# CLEAN POWER PLAN

Proposal to Reduce Carbon Pollution From Existing Power Plants

December 3, 2014

# This Proposal Deals With the Largest Source of GHG Emissions in the U.S.

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# Outline

• Summary of Proposal • Background on Clean Air Act Section 111(d) • Pre - proposal Outreach & What We Heard 

## • Setting State Goals • State Plans for Meeting Goals • Costs and Benefits • Next Steps

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### This proposal will: 

### • Reduce carbon pollution from existing power plants, for which there are currently no national limits. • Maintain an affordable, reliable energy system. • By 2030, reduce nationwide carbon dioxide (CO 2 

### ) emissions, from the power sector by approximately 30% from 2005 levels. • Significant reductions begin by 2020. • Cut hundreds of thousands of tons of harmful particle pollution, sulfur dioxide and nitrogen oxides as a co - benefit. • Provide important health protections to the most vulnerable, such as children and older Americans. • Lead to health and climate benefits worth an estimated $55 billion to $93 billion in 2030. • From soot and smog reductions alone, for every dollar invested through the 

### Clean Power Plan – American families will see up to $7 in health benefits. 4 

# Summary

### • Build on actions states, cities and businesses across the country are already taking to address the risks of climate change. • Spur investment in cleaner and more efficient technologies, creating jobs and driving innovation. • Require a reasonable emission reduction glidepath starting in 2020. • Provide a flexible timeline — up to 15 years from guideline issuance — for all emission reduction measures to be fully implemented in 2030. • Recognizing that investments in infrastructure can take time to put in place and • Avoiding stranded assets. • Provide an array of tools states can use to formulate approvable plans. 

# Summary (Cont’d)

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# Background: Clean Air Act Section 111(d) Best System of Emission Reduction

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### • Previous EPA rules under this section of the Clean Air Act have considered “add - on” control technologies – like scrubbers -- that are 

### technically feasible to deploy at virtually any facility. • In contrast, there are a wide variety of ways to reduce carbon pollution that are commercially available, technically feasible, and cost effective. • The opportunities vary from state to state, depending on how electricity is generated , energy infrastructure, and other factors. • I n this proposal, EPA took an approach that viewed the Clean Air Act factors in determining Best System of Emission Reduction in light of the interconnected nature of power generation. • BSER factors 

### • Costs • Size of reductions • Technology • Feasibility

### • EPA conducted a robust pre - proposal stakeholder engagement process. • Participated in meetings with over 300 utility, 

### consumer, labor and environmental groups since June 2013. • Held 11 public listening sessions around the country. • 3,300 people attended. • More than 1,600 people offered oral 

### statements. • Reached out to all 50 states. • Some states noted their programs to address carbon evolved because of: • The need to address carbon pollution; 

### • Electric system that is dynamic, and in the midst of market changes; and • Modernizing the power sector is good for the economy. • Common themes included reliability, flexibility, affordability, time for plans and implementation. 7 

# Early Outreach Informed This Proposal

# State Actions are Foundation of Proposal

• What we learned during the engagement process about what states are already doing has informed EPA’s proposal.

• State actions provide the foundation for our analysis. • 10 states with market- based GHG emission programs . • 38 states with renewable portfolio standards or goals. 

### • 47 states with utilities that run demand -side energy efficiency programs. • 27 states with energy efficiency standards or goals.

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# States and Communities with Programs That Reduce Carbon Pollution

State programs that reduce carbon include carbon cap and trade programs and energy efficiency and renewable energy standards or goals. 9

# EPA Sets the Goals

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# EPA Establishes a Goal for Every State

• EPA analyzed the practical and affordable strategies that states and utilities are already using to lower carbon pollution from the power sector. • Proposed goals are based on a consistent national formula, calculated with state and regional specific information. • The result of the equation is the state goal. • Each state goal is a rate – a statewide number for the future carbon intensity of covered existing fossil -fuel -fired power plants in a state. • E ncompasses the dynamic variables that ultimately determine how much carbon pollution is emitted by fossil fuel power plants. • Accommodates the fact that CO 2 emissions from fossil fuel -fired power plants are influenced by how efficiently they operate and by how much they operate. • The state goal rate is calculated to account for the mix of power sources in each state and the application of the “building blocks” that make up the best system of emission reduction . • States will need to meet an interim goal and a final goal 

