1

December 16 , 2013

Gina McCarthy Administrator Environmental Protection Agency 1200 Pennsylvania Avenue, N.W. Washington, DC 20460

Dear Administrator McCarthy,

We are a group of state environmental agency leaders , energy agency leaders, and p ublic u tility

c ommissioners from 15 states that have taken action to promote clean energy and address climate change . Please accept our enclosed joint comments on forthcoming carbon pollution standards for existing power plants. The development of these comments was facilitated by the Georgetown Climate Center.
At the outset, we applaud the commitment by President Barack Obama and the United States Environmental Protection Agency (EPA) to tackle head

- on the challenge of climate change, and to focus in part upon r educing carbon emissions from existing power plants, which account for 33 percent of total greenhouse gas emissions nationwide. 1

The President, in his June 2013 Presidential Memorandum, called on EPA to build on the leadership that many states, cities, a nd companies have already shown in reducing carbon pollution from the power sector as it develops its own standards under section 111(d) of the Clean Air Act. 2 EPA subsequently asked for states to provide feedback on specific issues, including state experi ences with carbon pollution reduction programs. 3
We are happy to share our experiences with you. Our states are already achieving significant carbon pollution reductions from the power sector, and are demonstrating a variety of ways in which such reductio ns can be achieved. Through market

- based programs, renewable portfolio standards, energy efficiency resource standards and funding commitments, utility planning, and other efforts, our states have reduced carbon pollution from the electricity sector by 20 percent from 2005 to 2011, and similarly improved our net carbon emission rate 19 percent over the same time period. Many individual states have achieved even greater reductions in carbon pollution

— in the range of 30 to 46 percent

— in that time period. Our state programs are

1 U.S. EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990

- 2011 (2013), http://www.epa.gov/climatechange/g hgemissions/usinventoryreport.html

. 2 Presidential Memorandum from Barack Obama to the EPA, June 25, 2013, http://www.whi tehouse.gov/the

press

- office/2013/06/25/presidential

- memorandum

- power

- sector

- carbon

- pollution

- standards

. 3 U.S. EPA, Considerations in the Design of a Program to Reduce Carbon Pollution from Existing Power Plant s (2013), http://www2.epa.gov/sites/production/files/2013

- 09/documents/20130923statequestions.pdf

.2

delivering major economic and health benefits by reducing carbon pollution and traditional pollutants while driving investments in energy efficiency and renewable energy.
We encourage EPA to develop a stringent but flexible framework tha t equitably achieves meaningful reductions in carbon pollution from the electricity sector while recognizing that states may employ a variety of strategies, including successful state programs already in force, to achieve these goals.

As we detail in our enclosed comments, we urge EPA to:

 Establish the performance level of the standard based on a “best system of emission reduction” that reflects the full range of approaches that states have successfully demonstrated can cost

- effectively reduce carbon poll ution from the electricity system as a whole ;

 Establish the form of the emission guideline in a way that equitably recognizes the different starting points and circumstances of different states, including the pollution reductions achieved by states throu gh climate and clean energy programs; and

 Allow for a variety of rigorous state compliance options, including options for compliance through participation in regional emission budget trading programs and state portfolio programs.
We are grateful to EPA f or considering these comments . We are confident that by drawing on the lessons of state experience, EPA can develop emission guidelines that secure the benefits that our states have experienced from carbon pollution reduction for the nation as a whole.

Sincerely,

Mary D. Nichols Chair California Air Resources Board Robert B. Weisenmiller Chair California Energy Commission Michael R. Peevey C hair California Public Utilities Commission

Larry Wolk, MD, MSPH Executive Director and Chief Medical Officer Colorado Department of Public Health and Environment Dan Esty Commissioner Connecticut Department of Energy and Environmental Protection Collin O’Mara Secretary Delaware Department of Natural Resources and Environmental Control3

Dallas Winslow Chairman Delaware Public Service Commission Douglas P. Scott Chair Illinois Commerce Commission David Littell Commissioner Maine Public Utilities Commiss ion

Robert M. Summers Secretary Maryland Department of the Environment Kelly Speakes

- Backman Commissioner Maryland Public Service Commission Ken Kimmell Commissioner Massachusetts Department of Environmental Protection

Mark Sylvia Commissioner Massachusetts Department of Energy Resources John Linc Stine Commissioner Minnesota Pollution Control Agency Mike Rothman Commissioner Minnesota Department of Commerce

Thomas S. Burack Commissioner New Hampshire Department of Environmental Services Joseph Martens Commissioner New York State Department of Environmental Conservation Audrey Zibelman Chair New York State Public Service Commission4

Dick Pederson Director Oregon Department of Environmental Quality Janet Coit Director Rhode Island Department of Environmental Management Mari on Gold Commissioner Rhode Island Office of Energy Resources

Deborah Markowitz Secretary Vermont Agency of Natural Resources James Volz Chairman Vermont Public Service Board Mai a Bellon Director Washington State Department of Ecology5 States’ § 111(d) Implementation Group Input to EPA
on Carbon Pollution Standards for Existing Power Plants



### Table of Contents

I. Overarching Principles

................................ ................................ ................................ ......................... 7
II. States have Demonstrated Various Programs that are Achieving Meaningful CO 2 Emission Reductions in the Power Sector along with Other Significant Benefits

................................ ................... 8
III. EPA Should Draw on the Experiences of States in Identifying the Best System of Emission Reduction and in Setting the Performance Level Through a S ystem

- Wide Approach

................................ ............ 16
IV. The Form of EPA’s Emission Guidelines Should Recognize Different State Starting Points and Support the Use of State Programs for Compliance

................................ ................................ .............. 20
IV.A. The Emission Guideline Should Equitably Recognize States’ Different Starting Points and
Circumstances

................................ ................................ ................................ ................................ ... 20
IV.B. EPA Should Provide a Durable Regulatory Signal for Further Emissions Reductions

.................... 21

IV.C. Emission Guideline Should Provide a Mass

- Based Performance Level Option

............................. 22

IV.D. Emission Guideline Should Recognize that Averaging or Trading Elements Necessarily Take into Account Remaining Useful Life

................................ ................................ ................................ ........... 23
V. EPA Should Allow for a Variety of Rigorous State Compliance Options

................................ ............ 25
V.A. EPA Emission Guidelines Should Allow States to Use Effective Current Programs

........................ 25

V.B. EPA Should Allow and Promote Interstate Cooperation and Regional Programs

......................... 26

V.C. EPA Should Provide Guidance on How to Address Interstate Issues such as Double

- Counting.

.... 27

V.D. EPA Should Work with States to Develop Compliance Pathways and Model Rules

...................... 27

V.E. EPA Should Ensure Consistent Evaluation and Quantification of State Plans

................................ 27
V.F. EPA Should Coordinate Efforts with Other Relevant Federal and State Agencies

......................... 29
VI. Specific Compliance Models that EPA Should Work with States to Develop

................................ ... 30

VI.A. Regional Budget T rading Programs as a Compliance Pathway

................................ .................... 30
VI.B. Portfolio of State Programs as a Compliance Pathway

................................ ............................... 316

VII. Appendix: State Experiences with Reducing Carbon Pollution

................................ ....................... 34

VII.A. California

................................ ................................ ................................ ................................ .. 34

VII.B. Colorado

................................ ................................ ................................ ................................ ... 37

VII.C. Connecticut

................................ ................................ ................................ .............................. 39

VII.D. Delaware

................................ ................................ ................................ ................................ .. 42

VII.E. Illinois

................................ ................................ ................................ ................................ ....... 43

VII.F. Maryland

................................ ................................ ................................ ................................ .. 45

VII.G. Massachusetts

................................ ................................ ................................ ......................... 47

VII.H. Minnesota

................................ ................................ ................................ ................................ 49

VII.I. New Hampshire

................................ ................................ ................................ ......................... 51

VII.J. New York

................................ ................................ ................................ ................................ ... 53

VII.K. Oregon

................................ ................................ ................................ ................................ ..... 55
VII.L. Washington

................................ ................................ ................................ ............................... 57

.7

I. Overarching Principles

Our states support EPA in developing a program that:

 Achieves significant emission reductions from the power sector in line with the reductions needed to pr otect public health and welfare. S tate greenhouse gas emission reduction goals and the President’s commitment to achieve economy

- wide carbon pollution reductions of 17 perce nt below 2005 levels by 2020 reflect the national consensus that these pollution reductions are essential

. T he electricity sector provides some of the most substantial cost

- effective opportunities for reductions relative to other
sectors

, as eviden ced by t he reductions in excess of 17 percent already being achieved by state programs, changes in energy markets, and advances in clean energy technologies. As several states have recognized in their plans to achieve economy

- wide greenhouse gas reduction goals, t he power sector will have to reduce its emissions more than the overall 17 percent goal because reductions from other sectors (e.g., transportation) will be more difficult to achieve.

 Allow s for a variety of flexible compliance options for states by setti ng rigorous targets while giving states the authority to innovate to reach them. Th is approach recognizes that different pathways may be appropriate for different states

, that flexibility allows states to cost

- effectively achieve reductions by identifying opportunities created by the complex and interconnected nature of the electricity system, and that flexibility also facilit ates efficient integration with other environmental obligations and reliability needs

.

 Encourage s states that have current effective carbon pollution reduction and clean energy programs to use those programs as compliance mechanisms to meet federal targets

. Th e se inclu de California’s AB 32 and related programs, the Regional Greenhouse Gas Initiative ’s (RGGI) state programs , and other pr ograms such as renewable energy standards and energy efficiency resource standards

.

 Recognize s the carbon pollution reductions already achieved by such state programs , while still achieving significant additional national carbon pollution reductions and c reating an equitable national system.

 R ecognize s the various states’ different starting points, but place s all states on a trajectory to achieve final targets of comparable rigor

.

 Minimize s compliance costs and burdens, maintain s electricity reliability, and maximize s economic and environmental benefits.8

II. States have Demonstrated Various Programs that are Achieving Meaningful CO 2 Emission Reductions in the Power Sector along with Other Significant Benefits

Our states

— along with others

— have developed a va riety of state programs that achieve substantial , cost

- effective carbon emission reductions and improvement s in net carbon emission
rate s

. Through market

- based programs, renewable portfolio standards, energy efficiency resource standards and funding commit ments , utility planning, and other efforts, our states have reduced carbon pollution from the electricity sector by 2 0 percent from 2005 to 201 1 , and similarly improved our net carbon emission rate 19 percent over the same time period

, from 941 to 759 poun ds C O 2 per megawatt hour of electricity produced (lbs CO 2 /MWh). 4 These programs are also delivering numerous additional benefits, including reductions of conventional pollutants and the significant public health benefits that accompany those reductions.

Our state programs have been developed through substantial democratic processes , and reflect the different on

- the

- ground experience of our states, including differences in the structure of energy markets and market participant s

. Taken together, these appro aches are driving improvements and innovation throughout the electricity system, leading to a cleaner and more efficient system overall.

4 Calculated from U.S. Energy Information Administration data. CO 2 emissions based on Total Elec tric Power Industry category, U.S. Energy Information Administration

, U.S. Electric Power Industry Estimated Emissions by State, http://www.eia.gov/electricity/data/state/emission _annual.xls [hereinafter EIA State Electric Power Emissions]. Electricity generation data represents the total electricity generated from all electricity generation sources in the state, not just fossil fuel

- fired sources. U.S. Energy Information Administ ration

, U.S. Energy Information Administration, 1990

- 2012 Net Generation by State by Type of Producer by Energy Source (EIA

- 906,
EIA

- 920, and EIA

- 923), http://www.eia.gov/ electricity/data/state/annual_generation_state.xls [hereinafter EIA State Generation]. Generation includes generation from sources that do not emit carbon pollution, including
renewable and nuclear sources.9 Figure 1 : Many of our states have experienced very significant reductions in CO 2 emissions in the electricity sector over the past decade, demonstrating the levels of emission reductions that are achievable. Source: EIA, Total Electric Power Industry CO 2 Emissions

.

Figure 2 : Similarly, many of our states have achieved very significant improvements in net carbon pollution emission rates ( comparing total carbon pollution from the electricity sector to total electricity generation , i.e., lbs CO 2 / MWh ). Source: EIA, Total Electric Power Industry CO 2 Emissions and Power Generation by State

. -60% -50% -40% -30% -20% -10% 0% 10% 20%



### 2001 2006 2011



## Percent Change in Electricity Sector Carbon Dioxide Emissions, from a 2000 Baseline

California

Colorado

Connecticut

Delaware

Maryland

Massachusetts

Minnesota

New York

Oregon

Washington

-60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40%



### 2001 2006 2011 

## Percent Change in the Carbon Dioxide Emissions Rate (lbs CO 2 

## / MWh), from a 2000 Baseline, Including All Electricty Resources

California

Colorado

Connecticut

Delaware

Maryland

Massachusetts

Minnesota

New Hampshire

New York

Oregon

Rhode Island

Washington10

Approaches used by our states include the following:

Market

- based programs: States that have market

- based em ission trading programs have demonstrated that these programs are a n efficient, cost

- effective way to achieve emission reductions and efficiently move the electric grid toward a cleaner system. These programs can operate as stand

- alone programs or as “umbr ella” policies that accumulate and account for emission reductions from complementary programs, such as renewable portfolio standards, energy efficiency programs

, and emission reduction programs directed at other pollutants

, as well as fuel switching and e nergy efficiency at power plants. M arket

- based programs can take different forms while yielding similar benefits.
For example, t he nine states 5 participating in the Regional Greenhouse Gas Initiative have together reduced carbon pollution in the region b y over 40 percent from 2005 to 20 12

. 6 The new RGGI cap 7 of approximately 78 million tons in 2020 is more than 50 percent below 2005 levels. Participating states are investing revenue from allowance auctions into energy efficiency and clean energy programs that benefit consumers and contribute to carbon pollution reductions. 8 These investments in energy efficiency have helped six of the nine RGGI states rank in the top ten most energy efficient states, accor ding to the American Council for an Energy Efficien t Economy

. Massachusetts, which invests approximately 90 percent of its RGGI proceeds in energy efficiency, has been ranked the number one energy

- efficient state for the last three
years. 9 An independent study found that the RGGI states have realized a $1. 6 billion net benefit from the first three years of the program’s operation , in large part due to the energy efficiency investments that have reduced consumer electricity spending and increased economic activity

. 10 The same study also found that the region would see a net increase of 16,000 jobs due to these energy efficiency investments and other auction revenue spending from the first three years of the program

. 11
Participating states have found that RGGI captures the benefits of complementary state policie s and has resulted in significant changes across the electricity system to reduce emissions. These

5 Connecticut, Delaware, Maine, Maryland, Mass achusetts, New Hampshire, New York, Rhode Island, and
Vermont.
6 Regional Greenhouse Gas Initiative, Report on Emission Reduction Efforts of the States Participating in the Regional Greenhouse Gas Initiative and Recommendations for Guidelines under Sectio n 111(d) of the Clean Air Act 1 (2013).

7 RGGI establishes an overall emissions cap on the power sector. In 2013, the participating RGGI states agreed to reduce the emissions cap by 45 percent in 2014. Program Review, Regional Greenhouse Gas Initiative we bsite, http://www.rggi.org/design/program_review

. 8 RGGI Benefits, http://www.rggi.org/market/CO2

- auctions/results ; RGGI, Regional In vestment of RGGI CO 2 Allowance Proceeds (2012), http://www.rggi.org/docs/Documents/2011

- Investment

- Report.pdf

. 9 ACEEE, State Energy Efficiency Scorecard, http://aceee.org/state

- policy/scorecard

. 10 The Analysis Group, The Economic Impacts of the Regional Greenhouse Gas Initiative 33 (2011), http://www.analysisgroup.com/uploadedFiles/Publishing/Articles/Economic_Impact_RGG I_Report.pdf. The study looked at years 2009

- 2011.
11 Jobs are “job years”, or one job sustained for one year. Id.11

include investment s by power companies to make existing units more efficient, shifts across the electricity system to greater use of cleaner fossil

- fuel gene ration sources, reduction of electricity load growth through demand

- side energy efficiency strategies , and replacement of fossil

- fuel generation with increased renewable energy.
Similarly, the state of California has mounted a comprehensive effort to redu ce greenhouse gas emissions , reflecting its commitments to cut carbon pollution to 1990 levels by 2020, 12 and by 80 percent below those levels by 2050 , while setting ambitious mid

- term targets to keep emissions trending downwards

. 13 In order to achieve these goals, California has implemented a comprehensive portfolio of policies, many under the authority of AB 32, California’s Global Warming Solutions Act . This includes setting an economy

- wide greenhouse gas ( GHG ) emissions cap that declines to 2020 along wit h a trading mechanism

. 14 Four successful allowance auctions have been held, and the cap is projected to reduce emissions by 25 percent from 2006 to 2020. 15
As a result of these many efforts, California’s utility sector greenhouse gas emissions have continue d to decline. Based on initial estimates from the California Air Resources Board, emissions from in

- state and imported power fell by 16 million metric tons, or 16 percent, from 2005 to the 2010

- 12 averaging period (from 108 million metric tons CO 2 e to 91 million tons CO 2 e). 16 By 2025, California expects to cut utility sector emissions to below 80 million metric tons CO 2 e, a roughly 25 percent reduction from 2005 levels in that sector, with already low emissions compared to other states. 17

Renewable Portfo lio Standards: At least 30 states have renewable portfolio standards (RPS) or alternative energy portfolio standards, which can increase renewable generation and displace carbon

- intensive fossil fuel generation. The experience of our states , confirmed by i ndependent analyses, 18 finds that sufficiently ambitious renewable energy policies can achieve significant carbon pollution reductions from fossil

- fuel fired sources

. In addition, these policies can spur

12 Cal. Public Health and Safety Code § 38550.

13 Cal

. Exec

. Order S

- 3

- 05 (June 1, 2005).

