Carrie Gombos manages The Conservation Fund’s voluntary reforestation-based forest carbon program. The Fund has spearheaded and verified more restoration-based forest carbon projects than any other group in the nation.

The Environmental Protection Agency (EPA) recently proposed regulating greenhouse gas emissions from existing power plants under Section 111(d) of the Clean Air Act.  EPA’s proposed rule, also known as the Clean Power Plan, was released on June 2, 2014, and will set guidelines for states to reduce their carbon dioxide emissions from existing fossil fuel-fired power plants.   The proposed rule defines existing sources as those that were operating or had begun construction by January 8, 2014.  

The challenge, however, is that the Clean Power Plan does not allow offsets from outside the power sector to be included as compliance mechanisms in state plans.  That’s why The Conservation Fund is working with a range of stakeholders across the United States, including private landowners, forest products manufacturers, and other conservation nonprofits to encourage the EPA to consider forests and forest carbon offsets as one of the tools that states can use to meet their overall emission reduction goals.  We sat down with Carrie in our Arlington, VA office for a deeper dive into the plan.

What is this proposed EPA 111(d) rule and what does it direct each state to do?  

The Clean Power Plan sets carbon dioxide emission reduction goals for each state and proposes ways for each state to meet its goal.  EPA offers states four potential “building blocks” to achieve the “Best System of Emission Reductions” (BSER).   These building blocks include (1) improving emission rates from existing fossil fuel power plants (2) increasing use of high efficiency, natural gas plants (3) securing more zero and low-emitting power sources such as renewable and nuclear and (4) increasing demand side energy efficiency.

What is the timeline for implementing EPA’s proposed 111(d) rule?

EPA is required to finalize the rulemaking by June 1, 2015 and the states are then required to submit their plans to EPA by no later than June 30, 2016. EPA provides an opportunity for states to seek an extension for an additional year for a state plan or an additional two years for a multi-state plan, in light of the additional level of coordination that may be required to develop and submit multi-state plans.

Will California’s Cap-and-Trade system satisfy the EPA rules?

It should. EPA clearly authorizes the use of market-based mechanisms as a way of meeting state goals and devotes significant discussion in the proposed rule to the role of California’s Cap-and-Trade program and the Regional Greenhouse Gas Initiative (RGGI) in reducing carbon dioxide emissions.  However, California likely will need to engage in some sophisticated modeling to demonstrate that, under A.B. 32, California’s electricity sector is meeting its target even without offsets and not counting out-of-sector reductions.

While nothing in the proposal requires states to implement market-based programs, the rule may spur renewed interest in cap-and-trade systems.   States that have thus far declined to participate in RGGI or the Western Climate Initiative might revisit those decisions and see either program as offering a “ready-made” solution to the otherwise daunting task of putting together a separate state 111(d) plan.  The expectation is that the number of states participating in cap-and-trade systems may increase as a result of the proposed EPA rule (there are currently 10 states participating in either RGGI or California’s system).  

What is the role of offsets under the EPA proposed rule? 

Under the proposed rule, carbon offsets cannot be used as a compliance mechanism.  The proposed rule does acknowledge that existing cap-and-trade programs (i.e., RGGI and California’s program) recognize offsets for compliance purposes and offsets may continue to be used in a state’s cap-and-trade program.  However, states would not be able to count the emission reductions generated by these offset projects toward the reductions required by EPA in the power sector; states must demonstrate that affected electric generating units (EGUs) alone are achieving the required emission reductions.

What is The Conservation Fund doing to help?

The Conservation Fund is working with a range of stakeholders across the United States, including private landowners, forest products manufacturers, and other conservation nonprofits to encourage EPA to consider forests and forest carbon offsets as one of the tools that states can use to meet their overall emission reduction goals.  While we don’t know to what extent forest carbon offsets will be permitted as part of each state’s plan in the final rule, The Conservation Fund will continue its work to address climate change by protecting and restoring forests that clean our air, filter our water, and provide benefits for both wildlife and communities for generations to come.  Already we have used carbon finance to help protect 74,000 acres of working forests and restore 25,000 acres of bottomland hardwood forest with 10 million trees.