From: Frey, Nathan J. <Nathan_J._Frey@omb.eop.gov> 

Sent: Saturday, July 25, 2015 10:46 AM 

To: Culligan, Kevin; Harvey, Reid; Vasu, Amy 

Cc: Szabo, Aaron; Grossman, Andrea 

Subject: Summary of Interagency Comments Under EO 12866 and 13563 -- Clean Power 

Plan draft final rule preamble 

Attached please find a summary of interagency comments under EO 12866 and 13563 on the EPA 

draft final rule preamble for the Clean Power Plan. 

 

Thanks and please let me know if you have any question or would like to discuss. 

Nathan 

<< SummaryofinteragencycommentsunderEO12866_13563_EO 12866_CPP 2060 AR33 

Final_2015_7_25.docx >> 

<< SummaryofinteragencycommentsunderEO12866_13563_EO 12866_CPP 2060 AR33 

Final_2015_7_25(2).docx >> 

 

 
Summary	of	Interagency	Working	Comments	on	Draft	Language	under

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1 

Clean Energy Incentive Program: CPP EGs text 

The following text is included in preamble section VIII.B.2. 

Provisions to encourage early action 

Many commenters supported providing incentives for states 

and utilities to deploy CO2-reducing investments, particularly 

zero-emitting sources such as RE and demand-side EE measures, as 

early as possible. In the proposal, the EPA requested comment on 

an approach that would recognize emission reductions that are 

secured prior to the initial plan performance period starting 

from a specified date. We also requested comment on options for 

that specified date and on conditions that should apply to 

counting those pre-compliance emission reductions toward a state 

goal. The EPA received many comments requesting that the agency 

recognize early actions for the emission reductions they provide 

prior to the performance period, that the EPA allow those precompliance impacts to be counted toward meeting requirements 

under the rule, and that certain conditions should be applied to 

recognition of early reductions so as to ensure the emission 

reductions required in the rule. We also received comments from 

stakeholders regarding the disproportionate burdens that some 

communities already bear, the concern that increases in electric 

bills would impact low-income ratepayers, and that all 

Commented [A1]: Recommend considering calling this the 

something that specifically refers to early action. Could simply be 

the Early Action Program. Potential variations include Clean 

Energy Early Action Program or Renewables Early Action Program. 

Commented [A2]: If feasible, suggest specifically highlighting 

comments that specifically supported early action for RE or EE or 

other zero-emitting generation 

Deleted: existing programs provide
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communities should have equal access to the benefits of clean 

and affordable energy. The EPA recognizes the validity and 

importance of these perspectives, and as a result is including 

in this final rule the Clean Energy Incentive Program described 

in this section. 

 The Clean Energy Incentive Program is a state-federal 

partnership designed to reward investment in zero-emitting 

generation as well as demand-side EE and distributed renewables 

projects for low-income communities that commence construction 

after the effective date of this rule and that generate MWh or 

reduce end-use energy demand during 2020 and 2021. State 

participation in the program is optional; the EPA is 

establishing this program as an additional flexibility to 

facilitate even more cost-effective achievement of the CO2

emission reductions required by this final rule. 

Under the Clean Energy Incentive Program, states may set 

aside allowances from their interim targets or generate early 

action emission rate credits (ERCs, as defined in section 

VIII.K.2), and allocate to eligible projects allowances or ERCs 

equivalent to each MWh generated or avoided. A state 

implementing a mass-based plan approach, as described in section 

VIII.C, may issue early action allowances, a state implementing 

a rate-based plan approach, also described in section VIII.C, 

Deleted: certain RE

Deleted: and low-income 

Commented [A3]: Consistent with prior discussions, 

recommend limiting EE to projects that target low-income and 

providing extra support to both EE and distributed RE for lowincome by allowing 100% use of additive allowances for these 

projects. The cost of these programs is higher (and therefore closer 

to the cost of zero-emitting generation) and early innovation is 

needed to ensure that more cost-effective programs are developed to 

unlock reductions in this sector of the economy. 

Commented [A4]: Recommend expanding the scope of the 

Clean Energy Incentive Program to include other zero-emitting 

technologies such as geothermal, hydro uprates, and nuclear uprates 
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may issue early action ERCs. For each allowance or ERC allocated 

to such projects, the EPA will provide the state with an equal 

number of matching allowances or ERCs that the state may 

allocate to those projects or to additional qualifying projects 

up to an amount that represents the equivalent of 300 million 

short tons of CO2 emissions. 