14 See generally Cal. Public Health and Safety Code § § 38550 et seq.
15 Center for Climate and Energy Solutions, California Global Warming Solutions Act (AB 32), http://www.c2es.org/us

- states

- regions/action/california/ab32 (last visited Oct. 22, 2013).

16 Cal. Air Resources Board analysis, based in part on Cal . Air Resources Board, 2008 to 2012 Emissions for Mandatory Greenhouse Gas Emissions Reporting Summary (2013), http://www.arb.ca.gov/cc/reporting/gh g

rep/reported

- data/2008

- 2012

- ghg

- emissions

- summary.pdf . This analysis is preliminary, but reflects California’s long

- term successes and program performance. Emissions in 2012 were relatively higher than in recent years because of relatively low hydroele ctric generation and the unexpected shutdown of the San Onofre Nuclear Generating Station, but the state remains on course to meet emissions targets.

17 Cal. Air Resources Board analysis.

18 See e.g.

, Bryan K. Mignone et al., Cost

- effectiveness and Economic Incidence of a Clean Energy Standard

, Economics of Energy and Environmental Policy, Volume 1, Number 3 (2012); Elizabeth Doris and Rachel Gelman

, National Renewable Energy Laboratory, State of the States 2010: The Role of Policy in Clean Energy Market
Tra nsformation (2011); Sanya Carley, State Renewable Energy Electricity Policies: An Empirical Evaluation of Effectiveness , 37 Energy Policy 3071

– 3081 (2009).12

renewable energy innovation and deployment and promot e long

- term change toward a cleaner electricity system.
For example, The New York State Energy Research and Development Authorit y (NYSERDA) estimates that the s tate’s RPS , which requires 30 percent of electricity used by consumers to come from renewables b y 2015, avoided 4.1 million tons of CO 2 from 2006 to 2012, along with 4,028 tons of nitrogen oxides (NO x ) and 8,853 tons of sulfur dioxide (SO 2 )

. 19 NYSERDA expects that renewable projects already initiated will inject $ 2.7 billion into the s tate’s economy o ver their operating lives. 20
Similarly, Minnesota’s R enewable E nergy S tandard (RES) r equires utilities to provide 25 percent of their power from renewables by 2025. 21 As a result of these policies and market condition s , Minnesota has seen a dramatic increase in wind resources, experiencing a 900 percent growth in wind generation from 2000 to 2010. 22 In 2011, wind had grown to provide 12.7 percent of Minnesota’s total electricity generation

. 23 A ll Minnesota utilities have met their 2012 RES goals and m ost ratepayers are benefitting from lower costs

. 24
Likewise, California has implemented a very aggressive RPS, requiring that 33 percent of state
power come from renewable sources by 2020. 25 With more than 20 percent of its power already coming from renewabl e sources, the state is well on its way to meeting that target, and is considering ways to further develop renewable power.
The success of renewable portfolio standards is being demonstrated in many other states across the country as well. 26

19 N.Y. State Energy Research & Dev elopment Auth ority , The New York State Renewable Portfolio Standar d Performance Report 19 (2012), http://www.nyserda.ny.gov/Publications/Program

- Planning

- Status

- and

- Evaluation

Rep orts/Renewable

- Portfolio

- Standard

- Reports.aspx

. 20 N.Y. State Energy Research & Dev elopment Auth ority

, NYSERDA Renewable Portfolio Standard Main Tier 2013 Program Review Final Report September 5 ( 2013 ), http://www.nyserda.ny.gov/Publications/Program

- Planning

Status

- and

- Evaluation

- Report s.Renewable

- Portfolio

- Standard

- Reports.aspx

21 Minn. Stat. 216B.1691 (2013); see a lso Minnesota , DSIRE: Database for State Incentives for Renewable and Efficiency, http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=MN14R

. Xcel Energy , the state’s largest utility, must achieve 30 percent from renewables by 2020, one quarter of which must be met with wind.

22 Provided by Minn. Department of Commerce.

23 Calculated from EIA State Generation, supra note 4 (Wind gen eration as percentage of Total Electricity Power Industry generation).

24 Minn. Dep ’ t

. of Commerce, Progress on Compliance by Electric Utilities with the Minnesota Renewable Energy Objective and the Renewable Energy Standard 3, 9 (2013), http://mn.gov/commerce/energy/images/2013RESLegReport.pdf

. 25 See generally RPS Program Overview , Cal. Public Utility Commission, http://www.cpuc.ca.gov/PUC/energy/Renewables/overview.htm

. 26 See, e.g., World Resources Institute report series, Power Sector Opportunities for Reducing Carbon Dioxide
Emissions , which identifies significant projected carbon pollution reductions from re newable strategies in specific states, including Pennsylvania, Michigan, North Carolina, and Ohio. Michael Obeiter et al., World Resources Institute, Power Sector Opportunities for Reducing Carbon Dioxide Emissions

, http://www.wri.org/our

work/project/us

- climate

- action/publications

.13

Energy Efficie ncy Standards and Programs : S tate energy efficiency programs and dedicated investments provide some of the most cost

- effective opportunities to reduce carbon pollution, reduce electricity costs to rate

- payers, increase local economic activity

, and create j obs. At least 25 states have energy efficiency resource standards or dedicated funding for energy efficiency established in law. Independent analysis has shown that

— when applied across the country

— such energy efficiency programs c an achieve incremental ann ual electricity savings in the range of 0.5 to 1 percent annually. 27

Experience in s ome of our states demonstrate s that even greate r annual savings are achievable. Vermont recorded annual savings of 1.8 percent last year through its Efficiency Vermont prog ram, 28 and ISO New England forecasts that New England states’ combined programs will effectively flatten projected demand growth through 20 22

. 29 These reductions in electricity use translate into very significant reductions in carbon pollution. For example, Massachusetts projects that its investment in energy efficiency f rom 2005 through 2015 will reduce Massachusetts’ electricity demand by 17.1 percent

, resulting in a total annual reduction of 3 million tons of CO 2 in 2015. 30
In reducing electricity use, th ese programs also reduce rate

- payer costs. For example, Vermont will see lifetime benefits of $136.1 million after spending $57.1 million on energy efficiency through its Efficiency Vermont program .I n Colorado Xcel Energy , Colorado’s largest utility, antic ipates $227 million in net lifetime economic benefits for its customers as a result of its 2010 demand

- side management programs. 31 California’s energy efficiency standards have saved consumers over $74 billion on their electric bills over their decades of o peration. 32
In addition to saving rate

- payers on electricity costs, demand

- side efficiency programs also represent investment in the local economy and the creation of jobs, by creating positions for those who perform energy efficiency audits or install ener gy efficiency controls in commercial buildings. Investments in energy efficiency by states participating in RGGI were a large driver

27 Galen L. Barbose et al., Lawrence Berkeley National Laboratory, The Shifting Landscape of Ratepayer

- Funded Energy Efficiency in the U.S. ( 2009 )

, http://energy.gov/sites/prod/files/oeprod/DocumentsandMedia/LBNL_Shifting_Landscape_of_Ratepayer_Energy _Efficiency_REPORT.pdf (finding savings of 0.4 to 0.9 percent achievable under low to high scenarios).

28 2012 Annual Highlights , Efficiency Vermont, http://www.efficiencyvermont.com/about_us/information_reports/annual

- highlights

- 2012.aspx

. 29 Presentation, ISO New England, Final 2013 Energy

- Effici ency Forecast 2016

- 2022 at slide 37, http://www.iso

ne.com/committees/comm_wkgrps/othr/enrgy_effncy_frcst/2013frcst/iso_ne_ final_ee_forecast_2016_2022.pdf

. 30 Provided by Mass. Department of Environmental Protection.

31 American Council for an Energy

- Efficient Economy, Energy Efficiency Resource Standards: A Progress Report on State Experience 12 (June 2011), http://aceee.org/research

- report/u112

. Vermont’s $57.1 million energy efficiency spending includes both Efficiency Vermont and participant spending.

32 Cal

. Energy Commission, Draft 2013 Integrated Energy Policy Report 2 3 ( 2013)

, http://www.energy.ca.gov/2013publications/CEC

- 100

- 2013

- 001/CEC

- 100

- 2013

- 001

- LCD.pdf

.14

for the finding that the RGGI program overall create d 16,000 jobs as a result of the first three years of its operation. 33

T hese tremendous cost savings to rate

- payers and economic benefits help make energy efficiency programs among the most cost

- effective measures for reducing carbon pollution. State and Utility Planning Efforts and Programs: State and utility planning effort s and programs, including planned early retirements of inefficient generation resources , are another approach that can significantly drive reductions in carbon pollution.
A prime example is Colorado’s Clean Air

– Clean Jobs Act, which required the state ’s regulated utilities to develop plans for reducing air pollutant emissions fr om coal

- fired power plants
equa ling either 900 MW capacity or 50 percent of their coal fleet. As a result, the state’s public utilities commission (PUC) has now approved plans f rom regulated utilities that will significantly reduce GHG emissions from coal plants, largely through plant retirements. 34 Colorado’s largest utility, Xcel Energy, anticipates reducing its CO 2 emissions by 28 percent by 2020 under the state’s Clean Air

– C lean Jobs Act. 35

Minnesota’s Emission Reduction s Rider statute similarly encourage s utilities to file p lans containing actions that would reduce emissions and that were not already required by federal regulations ; the statute then allowed utilities to reco ver costs for those actions. 36 For example, the Minnesota Metro Emissions Reduction Project , completed by Xcel Energy from 2007 to 2009, reduced carbon emissions from three Twin C ities area power projects by 21 percent through the replacement of two coal fa cilities with highly efficient combined cycle units and the rehabilitation of an existing coal unit. 37
Carbon Capture and Sequestration Programs and Policies: State projects and policies to support carbon capture and sequestration for coal plants can play a n important role in achieving reductions from the existing fossil fleet. For example, l l linois has supported the development of clean coal projects through the FutureGen project in conjunction with the U.S. Department of Energy. 38 Illinois also passed the C lean Coal Portfolio Standard Law , which requires new coal

-

33 Jobs are “job years,” or one job sustained for one year. T he Analysis Group, The Economic Impacts of the Regional Greenhouse Gas Initia tive 47 (2011), http://www.analysisgroup.com/uploadedFiles/Publishing/Articles/Economic_Impact_RGGI_Report.pdf.

34 See Press Release, Gov. Ritter, Bipartisan Lawmakers & Coalition Introduce Colorado Clean Air

- Clean Jobs Legislation ( Mar. 16, 2010 ), http://www.colorado.gov/cs/Satell ite%3Fc%3DPage%26childpagename%3DGovRitter%252FGOVRLayout%26cid% 3D1251573201310%26pagename%3DGOVRWrapper

. 35 Xcel Energy, Colorado Clean Air

– Clean Jobs Plan, http://www.xcelenergy.com/Environment/Doing_Our_Part/Clean_Air_Projects/Colorado_Clean_Air_

- _Clean_Jobs_Plan (reductions presumed from a 2010 baseline).

36 Minn. Stat. § 216B.1692 (2013).

37 Minn. Public Utility Commission, Re port to the Legislature on Emission Reduction Projects Under Minnesota Statutes 216B.1692 (2008), http://www.puc.state.mn.us/portal/groups/public/documents/pdf_fi les/000661.pdf ; Minnesota Metro Emissions Reduction Project , Xcel Energy, http://www.xcelenergy.com/Environment/Doing_Our_Part/Clean_Air_Projects/MN_MERP

. 38 S ee FutureG en Alliance, http://www.futuregenalliance.org

.15

fired power plants to capture and store more than half of the carbon emissions that the facility would otherwise emit. 39

Combined Heat and Power Incentives : Combined heat and power (CHP)

— also known a s cogeneration

— is an efficient, clean

, and reliable way to generate electricity and heat from a single fuel source. Commercial and industrial facilities installing CHP systems can reduce load, peak demand

, and associated carbon dioxide emissions from the g rid by cost effectively generating their own electricity with low

- emitting technologies such as fuel cells, natural gas microturbines, and gas turbines with waste heat recovery boilers. I nstalling CHP systems can significantly increase operational efficien cy while lowering energy costs and reducing overall emissions from the electricity sector

. States can play an important role in promoting CHP. For example, Connecticut has implemented a variety of programs to promote CHP including construction grants, sta ndardization of interconnection protocols, low interest loans, and the establishment of a CHP portfolio standard

. A s a result

, Connecticut industry has added more than 91 MW of CHP capacity between 2005 and 2011 40

State Ne w Source Performance Standards: Ca lifornia, New York, Oregon , and Washington all have state emission performance standards for new power plants that have required new facilities to be highly efficient. 41

The nation as a whole has also made important reductions in carbon pollution emissions, especially in very recent years

, due to a variety of factors, including programs to reduce emissions of other pollutants from the power sector (e.g.

, mercury, nitrogen oxides

, and sulfur dioxide), the increased availability and lower cost of natural gas

, and growing efforts to secure the benefits of energy efficiency and renewable power . Overall carbon pollution from the electric power sector fell by 10. 1 percent from 2005 to 201 1 , and the net emission rate for the power sector as a whole improved 11.1 per cent from 1390 to 1236 lbs CO 2 /MWh. 42 Separate data available for most recent years show that these improvements have accelerated ; in the last three years alone, from 2010 to 2012 , emissions from the power sector in the United States fell by 10.3 percent

. 43

39 20 Ill. Comp. Stat. 3855/1

- 10 (2013).

40 Conn. Department of Energy and Environmental Protection, 2013 Conn. Comprehensive Energy Strategy (2013), http://www.ct.gov/deep/lib/deep/energy/cep/2013_ces_final.pdf

41 Cal. Pub. Util. Code §§ 8340

- 41 (2013), SB 1368 Perata (2006); Or. SB 101 (2000); N.Y. Comp. Codes R. & Regs. tit. 6 Part 251 (2013); Wash. Rev. Code ch. 80.80 (201 3), Wash. SB 6001 (2007).

42 Calculated from U.S. Energy Information Administration data. CO 2 emissions based on Total Electric Power Industry category. EIA State Electric Power Emissions, supra note 4 . Electricity generation data represents the total electricity generated from all electricity generation sources in the state, not just fossil fuel

- fired sources EIA State Generation, supra note 4

. 43 Power Plants , Greenhouse Gas Reporting Program 201 2, U.S. Environmental Protection Agency, http://www.epa.gov/ghgreporting/ghgdata/reported/powerplants.html

.16

III. EPA Should Draw on the Experiences of States in Identifying the Best System of Emission Reduction and in Setting the Performance Level Through a System

- Wide Approach
As we discuss above, states are achieving very significant carbon pollution reductions th rough a variety of state programs, including emission budget and trading programs, renewable portfolio standards, energy efficiency programs, state statutes that require or promote planned electricity resource changes, and others. I mplementation of these p rograms across our states is driving changes to the electricity system as a whole, promoting efficiency imp rovements at individual sources, using a cleaner mix of our existing fossil fuel

- fired sources to meet our electricity needs, adding addition al renew able power and other zero

- carbon energy capacity, and reducing our overall demand for energy through efficiency.

As EPA designs its S ection 111(d) carbon pollution emission guideline for states on the basis of the “best system of emission reduction

, ” 44 it should take into account all of these types of demonstrated successes and the carbon pollution reductions achievable by them

. Only by considering reductions from all of these types of approaches will EPA be able to establish a standard that achieves the m ost meaningful, cost

- effective reductions.

The state programs can be grouped into three categories of approaches (as identified by EPA in its questions) , each of which can secure a dist inct pool of emission reductions:

1. Changes at individual covered sou rces to reduce carbon emission intensity. These includ e improving plant efficiency or heat rate, as well as switching to or co

- firing with lower carbon fuels. Market

- based programs can help drive these types of improvements

. Programs and incentives for c om bined heat and power generation that is more carbon efficient than grid power can also increase the overall efficiency of energy generation. Carbon capture and sequestration can also reduce emissions at individual

source s

. Other potential on

- site improveme nts that can be used to reduce emissions include : using renewable energy to provide supplemental steam heating; using waste heat to remove moisture from coal ; implementing advanced systems for combustion and dispatch optimization , or oxy

- combustion systems , and others

. 45

2. Shifts in generation from covered sources that have higher carbon

- pollution emission rates to others that have lower carbon

- pollution emission rates

. This includes increas ing generation at highly efficient natural gas plants and replacing existing sources with such efficient sources. Market

- based state programs are demonstrating the effectiveness of these types of shifts across the electricity system, because sources that have lower carbon emission rates can provide electricity at a lower

44 See 42 U.S.C. § 7411(a)(1).

45 See Megan Ceronsky and Tomas Carbonell, Environmental Defense Fund, Section 111(d) of the Clean Air Act, The Legal Foundation for Strong, Flexible & Cost

- Effective Carbon Pollution Standards for Existing Power Plants 11 (2013), http://blogs.edf.org/climate411/files/2013/10/Section

- 111d

- of

- the

- Clean

- Air

- Act

- The

- Legal

- Foundation

for

- Strong

- Flexible

- Cost

- Effective

- Carbon

- Pollution

- Standards

- for

- Existing

- Power

- Plants

- O.pdf

.17

c ompliance cost. State new source performance standards have also driven such improvements, as they have required replacement generation to meet emission standards.

