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In the final Clean Power Plan (CPP) promulgated in August 2015, the EPA set Emission Guidelines for the best system of emission reductions for carbon dioxide from existing power plants. States were tasked in the CPP with developing plans to achieve reductions in carbon dioxide emissions from the existing power plants in each state. In these model trading rules, the EPA will finalize models that provide two optional approaches (rate-based and mass-based emission trading programs) that states may use in developing a plan.

Statement of Need: These model trading rules provide states with examples of a mass-based trading program and a rate-based trading program that can be used as part of a state plan submission for the Clean Power Plan. These model trading rules achieve the level of carbon dioxide emission reductions achieved through the Clean Power Plan.

Summary of the Legal Basis: The Model Trading rules are example trading programs the states may use to achieve emission reductions for carbon dioxide from existing power plants. They can be used by states as part of their submissions for the Clean Power Plan. The Clean Power Plan was developed under the authority of the Clean Air Act Section 111.

Alternatives: In the proposal, the EPA solicited comments on many topics. For the rate-based Model Trading Rule, the EPA solicited comment on different methods for calculating Gas Shift Emission Rate Credits. Also in the rate-based Model Trading Rule, there were alternatives sought for the overall structure of a rate-base trading rule that aligns with the Clean Power Plan and facilitates interstate trading. For the mass-based Model Trading Rule, the EPA solicited comment on allocation approaches and methods for addressing leakage.

Anticipated Costs and Benefits: There are no anticipated costs for these Model Trading Rules that differ from the anticipated costs described in the Clean Power Plan. The Model Trading Rules have the anticipated benefits described there as well. Actions taken to comply with the Clean Power Plan will also reduce the emissions of directly-emitted PM2.5, SO2, and NOX. The benefits associated with these PM2.5, SO2, and NOX reductions are referred to as co-benefits, as these reductions are not the primary objective of this rule. The RIA for the Clean Power Plan spells out, in detail, the numerical benefits associated with the model trading rules.

Risks: Because these Model Trading Rules are example trading programs for states, there is no risk associated with them outside of what is described in the Clean Power Plan.