Turning the CPP from a Risk to an Opportunity

The EPA’s proposed Clean Power Plan (CPP) represents a paradigm shift for how states, energy providers, and utilities generate and procure energy. Or does it?

While the CPP is unique in the scope of its carbon reduction efforts it is in no way the first policy that states, energy providers or utilities have implemented to address climate change. States in the northeast participate in the Regional Greenhouse Gas Initiative, Exelon has a corporate goal of carbon emission reductions through its Exelon 2020 plan, and Ameren Missouri’s integrated resource plan includes carbon reduction goals.

Those enterprises that have already evaluated their ability to reduce carbon emissions should have a clear head start over others that have not begun this difficult internal assessment. Yet this is not always a clear advantage.

By voluntarily regulating carbon emissions the implementation of this federal standard can be seen as a risk to existing carbon emission reduction plans. These plans are carefully developed to consider the business process changes and financial commitment necessary to reach the carbon emission goals. When these plans would fall short of the requirements of the CPP (either in total emission reductions or in the time frame for reaching emission reduction targets) the efforts put into developing the plan feel like a sunk cost.

But like any market disruption the alternative way to view the CPP is as an opportunity. Even if an enterprise has to modify an existing carbon policy to meet the CPP requirements a modification will very likely be simpler than the development of a plan from scratch (which your competitors would likely have to do). Perhaps more importantly, as states begin to develop solo or joint implementation plans experience and knowledge in the actual costs and efforts required for an enterprise’s compliance with the CPP can make the enterprise a key stakeholder in the development of the state implementation plan.

Even if your enterprise does not view the CPP as a paradigm shift it can benefit from an analysis of the risks it poses to existing policies and, more importantly, how to leverage those risks into opportunities for market differentiation.

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