3. Reduction of emissions from covered sources th r ough displacement by zero

carbon generation or reduction in electricity demand. This category covers two different approaches

, both of which have the effect of displacing generation from covered fossil

- fuel fired power plants thereby reducing carbon pollution from those sources. Developing addition al zero

- carbon electricity generation capacity, for example by adding wind and solar energy resources as well as nuclear power , 46 can reduce the use of carbon

- emitting electricity resources.

Another approach is to reduce the overall need for electricity t hrough demand

- side energy efficiency measures, such as through more efficient lights and appliances, and better residential and commercial building efficiency. Market

- based programs, renewable energy standards, and state demand

- side energy efficiency stand ards and programs are all demonstrating the types of emission reductions that can be achieved from covered sources through this category of reductions.

Our experience has demonstrated that meaningful, cost

- effective emission reductions are best achieved through a system

- wide approach that draws from all three of these strategies

. In particular, state experience has demonstrated that the most cost

- effective strategies resulting in meaningful reductions are those that promote shifts away from high

- emission fossil sources

, displace emissions with zero

- carbon generation , or reduce electricity use through demand

- side efficiency programs.

In contrast

, more limited emission reductions are available from p lant

- level efficiency improvements , as demonstrated by th e extensive technical analysis in EPA’s proposed new source standards for the sector. 47 M eaningful reductions could be achiev ed at a reasonable cost if the full range of available on

- site systems , including efficiency upgrades and other improvements, were a pplied to each source, 48 except those nearing the end of their remaining useful life. H owever , we believe that such an approach is less cost

- effective , and less effective in promoting long

- term improvements in the electricity system, than a system

- wide appr oach as described above and as demonstrated in our states

.

46 Nuclear energy capacity can be increased through facility upgrades or construction of generation stations.

47 U.S. Environmental Protection Agency

, Standards of Performance for Greenhouse Gas Emissions from New Stationary Sources: Electric Utilit y Generating Units , EPA

- HQ

- OAR

- 2013

- 0495, at 27 (Sept. 20, 2013)

, http://www2.epa.gov/sites/production/files/2013

- 09/documents/20130920proposal.pdf

. We do note, however,
that source

- level programs which directly and significantly reduce the capacity factor (and hence emissions) of inefficient or aging fossil plants, or use similar approaches to limit such plants’ continued operations

, may achieve
substantial reductions.

48 Such improvement could include the full range of options described under the “ Changes at individual covered sources to reduce carbon emission intensity ” category above, but opportunities for application of some of the individual strategies may vary by source. See discussion supra note 45

.18

T he best emission reduction systems focus on shifting the grid as a whole away from high

carbon sources because individual generating units do not operate independently. Instead, they are part of a system of highly interdependent sources whose aggregate emissions are dependent on system management. 49 As state experience has shown, reducing demand for fossil generation or providing alternative, cleaner, sources of supply achieves emissions reduction s far beyond the level that can be achieved by improving the operations of individual fossil plants.

Grid

- level programs of this sort have delivered major economic benefits along with environmental improvements. In California, for instance, expanding ener gy efficiency alone has saved ratepayers billions of dollars while reducing the need for new power plants

. T he RGGI
states are adding thousands of jobs as a result of these efforts, while cutting emissions. Similarly, state efforts to add renewable power a cross the country have improved the fuel diversity and system performance of the grid, while supporting a nation al boom in clean energy jobs. These opportunities are not available from strategies which focus only on source

- level reductions, which are neces sarily more limited and so provide fewer opportunities to save energy and create jobs.

Indeed, one of the Clean Ai r Act’s most notable successes

— the Acid Rain Program

— achieved tremendous pollution reductions through a grid

- level approach, promoting tradin g between generation sources to reduce emissions from the fleet as a whole, rather than focusing narrowly on individual sources. 50 That effort cut acid gases from power plants in the program by more than 70 percent in an extremely cost

- effective way, l ead in g EPA to conclude that “market

- based trading systems can cost

- effectively reduce pollution and address environmental damage.” 51 Related programs have further cut pollution by providing incentives to move the grid, as a whole, toward cleaner energy. 52 We agre e with EPA that these system

- level approaches, 53 including efforts to integrate renewable energy and energy efficiency into the grid, “represent

... a real opportunity” to reduce air pollution. 54

EPA needs to seize that opportunity because S ection 111(d) st a ndards are to be based on the “best system of emission reduction

, ” 55 and the best systems available include all three carbon reduction strategies the states have demonstrated

. The courts are clear that EPA must “weigh cost, energy, and environmental impact s in the broadest sense at the national and regional

49 See U.S. Environme ntal Protection Agency , Roadmap for Incorporating Energy Efficiency/ Renewable Energy Policies and Programs into State and Tribal Implementatio n Plans at Appendix B , B

- 6 (2012) [hereinafter EPA EE/RE Roadmap].

50 See generally 42 U.S.C. §§ 7651 et seq .; 51 U.S. Environmental Protection Agency

, Acid Rain and Related Programs 2009 Highlights: 15 Years of Results (2009), http://www.epa.gov/airmarkets/progress/ARP09_4.html.

52 See, e.g.

, NO X SIP Call, 63 Fed. Reg. 57,356 (Oct. 27, 1998); Clean Air Interstate Rul e, 70 Fed. Reg. 25,162 (May 12, 2005).

53 See also Clean Air Mercury Rule, 69 Fed. Reg. 4,652, 4,698

- 4,705 ( proposed Jan. 30, 2004) (discussing benefits of allowance system for pollution reduction from the electri c power sector while proposing S ection 111( d) guidelines for the sector).

54 EPA EE/RE Roadmap

, supra note 49

, at 12.

55 42 U.S.C. §§ 7411(a)(1) & (d)(1) (emphasis added); see also 40 C.F.R. §§ 60.21(e), 60.22(b)(5).19

levels and over time as opposed to simply at the plant level in the immediate present” as it seeks the best ways to reduce emissions. 56 We are confident that a broad approach is the best path forward here

. Indeed, EPA has recently developed a “Roadmap” that outlines system

- level approaches for states seeking to reduce fossil fleet emissions in order to maintain compliance with air quality standards for pollutants like ozone and soot. 57 The Roadmap discusses all three of our strategies , including energy efficiency programs, emissions trading systems, and renewable portfolio standards which can help reduce grid

- level emissio ns. Those same strategies work to reduce gre enhouse gas pollution as well.

EPA must t herefore look broadly to ensure that it fully accounts for emission reduction opportunities across the electric system, from individual generation stations to the grid as a whole. Simply put, achieving meaningful, cost

- effective emission reductions across the power grid requires taking a grid

- level perspective

, as states’ experience demonstrates

. That experience shows carbon pollution reductions in the range of 17 to 46 percent over a seven year period (2005

- 2011) have been achieved by many leading states

, 58 along with related improvements in emission rates from 1 8 to 39 percent in the same time frame , demonstrating that such broad policies can successfully and cost

- effectively achieve real progress. 59

56 Sierra Club v. Costle , 657 F.2d 298, 330 (D.C. Cir. 1981).

57 See generally EPA EE/RE Roadmap

, supra note 49

. 58 Represents range of reductions achieved by Connecticut, Delaware, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Oregon, Vermont, and Washington. Calculated from U.S. Energy Information Administration data. CO 2 emissions based on Total Electric Power Industry category. EIA State Electric Power Emissions, supra note 4

. 59 Represents range of reductions achieved by Co nnecticut, Delaware, Maine, Massachusetts, New Hampshire, New York, and Oregon. Calculated from U.S. Energy Information Administration data. CO 2 emissions based on Total Electric Power Industry category. EIA State Electric Power Emissions, supra note 4 . Electricity generation data represents the total electricity generated from all electricity generation sources in the state, not just fossil fuel

fired sources EIA State Generation, supra note 4

.20

IV. The Form of EPA’s Emission Guidelines Should Recognize Different State Starting Points and Support the Use of State Programs for Compliance

IV.A. The Emission Guideline Should Equitabl y Recognize States’ Different Starting Points and Circumstances
States all across the country can take advantage of the strategies we discuss above to reduce their carbon pollution to a significantly lower level, but will begin with widely differing power fleets and existing regulatory initiatives. EPA should balance these differences with the need to reduce greenhouse gas emissions acr oss the country by placing all states on a trajectory to achiev e a uniformly rigorous target , while allowing varying compliance times (recognizing that this period of time may extend beyond an initial phase covered by the rulemaking).
One approach that E PA should consider is setting a single emission intensity target that would apply to each state, individually or as part of a region

, representing net improvements to the carbon intensity of a state’s electricity system that could be achieved through the s ystem

- wide approaches described above

. (This target could be expressed as an aggregate emission rate of pounds per megawatt

- hour or potentially as a rate of emissions per gross domestic product ). States that would have further to go to meet the target coul d have longer compliance times to meet the common goal. Th is approach would require all states to reduce emissions while being equitable to states that have already made progress toward meeting the emission intensity target

. The same goal would be achieved by establishing a mass

- based emission budget for each state that reflects a level of aggregate emissions from covered sources commensurate with full use of the best system of emission reduction s

. ( W e discuss ways to convert between mass and rate standards below

. )

A pproaches like these would automatically recognize the substantial emission reductions achieved by first

- mover states while providing other states the time they need to pursue these opportunities. S tates that have already taken significant action to reduce carbon pollution or already have mostly low

- carbon energy resources would be on track to meet such common standards quickly , with fewer opportunities for immediate further improvements beyond those already contemplated in their programs. S tates that have a high

- carbon energy portfolio may have greater opportunities to achieve significant reductions in the near term through actions that other states may have already taken, but may require more time to reach the same level of overall emission perfo rmance as states that have already taken significant action.
Reviewing state programs with in this framework, EPA would ensure that each state has designed its program to put regulated sources on an achievable glide path to reach its target as
soon as pra cticable, 60 thereby maintaining a clear regulatory incentive to reduce carbon dioxide emissions over the compliance period.
EPA has taken these approaches in the past: o ther Clean Air Act programs allow states time to comply

, with the time period depending on the degree of pollution reduction required and a

60 States would need to support through analysis that the “glidepath” demonstrates reasonable progress toward the target.21

showing of “reasonable progress” towards final standards. 61 EPA’s S ection 111(d) general regulations likewise support this approach, as they anticipate that state plans will set compliance schedules that i nclude regular progress reports. 62

We believe this approach , which focuses on moving states toward a shared endpoint, is substantially better than one based on requiring percentage reductions (either in tons or rates) from a particular baseline year. Settin g an equitable baseline across the states, which have varying economic and emissions histories, would be difficult and time

- consuming. And because states have very different emissions levels now, requiring all states to reduce emissions by the same percent age across the board, regardless of starting circumstances, would not treat the states equitably, or be the most cost

- effective way of achieving reductions. 63
We recognize that other equity issues will arise as EPA considers how to move the states towards a common target. These include the fact that states may be net importers or exporters of power, and so their emissions may be affected by actions in other states that they cannot directly control. On a related point, some states may have relatively smalle r in

- state power systems, and so may have limited opportunity for system

- wide improvements within the state

. We believe that encouraging regional 111(d) planning, as we discuss later in these comments, may help address these issues.

IV.B. EPA Should Provide a Du rable Regulatory Signal for Further Emissions Reductions The 111(d) guidelines should send a durable regulatory signal that greenhouse gas pollution from the power sector must be significantly reduced, and that further reductions will be required as system s of emission reduction further improve. Sending that signal requires setting meaningful endpoints for states to reach during the initial compliance period, and committing to regularly review (and, in all likelihood tighten ) the guidelines over time.

Alth ough we recognize that states may reach these endpoints at different times, it is important the standards be clear that the endpoints, once reached, are ceilings. Emissions level s (whether set as mass ceilings or maximum emissions rates) cannot be allowed to rise above the target after the end of the initial compliance period.
EPA should further ensure that it is clear to the regulated industry that further reductions are likely in the future. The reduction opportunities available with current adequately d emonstrated systems will expand down the road as further deployment of existing clean technologies takes place. EPA should be clear that it will be regularly revisiting its guidelines to assess new pollution control opportunities.

61 See, e.g. , 42 U.S.C. § 7410 (state plans for criteria pollutants); 42 U.S.C. § 7491(b) (plans need to make “reasonable progress” t oward visibility improvements).

62 See 40 C.F.R. §§ 60.24(a) & 60.25(e).

63 If EPA nonetheless chooses to pursue the approach of requiring all states to achieve a percentage reduction from a baseline year, it should provide states with the option of utilizin g an earlier baseline that would recognize the progress that they have already achieved. It would also be important for EPA to recognize the relationship between the baseline year and current reductions already achieved for the purpose of setting the perf ormance level. For example, if EPA were to select 2005 as a baseline year, it should recognize that 201 1 emissions nationwide are already 11 percent below 2005 emissions, and the average power sector emissions rate in 201 1 is
11 percent below the emission rate in 2005. See discussion supra at notes 42

, 43

.22

In particular, Section 11 1 and its implementing regulations already specify that EPA will review, and if appropriate, revise its new source regulations every eight years, 64 and that it will publish draft and final existing source guidelines “[c]oncurrently upon or after” proposing new source standards. 65 Although the rules thus anticipate revisions, EPA should further clarify this review obligation. It should do so by providing, by rule, that it will review and

, if appropriate, revise

, its existing source standards by a date certain, on the same eight

- year timeline as applies to its new source standards

– a sensible provision that will allow EPA to evaluate the power fleet as a whole in each review. Such regulatory deadlines are not unusual. In the greenhouse gas context, for instan ce, EPA included enforceable deadlines in its “tailoring” rule for major source permitting, requiring the agency to regularly revisit its rulemaking over time, as greenhouse gas regulation experience is gained

. 66 A similar course is appropriate here. A revi ew commitment will make clear to all parties that the emissions glide paths will continue to decline long after the first compliance period has passed.

IV.C. Emission Guideline Should Provide a Mass

- B ased Performance Level Option
Many current state greenhouse gas reduction programs, including the programs of states participating in RGGI and the California system, are based on limiting emissions to an overall quantity expressed as a mass (e.g., tons of CO 2 ) . To ensure that these programs can continue to operate smoothly to support compliance with the S ection 111(d) rules, EPA should provide for a mass

- based emission budget compliance option, either by articulating the standard as a

mass

- based emission budget, or providing a mechanism for translating from a rate

- b ased standard to a mass

- based emission budget

. S uch a methodology could apply an emission rate to the projected or historic generation from covered power plants in a state. For example, under a projected generation approach, modeling would be used to proj ect how a state’s generation from covered sources would change over a period of time, and then the EPA emission rate would be applied to that projected quantity of electricity generated. 67 Using such an approach would take into account changes in demand,

an d would therefore be more comparable to using a rate

- based standard, where the emission s

are proportionate to demand. EPA could require states to reduce or offset the projected demand growth with readily available energy efficiency improvements (e.g

. , one percent annually). This approach could potentially involve a “true

- up” as well

— a review of whether actual changes in

64 42 U.S.C. § 7411(b)(1)(B).

65 40 C.F.R § 60.22(a).

66 See 40 C.F.R. § 50.22.

67 Under such an approach, it would be appropriate to require new sources to be subject to the new source standard as part of their New Source Performance Standard compliance obligation, as using projected generation to compute a state’s emission budget would inherently reflect any new generation required to meet changes in load. Such an approach was proposed by EPA in the Clean Air Mercury Rule. 70 Fed. Reg. 28622 (May 18, 2005).23

demand and related factors are consistent with projected changes, and a potential adjustment to the budget to reflect those changes. 68

If a historic generation approach is used, a state ’s emission budget would be based on the amount of emissions that would have occurred in a baseline year if the state’s power plants had generated the same amount of electricity as they did during the baseline year, but had emitted at a target emission rate. 69

Note that under th ese approach es , the emission budget would represent an aggregate budget for all covered sources in a state . S tate s choosing to use the emission budget would be required to meet the stand ard in the aggregate, could use all cost

- effective measures

— such as efficiency, renewables, end

- use controls, carbon capture and sequestration

— to obtain the necessary reductions , and could allow averaging of emissions or trading of emissions allowances . Or a state could join a regional market

- based program

, and could demonstrate compliance if the group of states collectively met the states’ aggregate mass

- based standard.

If EPA articulates the standard as a rate

- based standard, and if EPA’s methodology fo r translating from a rate

- based standard to a mass

- based standard involves accounting for projected changes in generation from covered sources, the methodology should be transparent and consistent . The methodology should start with reliable, existing fede ral data sources, including the Clean Air Markets Division emissions database and the EIA Annual Energy Outlook. EPA should also allow states to seek to use their own data, but EPA should require states to rigorous ly substantiate any changes to projections based on other, non

- federal data

sources. 70

IV.D. Emission Guideline Should Recognize that Averaging or Trading Elements Necessarily Take into Account Remaining Useful Life
Section 111(d) requires EPA to allow a state

, in applying a standard of performance to any particular source

, to take into consideration the remaining useful life of the existing source to which the standard applies

. 71

68 A system

- wide approach to reducing emissions includes reducing electricity demand through energy efficiency or displacing demand for fossil fuel

- fired generation through additional zero

- carbon energy. Therefore any projection of demand change or “true

- up” should reflect those anticipated electricity savings or displacement.