 For a state to be eligible for a matching award of 

allowances or ERCs from the EPA it must demonstrate that it will 

award allowances or ERCs only to “eligible” projects. These are 

projects that: 

 Generate metered MWh from zero-emitting resources; or 

 Result in quantified and verified avoided generation 

through demand-side EE or distributed renewable energy 

projects in low-income communities. 

 In addition, in order to drive investments in distributed 

RE and demand-side EE that directly benefit low-income 

ratepayers and communities, the EPA will offer an additional 

incentive to states that encourage these types of investments. 

Upon demonstration by a state that a project benefitting a lowincome community has generated quantified and verified MWh 

achieved in 2020 or 2021, the state will not be required to 

award to that project ERCs or allowances from its own interim 

target. Rather, the EPA will provide the entirety of the award, 

Deleted: appropriate 

Commented [A5]: Recommend a 1:1 crediting instead of a 2:1 

crediting 

Deleted: wind or solar

Deleted: low-income
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equal to one ERC per avoided MWh or one allowance per avoided 

ton of emissions. 

 The EPA will address implementation details of the Clean 

Energy Incentive Program in a future action. Before doing so, 

the EPA will engage states and stakeholders to gather additional 

information concerning implementation topics, including the 

provisions outlined below, and to solicit information about the 

concerns, interests and priorities of states, stakeholders and 

the public. 

 In order for a state that chooses to participate in the 

Clean Energy Incentive Program to be eligible for an allocation 

of allowances or ERCs from the EPA, a state would indicate in 

its 2016 submittal its intent to participate in the program. In 

the case of a full plan submittal, the state plan would either 

include requirements establishing the necessary infrastructure 

to implement such a program and authorizing its affected EGUs to 

use early action allowances or ERCs as appropriate or would 

amend its plan to include those requirements at a later date. 

States submitting initial plans and extension requests would 

simply be required to include a non-binding statement of intent 

to participate in the program. 

 Allowances or ERCs awarded by the EPA pursuant to this 

program may be used for compliance by an affected EGU with its 

Deleted: double the number or 

Deleted: s

Deleted: s

Deleted: it would have awarded to an eligible 

project not focused on low-income ratepayers

Deleted: Following these state submittals in 

2016, the agency will create an allowance or 

ERC account for each participating state that 

reflects the pro rata share – based on the 

amount of the reductions from 2012 levels the 

state must achieve relative to that of the 

other participating states – of the 300 

million short ton CO2 emissions-equivalent 

pool that the state is eligible to receive. 

Thus, states with the greater reduction 

obligations will be eligible to secure a 

larger proportion of the federal allocation 

upon demonstration of quantified and verified 

MWh of RE generation or demand side-EE savings

realized in 2020 and 2021. Allowances or ERCs 

remaining in a state’s account as of June 30, 

2022 will be made available to other states 

that have drawn fully from their respective 

accounts as of that date and have additional 

reductions from eligible projects for which 

the match can be provided. 
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emission standards and are fully transferrable prior to such 

use. 

 For purposes of establishing a state program eligible for 

an award of matching allowances or ERCs from the EPA, such a 

program must include a mechanism for awarding early action 

emission allowances or ERCs for actions that reduce or avoid CO2 

emissions in 2020 and 2021 that meets the requirements set out 

in section VIII.K of this final rule, and that is implemented in 

a way such that the early action allowances or ERCs or 

allowances allocated by the state would maintain the stringency 

of the state’s goal for emission performance from affected EGUs 

in the performance periods established in this rule. 

Specifically, the state must demonstrate in its plan that it has 

a mechanism in place that enables issuance of ERCs or allowances 

from the state to parties effectuating reductions in 2020 and 

2021 in a manner that would have no impact on the emission 

performance of affected EGUs required to meet rate-based or 

mass-based emission standards during the compliance periods.1

This demonstration is not required to account for matching ERCs 

 

1 For example, under a mass-based implementation, the state plan 

could include a set-aside of allowances from an emissions budget 

that itself reflects the state goals. Allocation of those 

allowances to parties effectuating reductions in 2020 and 2021 

would have no impact on the total emissions budget, which sets 

the total allowable emissions in the compliance periods.
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or allowances that may be issued to the state by the EPA. By 

requiring one “borrowed” ERC or allowance for every “nonborrowed” ERC or allowance that is created, the program will 

ensure that reductions in program stringency during the 

compliance period due to the crediting of “anyway” actions 

during the early action period is significantly reduced or 

eliminated. Nothing in these provisions would have the effect 

of requiring any particular affected EGU to achieve reductions 

prior to 2022, or requiring states to offer incentives for 

reductions achieved prior to 2022.2 These and other details will 

be developed in the subsequent action. 

