The US Environmental Protection Agency wants power plants to cut carbon emissions by 30 per cent by 2030.
The proposal expects individual states to be given different targets depending on the carbon intensity of their current power plants. It is expected that states dependent on heavy coal usage, such as Kentucky and West Virginia, will be given more favourable timelines to accomplish the transition.
In addition to improving the energy efficiency of the power plants and using more zero-carbon electricity sources such as nuclear and renewables, states are expected to be allowed by the EPA to use emissions trading systems to comply.
California and a further nine Northeastern states have already been using carbon markets to cut emissions for several years.
Overall, the power sector would need to reduce carbon dioxide emissions by 25 per cent on average by 2020 and hit the 30 per cent target 10 years later.
The proposed reductions would be based on 2005 emissions, the baseline the White House used to set a global goal to slash greenhouse gas emissions by 17 per cent by 2020.
US energy-related carbon emissions fell after 2008 due to the shift toward cleaner natural gas and away from coal-fired plants, and the severe economic downturn.
Emissions in 2013 were already slightly more than 10 per cent below 2005 levels, according to the Energy Information Administration, meaning the United States is already well down the road to meeting to new targets.
The US government states health issues as the most significant reason behind the new regulations as it faces fierce opposition not only from some state governments but also from the coal industry and some pro-business groups.
In his weekly radio show on Saturday, US President Barrack Obama said the USA should do more to reduce the incidence of asthma and other related conditions in children.
Obama will participate in a conference call on Monday with health groups hosted by the American Lung Association to discuss the regulations, before leaving Washington for a trip to Europe.