Midwest coalition asks EPA to help it develop voluntary carbon market

Dive Brief:

A coalition of Midwest power stakeholders has asked the federal government to assist in creating a voluntary carbon market they believe would be the most cost-effective way to meet pollution mandates included in the Clean Power Plan (CPP).
The CPP's regulations are expected to be finalized this summer and target a 30% reduction in carbon emissions from 2005 levels by 2030. Several reports over the past year have found that putting a price on carbon in regional electricity markets could be a more cost effective way to ensure compliance with the regulations than if each state was to go it alone.
15 states, including some in the Midwest carbon price coalition, have opposed the CPP in court. Reuters reports that companies and regulators in those states are still preparing compliance strategies in case the regulations survive the legal challenges.

Dive Insight:

Reuters reports the Midwestern Power Sector Collaborative (MPSC) has asked the U.S. Environmental Protection Agency to develop rules for a voluntary carbon trading market, which the group believes could be a cost-effective method of meeting new greenhouse gas pollution mandates.

While some state and companies in the MPSC are also challenging the Clean Power Plan in federal court, regulators in those states are still devising cost-effective plans in case those challenges fail.

"There is a recognition that if the rule goes forward, having a plan of action that has been explored and tested and modeled with your neighboring states is probably a very prudent strategy," Minnesota Public Utilities commissioner Nancy Lange told Reuters. That mirrors what veteran air regulator Ken Colburn told Utility Dive this spring.

“The governor’s office and attorney general office express the public or political opinions that they have and then proceed with whatever litigation or steps they wish to take,” he said. “In case that litigation or other approaches are not successful, the first thing the governors and attorneys general are going to do is come back to the regulators and say ‘Oops! I lost, now what do we do?”

Last month, a three judge panel from the D.C. Circuit Court appeared skeptical of a case brought against the regulations because the rules are not set to be finalized until later this summer. And Senate Majority Leader Mitch McConnell (R-KY) has urged states to not comply with the federal carbon mandates, though it does not appear the tactic is gaining traction.

MPSC is a collaborative of investor-owned utilities, transmission cooperatives, generators, environmental groups and utility regulators. The group was convened by the Great Plains Institute.