Obama Unveils Climate Rules, With Texas-Wide Implications

_{Editor's note: This story has been updated throughout.}

Calling climate change “one of the key challenges of our lifetimes and future generations,” President Obama on Monday unveiled the final version of his state-by-state effort to combat the warming phenomenon by reshaping the nation’s energy sector — a plan that has roiled Republican leaders in Texas.

“No challenge poses a greater threat to our future and future generations, than a changing climate,” Obama said in a White House address, calling his new rule “the single most important step America has ever taken in the fight” against climate change.

The so-called Clean Power Plan aims to require the nation’s existing power plants to slash their carbon emissions – 32 percent from 2005 levels by 2030. That is 2 percent higher than the reduction proposed in a draft plan last year.

Now final, the unprecedented regulations could significantly affect Texas. As an industrial juggernaut, the Lone Star State generates more electricity and emits far more carbon than any other state. Texas also leads the nation in producing natural gas – a fuel that policymakers could lean on while trying to shift from dirtier coal-fired energy. The state also is already feeling the effects of climate change, including sea level rise, extreme heat and drought, and more frequent flooding, experts say.

Critics in Texas, including Attorney General Ken Paxton — who on Monday renewed his pledge to sue over the new regulations —  have said the plan would imperil the state's power grid and drastically inflate the cost of electricity for consumers.

On a national level, the Clean Power Plan's target is somewhat stricter than what the administration proposed a year ago, but the rule now gives states two extra years to comply.

Texas must cut an annual average of 51 million tons of carbon to reach its target, a reduction of about 21 percent from 2012 emissions, according to an EPA factsheet.

The agency said the state’s goal “looks less stringent” compared with  what it originally proposed, but some observers said an apples-to-apples comparison is difficult in large part because the EPA in the final rule changed its nationwide projections for renewable energy production in the coming decades.

“Part of the challenge is to get to a place where you can compare what was in the proposed rules and what’s in the final rules and it’s pretty clear some of the assumptions are very different so we’re in a place where we’ve got to spend the next couple of days trying figure it out like everybody else,” said John Hall, Texas director for the Environmental Defense Fund's clean energy program. “We’ve got homework to do and we’re not alone.”

EPA called Texas’ target “moderate” compared with required cuts in other states.

Nevertheless, Texas Republicans blasted the regulations on Monday, with Gov. Greg Abbott claiming the plan would cost thousands of jobs.

"Texas will lead the fight against an overreaching federal government that seems hell-bent on threatening the free-market principles this country was founded on,” he said.

The most basic structure of the agency’s final rule remains the same as the proposal: States may shape their own plans to meet federally mandated targets for cutting carbon. But the EPA has changed its guidelines for meeting the state goals.

States may choose between two types of plans. That includes an “emission standards” option that sets performance rates for specific power plants. Or, states may adopt a program that includes a mixture of measures, such those that incentivize renewable energy or improve energy efficiency.

The rule encourages – but does not require – states to adopt a cap and trade program – a scheme in which companies bid on the right to pollute. Examples include a two-year old program in California, and a nine-state effort in the northeast that’s more than a decade old.

The EPA will incentivize early action and reward state investments in wind, solar and other renewable technologies, Janet McCabe, who heads the agency’s Office of Air and Radiation, said in a conference call with reporters.

States now have until September 2018 to submit a final plan, meaning Texas could use the 2017 legislative session to hash one out.

But it’s not clear that Texas leaders will play ball, with many Republicans nationwide calling on state to just say no to the regulations.

Bills that would have directed Texas to adopt a climate plan – or even just a backup, should the state lose its legal challenge – went nowhere in the 2015 legislative session amid opposition from certain industry groups.

Paxton, who has called the regulations part of Obama’s “war on coal and fossil fuels,” announced the state's intention to sue over the plan in May. And Republicans statewide – including Abbott– have loudly panned the original proposal, saying it will raise utility bills and threaten the reliability of the electric grid. (Obama stressed Monday that his plan actually would ensure grid reliability and save consumers money on their electric bills — $85 per year for the average American by 2030.)

“If this rule takes effect, the harm to Texas families will be immeasurable, through skyrocketing electric bills and lost opportunities for jobs – all with little to no benefit to the environment,” Paxton said Monday in a statement. “The State of Texas will not back down in fighting this aggressive overreach in court.”

U.S. Sen. Ted Cruz, R-Texas, called the regulations a “lawless and radical attempt to destabilize the Nation’s energy system.”

“I urge leaders of both parties, including Democrats who represent communities that will be devastated by this reckless policy, to stand up against this Administration’s dangerous agenda of economic decline,” Cruz, a GOP presidential contender, said Monday in a statement.

If Texas ignores the rules, the EPA will construct its own plan for Texas. The agency on Monday released a model of what that strategy might look like, but an EPA official said it “would not put a federal plan in place until a state has not turned in a plan or has turned in a plan that is not approvable.” Once finalized, that model will serve as a “backstop” to ensure cuts in all states.

Democrats and others call the just-say-no approach risky and suggest it would beckon more stringent requirements. Well-positioned utilities – those that have shifted resources away from coal – are among those calling for Texas to provide some certainty by adopting a plan. 

One of those utilities, Houston-based Calpine, called Monday’s announcement “a seminal moment for the power generation industry."

“The Clean Power Plan represents a commitment to continuing the transition from carbon-intensive generation to efficient, low-carbon generation,” said Thad Hill, president and CEO of Calpine, the largest independent power producer in the nation. “This flexible, market-based solution will reward the companies that invest and have invested smartly in cleaner generation. We applaud the EPA for its efforts throughout this collaborative process and look forward to working with the agency, states and other stakeholders as the rule is ultimately implemented.”

On Monday, Obama took aim at those who are resisting the plan. He dismissed their wide-ranging criticism and said the U.S. must act before it’s too late to ward off its most serious effects of climate change.

“Every time Americans made progress, it’s been despite these kinds of claims,” he said. “We only get one home. We only get one planet. There’s no plan B."