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8 

WEST VIRGINIA v. EPA 

Opinion of the Court 

“building  blocks.”  Id.,  at  64667.  The  first  building  block
was “heat rate improvements” at coal-fired plants—essen-
tially  practices  such  plants  could  undertake  to  burn  coal 
more  efficiently.  Id.,  at  64727.    But  such  improvements, 
EPA stated, would “lead to only small emission reductions,” 
because  coal-fired  power  plants  were  already  operating 
near  optimum  efficiency.  Ibid.   On  the  Agency’s  view, 
“much larger emission reductions [were] needed from [coal-
fired plants] to address climate change.”  Ibid. 

So the Agency included two additional building blocks in
its BSER, both of which involve what it called “generation 
shifting from higher-emitting to lower-emitting” producers 
of electricity.  Id., at 64728.  Building block two was a shift
in  electricity  production  from  existing  coal-fired  power
plants to natural-gas-fired plants.  Ibid.  Because natural 
gas plants produce “typically less than half as much” carbon
dioxide  per  unit  of  electricity  created  as  coal-fired  plants, 
the  Agency  explained,  “this  generation  shift  [would]  re-
duce[ ] CO2 emissions.”  Ibid.  Building block three worked 
the same way, except that the shift was from both coal- and 
gas-fired plants to “new low- or zero-carbon generating ca-
pacity,” mainly wind and solar.  Id., at 64729, 64748.  “Most 
of the CO2 controls” in the rule came from the application
of building blocks two and three.  Id., at 64728. 

The  Agency  identified  three  ways  in  which  a  regulated 
plant  operator  could  implement  a  shift  in  generation  to
cleaner  sources.  Id.,  at  64731.  First,  an  operator  could
simply reduce the regulated plant’s own production of elec-
tricity.  Second, it could build a new natural gas plant, wind 
farm, or solar installation, or invest in someone else’s exist-
ing facility and then increase generation there.  Ibid.  Fi-
nally,  operators  could  purchase  emission  allowances  or 
credits  as  part  of  a  cap-and-trade  regime.    Id.,  at  64731– 
64732.  Under such a scheme, sources that achieve a reduc-
tion  in  their  emissions  can  sell  a  credit  representing  the
value of that reduction to others, who are able to count it