 The EPA is including the Clean Energy Incentive Program in 

this final rule – and is including a similar program for the 

Federal Plan proposal being issued concurrently – for several 

reasons. Chief among them are those offered by commenters to the 

effect that the overall cost of achievement of the emission 

performance rates or state goals could be reduced by an approach 

that granted some form of beneficial recognition to emissions 

reduction investments that both occur and yield reductions prior 

 

2 In addition to the Clean Energy Incentive Program, states may 

also offer credit for early investments in RE and demand-side EE 

according to the provisions of section VIII.K.1 of this final 

rule: a state may award ERCs to qualified providers that 

implement projects from 2013 onward for the quantified and 

verified MWh generated in 2022 and subsequent years.

Commented [A7]: Suggest clarifying that these would be 

borrowed ERCs or allowances only (being awarded to pre-2022 

reductions), or compliance ERCs or allowances for post-2022 

reductions. 

Deleted: that realize

Deleted: results
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to the first date on which the program mandates reductions or 

imposes emissions standards. Other commenters pointed out that 

to the extent that states and utilities would benefit from the 

availability of low-cost RE and other zero-emitting generation 

options during the interim and final periods, the EPA should 

include in the final guidelines provisions that accelerate 

deployment of those resources, since in so doing the program 

would speed achievement of expected reductions in the cost of 

those technologies commensurate with their accelerated 

deployment. 

The specific criteria the EPA is establishing for eligible 

projects reflect a variety of considerations. In contrast to 

other CO2-reducing or -avoiding technologies, many zero-emitting 

technologies, particularly renewables like solar and wind, and

many demand-side EE initiatives often have relatively short lead 

times, which would allow them to generate or avoid MWh beginning 

in 2020. More broadly, this early action program responds to the 

urgency of meeting the challenge of climate change in two key 

ways. First, of course, it fosters reductions before 2022. 

Second, in targeting investments in zero-emitting technologies

and low-income EE, it focuses on the kinds of measures and 

technologies that are the essential foundation of longer term 

climate strategies, strategies that inevitably depend on the 

Deleted: RE 

Deleted: First, solar and wind generation 

result in no direct emissions of either CO2 or

other air pollutants. Second, theThe EPA 

acknowledges that the total number of ERCs or 

allowances available to projects under this 

program is small. In our view, allocations by 

states even as supplemented by the matching 

allocations to the states from the EPA would 

provide little in the way of meaningful 

leverage for larger scale projects. At least 

some wind and solarzero-emitting projects 

(wind and solar projects for example) and 

demand-side EE initiatives tend to be of a 

scale for which relatively small incremental 

allocations of ERCs or allowances would 

provide an efficacious or higher leverage 

incentive. In addition, i

Deleted: including other

Deleted: or RE 

Deleted: , solar, wind, and many

Deleted: require 

Deleted: of shorter duration

Deleted: innovative demand-side EE and wind and 

solar
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further development and widespread deployment of highly 

adaptable zero-emitting technologies as well as ensuring broad 

availability of strategies for enhancing cost-effective energy 

efficiency. 

 Finally, consistent with the technology-forcing and 

development purposes of section 111, the EPA believes it is 

appropriate to offer an additional incentive to remove current 

barriers to implementing distributed renewables and demand-side 

EE programs in low-income communities. While the EPA 

acknowledges that a number of states have implemented programs 

focused on these communities,3 the agency also recognizes that 

there have been historic barriers, both economic and logistical, 

to implementing energy efficiency and distributed renewables 

projects in these communities. As a result, the costs of 

implementing projects in these communities are typically higher 

than in other communities and stand as barrier to harvesting 

potentially cost effective reductions, and advancing these 

technologies. By focusing this program on reductions in these 

communities, the Clean Energy Incentive Program can help 

incentivize projects that will deliver distributed renewables 

 

3 Several of these programs are discussed in section IX of this 

preamble, including, for example, Maryland’s EmPOWER Low Income 

Energy Efficiency Program (LIEEP) and New York’s EmPower New 

York program.