69 For a simplified example, assume that the standard is 1100 lbs/MWh (the proposed rate for new coal plants), and that state “X” has one gas plant and one coal plant, each of 500 MW. In the hypothetical base year of 2013, the gas and coal plant together generate 7 million MWh of electricity and emit 5.2 million tons of CO 2, at an average 2013 rate of 1500 lbs/MWh. The state’s cap in 2025 would assume the same generation

-- 7 million
MWh

— and multiply that by the 2025 rate

- based standard

-- 1100 lbs/MWh. This yields a cap of 3.8 million tons per year, 27 percent less than act ual emissions in 2013. Note that this method could be adapted to accommodate different rates for different fuels or plant types, such as those proposed in the new plant standard.

70 EPA should consider providing guidance for how a state can provide a rigor ous demonstration of changes from specific factors, for example if a state is projecting significant increases in electricity demand due to increase d electric vehicle deployment as a result of state policies that are not reflected in federal projections.

71 42 U.S.C. § 7411(d)(1).24

Programs that include averaging and trading inherently take into account remaining useful life, as they allow market partici pants to make decis ions about operations based on market prices. The owners of an older, inefficient facility nearing retirement need not choose between significant modifications to continue operating for only a few years or immediate retirement; instead the owners of such a facility cou ld choose to continue to operate for several years and comply through the purchase of allowances or through averaging emissions with more efficient facilities. In this way, regulated entities may continu e to operate facilit ies that would not be economically feasible to operate if emission reductions were required from each facility, but are economically feasible to operate under a market

- based program . In a market

- based or averaging program, EPA should consider that allowing states to elect such mechanisms is one way to allow states to take into consideration remaining useful life

. EPA should also consider an option for states without such averaging or trading systems to treat specific facilities separately, for example

, if t hose facilities enter into a legally enforceable agreement to retire by a certain date. If a facility commits to retire during the compliance period, a state might not require it to take all the regulatory steps that would be necessary to reduce its emissi ons to the level required at the end of that period, because the source will no longer be operating.

For states that use a mass

- based approach on a system

- wide basis , consideration of useful life could support a declining cap on emissions. For example, a system

- wide cap could, over time, decline to a level that corresponds to the emission level of new fossil

- fired plants, as higher

emitting existing sources are assumed to retire at the end of their useful lives. Of course, the market signals would determ ine whether those aging systems actually retire or whether the required emission reductions would be achieved from other plants reducing their generation.25

V. EPA Should Allow for a Variety of Rigorous State Compliance Options

V.A. EPA Emission Guidelines Should Al low States to Use Effective Current Programs
As we have discussed above, the states have developed a wide array of emissions reductions
programs that are now operating. EPA should incorporate into its “Best System of Emission Reduction” determination all o f the approaches that states are already demonstrating achieve cost

- effective, meaningful reductions from covered sources, including reductions from onsite improvements, shifts in generation among covered sources, and displacement from zero

- carbon generati on increases or demand

- side efficiency. Even if EPA does not explicitly base the “best system of reduction” on the variety of state programs described above , EPA should allow states with any effective existing programs the option of using these programs a s the basis of compliance as long as states can demonstrate through a rigorous, consistent methodology identified by EPA that those programs will achieve the required reductions.

S tates managing greenhouse gas reduction, energy efficiency, and renewable e nergy programs have built these programs through their own democratic and stakeholder processes, and with a deep understanding of conditions within their power grids. To the extent that those programs are delivering a substantial portion of the reductions needed to comply with S ection 111(d) guidelines, EPA should ensure that its federal framework provides states with the option of incorporating their current programs with minimal change or burden as long as they achieve equivalent reductions . As its govern ing regulations require, EPA has regularly invited the states to propose a range of approaches to meet federal standards, in whole or in part, and we expect it to follow the same course here. 72

72 See, e.g.

, Emission Guidelines for Municipal Waste Combustors, 60 Fed. Reg. 65,837, 65,402 (Dec. 19, 1995) (111(d) rules for municipal waste combustors, inviting states to submit trading plans to meet federal standards);
Clean Air Mercury Rule, 70 Fed. Reg. 28,606, 28,619 (May 18, 2005) (allowing states to develop their own plans to comply with power plant Section 111(d) standards); Clean Air Mercury Rule, 69 Fed . Reg. 12,398, 12,406 ( supplemental proposed Mar. 16, 2004) (allowi ng states to develop their own plans to comply with power plant
Section 111(d) standards).26 V.B. EPA Should Allow and Promote Interstate Cooperation and Region al Programs
Many existing programs already have a regional component, and others may well incorporate one. EPA should encourage interstate coordination and collaboration, recognizing that the electricity system is a complex, interstate system

, and that all owing interstate coordination and collaboration can reduce costs and help avoid challenges that arise when limiting systems to a specific state. Interstate cooperation can also lower the administrative burden on states and compliance entities, and helps to resolve equity issues that might otherwise arise between
power

- exporting and power

- importing states.
Interstate programs have already been successful in a variety of contexts. On a national basis, as we have noted above, EPA has promoted multi

- state trad ing systems through its A cid R ain P rogram and C ross

- S tate A ir P ollution R ule, as well as efforts to decrease regional haze and to address ozone transport issues between and among the states. 73 These programs are frequently identified as being highly cost

- ef fective. 74
RGGI is a prime example of how an interstate program helps to ensure that the most cost

effective emission reductions occur across the region. Since the program began, coal

- fired plants closed within the RGGI region and the capacity of those pla nts was replaced by increased generation from cleaner and more efficient renewable and natural gas powered sources elsewhere in the region. Indeed, emissions in at least one state actually increased, because that state is the location of some of the more e fficient natural gas

- fired power plants in the region that had excess capacity.
As RGGI demonstrates, a program that corresponds with or is more closely aligned with the borders of an electricity grid (for example, among states in the same NERC interconn ections or regional transmission organizations ) is potentially more efficient than programs that are constrained by state borders.
A regional program can also avoid market distortions that would result in less than optimal policy decisions due to some of the interstate issues raised by EPA in its questions. For example, if one state’s energy efficiency investments reduce emissions in a neighboring state

, a regional program that encompasses both states would be able to reap the emission reduction benefits o f that energy efficiency under a regional emissions cap.

73 Acid Rain Program, Clean Air Act Title IV, 42 U.S.C. §§ 7651

- 7651o; 40 C.F.R. Parts 72

- 28 (Acid Rain Program implementing regulations, establishing interstate trad ing program); Cross State Air Pollution Rule, 76 Fed. Reg. 48208, 48210 (Aug. 8, 2011) (establishing state trading programs that allow interstate trading); Regional Haze Regulations, 64 Fed. Reg. 35

, 714, 35,715 (July 1, 1999) (allowing multi

- state approach es to controlling regional haze); Overview of the Ozone Transport Commission NO x Budget Program , U.S. Environmental Protection Agency, http://www.epa.gov/AIRMARKET/progsregs/nox/ot c

- overview.html (describing Northeastern states implementation of NO x budget trading program); NOx SIP Call, 63 Fed. Reg. 57,359 (Oct. 27, 1998) (establishing
recommended multi

- state budget trading program to control ozone precursor NO x ).

74 See, e.g., Wi lliam F. Pederson, Should EPA Use Emissions Averaging or Cap and Trade to Implement §111(d) of
the Clean Air Act? , 34 Env. L Rptr. 10731 (2013).27 V.C. EPA S hould P

rovide G uidance on H ow to Ad

dress I nterstate I

ssues such as D ouble

- C ounting.
Regional collaboration on state Section 111(d) plans can directly address double

- counting, either through co ordination of compliance systems or through agreements on how to address any double

- counting problems. In order to promote such regional cooperation, EPA and DOE should make available information about regional electricity flows and interstate impacts of s tate programs and policies. EPA should consider providing guidance on how states can collaborate regionally on implementation plans. For example, EPA should allow states using mass

- based emission budgets to “pool” emission budgets, and to demonstrate how t heir state plans will jointly achieve an aggregated emission budget.
But not all states may opt to join regional plans, and clear accounting will be important between and among different regions.
EPA should also provide guidance on how it will address complications that may arise due to the use of different types of state programs. Such complications include situations where one state proposes a program that would achieve reductions through the displacement of fossil fuel generation due to the state’s r enewable portfolio standards, long

- term power purchase agreements, energy efficiency resource standards, or similar state policies, but where the actual reduction of emissions from fossil generation takes place in another state. If EPA provide s a state wit h credit from emission reductions occurring outside its borders, EPA must establish a process for ensuring that states that see their emissions reduced as a result exclude the resulting emissions reductions from their compliance demonstration. A similar si tuation would arise when a state seeks compliance through planned shut

- downs of fossil fuel generation, but then would see that generation replaced by increased carbon generation in another state

.

V.D. EPA S hould Work with States to Develop Compliance P athway s and Model Rules

To help states develop state

- level and regional plans, EPA should work with states to develop compliance pathways for existing programs, for example by developing model State Plans in collaboration with states or making clear that model S tate Plans developed by states are approvable. (See section VII below for proposed RGGI and State Portfolio compliance pathways).
As part of this work, EPA should develop a procedure for allowing states to demonstrate equivalency with the emission guidel ine, even if EPA does not explicitly contemplate a state’s program type in a model rule. Such a procedure should ensure that equivalent reductions will be achieved through the use of consistent evaluation and quantification methods, as discussed below.

In order to meet the timetable in the Presidential Memorandum requiring states to submit plans by June 30, 2016, EPA should provide a clear indication that it expects certain compliance pathways to be approvable prior to its publication of the final rule by J uly 1, 2015.

V.E. EPA Should Ensure Consistent Evaluation and Quantification of State Plans
Accommodating a range of state and regional program designs will require EPA to pro vide program evaluation metrics along with the draft guidelines. Those metrics shoul d offer a transparent, nationally consistent, and readily usable way for states to evaluate their existing programs to determine whether they suffice to comply with the guideline ’ s emissions level, or if additional reductions will be required . By setting o ut these goal posts early, EPA will make it28

easier for states to quickly advance strong programs through the S ection 111(d) process, and to identify ways to improve weaker ones. EPA should build on current program evaluation guidance such as the “Roadmap f or Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans ” 75 or the State and Local Energy Efficiency Action Network ’s “ Energy Efficiency Program Impact Evaluation Guide. ” 76 These guides describe the terminology, structures, and approaches used for evaluating energy and demand savings as well as methods for calculating avoided emissions and other non

- energy benefits resulting from energy efficiency programs that are implemented by local governments, s tates, utilities, private companies, and nonprofits. They provide context, planning guidance, and discussion of issues that help illustrate appropriate evaluation objectives and approaches for different efficiency portfolios. By promoting the us e of standa rd evaluation terminology and structures and approaches, evaluations can support the adoption, continuation, and expansion of effective efficiency actions for consistent inclusion in State Plans. EPA and DOE should continue to work with state and local ene rgy and environmental agencies to ensure that renewable energy and energy efficiency programs are evaluated transparently and consistently so that appropriate credit is provided for these programs

. Energy efficiency evaluation methodologies are particularl y important for programs ranging from LED lighting replacement to combined heat and power projects. Consistent quantification methodologies are needed for project ing reductions in energy use as part of a baseline energy

use forecast and for calculat ing red uctions documented after

- the

- fact as part of a compliance effort

.

75 EPA EE/RE Roadmap, supra note 49

. 76 State and Local Energy Efficiency Actio n Network, Energy Efficienc y Program Impact Evaluation Guide (2012), www1.eere.energy.gov/seeaction/impactguide.29 V.F. EPA Should Coordinate Efforts with Other Relevant Federal and State Agencies

I mplementing the guidelines will be a collaborative effort between and among numerous federal and regional enti ties, as well as with the states. We trust that EPA will work particularly closely with federal and state energy regulators, including the Federal Energy Regulatory Commission (FERC)

, the Department of Energy ( DOE )

, and through the National Association of Regulatory Utility Commissioners (NARUC), state utility regulators, as well as regional grid operators and reliability coordinators. This work will be critical to developing durable system

- level standards and accessing state plans employing a variety of po licies that may affect the grid. Strong collaboration between EPA and the energy regulators will also be important to make sure that these entities provide maximum support to states investing in emissions controls, by ensuring that energy markets are desig ned and operated in a way that ensures that clean energy investments are fully valued and able to participate.
Initially, we urge EPA to work particularly closely with DOE in order to develop clear evaluation metrics and modeling tools that EPA and the sta tes can use to assess their various grid

- level programs against the level of the emission guidelines , and to assess compliance pathways. As these programs move forward, EPA should also work with FERC and regional grid entities to ensure that reliability

- re lated issues are addressed early in the process, without delaying S ection 111(d)’s implementation, just as EPA has done during other Clean Air Act rulemakings. FERC’s recent Order 1000, which is helping to integrate public policy mandates into grid plannin g, should help with this process by enabling measures that complement and support states’ emission reduction strategies. EPA should work with FERC

, the grid operators

, and the states to ensure that the effects of S ection 111(d) plans are accounted for in p lanning early and that any necessary costs are allocated equitably to the affected parties. It will be important for the regional and inter

- regional grid plans to be able to account for changes driven by S ection 111, and to properly allocate any resulting costs. FERC should also support transmission upgrades that facilitate increased reliance on renewable generation

. States will also need help from federal energy regulators to properly deploy their plans. We trust the energy regulators will help states asse ss the effects of their policy proposals, and to design effective grid

- related programs, and ask that EPA help to coordinate efforts in this direction. Likewise, it is vitally important that federal programs not present unnecessary impediments to state ef forts. All members of the federal family should support ambitious carbon pollution reduction efforts. W e remain concerned, for instance, that the Federal Housing Finance Agen cy continues to complicate financing for the Property Assessed Clean Energy (PACE) program, which should be providing a ready funding stream to help further clean energy improvements. EPA, working with the White House Council on Environmental Quality and other federal coordinating bodies, should ensure that the states do not face confli cting federal messages as they work to reduce carbon pollution.30

VI. Specific Compliance Models that EPA Should Work with States to Develop

VI.A. Regional Budget Trading Programs as a Compliance Pathway
EPA’s guidelines should recognize the regional nature of elect rical grids by allowing participating states to demonstrate compliance with S ection 111(d) guidelines on a regional basis.
In a regional budget trading program, overall emissions are capped and sources comply by holding emission allowances equal to their emissions. Individual states participating in a regional program may also reduce emissions through a variety of state

- specific energy programs like renewable portfolio standards and energy efficiency programs. The regional emission cap can operate as an um brella, encompassing and accounting for the emission reductions from these complementary programs. Because overall emissions are limited by the emissions cap, the complementary programs would not need to be federally enforceable. The complementary programs also serve to reduce the cost of complying with the regional emissions cap. RGGI offers one example of this approach.

Under Section 111(d), t he states in the regional budget trading program c ould be given the option of demonstrating in each of their indiv idual state plans that the overall regional emissions
cap

— which is made up of each individual state’s emission budget

— collectively meets EPA’s standard for the region as a whole. As long as the overall regional emissions cap complies with the guidelines, it should be immaterial to EPA how the participating states elect to apportion the regional emissions cap among the states. Likewise, although a particular state’s actual emissions could theoretically exceed its individual state emission budget in a partic ular year, this should not affect EPA’s ability to accept a regional program as a pathway for compliance. As long as the regional program demonstrates that emissions from sources within the region will collectively meet EPA’s emission guideline, it can se rve as the basis for individual state plans.
As long as EPA provides a mechanism that enables states to have an annual mass

- based emissions budget under Section 111(d), then determining whether a regional budget trading program is equivalent to EPA’s emi ssion guideline will be a simple matter. In particular, the participating states will have to demonstrate that the annual regional emission cap under the regional program achieves emission reductions equal to or greater than those required by EPA’s guideli nes. Although determining equivalency for a regional program like RGGI will generally be straightforward, EPA should develop a mechanism to address any differences in the scope of sources covered by the Section 111(d) guidelines and the scope of sources su bject to the requirements of the emission budget trading program. For example, depending on the final shape of EPA’s guidelines, it is possible that RGGI could include certain smaller sources that may not be covered by EPA’s Section 111(d) guidelines. If t he regional budget meets EPA’s guidelines even with those additional sources, it clearly suffices. If the additional sources cause the regional budget to be higher than the guidelines, the participating states would demonstrate, using a rigorous and equita ble methodology prescribed by EPA, that emissions from the sources covered by Section 111(d) would comply with EPA’s guidelines.
Regional budget trading programs may have design elements intended to limit sharp cost escalations. For example, RGGI allows sources to u s e offsets for a small portion (three percent) of their compliance obligations, and the program revisions that will take effect in 2014 include a Cost Containment Reserve (CCR), which allows the distribution of a limited amount of additional al lowances if prices exceed specified levels. T hese elements are intended to respond to unforeseen market conditions, such as greater

- than

- anticipated demand growth, but they may31

lessen emission reductions. In their implementation plans, the participating st ates could either demonstrate that these design elements will not allow emissions in excess of those allowed by EPA’s emission guideline, or include supplemental measures to ensure consistency with EPA’s guideline.
Under a budget trading program like RGG I, enforceability, measurement

, and verification are already incorporated into the program in a straightforward matter. In terms of enforceability, sources subject to a budget trading program like RGGI are required to obtain and hold a sufficient amount of allowances by the relevant compliance deadline to cover emissions over the relevant compliance period. Under the existing terms of RGGI states’ respective implementing regulations, this is a regulatory requirement that is generally incorporated as a condi tion of each source’s operating permit.
Thus, under a regional budget trading program, an emission cap is enforceable directly against individual sources in a state where the sources are located, and the failure of a source to hold sufficient allowances w ould violate the state’s program and the source’s permit. Under an approved Section 111(d) plan, this obligation of each individual source to comply with the budget trading program would become a federally enforceable condition of an individual source’s Ti tle V permit. At the end of the compliance period, the “true

- up” process, in which states deduct allowances to cover sources’ emissions, provides verification that the emission reductions included as part of the participating states’ 111(d) plans are actua lly achieved.

