A new draft plan from the Environmental Protection Agency that would eliminate federal limits on greenhouse gas emissions from coal- and gas-fired power plants could shift the landscape of climate policy and the US carbon credit market, including Alaska’s.
According to reporting by The New York Times, a copy of the draft proposal was sent to the White House on May 2 and may be released for public comment in June.
The document marks a reversal in regulatory approach from prior Biden-era EPA actions, including a 2024 rule that imposed new emissions restrictions on coal-fired plants.
The draft reportedly says carbon dioxide emissions from US power plants do not contribute significantly to dangerous pollution or climate change, citing the declining share of global emissions represented by the US power sector. Eliminating these emissions would not produce a measurable improvement in public health or welfare.
Alaska Gov. Mike Dunleavy has been developing a regulatory framework for carbon management, focusing on carbon capture, utilization, and storage and carbon offset projects.
In 2023, Gov. Mike Dunleavy proposed carbon management and monetization legislation to enable the Department of Natural Resources to regulate carbon offset and sequestration projects on state lands. These legislation allows private companies to lease state lands for carbon offsets (keeping lands undeveloped) or store CO2 underground for permanent sequestration or enhanced oil recovery, particularly in the Cook Inlet basin, estimated to have a 50-gigaton CO2 storage capacity. The target for this monetization is Asia, with countries like Japan looking to buy carbon storage to meet international climate goals set by globalists.
Alaska also submitted a climate action plan (renamed Sustainable Energy Action Plan) to the EPA in 2024 under the Climate Pollution Reduction Grants program, focusing on renewable energy expansion and energy efficiency (e.g., heat pumps, home weatherization, and hydroelectric projects like Bradley Lake). The plan avoids direct regulation of oil and gas emissions but emphasizes reducing emissions from energy use.
The Trump Administration policy shift, if enacted, could have far-reaching consequences for the burgeoning carbon credit market, which relies heavily on emissions limits to drive demand for offsets. Such credits are typically purchased by companies seeking to comply with emissions regulations or to voluntarily meet environmental, social, and governance (ESG) targets.
By removing the regulatory cap on emissions from major polluters, the EPA could reduce the pressure on utilities and industrial firms to purchase offsets, dampening demand in both compliance and voluntary markets.
The move may also shift the center of gravity for carbon market activity from the federal level to states like California and Washington, which maintain their own cap-and-trade systems. These programs could gain new prominence as firms seek alternative venues for regulatory certainty and emissions accountability.
The new EPA direction is almost certain to bring lawsuits and fierce opposition from environmental groups and Democrat lawmakers, many of whom championed the 2024 EPA rules.
At that time, the EPA projected that its regulations would prevent up to 1,200 premature deaths annually and reduce thousands of cases of asthma and hospitalizations related to air pollution. Now, the EPA says there is no data to support that claim.
Power plant operators, many of which have already made major investments in emissions reductions and carbon trading strategies, may find themselves caught between diverging state and federal priorities.
Alaska’s carbon sequestration framework relies on market-driven demand for carbon storage. A federal rollback of emissions limits could weaken demand for carbon storage services, as power plants (especially coal- and gas-fired) would face no federal mandate to reduce CO2 emissions.
This could reduce revenue potential for Alaska’s carbon storage projects, undermining the economic viability of the DNR’s leasing program.
Before the new EPA rule can take place, it must go through public comment period and could be revised. The topic is sure to come up during Gov. Mike Dunleavy’s Sustainable Energy Conference in Anchorage in June, when the head of the EPA Lee Zeldin, Secretary of Energy Chris Wright and Interior Secretary Doug Burgum are scheduled to attend.