Deleted: and 

Deleted: ly

Deleted: le

Deleted: RE 

Deleted: RE and demand-side EE 

Deleted: RE and demand-side EE 

Deleted: RE 

Deleted: clean energy 
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and demand-side EE projects to these communities. These lower 

costs will help new technologies penetrate in the future, thus 

improving the cost of implementation for the program overall. 

 We are not requiring that projects demonstrate that they 

are “additional” or surplus relative to a business-as-usual or 

state goal-related baseline in order to be eligible. At the same 

time, we believe that including an incentive to develop projects 

that benefit low-income communities will increase the likelihood 

of investments being made that would not have been made 

otherwise. 

 In order to be awarded matching ERCs or allowances by the 

EPA for projects that meet the eligibility criteria, a final 

state plan must have requirements establishing the appropriate 

infrastructure to issue early action ERCs and allowances to 

qualified project providers by 2020, and those requirements must 

be consistent with the provisions included in section VIII.K of 

this final rule. The state must require that the state or its 

agent will (1) evaluate project proposals from clean energy and 

low-income EE providers, including the EM&V plans that must 

accompany such proposals and that must adhere to the EM&V 

requirements included in these guidelines; (2) evaluate 

monitoring and verification reports submitted by providers 

following project implementation, which contain the quantified 

Deleted: RE 

Deleted: demand-side
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and verified MWh of RE generation or energy savings achieved by 

the project in 2020 and 2021 assessed according to the EM&V 

requirements included in these guidelines; and (3) issue ERCs or 

allowances to qualified providers for these MWh results. 

 A state may award early action ERCs or allowances to zeroemitting sources and low-income demand-side EE project providers 

that demonstrate quantified and verified MWh or emissions 

reduced or avoided in 2020 and 2021. These reduced or avoided 

emissions may result from projects procured by the state issuing 

the ERCs or allowances during the period that follows the 

effective date of these guidelines and until 2022. 

 The Clean Energy Incentive Program will provide a number of 

benefits. First, the program will provide incentives designed to 

reduce energy bills early in the program through targeted

application of energy saving technologies in low-income 

communities. Second, the EPA believes that stimulating or 

supporting early investment in zero-emitting generation 

technologies could accelerate the rate at which the costs of 

these technologies fall over the course of the interim 

performance period. In addition, the Clean Energy Incentive 

Program will provide affected EGUs and states with additional 

resources to help them achieve their state plan obligations. 

Finally, the program will improve the liquidity, in the early 

Deleted: RE 

Deleted: implemented in or benefitting

Deleted: earlier and broader

Deleted: , and help ensure that these benefits 

are shared with low-income communities

Deleted: RE 
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11 

years of the program, of the ERC and allowance markets we expect 

to emerge for compliance with the requirements of these 

guidelines. 

 The Clean Energy Incentive Program does not modify the CO2

emission performance rates or the final goals. The EPA is 

establishing this program as an option for states that wish to 

drive investments in clean energy and low-income EE that will 

result in actual, early reductions in CO2 emissions from affected 

EGUs. States are also authorized to set their own glide path, or 

interim step performance rates or goals, during the compliance 

period so long as the interim and final performance rates or 

goals are met, and could do so in a way that takes into account 

the availability of the Clean Energy Incentive Program to assist 

affected EGUs in meeting the applicable glide path and 

performance rates or goals. While the EPA is not requiring 

states to take advantage of this program, its availability 

simply enhances these already-existing implementation and 

compliance flexibilities while at the same time delivering 

meaningful benefits, particularly for low-income communities. 

The EPA looks forward to a robust public dialogue about the 

implementation details of the Clean Energy Incentive Program. 

Deleted: RE 

Deleted: demand-side 
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Early Action Incentive Program language for FP Preamble 

Overview – in section III in FP preamble 

The EPA outlined and initiated the Clean Energy Incentive 

Program in the final emission guidelines (Clean Power Plan EGs, 

section VIII.B.2). The program is designed to reward investment 

in certain zero-emitting and low-income demand-side EE projects 

that commence construction after the effective date of the final 

emission guidelines and that generate MWh or reduce end-use 

energy demand during 2020 and 2021, with an additional incentive 

for EE and distributed renewables that target low-income 

communities. EPA requests comment on how to define a low-income 

EE or distributed renewables projects. 