VI.B. Portfolio of State Programs as a Compliance Pathway
As we discuss above, b ecause S ection 111(d)

- covered fossil plants are embedded in larger power grids, states can reduce emissions through a wide array of programs that improve the performanc e of the grid as a whole , as well as addressing the plants themselves. Such “portfolio” approaches would integrate an array of programs to reduce emissions from S ection 111(d) sources . Because the breadth of such approaches provides an effective platform f or emission reductions, EPA should ensure that its proposed Section 111(d) guidelines can accommodate them. EPA’s Roadmap for Incorporating Energy Efficiency and Renewable Energy in State Implementation Plans provides a sound foundation for that effort.

In essence, a state putting forward a portfolio plan would demonstrate to EPA that its collection of programs can collectively achieve the emissions reductions required by EPA’s S ection 111(d) guidelines. These programs might include, for example, energy eff iciency standards that reduce demand now being satisfied by fossil plants, renewable energy standards that increase the amount of emission

- free power on the grid, and dispatch rules that favor lower

- carbon sources of energy over higher

- carbon sources. Thus , by chipping away at demand for fossil power, introducing new supplies, and lowering the emissions from any fossil generation that is required, states would implement durable grid

- level reforms to comply with S ection 111(d).
Many states have programs that could help support such an approach. A t least thirty states have enforceable renewable portfolio standards, and at least another seven have policy goals to increase renewable power in their states. 77 Similarly, although state energy efficiency efforts

77 Most states have renewable portfolio standards , U.S. Energy Information Administration

, http://www.eia.gov/todayinenergy/detail.cfm?id=4850.32

vary widely in stringency, almost all states have implemented at least some such programs, some very aggressively. 78
Some states have taken particularly comprehensive approaches. These include California, whose AB 32 programs and related energy sector work in clude a 33 percent renewable portfolio standard requirement by 2020, 79 extensive energy efficiency standards, and an economy

- wide
cap

- and

- trade program, among other efforts.
We expect states to present these programs to EPA in one of two general ways, bot h outlined in the Roadmap:

S ome states may choose to present many of their programs as federally

- enforceable “control strategies” within their S ection 111(d) plans. 80 Under that approach, EPA and the state would share enforcement authority over the state’s portfolio of programs, and EPA could either call for plan revisions or enforce directly against a regulated party if required emissions reductions were not forthcoming. 81
We anticipate, however, that most states will prefer to instead use EPA’s “[b]aseline emissions projection pathway.” 82 Under that pathway, states first canvass existing energy efficiency and renewable energy programs (among other programs that may affect emissions of Section 111(d) programs) and project the emissions of covered Section 111(d ) sources as those programs operate over the course of the compliance period. 83 If the portfolio operates as intended, those projections will likely show that the portfolio programs substantially limit section Section 111(d) source emissions.

Because the portfolio of programs constraining section Section 111(d) emissions forms the background for future emissions projections, the programs themselves are not part of the state’s federally

- enforceable section Section 111(d) plan , as long as other compliance ob ligations limit emissions

. 84 For example, in California, emissions are limited by the multi

- sector emissions cap, and California would demonstrate that the energy efficiency and renewable energy programs, coupled with sources’ obligation to hold allowances, limit emissions from the po wer sector sources to below the state’s Section 111(d) budget.
The acceptability of this demonstration turns upon the rigor of the modeling used to test various baseline assumptions. We therefore anticipate work ing with EPA t o develop a modeling “toolkit” that would outlin e program evaluation methods and acceptable modeling protocols and assumptions for use in such analyses. Such evaluation tools would be used to demonstrate, at

78 See generally State Energy Efficiency Scorecard

, American Council for an Energy Efficient Economy (2012), http://aceee.org/state

- policy/scorecard.

79 See, e.g., Ca l. Public Utilities Commission , Renewable Portfolio Standard: Quarterly Report, 1 st Quarter 2013 (2013), http://www.cpuc.ca.gov/NR/rdonlyres/384E3432

- 6EAB

- 4492

- BF88

- 992874A7B978/0/2013_Q1RPSReportFINAL.pdf

. 80 EPA EE/RE Roadmap, s upra note 49

, Appendix F: Control Strategy Pathway.

81 We note, in this regard, that EPA’ S ection 111(d) regulations do allow state agencies other than the state air pollution agency

– such as a utility commission which may hav e primary responsibility over renewable portfolio requirements

-- to enforce portions of S ection 111(d) plans. See 40 C.F.R. § 60.26(d).

82 See EPA EE/RE Roadmap, supra note 49 , at 33

. 83 Id. at Appendix E: Baseline Emissions Pr ojection Pathway (explaining this process).

84 Id. at E

- 6.33

a minimum, that, under a reasonable range of sta rting assumptions, S ection 111(d) source emissions will fall below guideline levels by the time compliance is due, and will not then rise above those levels at any time thereafter

. While many of the grid

- level programs themselves are not federally

- enforc eable under this approach, sources remain accountable for their emissions and c ould be subject to federal enforcement if necessary . In states with cap

- and

- trade programs, for instance, sources could be required to hold sufficient allowances to cover their emissions as a federally

- enforceable program condition , just as in the RGGI example above

. To show that this condition suffices to guarantee compliance, a state c ould demonstrate that its Section 111(d) source emissions will follow an acceptable trajectory as a result of the state portfolio of programs, and that the cap

and

- trade system’s allowance allocation likewise follows this trajectory under all reasonably probable trading outcomes. If that demonstration is made, requiring covered sources to hold allo wances to cover their emissions would guarantee compliance because those sources would not be able to acquire sufficient allowances to exceed the aggregate emission level required by the S ection 111(d) guidelines. 85

States that don’t have existing cap

- and

- trade programs could propose such programs as a backstop obligation for covered sources. Alternatively, a similar result could be achieved by modeling how many hours covered sources may run without exceeding the guidelines (while taking reliability needs into account) . Programs to reduce fossil demand will reduce the need for fossil sources, and so reduce their operating hours. States could then incorporate commensurate operating hour restrictions into the operating permits for covered sources.

We believe that this portfolio approach would apply to groups of states submitting joint plans. In that circumstance, states would undertake the modeling exercises together, thereby accounting for the total impact of all programs on sources within their boundaries.
In sum, the portfolio approach is a natural extension of the baseline modeling states routinely do when developing state implementation plans for air quality programs. Such existing programs form an important foundation for these new planning efforts and can even potentially contribute substantively to achieving required emission reductions if they are sufficiently stringent. As long as states develop clear mechanisms to hold sources to the modeled emission trajectories, and commit to regular program eval uations and necessary revisions, this portfolio approach provides an important way of recognizing state efforts to reduce emissions across the grid.

85 If there w ere a serious question as to whether the portfolio (including the allowance market) would function as expected, states could also consider developing an additional, automatic, backstop m echanism which might require sources to retire additional allowances if emissions trajectories deviated sharply from what modeling had predicted.34

VII. Appendix : State Experiences with Reducing Carbon Pollu t ion
Individual descriptions of state experiences w ith reducing carbon pollution in the electricity sector are provided in this appendix.

VII.A. California
California has implemented a suite of programs to meet its goals of reducing greenhouse gas emissions to 1990 levels by 2020 and 80 percent below 1990 levels by 2050. 86 These policies include groundbreaking energy efficiency programs, the most ambitious renewable energy programs in the country, and a multi

- sector cap

- and trade program.
California’s energy efficiency standards are the bedrock upon which its cli mate policies are built. 87 Energy efficiency is the first resource procured under California’s loading order. 88 Because California has decoupled utility profits from sales and offered utilities the opportunity to profit from efficiency, its utilities have st rong incentives to pursue these savings. 89 Savings are projected at nearly 70 million megawatt hours (MWh) in 2013 alone. 90 California’s efficiency efforts are an economic driver; the state produces twice as much economic output per kilowatt

hour than the n ational average. 91 The California Energy Commission estimates that efficiency standards have generated $74 billion in savings for Californians. 92 According to independent analysts, California’s average monthly residential energy bills are 25 percent below t he national
average. 93 Analysts have concluded that hundreds of thousands of jobs can be created by the
program. 94
California strives to fill any remaining energy needs with renewable energy. California’s Renewable Portfolio Standard (RPS) requires that 33 percent of electricity come from renewable sources by 2020. 95 Companies have responded with large

- scale renewable projects and citizens have installed small

- scale renewable energy. California has 15,000 megawatts

86 See Cal. Air Res. Bd., Climate Change Scoping Plan 31

- 32, 41

- 46 (2008), available at http://www.arb.ca.gov/cc/scopingplan/document/adopted_scoping_plan.pdf

. 87 See generally Cal. Energy Commission, Tracking Progress: Energy Efficiency (2013), http://www.energy.ca.gov/renewables/tracking_progress/documents/energy_efficiency.pdf

. 88 Cal. Energy Commission, Implementing California’s Loading Order for Electricity Resources (2004), http://www.energy.ca.gov/2005publications/CEC

- 400

- 2005

- 043/CEC

- 400

- 2005

- 043.PDF

. 89 See State Energy Efficiency Database: California, American Council for an Energ y

- Efficient Economy

, http://aceee.org/sector/state

- policy/california

. 90 Id.

91 Id.

92 See Id.

93 Devra Wang, Natural Resources Defense Council, California’s Energy Efficiency Success Story (2013 ), http://www.nrdc.org/energy/files/ca

- success

- story

- FS.pdf

. 94 David Roland

- Holst

, Energy Efficiency, Innovation, and Job Creation in California 35 (2008), http://are.berkeley.edu/~dwrh/CERES_Web/Docs/UCB%20Energy%20Innovation%20and%20Job%20Creation%20
10

- 20

- 08.pdf

. 95 See California’s Renewables Portfolio Standard (RPS) , Cal. Public Utility Commission, http://www.cpuc.ca.gov/PUC/energy/Renewables/index.htm

.35

(MW) of installed renewable capacity, more than doubling its installed capacity since 2002. 96 In 2012, California served about 22 percent of retail energy sales with renewable energy. 97 Proponents of the RPS believe the measure could generate $60 billion and create up to 235,000 jobs. 98 The RPS av oided 3.5 million metric tons of CO 2 e in 2011 alone. 99
California is also a leader in deploying small renewable energy systems. In 2007, the state launched the California Solar Initiative, a first

- of

- its kind effort to deploy 3,000 MW of rooftop solar photo voltaic (PV) systems and create a self

- sustaining market for the technology. It is on track to meet its goal two years early, creating thousands of local jobs and spurring technological innovation. 100
Importantly, California’s cap

- and

- trade program includes power plants. By placing a price on the carbon content of electricity, the program encourages use of cleaner electricity. 101
The state is also promoting energy storage efforts which will help further integrate renewable power into the grid, 102 investing in d evelopment of other low

- emission technologies, 103 implementing a GHG permitting program for new major sources of carbon pollution, and maintaining a GHG emission reporting system. 104
These efforts support one of the lowest

- emitting electricity systems in the c ountry. California’s in

- state fossil generation is almost entirely natural gas

- fired, 105 and the state is rapidly phasing out imported power from higher

- emitting coal

- fired power plants. These coal imports represent only about 10 percent of California’s en ergy portfolio, and are expected to decline by nearly two

- thirds by 2020. 106
As a result of these efforts, California’s utility sector’s GHG emissions have continued to decline. Based upon the Air Resources Board’s initial analysis, emissions from in

- state and imported power fell by 16 million metric tons, or 16 percent, from 2005 to the 2010

- 12

96 Cal. Energy Commission, Tracking Progress: Renewable Energy (2013), http://www.energy.ca.gov/renewables/tracking_progress/documents/renewable.pdf

. 97 Id.

98 Office of Senate Floor Analyses, Bill Analysis for 2011 Senate Bill 2X1 at 10 (2011), http://www.leginfo.ca.gov/pub/11

- 12/bill/sen/sb_0001

- 0050/sbx1_2_cfa_20110223_155225_sen_floor.html

. 99 Cal. Environmental Protection Agency, State A gency Greenhouse Gas Reduction Report Card 10, 16 (2013), http://www.climatechange.ca.gov/climate_action_team/reports/2013_CalEPA_Report _Card.pdf.From 2008

- 2011

. 100 Cal. Solar Initiative 2013 Annual Program Assessment , Cal. Public Utilities Commission, http://www.cpuc.ca.gov/PUC/energy/Solar/2013_Annual_Program_Assessment.htm

101 See generally Cal. Air Resources Board, Proposed Regulation t o Implement the California Cap and Trade Program, Initial Statement of Reasons (2010), http://www.arb.ca.gov/regact/2010/capandtrade10/capisor.pdf

. 102 Electric Energy Storage, Cal. Public Utility Commission, (2013), http://www.cpuc.ca.gov/PUC/energy/electric/storage.htm

. 103 Electric Program Investment Charge, Cal. Energy Commission, http://www.energy.ca.gov/research/epic/

. 104 Mandatory Greenhouse Gas Reporting, Cal. Air Resources Board, (2013), http://www.arb.ca.gov/cc/reporting/ghg

- rep/ghg

- re p.htm

. 105 Cal. Energy Commission, Tracking Progress: Installed Capacity (2013), http://www.energy.ca.gov/renewables/tracking_progress/documents/installed_ capacity.pdf

. 106 Cal. Energy Commission, Tracking Progress: Current and Expected Energy from Coal in California (2013), http://www.energy.c a.gov/renewables/tracking_progress/documents/current_expected_energy_from_coal.pdf

.36

averaging period (from 108 million metric tons CO 2 e to 91 million tons CO 2 e). 107 By 2025, California expects to cut utility sector emissions to below 80 million metr ic tons CO 2 e, a roughly 25 percent reduction from 2005 levels. 108 Carbon emissions from all generation are expected to decline over the 2005

- 2025 period, with emissions from in

- state generation projected to drop by 9 million metric tons and from imported po wer by 20 million metric tons. California’s carbon emissions rates have also fallen, from approximately 1,245 lbs CO 2 e/MWh for fossil generation (considering both in

- state and imported power) and 875 lbs CO 2 e/MWh for all power in 2005 to an average of app roximately 1,090 lbs CO 2 e/MWh and 775 lbs CO 2 e/MWh in the three years before 2012. Those rates are expected to decline to an estimated rate in the range of 830 lbs CO 2 e/MWh for fossil sources and of about 581 lbs CO 2 e/MWh for all generation by 2025.

107 Cal. Air Resources Board analysis, based in part on CARB, 2008 to 2012 Emissions for Mandatory Greenhouse Gas Emissions Reporting Summary

, http://www.arb.ca.gov/cc/reporting/ghg

- rep/reported

- data/2008

- 2012

- ghg

emissions

- summary.pdf (last visited Nov. 13, 2013). Analysis is preliminary, but representative. Emissio ns in 2012 were relatively higher than in recent years because of relatively low hydroelectric generation and the unexpected shutdown of the San Onofre Nuclear Generating Station, but the state remains on course to meet emissions targets.

108 Cal. Air Resour ces Board analysis.37 VII.B. Col orado

Colorado is on track to achieve a 29 percent reduction in carbon dioxide emissions by 2018 109 and has experienced significant growth in renewable power in recent years. 110 Policies to promote energy efficiency, support renewable energy, and reduce carbon pollution play an important role in Colorado’s energy outlook , including Colorado’s Clean Air

– Clean Jobs Act

. Colorado’s efforts to reduce carbon pollution will also result in reductions in other air pollutants and promote cleaner energy sources to meet electricity needs while promoting economic development.
To support greater energy efficiency

— and reduce energy costs

— Colorado law requires a 5 percent reduction from 2006 electricity sales by 2018 and 5 percent reduction from 2006 peak demand by 2018. 111 In 2012, the electricity demand

- side management plans of the Public Service Company of Colorado and Black Hills Energy resulted in net economic benefits of $103.7 million. 112 Energy efficiency goals set for Xcel Energy and Black Hills Energy under th e law reduced CO 2 emissions by 1 million tons from 2009 to 2011. 113
In 2010, Colorado increased its Renewable Energy Standard (RES) from 20 percent to 30 percent by 2020 for investor

- owned utilities. 114 Under legislation passed in 2013, l arger rural electric

co

- ops must meet a 20 percent renewable target by 2020, while smaller co

- ops and most municipal utilities have a 10 percent target. 115 Caps on retail cost increases address concerns about price spikes for consumer s

. 116 The RES is projected to create more than 33,000 jobs during construction and $4.3 billion in lifetime economic output. 117 These benefits are in addition to some 30 million tons of avoided CO 2
. 118

The Clean Air

– Clean Jobs Act enacted in 2010 will significantly reduce air pollution, including GHG em issions, while improving public health, supporting in

- state energy production , and spurring job creation. The law, which was supported by a diverse group of stakeholders,

109 Per Colo. Department of Public Health and Environment.

110 EIA State Generation, supra note 4

. 111 Colo. Rev. Stat. § 40

- 3.2

- 104 (2013).

