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NM opts to comply with impending carbon rules

ALBUQUERQUE, N.M. — The U.S. Environmental Protection Agency is expected to face a political hailstorm over its nationwide carbon reduction mandates, but New Mexico won’t be among the many Republican-led states expected to fight the plan.

That’s because New Mexico Gov. Susana Martinez has decided to comply with the rule to allow the state to craft its own path to compliance rather than face a federally imposed implementation plan that may be far more difficult to meet, said Environment Department Secretary Ryan Flynn.

FLYNN: Committed to state crafting its own plan

FLYNN: Committed to state crafting its own plan

In contrast, six states – urged on by U.S. Senate Majority Leader Mitch McConnell, R-Ky. – have said they will boycott the mandates outright and more than a dozen are expected to fight the rules in court.

“We’re committed to submitting a state implementation plan,” Flynn told the

Journal . “There’s a lot of debate on the national level whether states should boycott the rule and refuse to comply, with Mitch McConnell being the most vocal proponent of that approach. But we don’t believe that’s a smart approach for our state, given the risks we’d face.”

Flynn said New Mexico officials learned the hard way about harsh consequences of defying EPA mandates following the federal imposition of a nearly $1 billion haze-reduction plan at the coal-fired San Juan Generating Station near Farmington. Former Gov. Bill Richardson’s administration failed to submit a state plan to comply with federal rules to lower nitrogen oxide emissions, which cause haze, and the Martinez administration had to scramble to devise a much lower-cost state plan that the EPA accepted only following lengthy, difficult negotiations.

The Martinez administration wants to avoid a repeat of that episode and instead devise a homegrown plan based on what’s best for New Mexico, rather than what federal regulators deem necessary regardless of costs.

“We know the consequences for failing to submit a state compliance plan from the last time, which put us at a major disadvantage and ended up hurting the state,” Flynn said. “At the end of the day, we’re in a strong position to create our own plan to meet the new standards.”

The forthcoming rules, which the EPA initially proposed in June 2014, are aimed at reducing U.S. carbon emissions from electric power plants by 30 percent by 2030. It’s the first federal mandate to cut greenhouse gas emissions from existing power plants, which account for about 40 percent of the nationwide emissions that contribute to global warming.

The San Juan Generating Station near Farmington is already expected to close two of its four units by 2017, which will help the state meet new EPA regulations on reducing carbon emissions.  (Albuquerque Journal File)

The San Juan Generating Station near Farmington is already expected to close two of its four units by 2017, which will help the state meet new EPA regulations on reducing carbon emissions. (Albuquerque Journal File)

The initial proposal sets a specific reduction target based on each state’s current rate of carbon emissions. For New Mexico, it calls for a 34 percent reduction statewide by 2030, with an initial 23 percent reduction target by 2020.

Under the mandates, each state can design its own implementation plan to allow local public and private entities to choose the most cost-efficient mix of measures to comply with federal standards. States can select from four sets of measures to achieve their goals: improve the efficiency of coal-fired plants; increase the use of natural gas generation; add renewables, such as solar or wind, to state grids; and pursue energy-efficiency programs that lower consumption.

The EPA has spent the past year collecting public comments on its plan to incorporate feedback into its final rule.

From the start, the proposed mandates have generated broad, acrimonious debate. EPA and its supporters insist that the health and economic benefits of reducing power plant emissions far outweigh the costs, while industry groups and climate change skeptics project tens of billions of dollars in annual economic losses, hundreds of thousands of lost jobs and double-digit electricity rate hikes.

The High Lonesome Mesa wind farm between Willard and Cedarvale is an example of alternative energy sources that can help New Mexico meet EPA carbon-reduction mandates.  (Dean Hanson / Albuquerque Journal)

The High Lonesome Mesa wind farm between Willard and Cedarvale is an example of alternative energy sources that can help New Mexico meet EPA carbon-reduction mandates. (Dean Hanson / Albuquerque Journal)

A Brookings report released in May showed a clear partisan divide among Republican and Democratic state governors regarding the legality of the “clean power plan.” The former generally outright reject the plan’s legality as federal overreach, while the latter mostly accept the EPA’s authority to impose greenhouse gas mandates.

Lengthy legal challenges are inevitable once the final rule comes out. In June, the U.S. Court of Appeals for the District of Columbia Circuit rejected an initial lawsuit from a group of states and industry as premature until the proposed mandates are released in final form.