The EPA proposes to apply the Clean Energy Incentive 

Program in all states subject to either a rate-based or massbased federal plan. The EPA’s proposed approaches to 

implementing the program in the rate-based and mass-based 

federal plans are detailed in sections IV and V of this 

preamble, respectively. Further details on implementation and 

operation of the program will be set out in a future action 

following publication of this proposal.

Formatted: Font: Bold, Underline

Commented [A1]: See comment on program title from Section 

VIII excerpt 

Deleted: RE 

Commented [A2]: Recommend expanding the scope of the 

Clean Energy Incentive Program to include other zero-emitting 

technologies such as geothermal, hydro uprates and nuclear uprates 

Deleted: to 

Deleted: these programs at 
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Rate-based approach - in section IV in FP preamble 

In the rate-based federal plan, the EPA proposes to implement 

the Clean Energy Incentive Program by issuing early action ERCs 

for actions that reduce or avoid CO2 emissions in 2020 and 2021, 

and that are implemented in a way that maintains the stringency 

of the state’s goal for emission performance in the compliance 

periods established in this rule. In accordance with the final 

emission guidelines, the EPA is also proposing to award early 

action ERCs to eligible projects that generate metered MWh from 

zero-emitting resources, and/or result in quantified and 

verified MWh generated or avoided through EE and distributed 

renewable energy projects implemented in low-income communities. 

These projects will also need to meet the requirements outlined 

for Clean Energy Incentive Program participation outlined in 

section VIII.B.2 of the final guidelines. 

The EPA proposes the following framework for issuing early 

action ERCs for this program and distributing them to eligible 

projects. First, EPA will implement a mechanism for issuing 

early action ERCs for actions that reduce or avoid CO2 emissions 

in 2020 and 2021 that would have no impact on the emission 

performance of sources required to meet rate-based emission 

standards during the compliance periods. The EPA requests 

Deleted: directly benefit low-income ratepayers 

or communities, 

Deleted: wind or solar

Deleted: generation

Deleted: demand-side low-income 

Deleted: or

Deleted: distributed renewables projects

Commented [A3]: Might these communities be defined by the 

criteria used to identify overburdened communities? 
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comment on the structure of this mechanism. Key structural 

components include: 1) eligible project approval, 2) the ERC 

issuance process, 3) EM&V requirements, 4) M&V reports, 5) 

verification reports from an independent verifier, and 6) a 

method for maintaining the stringency of state goals.

With regards to the last point, EPA specifically requests 

comment on adjusting future targets as a way take into account 

the borrowed ERCs. One example may be to use modeling to obtain 

expected emissions and generation for covered sources. New 

targets could then be obtained by dividing the modeled level of 

emission by the modeled level of generation adding in the number 

of borrowed ERCs. EPA also requests comment on determining the 

adjusted targets by assuming reference case generation and 

emissions over the 2022-2029 period and allocating those to 

fossil steam and NGCC using 2012 shares, then adding in the 

number of borrowed ERCs. EPA requests comments on all 

alternative ideas for appropriately adjusting future targets to 

offset borrowed ERCs. 

For determining borrowed allowances in states with mass-based 

plans, EPA requests comment on converting the ERC MWhs into 

borrowed tons to reduce the mass-based target. EPA specifically 

requests comment on the following ways of doing this: using a 
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nationwide conversion factor based on the 2012 fossil fuel mix, 

using state-specific emission rates or basing the value on 

modeled emission reductions. 

 

Second, as part of the implementation of the Clean Energy 

Incentive Program for all states, the agency will create an 

early action ERC account of 300 million short ton CO2 emissionsequivalent pool available to all states. 

Third, the EPA is proposing to issue early action ERCs and 

award matching early action ERCs from the federal pool to 

eligible projects in each jurisdiction as follows: each eligible 

project that generates metered MWh from zero-emitting resources 

will be awarded 1 early action ERC for each MWh. For every ERC 

that is drawn from the compliance period, one ERC will be 

awarded from the federal pool to the subsequent MWh. Each 

eligible project that generates metered MWh from distributed 

renewable generation or EE in low-income communities will be 

awarded one ERC from the federal pool.. ERCs awarded by the EPA 

pursuant to this program may be used for compliance by an 

affected EGU with its emission standards in any compliance 

period and are fully transferrable prior to such use. 