112 Colo. Public Utility Commission, 2013 Report to the Colorado Gener al Assembly on Demand Side Management 6 (2013), http://cdn.colorado.gov/cs/Satellite/DORA

- PUC/CBON/DORA/1251638492924

. 113 Southwest Energy Efficiency Project, House Bill 0 7

- 1037: A Success Story for Homes and Businesses in Colorado Serviced by Xcel Energy and Black Hills Energy (2011), http://www.swenergy.org/news/new s/documents/file/CO%20House%20Bill%201037%20fact%20sheet.pdf

. 114 Colo. House Bill 10

- 1001 (2010); s ee Colo. Governor’s Energy Office, Colorado’s 30% Renewable Energy Standard: Policy Design and New Markets 3 (2010), http://cnee.colostate.edu/graphics/uploads/HB10

- 1001

- Colorados

- 30

- percent

- Renewable

- Energy

- Standard.pdf

. 115 Colo. Senate Bill 13

- 252 (2013).

116 See Press Release, Gov. Hickenloop er S igns Executive Order, I ssues S igning S tatement R elated to SB13

- 252 ( June 5, 2013)

, http://www.colorado.gov/cs/Satellite?c =Page&cid=1251643166067&p=1251643166067&pagename=GovHickenlo oper%2FCBONLayout

. 117 Colo. Governor’s Energy Office, Colorado’s 30% Renewable Energy Standard: Policy Design and New Markets 10 (2010), http://cnee.colostate.edu/graphics/uploads/HB10

- 1001

- Colorados

- 30

- percent

- Renewable

- Energy

Standard.pdf

. 118 Id.38

including utilities, environmental groups, the natural gas industry, and state offici als , requires utilities to develop plans to reduce air pollution emissions from dirtier plants

. 119 Xcel Energy

, Colorado’s largest utility, anticipates reducing its emissions of CO 2 in Colorado by 28 percent, NO X by 86 percent , SO 2 by 83 percent , and mercury by 82 percent by 2020 under the law (Xcel Energy was also a participant in this dialogue)

. 120 Xcel’s plan is predicted to have a positive economic impact of $590 million on the s tate from 2010 to 2026, and to create about 1,500 jobs during peak construction

. 121
Colorado’s electricity generation mix is made up of 10 percent renewables, 62 percent coal, and 27 percent natural gas. 122 From 2005

- 2011 , power generation from wind jumped 570 percent providing 4.4 million MWh

— a significant increase that in pa rt reflects the effectiveness of the state’s RES. 123 During this time , Colorado’s CO 2 emissions declined by 1.9 million tons and its CO 2 emissions rate dropped 7.9 percent while power generation increased 3.7 percent

. 124

119 See Press Release, Gov. Ritter, Bipartisan Lawmakers & Coalition Introduce Colora do Clean Air

- Clean Jobs Legislation (Mar. 16, 2010), http://www.colorado.gov/cs/Satellite%3Fc%3DPage%26 childpagename%3DGovRitter%252FGOVRLayout%26cid% 3D1251573201310%26pagename%3DGOVRWrapper

. 120 Colorado Clean Air

– Clean Jobs Act

, Xcel Energy, http://www.xcelenergy.com/Environment/Doing_Our_Part/Clean_Air_Projects/Colorado_Clean_Air_

- _Clean_Jobs_Plan

. 121 Id.

122 Generation , Colo. Energy Office, ht tp://www.colorado.gov/cs/Satellite/GovEnergyOffice/CBON/1251599939003

. 123 EIA State Generation, supra note 25.

124 Id.39 VII.C. Connecticut
Connecticut’s early lea dership to mitigate the effects of climate change produced its 2005 Climate Change Action Plan, which included increasing investments in energy efficiency, supporting the expansion of Connecticut’s Renewable Portfolio Standard (RPS), and participation in t he Regional Greenhouse Gas Initiatives (RGGI) among its top ten strategies for reducing the sta te’s greenhouse gases emissions

. 125 The strategies embodied in that plan set Connecticut on a firm trajectory toward meeting the emissions reductions requirements of the state’s 2008 Glo bal Warming Solutions Act: a 10 percent reduction from 1 990 emissions by 2020 and an 80 percent reduction from 2001 emissions by 2050. 126
From 2005 to 2011, Connecticut expanded climate mitigation efforts to include initiatives on:

c lean cars, green building standards, smart growth, appliance standards and an expansion of energy efficiency to include oil heat customers. 127 As a result of these actions statewide GHG emissions decreased by nearly 5 percent from 1990 levels; bringing Conne cticut almost halfway to its 2020 goal under its Global Warming Solutions Act. At the same time, Gross State Product has increase d by 64 percent

. 128

Between 2005 and 2011, Connecticut reduced annual emissions of carbon dioxide from its power sector by nearly 30 percent (from 11.7 to 8.2 million metric tons ) and reduced the carbon intensit y of its generating fleet by 30 percent (from 766 lbs/MWh to 535 lbs /MWh) 129 due to reductions in energy consumption and a shift to cleaner generation sources, catalyzed by

suc cessful state air quality regulations, including the Regional Greenhouse Gas Initiative (RGGI); improved economics and supply of natural gas as a fuel for power generation; investments in energy efficiency; and increased deployment of renewable energy sour ces through the RPS and other market

- based tools. Connecticut is saving energy and reducing emissions every year through investments in energy efficiency as the state pursues its statutory goal of “all cost effective energy efficiency” through its utility

- administered, conservation and load management programs. Each $1 invested in these programs provides direct energy savings for participating residents and businesses, and results in more than $2 of system

- wide benefits. Since 2006, the State’s energy effi ciency programs have resulted in average annual electricity savings of more than 300 million kilowatt/hrs per year, 130 which is enough electricity to power more than 30,000 homes for a year. Connecticut’s efficiency programs have helped reduc e electricity c onsumption by 10 percent

125 Conn

. Climate Change Action Plan (2005), http://www.ct.gov/deep/lib/deep/climatechange/ct_climate_change_action_plan_2005.pdf

. 126 An Act Concerning Connecticut Global Warming Solutions, Public Act No. 08

- 98, ht tp://www.cga.ct.gov/2008/ACT/PA/2008PA

- 00098

- R00HB

- 05600

- PA.htm

. 127 Climate Actions, Conn. Department of Energy & Environmental Protection, http://www.ct.gov/deep/cwp/vie w.asp?a=4423&q=530720&DEEPNAV_GID=2121

. 128 Calculated based o n Federal Reserve Economic Data, http://research.stlouisfed.org/fred2

. 129 Calculated from EIA data. EIA State Generation, supra note 4

. 130 Conn

. Statewide Ene rgy Efficiency Dashboard, http://www.ctenergydashboard.com/Public/PublicHome.aspx40

from 2005 levels, 131 resulting in avoiding the emission of more than 2 million tons of carbon dioxide. Connecticut’s renewable portfolio standard (RPS) requires all retail electricity suppliers to obtain at least 27 percent of their supply from renewable sources by 2020. 132 In recent years, Connecticut has launched new initiatives that harness market forces to boost the supply of low

cost, in

- state renewables. Small

- scale (up to 1

- 2 MW) renewable distributed generation projects

can com pete for long

- term power purchase agreements that Connecticut’s electric distribution companies are required to offer through reverse auctions. 133 These projects support local economic development and also reduce local electricity consumption. Additionally, through various innovative financing mechanisms from the Clean Energy Finance and Investment Authority (CEFIA), Connecticut’s groundbreaking “green bank,” installed solar capacity within the state continues to grow. 134 CEFIA has also employed its model of le veraging state funding to attract private capital and investment in clean energy to ramp up the deployment of fuel cells throughout Connecticut. As a result of these programs, the state has increased its deployment of in

- state renewables more than ten

- fold since 2010, and will deploy more than 55 MW in 2013. 135 At the regional level, in 2013, Connecticut’s electric companies have signed long

- term power purchase agreements that will bring more grid

- scale solar and wind to the regional wholesale power market, while staying on track to meet its RPS goals and displace fossil fuel generating units.
Connecticut participates in RGGI, the nation’s first market

- based, regulatory program to cap and reduce greenhouse gas emissions from large fossil fueled power plants. Connecticut has received more than $87 million in proceeds from the auction of emission allowances. The state reinvests nearly 70 percent of those proceeds in energy efficiency programs that benefit individuals, businesses, and state and local governments

. Connecticut also invested 23 percent of its RGGI proceeds in the deployment of more than 6 MW of clean energy systems, including residential and commercial solar photovoltaic power systems and comme rcial fuel cell power systems. 136 Studies indicate that eac h dollar of Connecticut investment of RGGI proceeds will yield more than $394 million in net economic value to Connecticut and produce 2,036 job years of employment over 10 years. 137
Connecticut has also promoted the use of combined heat and power to achiev e additional emission reductions. Through a variety of programs

— including construction grants,

131 Calculated from EIA data, Retail Sales of Electricity by State by Sector by Provider, http://www.eia.gov/electricity/data/state/

. 132 Conn. Renewable Portfolio Standards Overview , Conn. Department of En ergy & Environmental Protection, Public Utilities Regulatory Authority, http://www.ct.gov/pura/cwp/view.asp?a=3354&q=415186

. 133 Low and Zero Emissions Renewable Energy Credit Program

, Conn. Department of En ergy & Environmental
Protection http://www.ct.gov/deep/cwp/view.asp?a=4120&Q=503720

. 134 Clean Energy Finance and Investment Authority, http://www.ctcleanenergy.com /Default.aspx

. 135 Conn. Department of En ergy & Environmental Protection , Restructuring Connecticut’s Renewable Portfolio Standard ii (2013), http://www.ct.gov/deep/lib/deep/energy/rps /rps_final.pdf

. 136 Conn. Program Investments , R egional Greenhouse Gas Initiative, http://www.rggi.org/rggi_benefits/program_investments/connecticut

. 137 Environment Northeast , Economic Benefits of RGGI in CT (June 2013), http://www.env

ne.org/public/resources/ENE_RGGI_Economic_Benefits_CT_20130627.pdf

.41

standardization of interconnection protocols, low interest loans, and the establishment of a CHP portfolio standard

— Connecticut industry added more than 91 MW of CHP capacity , which is more than any state in the region between 2005 and 2011

. 138

138 Conn. Department of Energ y and Environmental Protection, 2013 Conn. Comprehensive Energy Strategy (2013), http://www.ct.gov/deep/lib/deep/energy/cep/2013_ces_final.pdf

.42 VII.D. Delaware
Delaware’s efforts to transform its electric generation fleet have resulted in drastic reduction in CO 2 emissions. Compared to 2005, all sources of electric power generation in Delaware have lowered their CO 2 emissions by 43 percent and CO 2 emissions from coal fired units have been reduced by nearly 70 percent. 139 This is a result of a coordinated effort involving adoption of regulations that required installation of controls on coal and oil fired generating units, 140 participation in the Regional Greenhouse Gas Initiative, adoption of Renewable Portfolio Standards, 141 and aggressive implementation of energy efficiency and combined heat and
power.

Nine out of ten uncontro lled coal units that existed in 2005 have either retired, converted to natural gas or repowered to more efficient natural gas fired CHP. The remaining unit is equipped with activated carbon for mercury control, state of the art scrubber to reduce acid
gase s, and selective catalytic reduction (SCR) to control NOx. New state

- of

- the

- art natural gas units are replacing any lost capacity.
In addition, solar deployment has increased 25

- fold, from two MW to more than 50 MW of installed capacity, and Delaware hosts some of the largest fuel cell farms in the nation. In addition, the state has invested more than $120 million in efficiency in the past three years, including more than $72 million in public facilities through the innovative green bonds of the Delaware Su stainable Energy Utility. 142

139 2005

- 2011. EIA State Emissions, supra note 4

. 140 Electric Generating Unit (EGU) Multi

- Pollutant Regulation, 7

- 1100 Del. Admin. Code § 1146 (2013), available at http://regulations.delaware.gov/AdminCode/title7/1000/1100/1146.shtml#TopOfPage

141 Delaware’s Renewable Portfolio Standard , Delaware Public Service Commission, http://depsc.delaware.gov/elect ric/delrps.shtml

. 142 Gayathri Vaidyanathan

, Del. C reates U tility F und for P ublic B uilding R etrofits , Greenwire (Oct. 20, 2011),
available at http://www. seu

de.org/Press/2011_media_E&E_News_Greenwire_SEU_Bond_Story_10Oct%2020.pdf

.43 VII.E. Illinois

Illinois encourages efforts to reduce carbon pollution and increase clean energy through its energy efficiency and renewable energy standards

. In addition, the state plays a leading role in advancing carbon capture an d storage (CCS) technolog ies through the FutureGen project in conjunction with the U.S. Department of Energy. 143
Energy efficiency policies requir e electric utilities to save two percent of electricity annually by 2015 and have reduced rate

- payer spending o n electricity

. 144 For example, in the first year (2008

- 2009) of the Illinois Public Utilities Act, Ameren Illinois Utilities (AIU) customers saved almost 90,000 MWh, far exceeding AIU’s goal for that year

. 145 In Plan Year 3 (June 2010

- May 2011), another major utility, Commonwealth Edison Company (ComEd), achieved about 662,000 MWh net energy savings through its energy

- efficiency and demand

- response programs. 146
Under its RPS, Illinois requires that 25 percent of its electricity come from renewables by 2025. 147 The state has experienced significant growth in wind power development as a result

— electricity generation from wind increased by more than six million MWh from 2005

- 2011. 148 G rowth in wind energy from 2003 to 2010 alone created almost 10,000 new local jobs du ring construction and a lifetime economic benefit of $3.2 billion , according to one analysis

. 149 In 2011, Illinois avoided about five million tons of CO 2 emissions from renewable resource integration, along with four million tons of NO X

. 150

In addition to its CCS work on FutureGen, Illinois aims to significantly reduce carbon pollution f rom any new coal plants through emission standards. From 2009

- 2015, any new coal

- fueled power plant must capture and store 50 percent of the carbon emissions that the facility would otherwise emit. 151 Th is target increase s to 70 percent from 2016

- 2017 and to 90

143 See FutureGen Alliance, http://www.futuregenalliance.org/

. 144 220 Ill. Comp. Stat. 5/8

- 103(b) (2013).

145 See Ameren Ill. Util ities , ActOnEnergy Energy Efficiency and Demand

- Response Program Results 9 (2010),
available at http://library.cee1.org/ sites/default/files/library/8579/CEE_Eval_AIUEnergyEfficiencyPofolioReport2008_2009_1Ja n2010.pdf

. 146 Navigant Consulting, Inc., Evaluation Report: Summary Report Final 1 (2012), available at http://ilsagfiles.org/SAG_files/Evaluation_Documents/ComEd/ComEd%20EPY3%20Evaluation%20Reports/ComEd_ Summary_PY3_Evaluation_Report_Final.pdf

. 147 Ill. Pub. Act 095

- 0 481 (2007).

148 EIA State Generation, supra note 4

. 149 Ctr. for Renewable Energy, Illinois State University, Economic Impact: Wind Energy Development in Illinois 6, 25 (2010), http://web.extension.illinois.edu/lgien/pdf/events/2012_04

- 19_economic.pdf

. 150 Ill. Power Agency, Annual Report: The Costs and Benefits of Renewable Resource Procurement in Illinois Under the Illinois Power Agency and Illinois Public Utilities Acts 35 (2013), http://www2.illinois.gov/ipa/Documents/201304

- IPA

- Renewables

- Report.pdf

. 151 Ill. Clean Coal Portfolio Standard, Public Act 095

- 1027 (2009).44

percent after 2017. 152 These policies are especially notable as coal provides 45 percent of the state’s electricity. 153

152 Id.

153 2011 data. EIA State Generation, supra note 4

.45 VII.F. Maryland
Maryland has achieved significant electricity sector GHG emission reductions since 2006

— a decline of 9.7 million metric tons, or 30 percent

— due in significant part to its participation in the Regional Greenhouse Gas Initiative (RGGI), a requirement to reduce energy use , its RPS, and regional fuel swi tching

. 154

In July 2013

, a plan released by Gov ernor Martin O’Malley outlined more aggressive measures the state can take to meet its economy

- wide goal to reduce GHG pollution 25 percent from 2006 levels by 2020

. 155 Continuing to reduce carbon pollution from the electricity sector through participation in RGGI, energy efficiency programs, and renewable energy programs are key components of the plan. An independent study found the overall collection of climate and energy proposals would generate $1.6 billion fo r Maryland’s economy a nd support 3 7,000 jobs. 156
Through recently announced programmatic changes to RGGI

, including a reduction in the regional emissions cap of more than 50 percent from 2005 levels by 2020, Maryland expect s to further reduce the state’s 202 0 CO 2 emissions from the electricity sector by an additional 3.6 million metric tons

. 157
The state’s EmPOWER Maryland initiative mandates a 15 percent reduction in peak demand and per

- capita electricity consumption and demand by 2015 from 2007 levels . Ten percent of the overall reduction must come from measures implemented by the state’s utilities and five percent from other energy efficiency programs

. 158 To date, Maryland has achieved a 10.8 percent reduction in peak electricity demand, equivalent to a voiding one coal power plant. 159
The state is on track to exceed its peak demand target with a current projected 17.7 percent reduction in peak demand by 2015. The EmPOWER Maryland program has fund ed measures that will reduce ratepayer electricity us e by mor e than 2 million MWh per year and save $250 million annually. 160 These savings will continue for years, with currently existing measures saving ratepayers $3.7 billion over their useful life. 161 T o tal annual GHG emission reductions attributable to aggressive implementation of EmPOWER Maryland could reach 10.52 million metric tons of CO 2 e in 2020

. 162

154 Reduction based on emissions from in

- state electricity generation. Per Md. Department of the Environment.

