Clean Energy Incentive Program: Basics and Next Steps

The Clean Energy Incentive Program (CEIP) is EPA’s program to incentivize early investment in solar and wind renewable energy generation and energy efficiency programs in low-income communities.

What is the CEIP? 

The CEIP, which was first introduced by the EPA in the final CPP, is an optional program through which states may generate, prior to the commencement of the CPP compliance period, “two for one” emission rate credits (ERCs) and emission allowances.  A participating state may award ERCs or set aside a portion of its allowance budget for new renewable generation projects that commence construction or new energy efficiency programs in low-income neighborhoods that commence operations after the submission of a state’s final plan and that generate (in the case of renewable energy) or save (in the case of energy efficiency) MWh during 2020-2021.   EPA will then grant up to a specified cap matching credits and allowances.

Specifically, the CPP provides that it will award early credits and allowances up to an amount equal to 300 million short tons of carbon emissions in the following manner:

• For every 2 MWh of qualifying renewable energy generation, the state may award 1 early action ERC to the project, and EPA will award 1 matching early action ERC to the state to award to the project.

• For every 2 MWh of energy savings from qualified energy efficiency programs, the state may award 2 early action ERCs to the project, and EPA will award the state with 2 matching early action ERCs.

The earned credits and allowances may be applied (or transferred) during the compliance period to meet the state’s CPP emission goals.

How can a state participate?

In order to participate in the program, the state must include in its September 6, 2016 submittal (whether that is the state’s initial submittal or the final plan) a non-binding statement of intent to participate in the plan.   The EPA is also proposing to implement the CEIP in states in which it implements a federal implementation plan.

How will the details be developed? 

What does it mean to “commence construction” or “commence operations,” how will EPA implement the CEIP in states that choose mass-based compliance, how will CEIP-eligible programs be certified, how will energy savings be verified, and what communities qualify as “low-income”?

All good questions, with no current answers.  While the CPP outlines the CEIP framework, the details have not yet been worked out.  EPA is in the process of seeking input from stakeholders about how it should design the details of the program.  In late October, EPA released CEIP Next Steps [link eliminated], detailing more information about the program and seeking input from stakeholders.  More information is also available in the slides [link eliminated] from a November 12 EPA webinar for communities.

Additionally, EPA is holding a series of stakeholder calls, and has established a non-regulatory docket, Docket No. EPA-HQ-OAR-2015-0734, for stakeholders to provide written comments through December 15, 2015 on the CEIP.  Stakeholders may also submit written comments, before January 21, 2016, on the inclusion of the CEIP in the proposed Federal Plan and Model Rules (Docket No. EPA-HQ-OAR-2015-0199).