Deleted: that reflects a pro rata share of a 

federal pool of additional ERCs for all states

– distributed based upon the amount of the 

reductions from 2012 levels the state must 

achieve relative to that of the other 

participating states – 

Deleted: the total 

Commented [A4]: As noted on other document, we are 

concerned that a program allocating credit opportunities to states 

based on their emission reduction obligation will not provide 

sufficient incentive for RE development by the states with small 

portions of that allocation, particularly since the reallocation of 

unused matching credits would not occur until after the fact in 2022. 

Would it be possible to make the pool nationally available on a firstcome, first serve basis? 

Deleted: Thus, states under a federal plan 

whose EGUs face greater reduction obligations 

will be eligible to secure a larger proportion

of the federal allocation upon demonstration 

of quantified and verified MWh of RE zeroemitting generation, or demand side-low-income

EE or savings or low-income distributed 

renewables realized in 2020 and 2021. 

Deleted: once the accounts and the size of each 

state’s eligible pool of ERCs have been 

established, 

Deleted: wind or solar 

Deleted: or quantified and verified avoided 

generation through demand-side EE will be 

issued one early action ERC and will also be 

awarded a matching early action ERC from the 

federal pool for every verified 2 MWh of 

generation that the project produces in 2020 

and 2021

Commented [A5]: Recommend 1:1 crediting instead of a 2:1 

crediting. In other words, each MWh of verified zero-emissions 

generation earns 0.5 borrowed early action ERCs + 0.5 matching 

additive ERCs from the federal pool. 

Deleted: ERCs remaining in the account for a 

state as of June 30, 2022 will be made 

available to states that have drawn fully from

their respective accounts as of that date and 

still have additional demonstrated qualifying 

generation. The EPA requests comment on the 

approach to distribute remaining matching ERCs

among states. 

Deleted: The EPA also requests comment on not 

providing matching ERCs in the rate-based 

trading federal plan.

Deleted: The EPA also proposes that each 

eligible project that directly benefits lowincome ratepayers or communities and generates

metered MWh from wind or solar resources or 

quantified and verified avoided generation 

through demand-side EE will be awarded two 

ERCs from the federal pool for every 2 

verified MWh of generation that the project 

produces in 2020 and 2021, and will not need 

to issue any ERCs for which stringency of the 

program must be maintained.. 
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The EPA requests comment on all aspects of implementing the 

Clean Energy Incentive Program under a rate-based federal plan 

approach, including eligible projects, the early action ERC 

issuance mechanism, and the process and criteria for 

distributing early action ERCs. 

Mass-based approach – in section V in FP preamble 

In order to implement the Clean Energy Incentive Program 

under a mass-based federal plan, the EPA proposes a third setaside of allowances from the general distribution methodology. 

The EPA proposes this set-aside would be capped at 300 million 

CO2 allowances across all states. Each state would be allowed to 

borrow allowances, up to the total allowances they are allocated 

for compliance. . 

Pursuant to the EGs, the EPA intends to provide up to 300 

million matching allowances across all states (not only states 

under a federal plan), which would be additional to the setaside allowances. Under the Clean Energy Incentive Program setaside, the EPA intends to issue to eligible projects a number of 

CO2 allowances from the set-aside equivalent to each MWh 

generated or avoided. For each such allowance issued, the EPA 

Deleted: in the amount of the pro-rata share of 

Deleted: for each state, in proportion to the 

state’s mass goal, as listed in Table &&& 

below; the table shows set-asides for every 

state, however, the EPA would only implement 

this set-aside for a state under the federal 

plan. The EPA also requests comment on other 

approaches to determining the size of this 

set-aside in the federal plan
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would make available a matching allowances to be distributed to 

a similarly eligible project. 

. 

As part of the implementation of the Clean Energy Incentive 

Program for all states, the agency intends to apportion the 300 

million short ton-equivalent matching pool of allowances or ERCs 

among all states participating in the Program, regardless of 

whether they are participating under a state plan or a federal 

plan 

The EPA intends to implement this program, including the 

distribution of matching allowances, consistent with the Clean 

Energy Incentive Program provisions in Clean Power Plan EGs (see 

section VIII.B.2). The agency requests comment on all aspects of 

implementing the Clean Energy Incentive Program under a massbased federal plan approach. 