Despite the partisan battle on legality, Brookings said criticism of the initial EPA proposals is bipartisan and widespread, with both Republican and Democratic governors questioning the fairness of many aspects, such as how individual state mandates were calculated, as well as the ambitiousness of the mid-term 2020 goals that governors and others fear could endanger grid reliability and drive up cost compliance.

Like other Republican-led states, New Mexico does question the lawfulness of EPA’s plan, but it chose to provide detailed feedback to the EPA to improve New Mexico’s ability to comply rather than oppose the mandates outright, Flynn said.

“We’ve met with the EPA and White House officials on a number of occasions in the last year,” Flynn said. “For us, the bottom line is not political or ideological, but to give constructive, technical feedback on what’s being proposed, with meaningful, substantive comments and not political posturing.”

The state Environment Department submitted a detailed list of “technical comments” requesting changes in some requirements and greater flexibility in EPA’s approach to the mandates. Among other things, that includes longer timelines to submit a state implementation plan and comply with carbon reduction goals, and more initial credit for measures already taken, such as energy efficiency programs that began years ago and improvements already made to power plants.

Costs for meeting EPA mandates won’t be clear until after the final rule is announced. But state officials, utilities, clean energy advocates and environmentalists agree that New Mexico is in a strong position to achieve the carbon reduction goals, thanks to Public Service Company of New Mexico’s current plan to shut half of the San Juan Generating Station to meet federal haze regulations. That will simultaneously cut that facility’s carbon emissions in half.

VINCENT-COLLAWN: N.M. "in great shape"

VINCENT-COLLAWN: N.M. “in great shape”

In addition, New Mexico’s public utilities have been integrating renewable energy into the grid for nearly a decade under the state’s renewable portfolio standard, which commits public utilities to derive 20 percent of their electricity from renewables by 2020. They’ve also pursued extensive conservation programs to comply with state energy efficiency mandates.

PNM's solar plant south of the Reeves Generating Station in far northern Albuquerque will help meet EPA emissions rules.  (Dean Hanson / Albuquerque Journal)

PNM’s solar plant south of the Reeves Generating Station in far northern Albuquerque will help meet EPA emissions rules. (Dean Hanson / Albuquerque Journal)

“New Mexico is in great shape,” said PNM Resources President, Chairman and CEO Pat Vincent Collawn. “With the San Juan plan and measures already taken under the renewable portfolio standard and the energy efficiency rules, our modeling shows that New Mexico’s path forward tracks very closely with what’s already included in the EPA’s initial proposal.”

To meet the EPA’s 34 percent reduction goal, the state overall would have to cut its carbon emissions by about 550 pounds per megawatt-hour of electricity produced by 2030. But, with changes already either underway or planned by PNM and New Mexico’s other two public utilities – El Paso Electric Co. and Southwestern Public Service – the state will reduce projected emissions anyway by nearly 350 pounds per megawatt-hour.

“There will still be a gap but, depending on the final rule, we believe the state can meet its goals,” said PNM Executive Director of Environment and Safety Maureen Gannon.

That optimism is shared by environmental groups, which praise state officials for trying to comply with EPA mandates rather than fight them.

MOORE: Anticipates no major battles

MOORE: Anticipates no major battles

“That’s great news,” said Environment New Mexico Director Sanders Moore. “We don’t anticipate any major battles. We’ll be happy to work with the Environment Department to help make the state’s compliance plan as strong as possible.”

Still, the devil could be in the details. Environmentalists and clean energy advocates, for example, could push for more renewables and energy efficiency with less reliance on natural gas and the continued use of coal in future years.

But Flynn said he wants to keep all options open without picking “winners and losers” in terms of the mix of energy that ends up on the grid. In particular, he wants to keep public debate focused on the goal of reducing carbon emissions and global warming.

“We’re interested in developing approaches that give maximum flexibility to utilities to meet the EPA goals,” Flynn said. “We won’t support a plan that just says coal is bad and everything should be focused on renewables. We can’t put all of our eggs in one basket – we still need traditional, base-load generation and we have to be sensitive to the costs placed on ratepayers.”

Once the final rule is out and states begin to hammer out individual compliance plans, such debate will move to the forefront of local politics.

“Next year, this will consume the environmental space in our state,” Flynn said. “It’s going to become the hottest topic – front and center.”

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