carbon Trading, State Legislation and the Political Economy Issue

Ray Gifford, Greg Sopkin and Matt Larson released a new white paper, “The Clean Power Plan: Carbon Trading, State Legislation and the Political Economy Issue,” on October 21, 2015.

The  notion  of  headroom  available  for  states  in  the  Western  Interconnection and Texas Interconnection assumes the accuracy and feasibility of the inputs to EPA’s BSER formula. The BSER formula in the Western Interconnection and Texas Interconnection yielded carbon budgets that no state could reasonably achieve.  The notion of “headroom” fails by extension, because the amount of the headroom is predicated on the low emission rates in the Western Interconnection and Texas Interconnection, as compared to the Eastern Interconnection. Therefore, states and entities presented with the headroom argument in favor of the achievability and ease of CO2 emissions trading schemes should be highly skeptical, if not outright dismissive, of this position as support for viable trading regimes. Nevertheless, the ineluctable logic of the CPP Final Rule still leads states toward trading…