Stay on Top of Enterprise Technology Trends
Get updates impacting your industry from our GigaOm Research Community
The Environmental Protection Agency has just proposed the most aggressive plan to fight climate change to come from the U.S. to date. On Monday, in a speech by EPA Administrator Gina McCarthy, the EPA proposed rules to reduce carbon emissions from power plants by 30 percent by 2030.
While the plans will take a long time to implement (if it doesn’t get blocked along the way) and will face protests from power plant companies that own a lot of coal plants, one thing is clear: the news is a large and historic push for clean energy and energy efficiency technology in the U.S. This is a major step for the cleantech sector, which has faced hard times over the past few years.
Essentially, the EPA’s plan means that power plant owners and utilities over the coming years will need to reduce their reliance on carbon-emitting coal plants, which provide 39 percent of the nation’s power. They’ll have to add more cleaner burning natural gas and zero-carbon energy sources like solar and wind, and increase the use of energy efficiency. There are close to 600 coal plants in the U.S.
The ruling lets states control how they want to meet those targets. This is particularly important for energy efficiency technologies because reducing energy use is the cheapest way to lower carbon emissions, compared to building new generation capacity. States that can’t swiftly close coal plants, or build out new generation immediately, will likely choose to make buildings run more efficiently.
States can also implement cap-and-trade programs, like the one California introduced in 2012. Cap-and-trade programs set a cap on greenhouse gas emissions and create a marketplace where companies can trade allowances (a pretty good explanation here).
McCarthy noted in her speech that the EPA proposal will be important to investors focused on clean energy and energy efficiency. She said the ruling “gives entrepreneurs and investors more options”:
“Our plan pulls private investment off the shelves and into our clean energy revolution, and sends it in every direction, not just one or two. The opportunities are tremendous.”
To cleantech entrepreneurs and investors, this proposal is huge. Phil Giudice, the CEO of grid battery company Ambri, says:
“I fully expect we will look back on these rules as an important milestone in moving our country and our planet to a lower carbon energy future. Further I suspect the cost of this transition will parallel the move to reducing sulfur emissions (e.g. acid rain) which through the innovation of the private sector was accomplished at much much less than the expected cost.”
Colin lu Duc, a partner with Generation Investment Management, tells me that the EPA proposal “signals that dirty energy is yesterday’s business model and that clean innovation is tomorrow’s.”
“This plan will take time to implement and will be subject to significant push back from incumbents, but we believe it will eventually be implemented and create larger markets for clean solutions.”
Beyond the effects of the proposal within the U.S., the plan will also help the U.S. meet its international carbon emissions goals. Le Duc says the rule “allows the USA to participate in international climate negotiations with significantly more credibility.” Generation has its headquarters in London and invested in companies like smart thermostat maker Nest and solar installer SolarCity.
Billionaire Tom Steyer, who’s pumped millions into clean energy and efficiency, said in a statement:
“The Administration’s plan to end this carbon pollution loophole will establish a level playing field for advanced energy solutions that are cleaner, affordable and more secure. Now, more than ever, the United States must be a global leader in addressing climate change.”
Expect the EPA ruling to get significant pushback over the coming months, particularly from states that might see electricity prices rise through the energy rehaul. Senate minority leader Mitch McConnell, a Republican, tells Bloomberg that he plans to introduce legislation in the Senate to block the rules from taking effect.