The agency intends that the allowances from the Incentive 

Program set-aside would be awarded to generation from “eligible” 

projects. These are projects that are constructed or implemented 

after finalization of the EGs, and generate metered MWh from 

zero-emitting resources (including distributed renewables in 

low-income communities) or quantified and verified avoided 

generation through EE projects in low-income communities. These 

projects would be eligible to receive allowance awards based on 

Deleted: provide the eligible project with an 

appropriate number of

Commented [A7]: Recommend a 1:1 crediting instead of a 2:1 

crediting 

Deleted: The EPA also requests comment on not 

providing matching allowances in the massbased trading federal plan, or on only 

providing matching allowances in federal plan 

states that choose to determine their own 

allocation approach as discussed below.

Deleted: The EPA proposes to set aside a prorata share of the 300 million allowances 

available nationwide from each federal-plan 

state’s mass goal in the first compliance 

period in proportion to the size of each 

state’s mass goal

Deleted: This would result in a Clean Energy 

Incentive set-aside of approximately five 

percent of allowances for each state for each 

of the three years in the first compliance 

period (i.e., 2022 through 2024); see Table 

&&&. The EPA proposes to distribute any 

remaining set-aside allowances in a state – 

after distribution to all eligible projects in

the state – to the affected EGUs in the state 

on a pro-rata basis in proportion to the 

initial allocations based on the historicgeneration allocation approach detailed above.

Deleted: under an approved state plan

Deleted: , to reflect the amount of the 

reductions from 2012 levels the state must 

achieve relative to that of the other 

participating states. This approach is 

consistent with the method of apportioning the

matching pool described in the final 

guidelines.

Deleted: rate

Deleted: wind or solar

Deleted: low-income demand-side 

Deleted: or low-income distributed renewables
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7 

the quantified and verified MWh of generation or avoided 

generation that occurs in calendar years 2020 and 2021. For each 

allowance awarded to an eligible project drawn from the 

compliance period allowances for that state, EPA proposes that 

it will award an allowance from the federal pool to that same 

state. EPA also proposes that allowances awarded to distributed 

generation or EE projects in low-income communities will be 

drawn entirely from the federal pool and not from the compliance 

period allowances. The EPA requests comment on the types of 

projects that would be eligible for the set-aside, the treatment 

of matching allowances, and on the timing of distribution of 

set-aside and matching allowances. The EPA intends to issue 

matching allowances to eligible projects up to the limit of 300 

million matching allowances for all states. The 300 million 

matching-allowance limit is a total that applies collectively to 

all states covered by the Clean Power Plan EGs, not only to 

federal-plan states. 

As noted in the EGs, the EPA will address implementation 

details of the Clean Energy Incentive Program in a future 

rulemaking. Before doing so, the agency will engage states and 

stakeholders to gather additional information concerning 

implementation topics and to solicit information about the 

Deleted: , on a one-to-one basis for each setaside allowance any such eligible project 

receives, 

Commented [A8]: Would be good to use the short ton CO2 

emissions equivalent language throughout when referencing the 300 

million pool 

Deleted: In addition, the EPA proposes that a 

project benefitting a low-income community 

that has generated one ton of quantified and 

verified MWh achieved emission reductions in 

2020 or 2021 will receive twocan receive an 

allowances from the matching-allowance pool, 

and will not without receive the need for a 

matchingan allowance from the investment pool 

set-aside; this approach would be consistent 

with the approach for such projects in the 

Clean Power Plan EGs. In the alternative, the 

EPA proposes that such a project would receive

one allowance from the investment pool setaside and one matching allowance from the 

matching-allowance pool. In either approach, 

the project would receive two allowances per 

MWh generated (or avoided).
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8 

concerns, interests and priorities of states, stakeholders and 

the public. 

The Clean Energy Incentive Program does not modify the CO2

emission performance rates or the final goals. The EPA has 

established this program in the EGs to drive investments in 

zero-emitting technologies and low-income EE and low-income 

distributed renewables that will result in actual, early 

reductions in CO2 emissions from affected EGUs. 

