A smokestack rises from the We Energies coal-fired power plant in Oak Creek. Credit: Ed Brud

By of the

The U.S. Environmental Protection Agency will unveil a proposal Monday to cut emissions at coal-fired power plants — the biggest step yet by the Obama administration to combat global warming, and a move with major implications for Wisconsin, because coal generates more than half the state's electricity.

EPA Administrator Gina McCarthy has said the agency will give broad latitude to states to meet targets for carbon emissions. While those targets are not yet known, a mandate to cut emissions by 25% by 2030 is expected, says Mark Thimke, a Milwaukee energy and environmental lawyer who follows the issue closely.

To meet that, states will need to employ a suite of alternatives:

■Cap-and-trade systems, which let low producers of carbon sell credits to higher producers, resulting in an overall reduction in emissions.

■More renewable energy.

■Greater use of technologies to cut energy use in businesses and homes.

■Greater reliance on natural gas, which produces about 50% fewer emissions than coal.

A World Resources Institute study that analyzed Wisconsin's energy picture concluded that expanding several technologies — natural gas, energy efficiency, wind and solar — could slash emissions of greenhouse gases by more than 40%.

In 2011, Wisconsin released 96 million tons of greenhouse gases. Of this, 41% came from coal plants, according to state figures.

For Obama, who has already moved to curb emissions from cars and trucks, "this is the crowning achievement," said Michael Kraft, professor emeritus of environmental policy at the University of Wisconsin-Green Bay.

"About 40% of U.S. greenhouse gas emissions come from coal-fired power plants, and if you can move away from that, that's a big, big deal," he said.

The regulations come less than a month after the EPA issued a national climate assessment, prepared by a panel of scientists, that underscored the urgency of addressing rising carbon levels.

"Climate change, once considered an issue for a distant future, has moved firmly into the present," the report said. "Summers are longer and hotter, and extended periods of unusual heat last longer than any living American has ever experienced."

State wants flexibility

Last week, state Department of Natural Resources officials were guarded about the upcoming regulations. Bart Sponseller, the state's top air administrator, said Wisconsin wants flexibility and an assurance that the reliability of its electricity supply won't be compromised.

But the administration of Republican Gov. Scott Walker took a tougher stand in a letter to the EPA in December.

DNR Secretary Cathy Stepp and all three members of the Public Service Commission said they see "significant legal issues regarding the EPA's authority to regulate CO2 from existing power plants." The Obama administration's approach, they said, "risks continued access to Wisconsin's most reliable energy source and our ability to provide affordable energy to the citizens of Wisconsin."

Another concern: Will the state receive credit for past reductions in carbon emissions? State officials said that utilities have spent nearly $8 billion since 2000 to pay for new, more efficient coal plants, environmental upgrades at old plants and systems to burn more natural gas.

Todd Stuart, executive director of the Wisconsin Industrial Energy Group, a consortium of large manufacturers, said factory owners are worried that they could be saddled with higher rates.

"Wisconsin's ratepayers have spent billions to upgrade our power plants over the last decade," Stuart said. "We're concerned that we will be financially punished for being ahead of the curve and taking early action."

He expects the new rules to be tied up in courts for years.

Public relations battle

The public relations battle has been building steadily. Last week business and environmental groups were busy spinning their messages: The U.S. Chamber of Commerce said the regulations will slow economic growth, kill jobs and raise energy prices. The Natural Resources Defense Council said increased efficiency will lower costs for consumers and create jobs in energy efficiency, solar and wind energy.

The state's heavy use of coal — Wisconsin ranked 14th in its reliance on coal for power generation in 2012 — is a key concern.

"We're not as bad as Ohio and West Virginia, but we're pretty high on coal, and that indicates there will be a significant impact" here, Kraft said.

While the rules won't be easy for utilities to meet, they may not be as draconian as many envisioned a few years ago when natural gas and renewable energy were more costly, experts say.

Carbon emissions from utilities have dropped because of a sluggish economy, falling natural gas prices and the growing use of renewable energy.

In Wisconsin, carbon emissions from coal plants fell more than 13% between 2005 and 2011, according to the U.S. Energy Information Administration.

One utility, Minnesota-based Xcel Energy, which serves western Wisconsin, set a company record one recent day for renewable power generation, when wind turbines generated nearly half of the electricity it was selling to upper Midwest customers.

Some utilities around the country, including Xcel, have signed on with environmental groups to express support for a predictable — and flexible — regime to curb emissions.

Moves already made

At the same time, power companies including Milwaukee-based We Energies hope to receive credit for moves they've already taken. After shutting a coal plant, building a natural gas-fired plant and two large wind farms, We Energies' carbon emissions last year totaled 22.4 million tons — a drop of nearly 17% since 2005.

Other state utilities are starting to use more natural gas. Utilities in Green Bay and Madison bought natural gas plants over the past year and are shuttering coal boilers in Green Bay, Wausau and Cassville, in southwestern Wisconsin.

But the new rules are expected to continue a shift already underway, said energy lawyer Thimke, who is with Foley and Lardner. By 2030, coal plants that were built in the 1970s or early 1980s may be on the chopping block if the rules are finalized in 2015 and take effect.

A complicating factor is that power companies have made long-term bets on fossil-fuel plants, said Steve Kihm, policy and research director at the Energy Center of Wisconsin, an energy think tank.

"It's not like they can turn on a dime," Kihm said. "So any policy shifts that are fundamental changes are by their nature very difficult."

Kihm said that cheapest alternative to comply will be through stepped-up investment in energy efficiency, but he noted that wind and solar have become substantially cheaper in recent years.

Efficiency, renewables

For Wisconsin, the EPA rules could rekindle debate on spending more on energy efficiency and renewable power. In 2011, Walker and the Legislature rolled back a funding boost for energy efficiency that Democrats had passed before he took office.

Wisconsin could tap utilities' energy efficiency and renewable power program, known as Focus on Energy, to move more aggressively by boosting incentives to cut energy use, Kihm said.

Keith Reopelle, senior policy director at the conservation group Clean Wisconsin, said expanding the program would make sense because it has proved cost-effective. A recent report found that for every dollar it spent, Wisconsin utility customers saved more than $3.40 from incentives the Focus program enabled.

The EPA may also be open to regional multistate approaches, Thimke said, allowing states to keep in place emissions-trading systems, known as cap-and-trade. The system sets a price on carbon emissions, and parties that reduce their carbon emissions can sell them to other parties.

States in the Northeast and the West Coast are using the system — the northeastern states use funds from setting a price on carbon to invest in energy efficiency measures.

No cap-and-trade system is in place Wisconsin and other Midwestern states. Here, a regional approach could take advantage of wind-rich states like Iowa and the Dakotas as well as nuclear-power intensive Illinois to help reduce coal plant emissions from more coal-intensive states such as Ohio, Indiana and Wisconsin, Thimke said.

The rollout of the proposed rule Monday will be followed by a year of public comments, with a final rule coming in June 2015.