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# States Have Flexibility

12 Carbon emissions from affected power

plants in an example state As an example, states could do less in the early years, and more in the later

years, as long as on average it meets the goal

Timing of Power Plant Emission ReductionsBuilding Block Strategy EPA Used to Calculate the State Goal Maximum Flexibility: Examples of State Compliance Measures 1. Make fossil fuel -fired power plants more efficient Efficiency Improvements Efficiency improvements Co -firing or switching to natural gas Coal retirements Retrofit CCS (e.g.,WA Parish in Texas) 2. Use lower- emitting power sources more Dispatch changes to existing natural gas combined cycle (CC) Dispatch changes to existing natural gas CC 3. Build more zero/lowemitting energy sources Renewable Energy Certain Nuclear New NGCC Renewables Nuclear (new and up - rates) New coal with CCS 4. Use electricity more efficiently Demand -side energy efficiency programs Demand -side energy efficiency programs Transmission efficiency improvements Energy storage 13

# States Meet the Goals

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# When States Plan , They Can :

• Look broadly across the power sector for strategies that get reductions. • Choose to rely to varying degrees on measures that EPA used to calculate the goal, or on other measures that were not part of the state goal -setting analysis. • Invest in existing energy efficiency programs or create new ones. • Consider market trends toward improved energy efficiency and a greater reliance on lower carbon energy. • Tap into investments already being made to upgrade aging infrastructure. 

### • Expand renewable energy capacity. • Integrate their plans into existing power sector planning processes. • Design plans that use innovative, cost- effective regulatory strategies. • Develop a state - only plan or collaborate with each other to develop plans on a multi -state basis. 

### • Decide how to treat plants nearing the end of their useful life and how to help plants avoid “stranded investments.”
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# Flexibilities Available To States

• Timing: • Up to 15 -year window in which to plan for and achieve reductions in carbon pollution. • U p to two or three years to submit final plans. • Form of goal: States can use either a rate - based or mass - based goal. • Single or multi -state plans: States can collaborate and develop plans on a multi -state basis. • Selection of measures : • States will choose how to meet the goal through whatever collection of measures reflects its particular circumstances and policy objectives. • State measures may impact and, in fact may be explicitly designed to reduce, CO 2 emissions from utilities on a regional basis. • EPA would support building off existing reduction programs.

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# States Choose How to Meet the Goals

• Demand -side energy efficiency programs. • Generating electricity from low/zero- emitting facilities. • Expanding use of existing NGCC units. • Transmission efficiency improvements. • Energy storage technology. • Working with utilities to consider retiring units that are high emitting. • Energy conservation programs. • Retrofitting units with partial CCS. • Use of certain biomass. • Efficiency improvements at higheremitting plants. • Market- based trading programs. • Building new renewables. • Dispatch changes. • Co-firing or switching to natural gas. • Building new natural gas combined cycle units.

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# Details About State Plans

• EPA will provide a list of about a dozen components that will need to be included in the plan. • Measures to meet the state’s interim goal and final goal. • Interim goal -- meet on average over a 10-year period from 2020- 2029 ; • Final goal -- meet in 2030 and thereafter . • Individual and multi -state plans due June 30, 2016. • Proposed timing of extensions to submit a complete plan, if justified and supported: • Submit initial plan by June 30, 2016; • Individual state plans: a one -year extension (June 30, 2017 ); and • Multi -state plans: a two -year extension (June 30, 2018 ).

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# Benefits and Costs

• Nationwide, by 2030, this rule would help reduce CO 2 

### emissions from the power sector by approximately 30% from 2005 levels. • Also by 2030, reduce by over 25% pollutants that contribute to the soot and smog that make people sick. 

### • These reductions will lead to public health and climate benefits worth an estimated $55 billion to $93 billion in 2030. • Proposal will avoid an estimated 2,700 to 6,600 premature deaths and 140,000 to 150,000 asthma attacks in 2030. • H ealth and climate benefits far outweigh the estimated annual costs of meeting the standards. • Estimated at $ 7.3 billion to $8.8 billion in 2030. 

### • Proposal protects children and other vulnerable Americans from the 

### health threats posed by a range of pollutants. • Move us toward a cleaner, more stable environment for future generations. • Ensures an ongoing supply of the reliable, affordable power needed for economic growth. 19

# Other Impacts

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# Electricity bills down 

# 8% in 2030

$0 $20 $40 $60 $80 $100 $120

1990 1995 2000 2005 2010 2015 2020 2025 2030

Monthly Residential Electricity Bills (2011$)

Historical - Converted to 2011$ Base Case Clean Power Plan

# After Proposal, Coal & Natural Gas Remain Leading Sources of Electricity Generation

21 Each more than 30% of projected generation in 2030 

## Coal 31% Natural Gas 32% Other Fuel 37%

# Other Impacts

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0 50 100 150 200 250 300 350 400 450 500

2012 2020 2030 Coal - Fired Generation Capacity (GW)

Year Past and Projected Coal Generation

in US

Base Case Proposal -- Option 1 Regional Proposal -- Option 1 State23 

# For More State - By-State Information

http://www.epa.gov/cleanpowerplan

# Recent Developments

• The proposed rule and supporting technical information are available online at: http://www.epa.gov/cleanpowerplan

• The public comment period ended on December 1, 2014.