155 Md. Department of the Environment, Maryland ’s Greenhouse Gas Reduction Plan (2013) http://www.climatechangemaryland.org/site/assets/files/1184/mde_ggrp_execsummary_2013.pdf [hereinafter
Md. 201 3 GHG Reduction Plan]. Maryland’s Greenhouse Gas Reduction Act requires Maryland to achieve a 25 percent reduction in state

- wide greenhouse gases from 2006 levels by 2020 and establishes a long

- term goal to
reduce emissions 90 percent by 2050. Md. Code An n., Envir. §§ 2

- 120 1 to 1211.

156 Md. 2013 GHG Reduction Plan, supra note 155 , at 192

- 93.

157 Press Release, M d

. Energy Administration

, RGGI States Propose Lowering Regional CO2 Emissions Cap 40%

, http://www.mde.state.md.us/programs/PressRoom/Pages/0207RGGIAnnouncement.aspx

. 158 Per M d

. Energy Administration

. 159 Id . Similarly, since 2007, the state’s per capita energy consumption has decl ined by nearly 10 percent.

160 EmPOWER Maryland Planning , M d

. Energy Administration

, http://energy.maryland.gov/empower3/

. 161 Id.

162 Md. 2013 GHG Reduction Plan, supra note 155 , at 84

.46

Maryland’s RPS requires 20 percent of electricity consumed in the state to be generated by renewable energy sources in 2022. A proposal to increase the RPS to 25 pe rcent by 2020 is under consideration. 163 Maryland’s RPS includes a solar “ carve out” requiring 2 percent of all electricity delivered in Maryland to come from in

- state solar generation ( photovoltaic or thermal) by 2020. 164 The Maryland Offshore Wind Energy Ac t of 2013 establishes revenue certainty for 20 years for a 200 MW offshore wind project, and is a key component of the sta te’s renewable energy expansion

. 165
Coal is the single largest source of electricity in Maryland’s generation portfolio. However, durin g the period from 2005 to 2012, the percentage of electricity generated from coal dropped from 56 to 43 percent. Maryland’s CO 2 emission rate per MWh hour declined by 12 percent during 2005

- 2011. 166 The state’s Calvert Cliffs nuclear plant provide s 35 percen t of the state’s electricity, and renewables, including hydroelectric plants, wind farms, and solar cells

now contribute nearly seven percent. 167

163 Id. at 84

- 85; Md. Code Ann., Pub. Util. Cos. § 7

- 701 et seq.

164 Md. Code Ann., Pub. Util. Cos. § 7

- 701

. 165 Per M d. Energy Administration June 27 presentation or comments; see also Md

. Offshore Wind Energy Act of
2013 , House Bill 226 (2013).

166 Em ission rate calculated using all electricity generation. EIA State Generation, supra note 4 ; EIA State Emissions,

supra note 4

. 167 2011 data. U.S. Energy Information Administration , Maryland State Profile, http://www.eia.gov/state/?sid=MD#tabs

- 4

.47 VII.G. Massachusetts

T he Global Warming Solutions Act (GWSA), signed by Governor Patrick in August of 2008, created a framework for reducing heat

- trapping emissions to levels that scientists believe give us a decent chance of avoiding the worst effects of global warming. It requires reductions from all secto rs of the economy to reach a 25 percent reduction of greenhouse gas emissions (GHGs) belo w 1990 levels by 2020 and an 80 percent reduction by 2050, the path toward which is laid out in the Massachusetts Clean Energy and Climate Plan for 2020. 168

 Massachusetts is showing the way to a clean energy economy

— and it is reapi ng some of the direct benefits in economic growth

— through the development of smart, targeted policies that reduce emissions by promoting greater energy efficiency, developing renewable energy, and encouraging other alternatives to the combustion of fossil fuels. Elements of this success include:

 From 1990 to 2011, the New England electric grid operator indicates total Massachusetts elect ric consumption increased by 22 percent ; however, associated emissions dropped 37 percent because higher carbon fuels like coal and oil are being replaced with cleaner fuels like natural gas and renewable sources. This shift can be attributed to successes of the renewable energy requirements, the regional CO2 cap

and

- trade system, air quality regulations and the recent natura l gas boom in the United States. In recent years the growth rate in electric demand has flattened due in large part to investment in end

- use energy efficiency. 169

 Massachusetts is one of the states participating in the Regional Greenhouse Gas Initiative ( RGGI), the nation's first market

- based regulatory program to cap and reduce greenhouse gas emissions from large fossil

- fueled power plants. Massachusetts has directed the vast majority of its RGGI proceeds into clean energy programs and initiatives. Since 2008, Massachusetts has received more than $233 million in RGGI auction proceeds, which it has used to implement energy programs that improve building efficiency, comfort, durability, health, and affordability for individuals, businesses, and state and loc al governments.

 Massachusetts is saving energy every year through with new energy efficiency investments and programs as the state continues to embrace efficiency as its “First Fuel.” These diverse programs have saved enough electricity to power almost 11 0,000 homes for a year and enough natural gas to heat 15,000 homes for a year. Energy

168 Massachusetts Clean Energy and Climate Plan for 2020 (2010), http://www.mass.gov/eea/docs/eea/energy/2020

- clean

- energy

- pl an.pdf . For more information, see the Global Warming Solutions Act Dashboard: http://www. mass.gov/eea/air

- water

- climate

- change/climate

change/massachusetts

- global

- warming

- solutions

- act/global

- warming

- solutions

- act

- dashboard.html . Except for where otherwise noted, all data in this document is drawn from the Dashboard, updated by MassDEP Octobe r 2013.

169 Regional Greenhouse Gas Initiative Auction Proceeds, Massachusetts Executive Office of Energy and Environmental Affairs, http://www.mass.gov/eea/grants

- and

- tech

- assistance/guidance

- technical

assistance/agencies

- and

- divisions/doer/rggi

- auction

- proceeds.html

.48

efficiency has reduced greenhouse gas emissions by more than 431,000 metric tons

— the equivalent of taking about 85,000 cars off Massachusetts’ roads for a whole year. For every one dollar invested in efficiency, the average benefit was $4.17 for homeowners and $5.10 for businesses. Massachusetts’ bold energy efficiency initiatives have made it the most energy efficient state in the country for the last three years, accordi ng to the American Council on an Energy Efficient Economy. 170

 Massachusetts is dramatically boosting renewable energy generation. Due to financial incentives such as renewable energy credits, net metering, and long

- term contracts, solar energy capacity has grown from 1.64 MW in 2007 to 327 MW in 2013, reaching Governor Patrick’s goal of 250 MW 4 years early; 171 wind energy has grown from 1.64 MW to 103 MW in these same years. 172 And Massachusetts is vigorously pursuing other clean energy solutions, such as combi ned heat and power, and energy from the anaerobic digestion of food waste.

 Green building standards have created new markets for energy efficient building design, retrofit, and operations. Almost 200 new LEED

- certified buildings were constructed in Massach usetts from 2001

- 2011.

 The Commonwealth’s clean energy industry is growing rapidly, despite a tough economic environment nationally. Surveys by the Clean Energy Center show that there was an increa se in clean energy jobs of 11.8 percent in 2013 and now alm ost 80,000 employees are working in clean energy throughout the Commonwealth. Since 2011, this growth has outpaced the growth in the Massachusetts economy by more than eight times. Clean energy continues to maintain its place as one of the Commonwealt h’s

m arquee industries with 1.9 percent of the total Massachusetts work force.
Thanks to a combination of these measures, since 1990 statewide GHG emissions have fallen 10%, while over the same period Gross State Product has increased 68 percent . These results clearly disprove the myth that environmental protection hinders economic progress. In the past decades

— against a backdrop of tightening federal and state emission limits on many sectors

, from factories and power plants to automobiles

— Massachusetts’ populat ion and total energy use have grown modestly as the state’s economy has increased dramatically. Over the same period, emissions of greenhouse gases and other air pollutants have dropped. Massachusetts looks forward to continuing this trend of emissions red uctions coupled with economic growth as it works toward the limits set by the Global Warming Solutions Act and federal stationary source GHG regulations.

170 ACEEE, The State Energy Efficiency Scorecard

, http://aceee.org/state

- policy/scorecard

. 171 Mass. Department of Energy Resources, Installed Solar Capacity (2013), http://www.mass.gov/eea/docs/doer/renewables/insta lled

- solar.pdf

. 172 Mass. Department of Energy Resources, Installed Wind Capacity (2013), http://www.mass.gov/eea/docs/doer/renewables/installed

- wind.pdf

.49 VII.H. Minnesota

From 2005

- 2011, Minnesota experienced a 17.5 percent reduction in carbon dioxide pollution. 173 Policies to reduce carbon dioxide emissions, reduce emissions of mercury and other air pollutants, increase renewable energy use, and improve energy efficiency have helped drive these reductions. To build on this progress, the state has established goals to reduce greenhouse gas emissions by 15 percent from 2005 levels by 2015, by 30 percent by 2025, and by 80 percent by 2050. 174
Minnesota has a target of reducing energy use by 1.5 percent per year through energy efficiency measures. 175 Minnesota’s Conservat ion Improvement Program (CIP) requires utilities to spend a minimum of 1.5 percent of annual operating revenues on incentives like rebates on high

- efficiency appliances and efficient lighting programs. 176 CO 2 emissions reductions from the CIP have been incre asing in recent years, reaching more than 800,000 tons in 2010. 177
Minnesota’s Renewable Energy Standard (RES) requires utilities to generate 25 percent of their power from renewables by 2025. 178 Xcel Energy, the state’s largest utility, must achieve 30
percen t from renewables by 2020, one quarter of which must be met with wind. All utilities have met their 2012 RES goals and most ratepayers are experiencing cost benefits. 179 New legislation creates an additional solar energy standard that will require investor

- owned utilities to obtain 1.5 percent of their power from solar energy by 2020. 180 Between 2000 and 2010, wind power generation in Minnesota increased 900 percent and natural gas generation increased 250 percent. 181 Most of the growth in natural gas use occurr ed after its price dropped from historic highs in 2008. 182 Also between 2000 and 2010, the use of biomass for power generation increased 60 percent, while the use of coal for power generation decreased about 17 percent and use of petroleum for power generati on decreased 94 percent. 183 The chart below shows the current electricity generating mix in Minnesota today. 184

173 Reduction in in

- st ate electricity generation. EIA State Emissions, supra note 4

. 174 Minn. Stat. § 216H.02.

175 Minn. Stat. § 216B.2401. Amended 2013 to “at least” 1.5%.

176 How CIP Works , Minn. Department of Commerce, http://mn.gov/commerce/energy/topics/conservation/How

CIP

- Works.jsp ; Minn. Stat. 216B.241.

177 Minn. Department of Commerce, Minnesota Conservation Improvement Program Energy and Carbon Dioxide
Sa vings R eport for 2009

- 2010 at 3 (2012), http://mn.gov/commerce/energy/images/CIPCO2Rpt2012.pdf

. 178 Renewable Energy

, Minn., http://mn.gov/portal/natural

- resources/renewable

- energy/ ; Minn. Stat. §
216B.1691.

179 Minn. Department of Commerce , Progress on Compliance by Electric Utilities with the Minnesota Renewable Energy Objective and the Renewable Energy Standard 3, 9 (2013 ), http://mn.gov/commerce/energy/images/2013RESLegReport.pdf

. 180 Governor O K

s Solar Energy Bill, Greenwire (May 24, 2013); Minn. Stat. § 216B.1691 (Subd. 2f.).

181 Provided by Minn. Dep artment of Commerce.

182 Id.

183 Id.

184 Id.50

Under the 2007 Next Generation Energy Act, Minnesota prohibits new coal

- fired power plants that produce a net increase in carbon emissions. 185 Util ities cannot import electricity from large fossil fuel

- fired power plants in another state that were not operating by January 1, 2007. 186 Minnesota also has a longstanding moratorium on new nuclear power plants, although two existing plants operate. 187

From 2 005

- 2011, Minnesota reduced its CO 2 emissions by 6.9 million tons, lowering its CO 2 emissions rate by 17.5 percent, even while power generation slightly increased. 188 Minnesota experienced economic growth as emissions have dropped and electricity rates remai n competitive. 189 Minnesota is committed to continuing its transformation of the nature of the generation of electric power used in Minnesota and look to this federal rulemaking to help meet our commitments.

185 Minn. Stat. § 216H.03.

186 Id.

187 Per Minn. Department of Pollution Control Agency.

188 In

- state electricity generation. EIA State Emissions, supra note 4

. 189 Per Ellen Anderson, Energy Ad viser to Minnesota Gov. Mark Dayton.51 VII.I. New Hampshire
New Hampshire demonstrated early leadership to mitigate the effects of climate change by enacting its Clean Power Act in 2002. It also produced its revised March 2009 Climate Change Action Plan, which included recommendations for maximizing energy efficiency, increasing renewable energy required by its Renewable Portfolio Standard (RPS), and participation in the Regional Greenhouse Gas Initiatives (RGGI) among its top strategies for reducing the state’s greenhouse gases emissions. 190 The strategies embodied in that plan set New Hampshire on a firm trajectory toward meeting the emissions reductions goals: a 20 percent reduction from 1990 emissions by 2025 and an 80 percent reduction by 2050.
New Hampshire has achieved a 38 percent reduction in carbon pollution from the power sector in the p ast seven years due to policies that have capped carbon emissions, required more renewable energy generation, invested in energy efficiency, and experienced fuel

- switching from coal to natural gas. 191 New Hampshire’s policies have resulted in significant new clean generation sources, including increased operation of new, efficient natural gas plants, increased operation of a nuclear plant, and increased renewable power generation. New Hampshire’s participation in RGGI is a major factor in the state’s efforts to curb carbon pollution while generating more than $57 million in proceeds from the auction of emission allowances. 192
New Hampshire is one of nine states that form RGGI, the first emissions budget and allowance trading program in the United States to redu ce GHG emissions from the power sector. A study by The Analysis Group found the first three years of RGGI produced $1.6 billion in economic growth while lowering consumer energy bills. 193 New Hampshire uses a portion of the proceeds from RGGI allowance aucti ons to invest in energy efficiency in communities and support green jobs. As of June 2012, New Hampshire’s cumulative energy savings due to projects that received RGGI funds ($21.8 million spent) are expected to be $107.8 million through 2030 based on curr ent energy prices. For every dollar spent as of June 2012, the expected return is $4.95 in energy savings. 194

190 NH Climate Change Action Plan (2009), http://des.nh.gov/organization/divisions/air/tsb/tps/climate/ac tion_plan/nh_climate_action_plan.htm

. 191 2005

- 2011. EIA State Emissions, supra note 4

. 192 2013 RGGI Annual Report to Legislative Committees (2013), http://puc.nh.gov/Sustainable%20Energy/GHGERF/RGGI%20Annual%20Reports/2013%20RGGI%20Annual%20Rep ort%20to%20NH%20Legislature.pdf

. 193 Analysis Group, The Regional Greenhouse Gas Initiative: Ec onomic Impacts of the First Three Years (2011), http://www.analysisgroup.com/uploadedFiles/Publishing/Articles/Economic_Impact_RGGI_Fact_Shee t.pdf

. 194 Carbon Solutions New England, New Hampshire Greenhouse Gas Emissions Reduction Fund (GHGERF): Year 3 (July 2011

– June 2012) Evaluation (2012), http://puc.nh.gov/Sustainable%20Energy/GHGERF/Evaulations/GHGERF_Year%203_annual_report_2011

- 12_FINAL.pdf (Greenhouse Gas Emissions Reduction Fund administered by the NH Public Utilities Commission (PUC)).52

New Hampshire’s RPS calls for 24.8 percent of the state’s electricity to come from renewable sources by 2025. 195 This policy boosted the use of bioma ss and hydroelectric resources and jumpstarted wind power development. The New Hampshire Public Utilities Commission (PUC) administers the Renewable Energy Fund, (REF) under which it has established five grant and rebate programs that have seen substantial demand and growth since their creation following the REF’s establishment in 2009. The REF has awarded 1,614 rebates for renewable energy systems, and provided New Hampshire homeowners, businesses, schools, towns, non

- profit organizations and other eligibl e entities with $7,455,536 in funding toward these systems. In addition, the PUC’s competitive grant program has provided close to $2 million in funding for renewable projects featuring technologies from biomass heating systems to hydroelectricity upgrades to photovoltaic, solar hot air, and landfill

- gas

- to

- energy, among others. In 2013, it is expected that an additional $4 million will be awarded through additional grants for renewable energy projects. These rebate and grant funds have leveraged $38.4 mil lion in private investment, providing a boost to the state’s economy and creating jobs for electricians, plumbers, and alternative energy businesses. 196
These new policies and the low price of natural gas have delivered a cleaner power sector in New Hampshir e and resulted in lower wholesale electricity prices. Fourteen percent of New Hampshire's 2011 net electricity generation came from renewable energy. 197 Natural gas accounted for 33 percent of New Hampshire’s net electricity generation in 2011, up from 24
pe rcent in 2010. 198 The Seabrook nuclear power reactor, the largest in New England, provided 42 percent of New Hampshire’s 2011 net electricity generation. 199

195 Electric Renewable Portf olio Standard , New Hampshire Public Utilities Commission, http://puc.nh.gov/Sustainable%20Energy/Renewable_Portfolio_Standard_Program.htm

196 New Hampshire Pub lic Utilities Commission, 2013 REF Annual Report to Legislative Committees (2013), http://puc.nh.gov/Sustainable%20Energy/R enewable%20Energy%20Fund/2013%20REF%20Report%20to%20Legisl
ature%2010

- 1

- 13.pdf

. 197 2011 data. U.S. Energy Information Administration, New Hampshire State Profile, http://www.eia.gov/state/?sid=NH

. 198 Id.