As discussed in section V.E below, the EPA proposes to 

allow any state to replace the EPA-determined federal-plan 

allowance-distribution provisions with state-developed 

allowance-distribution provisions. This will allow a state to 

tailor its allowance-distribution approach to the 

characteristics and preferences of the state. The EPA proposes 

that for approval of a delegation or a partial state plan to 

handle allocations, a state that chooses to replace the federalplan allocations with a state-determined approach must include a 

Clean Energy Incentive Program set-aside, as authorized in 

section VIII.B.2 in the Clean Power Plan EGs. The EPA intends 

that such a state would have the same flexibilities as a state 

implementing a full state plan with respect to implementation of 

the Clean Energy Incentive Program — and would not be required 

to implement set-asides of the same size as proposed in Table 

Deleted: RE 

Deleted: demand-side 
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9 

&&&, but rather could choose how many of its allowances to setaside for the Clean Energy Incentive Program. 

The quantity of matching allowances that the EPA intends to 

distribute for all states – including states that implement a 

state plan, states that implement the allowance-distribution 

provisions under the proposed federal plan, and states where EPA 

implements the federal plan including allocations – would not 

exceed 300 million allowances. The EPA intends that if any 

matching allowances remain after the program, the agency would 

retire any such allowances, so they may not be used in the 

future. 

The EPA requests comment on all aspects of this program, 

including the size of the total set-aside, the approach for 

distributing the total among states, eligible project types, and 

the amount of allowances awarded per eligible MWh generated (or 

avoided if including demand-side EE) or per ton of emissions 

reduced. The EPA also requests comment on the proposed approach 

to require this program as a condition of a state choosing to 

determine its own allocation approach via a partial state plan 

or a delegation of the federal plan. 

State Set-Aside 

Deleted: The EPA intends that, consistent with 

the provisions in the Clean Power Plan EGs, if

any allowances from the 300 million matching 

allowance pool remain as of June 30, 2022, 

they will be made available to other states 

where there is unmet demand for matching 

allowances. The EPA requests comment on the 

approach to distribute remaining matching 

allowances among states. 

Deleted: this redistribution

Deleted: The set-asides shown in Table &&& are 

the number of allowances that the EPA would 

set aside, from the total allowances in a 

state, for the Clean Energy Incentive Program.

The EPA proposes to create these allowance 

set-asides in any state for which we implement

the mass-based federal plan and where the 

state chooses not to determine its own 

allowance-distribution approach. The EPA does 

not intend to create these set asides under 

any other circumstances.¶

Deleted: Table &&&. Proposed Clean Energy 

Incentive Set-Aside in Federal Plan for 

Projects in 2020 and 2021 (Short Tons

Deleted: )

Commented [A10]: The column show a total of ~98k tons. 

Suggest clarifying that “The EPA proposes to set aside 

a pro-rata share of the 300 million allowances

available nationwide from each federal-plan 

state’s mass goal in the first compliance 

period in proportion to the size of each 

state’s mass goal. This would result in a 

Clean Energy Incentive set-aside of 

approximately five percent of allowances for 

each state for each of the three years in the 

first compliance period (i.e., 2022 through 

2024)”

Also, the current total would be 3*98=294k, so a slightly higher set 

aside percentage would be needed to reach 300k. 
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2022 through 

2024 

Alabama 3,359,045 

Arizona 1,786,490 

Arkansas 1,829,305 

California 2,716,120 

Colorado 1,816,328 

Connecticut 383,597 

Delaware 271,527 

Florida 6,060,742 

Georgia 2,754,570 

Idaho 77,133 

Illinois 4,081,535 

Indiana 4,671,187 

Iowa 1,543,937 

Kansas 1,358,734 

Kentucky 3,896,801 

Lands of the Fort Mojave Tribe 32,333 

Lands of the Navajo Nation 1,342,777 

Lands of the Uintah and Ouray Reservation 140,055 

Louisiana 2,134,041 

Maine 114,273 

Maryland 885,763 

Massachusetts 678,305 

Michigan 2,886,371 

Minnesota 1,386,122 

Mississippi 1,469,267 

Missouri 3,417,328 

Montana 699,407 

Nebraska 1,129,398 

Nevada 765,412 

New Hampshire 226,507 

New Jersey 926,094 

New Mexico 750,857 

New York 1,801,944 

North Carolina 3,095,617 

North Dakota 1,292,201 

Ohio 4,493,582 

Oklahoma 2,415,422 

Oregon 461,877 

Pennsylvania 5,385,609 

Rhode Island 193,511 

South Carolina 1,575,101 
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South Dakota 214,166 

Tennessee 1,732,113 

Texas 11,250,879 

Utah 1,445,860 

Virginia 1,588,549 

Washington 629,307 

West Virginia 3,175,880 

Wisconsin 1,701,012