• Public hearings were held: • July 29 Atlanta and Denver • July 30 Washington DC • July 31 Pittsburgh

• Notice of Data Availability (NODA)

• Supplemental Proposal for Indian Country and Territories

• Rate -to- Mass Technical Support Document 24

# Clean Power Plan: Public Comment Period and What We’ve Heard So Far • We are continuing our public outreach, working closely with the states • 120- day public comment period, which was extended by 45 - days, will close on December 1, 2014 • EPA held four public hearings • Almost 3,000 attendees, with more than 1,300 speakers • So far, EPA has received nearly 1.5 million comments on the proposal 

## • State conversations • NACAA menu of options and model rule 

## • Common issues • State goals • Interim targets (the glide path) • 2012 as a “baseline” • Credit for early action • Rate - based vs. mass- based goals • The building blocks • Biomass • Renewable energy • Dispatch • Enforceability • Multi -state plans 25

# Responding to Public Input: Notice of Data Availability • Issued on October 28, 2014 • Purpose • Describe and seek comment on several ideas raised by multiple stakeholders 

## • Bring these ideas to the attention of other stakeholders and the public so that they have the opportunity to consider them as the develop their comments. 

# • Topics • Glide path of emission reductions from 2020 to 2029 • Certain aspects of the building block methodology • Stringency of building block 2 • Methodology for building b lock 3 and how building b lock 3 targets relate to compliance options • The way the state -specific CO 2 goals are calculated • Goal -setting equation • Alternatives to the 2012 data year 26

# Clean Power Plan Supplemental Proposal for Indian Country and Territories • Issued on October 28, 2014 

# • Summary • Propose Best System of Emission Reduction (BSER) and set goals for certain areas where we had limited information in June 2014. • For Indian country, propose goals for each of the three areas of Indian country with affected EGUs: • Lands of the Navajo Nation, Ute Tribe of the Uintah and Ouray Reservation, and Fort Mojave Tribe • For territories, propose goals for Puerto Rico and Guam only 

### • Uses same methodology as for states to determine the best system of emissions reduction and goals; applying four building blocks to 2012 

### data. 

# • Comment period: December 19, 2014

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# Rate -to - Mass Technical Support Document
• Issued on November 6, 2014 in response to requests from states and other stakeholders. • P rovides two examples of how a state could translate its rate based goal to total metric tons of carbon (a mass- based equivalent). • The basic formula for translating from a rate - based goal to a massbased equivalent is:

Mass = CO 2 

## Emissions Rate * Generation
• In calculating a mass- based equivalent, EPA used each state’s 

## proposed rate - based goal from the June 2 nd 

## proposal as the emissions rate. • The TSD describes two approaches conceptually and applies the calculation to an example state. • The first approach calculates generation from existing affected fossil fuel -fired sources using historical data. • The second approach calculates generation from existing affected and new fossil fuel -fired sources using a combination of historical and projected data. 2829 By June 30, 2016 State submits initial multi state plan and request for 2- year extension EPA reviews initial plan and determines if extension is warranted by June 30, 2017 State submits progress report of plan by June 30, 2018 States submits multi state plan State submits Negative Declaration State submits complete implementation Plan by June 30, 2016 State submits initial Plan by June 30, 2016 and request 1 -year extension
State submits initial m ulti -state P lan by June 30, 2016 and request 2 -year extension Emission Guideline Promulgation June 1, 2015 by June 30, 2016

State submits n egative declaration EPA publishes FR notice
by June 30, 2016 State submits plan
by June 30, 2016 State submits initial plan and request for 1 -year extension EPA reviews initial plan and determines if extension is warranted by June 30, 2017 State submits complete plan 2015 2019 

# Proposed Implementation Timeline

Compliance period begins 2020 2020

EPA reviews plan and publishes final decision within 12 months on approval/disapproval EPA reviews plan and publishes final decision within 12 months on approval/disapproval
EPA reviews plan and publishes final decision within 12 months on approval/disapproval 2016 2017 2018

## Thank you! Mike Gordon 215 - 814-2134 gordon.mike@epa.gov Emily Linn 215 - 814-5273 linn.emily@epa.gov Air Protection Division US Environmental Protection Agency Region 3 1650 Arch Street Philadelphia, PA 19103