199 Id.53 VII.J. New York
New York has achieved a 39 percent reduction i n carbon pollution from the power sector in t he past seven years due to policies that have capped carbon emissions, required more renewable energy generation, and invested in energy efficiency , as well as a switch in generation sources from coal to natural gas due in part to low natural gas prices. 200 New York’s policies have resulted in significant additions of clean generation sources, including new efficient natural gas plants and renewables. New York’s participation in RGGI is a major factor in the state’s efforts to curb carbon pollution while gene rating nearly $ 6 0 0 million to date for a broad spectrum of clean energy programs. 201

New York is one of nine states that form RGGI, the first emissions budget and allowance trading
program in the United States to reduce GHG emissions from the power sector. A n independent study by t he Analysis Group found the first three years of RGGI produce d $1.6 billion in economic growth while lowering consumer energy bills. 202 New York uses proceeds from RGGI allowance auctions, which are projected at approximately $65 mil lion annually, to invest in comprehensive strategies that help achieve the RGGI CO 2 emission reduction goals to reduce GHG pollution through energy efficiency, renewable energy, and carbon abatement technology. 203 RGGI revenues support green jobs, including the training of 1,000 workers to implement building retrofits. 204 The revenues also fund solar power installation efforts. 205 Overall, RGGI

- funded pro jects have benefited more than 55,000 households and 600 businesses in New York. 206

New York implemented a n e ner gy efficiency goal reducing energy consumption 15 percent by 2015. 207 As a result of this Energy Efficiency Portfolio Standard, t he 2009 New York State Energy Plan projected emissions reductions of more than 9 million tons of CO 2 in 2015, as well as 6,544 to ns of NO X and 9,040 tons of SO 2
. 208 While more savings are achievable, third party

200 2005

- 2011. EIA State Emissions, supra note 4

. 201 $583.4 million in cumulative proceeds from auction of New York allowances, as of Dec. 6, 2013. Cumulative Allowances and Proceeds by State , Regional Greenhouse Gas Ini tiative, http://www.rggi.org/market/co2_auctions/results#state_proceeds

. 202 Analysis Group, The Regional Greenhouse Gas Initiative: Economic Impacts of the First Three Yea rs (2011) http://www.analysisgroup.com/uploadedFiles/Publishing/Articles/Economic_Impact_RGGI_Fact_Sheet.pdf

. 203 N.Y. State Department of Env ironmental Conservation

. See also N.Y. State Energy Research & Dev elopment
Auth ority, Regional Greenhouse Gas Initiative Investment Plan (2013), http://www.nyserda.ny.gov/Energy

- and

the

- Environment/Regional

- Greenhouse

- Gas

- Initiative/Auction

- Proceeds.aspx

. 204 N.Y. State Department of Environmental Conservation

. 205 Id.

206 Id. ; Regional Greenhouse Gas Initiative , N.Y. State Department of Environmental Conservation, http://www.dec.ny.gov/energy/rggi.html#Rulemaking

. 207 N.Y. State Public Service Commission, Order Establishing Energy Efficiency Portfolio Standard and Appr oving Programs , Case 07

- M

- 0548 (June 18, 2008), available at http://www3.dps.ny.gov/W/PSCWeb.nsf/0/06F2FEE55575BD8A852576E4006F9AF7?OpenDocument

. 208 State E nergy Planning B d

. , Energy Efficiency Assessment

, New York State Energy Plan 2009 at 29 (2009), http://www.nysenergyplan.com/Prior

- State

- Energy

- Plans/2009stateene rgyplan.aspx

.54

analysis shows by the end of 2011 the program had avoided $3.2 billion in wasted energy costs and created about 10,000 jobs. 209

New York’s RPS calls for 30 percent of the state’ s electricity to come from renewable sources by 2015. 210 This policy has boosted wind power development and jumpstarted solar resource development in the Empire State

. The New York State Energy Research and Development Authorit y (NYSERDA) estimates that the RPS avoided 4.1 million tons of CO 2 from 2006 to 2012, along with 4,028 tons of NO x and 8,853 tons of SO 2
. 211 NYSERDA expects that projects initiated to meet the standard will inject $1.1 billion into the s tate’s economy over their operating lives. 212

These ne w policies and the low price of natural gas have delivered a cleaner power sector in New York and resulted in lower wholesale electricity prices. 213 New York currently gets 22 percent of its energy from renewable sources, 18 percent of which come s from hydro electric
power. 214 Prior to implementing an RPS, New York generated only a nominal amount of wind
power. 215 It now has more than 1,600 MW of installed wind energy capacity , accounting for two percent of the state’s power. 216 Natural gas power plants generate 44 percent of New York’s electricity. 217 Nuclear power plants produce 30 percent of the generation mix. 218 From 2005

- 2011, New York reduced 24 million tons of CO 2 emissions from the power sector and its CO 2 emission rate declined 35 percent. 219

209 Pace Energy & Climate Center, Energy Efficiency in New York: Midcourse Status Report of ’15 by 15’ at 6 (2012), http://energy.pace.edu/sites/default/files/publications/Energy%20Efficiency%20in%20New%20York%2015x15_0.p
df

. 210 Per N.Y. State Department of Environmental Conservation June 27 presentation, comments; N.Y. State Public

Service Commission

, Order Establishing New RPS Goal and Resolving Main Tier Issues, Case 03

- E

- 0188 (Jan. 8, 2010), available at http://www3.dps.ny.gov/W/PSCWeb.nsf/0/1008ED2F934294AE85257687006F38BD? OpenDocument

. 211 N.Y. State Energy Research & Dev elopment Auth ority , The New York State Renewable Portfolio Standard Performance Report 19 (2012), http://www.nyserda.ny.gov/Publications/Program

- Planning

- Status

- and

- Evaluation

Reports/Renewable

- Portfolio

- Standard

- Reports.aspx

. 212 Id.

213 Per N.Y. State Department of Environmental Conservation

. 214 2012 data. EIA State Ge neration, supra note 4

. 215 N.Y. State Energy Research & Development Authority, RPS Performance Report (2013), http://www.nyserda.ny.gov/Energy

- Data

- and

- Prices

- Planning

- and

- Policy/Program

- Planning/Renewable

- Portfolio

Standard/Main

- Tier/Documents.aspx

. 216 2011 data, U.S. Ene rgy Information Administration, Existing Nameplate an d Net Summer Capacity by Energy Source, Producer Type and State (EIA

- 860), http://www.eia.gov/electricity/data/state/existcapacity_annual.xls

. 217 2012 data. EIA State Genera tion, supra note 4

. 218 Id.

219 Id .; EIA State Electric Power Emissions, supra note 4

.55 VII.K. Oregon
In 2007, Or egon established ambitious goals for red ucing statewide emissions to 75 percent below 1990 levels by 2050. 220 While significant progress is required to meet this goal, the state recently announced that the first interim goal

— arresting growth and beginning to reduce emissions by 2010

— has been met

. 221 A significant part of this progress has been achieved through a variety of programs that have improved energy efficiency across the state and increased investment in renewable energy. Following are brief description s of several programs Oregon has implemented that have reduced emissions from the power sector.

 The Energy Facility Siting Council Carbon Dioxide Standard sets carbon dioxide emissions standards for new energy facilities (currently 0.675 lbs/KWh for baselo ad gas plants) . An applicant has three alternatives for meeting the standard: 1) on

- site cogeneration, 2) implementing offset projects directly or through a third party; or, 3) to pay the Climate Trust $1.27 per ton to offset emissions for the applicant. 222

 The Emissions Performance Standard requires that all l ong

- term commitments for power meet an emissions standard of 1,100 lbs/MWh, rega rdless of the geographic location of the generation. 223

 The Renewable Portfolio Standard requires that all utilities serving Oregon load must include in their portfolio a percentage of electricity generated from qualifying renewable energy sources. The percentage of qualifying electricity that must be included varies by utility , with Oregon’s three largest utilities required to reach 5 percent in 2011, 15 percent in 2015, 20 percent in 2020, and 25 percent in 2025. 224

 The Oregon PUC 's integrated resource planning approach requires electric utilities to update 20

- year plan s every two years that identify the resources to meet expec ted demand that provide the best mix of cost and risk. Costs of potential future greenhouse gas regulation are required to be explicitly evaluated for m ajor capital investments and environmental compliance inv estments in existing resources.

 Oregon's public purpose charge takes 3 percent of the total revenues collected by the utilities to provide roughly $60 million per year to support energy efficiency, renewable energy, and low

- income programs in Oregon. Furthermore, utilities are required to assess the ac hievable cost effective conservation potential in their service territories. If there is a gap between the potential and what can be achieved through funding provided by the public purpose charge funding, the utilities can ask for rate recovery in order to

220 Global Warming Actions, 2007 Or. Laws 907, http://www.oregonlegislature.gov/bills_laws/lawsstatutes/2007orLaw0907.html

. 221 Or. Global Warming Commission Report to Legislature (2013), http://www.keeporegoncool.org/sites/default/files/ogwc

- standard

- documents/OGWC_2013_Rpt_Leg.pdf

222 Or. Department of Energy, Oregon’s Carbon Dioxide Standards For New Energy Facilities (2010), http://www.oregon.gov/energy/Siting/docs/Reports/CO2Standard.pdf

. 223 Or. Department of Energy, Greenhouse Gas Emissions Standard, http://www.oreg on.gov/energy/GBLWRM/docs/GHG_Rules.pdf

. 224 Renewable Portfolio Standard , Or. Department of Energy, http://www.oregon.gov/energy/RENEW/RPS/Pages/index.aspx

.56

pursue the additional conservation. Recently, this has provided approximately $125 million per year fo r cost

- effective energy efficiency

. 225

 Oregon’s Residential Energy Tax Credit program has provided a wide variety of tax credits for efficient appliances, cars and energy systems. 226 Similarly, tax credits aimed at business and commercial customers provided a wide range of credits for energy ef ficiency and renewable energy. Currently this program provides credits for high efficiency heating and air conditioni ng systems, as well as energy generatio n and alternative fuel systems.
Overall, Oregon has made considerable reductions in greenhouse gas emissions associated with the generation of electricity supplied in the state. Between 2005 and 2010, emissions associ ated with electricity used by Oregon households and businesses declined 10 percent. 227
This reduction

— spurred by the policies described above

— has helped the state meet its first greenhouse gas reduction goal; meeting the ambitious goals for the future will r equire the state to build on these policies and the introduction of new approaches.

225 Public Purpose Charges for PGE , PacifiCorp, Or. Department of Energy, http://www.oregon.gov/energy/cons/pages/sb1149/business/ppcinvest.aspx

. 226 About Oregon’s Residential Energy Tax Credit Pr ogram, Or. Department of Energy, http://www.oregon.gov/ENERGY/RESIDENTIAL/Pages/residential_energy_tax_credits.aspx

. 227 Or. Department of Environmental Quali ty, Oregon’s Greenhouse Gas Emissions Through 2010: In

- Boundary, Consumption

- Based and Expanded Transportation Sector Inventories (2013), http://www.oregon.gov/DEQ/AQ/Pa ges/Greenhouse

- Gas

- Inventory

- Report.aspx

.57 VII.L. Washington
Washington produces very low carbon emissions from its electricity sector due to its ex pansive hydroelectric resources. The state is taking steps to further re duce its carbon emissions through energy conservation and renewable energy programs , as well as by requiring the early closure of its only coal plant . Washington achieved a 46 percent carbon emissions reduction from 2005 to 2011, and reduced its carbon emi ssions rate by 52 percent over the same period, from 328 to 158 lbs CO 2 /MWh of electricity generated. 228
Washington has achieved significant savings from its energy conversation programs. In 2012, the S tate of Washington achieved 980,643 MWh of incremental c onservation savings, out of retail sales of 92,675,126 MWh.
Washington voters approved ballot initiative 937 in November 2006 which set new renewable energy resource and conservation requirements for electric utilities to meet. 229 Codified in Chapter 19.285 RCW, the energy conservation section requires each qualifying utility to “pursue all available conservation that is cost

- effective, reliable and feasible.” Seventeen utilities, representing about 84 percent of Washington's load , currently meet the definiti on of qualifying utility.
The law requires utilities to use the Northwest Power and Conservation Council’s methodology to determine their achievable cost

- effective conservation potential every two years for the subsequent ten

- year period. Utilities also mu st establish and update a biennial conservation acquisition every two years. If a utility does not meet its conservation goals, it must pay an administrative fine for each MWh of shortfall, starting at $50 and adjusting annually for inflation beginning in 2007. 230

The Northwest Power and Conservation Council approved its Sixth Power Plan, in 2010. The Power Plan is a regional energy blueprint that guides the region’s electric utilities. Covering the 20 year period from 2010

- 2020, the Power Plan called for 6,000

– 7,000 average megawatts of conservation savings to meet 85 percent of the region’s load growth

. 231 The Pacific Northwest is on track to meet this goal, and expects to continue i nvesting heavily i n efficiency. Under federal law, the Council revises the 20

- year plan every five years.
Washington's private and public utilities also have long records of offering customer energy efficiency and conservation programs supported by regional organizations in cluding the Northwest En ergy Efficien cy Alliance. The Northwest Energy Efficiency Alliance seeks to

228 Calculated from U.S. Energy Information Administration data. CO 2 emissions based on Total Electric Power Industry category. EIA State Electric Power Emissions, supra note 4 . Electr icity generation data represents the total electricity generated from all electricity generation sources in the state, not just fossil fuel

- fired sources EIA State Generation, supra note 4

. 229 Energy Independence Act, Washingto n Initiative Measure No. 937, http://www.secstate.wa.gov/elections/initiatives/text/i937.pdf

. 230 ACEEE, State Energy Efficiency Policy Database: Washington, http://aceee.org/sec tor/state

policy/washington#Energy Efficiency Resource Standards (last updated Aug. 12, 2013).

231 Northwest Power and Conservation Council, Power Planning, http://www.nwcouncil.org/energy/powerplan/

.58

transfo rm markets for energy efficient products. Its marke t transformation program impacts consumer goods, as well as building codes, desi gn, construction a nd operations. 232
Washington has also taken significant steps to increase renewable resources. In addition to conservation requirements, ballot initiative 937 set new renewable energy resource requirements for electric utilities

. Codified in Chapter 19.285 R CW, the law requires qualifying utilities to meet 15 percent of their electric load with new renewable energy by 2020. According to the Utilities and Transportation Commission, in 2012 Washington’s investor

- owned electric utilities, which combined serve ab out half the state of Washington’s residents, generated or acquired 2.35 million megawatt hours of new clean electricity. 233 This only includes energy generated from new renewable projects, and not energy generated from the region’s considerable fle et of ol der hydroelectric dams. According to the Washington State Energy Office, in 2012 state of Washington produced about 73 percent of its electricity from carbon

- free

sources. 234
And this new renewable energy is not as expensive as many claimed it would be when the law

was passed by Washington’s voters. The investor owned utilities’ filings show that complying with the RPS only cost their customers an additional $35 million in 2012

— an increase to the average household bill of 1.2 percen t, or a little over $1 a month. 235
Finally, Washington will achieve significant further reductions through the early closure of its only coal

- fired power plant. In 2011 the Washington State Legislature passed, and the Governor signed into law, legislation requiring the closure of th e only coal powered electricity plant located in Washington. The Centralia plant was the largest single source greenhouse gas emission in the state, and through the deal closes one coal boiler in 2020 and the other by 2025. Additionally, the plant will me et a schedule of emissions reductions along the way. 236

232 Northwest Energy Efficiency Alliance, Market Transformation, http://neea.org/about

- neea/market

transformation

. 233 Washington Utilities and Transportation Commission, Renewable Energy, http://www.utc.wa.gov/regulatedIndustries/utilities/energy/Pages/renewalEnergy.aspx

. 234 Washington Dept. of Commerce State Energy Office, Fuel Mix Disclosure, http://www.commerce.wa.gov/Programs/Energy/Office/Utilities/Pages/FuelMix.aspx

. 235 Washington Utilities and Transportation Commission, Company Annual Reports, http://www.utc.wa.gov/regulatedIndustries/utilities/energy/Pages/CompanyAnnualReports.aspx

. 236 Coal

- Fired Electric Generation Facilities, ch. 180, 201 1 Wash. Laws 1330, http://www.leg.wa.gov/CodeReviser/documents/sessionlaw/2011pam2.pdf

.