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By Neela Banerjee, Tribune Washington Bureau

WASHINGTON — President Barack Obama will unveil a rule Monday intended to confront climate change by cutting carbon dioxide emissions from power plants, the nation’s greatest source of the heat-trapping gas.

Obama plans to bypass Congress and use his authority under the Clean Air Act to achieve greenhouse gas reductions. Power generation accounts for about 40 percent of such emissions.

The 3,000-page rule is expected to spark lawsuits, claims of job losses and charges by critics that Obama has launched a new “war on coal.”

In some coal-reliant states, however, power companies and regulators are expected to take a more pragmatic approach, planning for a future they assume will include carbon dioxide limits.

“Carbon policy is going to impact our business, and we have to be prepared for that,” said Robert C. Flexon, chief executive of Houston-based Dynegy. “It can be a threat or an opportunity. I’d rather make it an opportunity.”

Which approach prevails — a legal fight or a political compromise — will help determine how quickly the U.S. will begin to reduce its greenhouse gas emissions.

As it seeks to reduce pollution, the administration must ensure that electricity supplies remain reliable and consumer rates do not increase significantly.

Some potential approaches are on display in Illinois, which relies heavily on coal, including nine plants operated by Dynegy. Additional power comes from nuclear plants and renewable sources, especially wind.

Although some older coal-fired plants have closed, power executives, regulators and some environmentalists say many need to keep running for now, although at less capacity. The reduced output could be made up through energy efficiency and renewable power, they say.

“We’re pretty consistent with what you’re hearing from other states, that you can’t have a one-size-fits-all approach, but a suite of tools instead to use to cut emissions,” said Lisa Bonnett, director of the Illinois Environmental Protection Agency.

Much of the wrangling over the new rule will probably center on its stringency: What baseline will be used to determine how much states have to reduce their emissions?

Will states have different standards to meet depending on how much coal generation they have? Will states get credit for cuts they already have made to emissions?

The Obama administration wants the rule in place by the end of 2016, just before the president leaves office, but given the likelihood of legal challenges, when the cuts might take effect is unclear.

In the past, the federal Environmental Protection Agency has ordered individual power plants to cut specific pollutants by set amounts. But that doesn’t work for carbon dioxide because the technology that would allow coal plants to cut those emissions is not currently cost-effective.

Instead, the EPA is expected to propose a rule that sets overall pollution reduction targets for states and gives them considerable flexibility on how to meet those goals.

In effect, the rule would enact some features of the so-called cap-and-trade plan that passed the House early in Obama’s first term but died in the Senate.

States would have an overall ceiling on the amount of greenhouse gases their power plants could emit — the cap. They could allow utility companies to trade in the hope of finding efficient, low-cost ways to achieve those goals.

Many energy companies have a mix of plants that use different fuels, and some could run cleaner units powered by natural gas or wind and reduce the use of coal-fired generators.

AFP Photo/Patrik Stollarz

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