EPA Must Retain the Requirement that Rate-based States Seeking to Engage in Interstate Trading Merge their Target Emission Rates

The Clean Air Task Force (CATF) asserts that allowing interstate trading between states with separate, unmerged emission rate targets creates a perverse economic incentive to operate higher-emitting power plants in states with more lenient targets. This 'leakage' problem would displace lower-emitting generation, leading to higher overall system emissions and increased operating costs. CATF provides a quantitative example showing that relaxing the merger requirement could result in 20 percent more emissions and nearly 50 percent higher dispatch costs. The document further argues that this risk is widespread, noting that 26 states have target emission rates below the 1000 lbs./MWh new source performance standard for natural gas combined cycle (NGCC) units. Finally, it contends that limiting interstate trading to renewable energy credits (RECs) would not solve the problem, as renewable resources in states with higher targets would generate disproportionately more credits, allowing for greater continued use of fossil resources in more stringent states.

• Relaxing the requirement for states to merge their emission rate targets when engaging in interstate trading creates an incentive to operate generation in states with more lenient targets, leading to an overall increase in emissions compared to state-specific targets.
• If emission rate targets are not merged, identical fossil plants in different states will face different CO2 costs, potentially causing lower-emitting plants with higher credit costs to be outbid and displaced by higher-emitting plants in states with lower credit costs.
• A quantitative example involving two hypothetical states demonstrates that failing to merge rate targets could result in 20 percent more emissions and nearly 50 percent higher dispatch costs.
• The risk of 'leakage' is widespread because 26 states have target emission rates below the 1000 lbs./MWh proposed section 111(b) new source performance standard for natural gas combined cycle (NGCC) units.

APA

Clean Air Task Force (2015). EPA Must Retain the Requirement that Rate-based States Seeking to Engage in Interstate Trading Merge their Target Emission Rates. https://cdn.catf.us/wp-content/uploads/2015/07/21094409/CATF_WhitePaper_CPPRateMerger.pdf

Chicago

Clean Air Task Force. EPA Must Retain the Requirement that Rate-based States Seeking to Engage in Interstate Trading Merge their Target Emission Rates. 2015. https://cdn.catf.us/wp-content/uploads/2015/07/21094409/CATF_WhitePaper_CPPRateMerger.pdf.

Wikipedia

{{cite press release |author=Clean Air Task Force |title=EPA Must Retain the Requirement that Rate-based States Seeking to Engage in Interstate Trading Merge their Target Emission Rates |date=July 2015 |url=https://cdn.catf.us/wp-content/uploads/2015/07/21094409/CATF_WhitePaper_CPPRateMerger.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{cleanairtaskforce2015epa, author = {{Clean Air Task Force}}, title = {{EPA Must Retain the Requirement that Rate-based States Seeking to Engage in Interstate Trading Merge their Target Emission Rates}}, publisher = {Clean Air Task Force}, year = {2015}, month = jul, url = {https://cdn.catf.us/wp-content/uploads/2015/07/21094409/CATF_WhitePaper_CPPRateMerger.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }