Clean Power Plan:

Overview of EPA’s Proposed 

Carbon Reduction Regulations

Marguerite McLamb, OAQPS, U.S. EPA

October 1, 2014
Agenda

► Discuss the origin of this proposal 

► Identify the four “building blocks” of the proposal

► Describe how we used them to determine BSER and create 

state goals for reducing carbon pollution 

► Describe the process, components and flexibilities available 

to the states in creating plans to meet these goals

► Review the timeline for implementation and reductions

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The President’s Climate Action Plan (June 2013)

► Directs EPA to:

► Set flexible carbon pollution standards, regulations or guidelines, 

as appropriate, for power plants under section 111 of the Clean Air 

Act (CAA)

► Propose standards, regulations or guidelines for modified, reconstructed 

and existing power plants by June 1, 2014 

► Issue final standards, regulations or guidelines by June 1, 2015

► Require that states submit implementation plans by June 30, 2016

► Focus on certain elements when developing the standards

► Stakeholder engagement on program design 

► Flexibilities in the program design

► Costs

► Continued importance of relying on a range of energy sources

► Other regulations that affect the power sector

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Reducing Carbon Pollution From Power Plants
Power Plant CO2 Emission Reduction Actions

Three related rulemakings issued under CAA s. 111:

► Standards of performance for new sources under section 

111(b)

► Standards of performance for modified and reconstructed 

sources under Section 111(b)

► Existing source emission guidelines under section 111(d)

– Extensive engagement undertaken for proposal

– Defines BSER (best system of emission reduction) for existing 

sources

– Translates BSER into state-specific goals

• Preferred option: more time, more reductions (two options)

• Interim and final goals

– Provides guidance to states on their existing source plan

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Benefits, Costs and Impacts 

► Coal and natural gas will remain the two leading sources of electricity 

generation, with each providing more than 30% of the projected generation in 

2030

► By 2030: 

► Carbon pollution reduced due to this proposal: approximately 30% below 2005 

levels

► Climate and health benefits including significant reductions of SO2, PM, and NOx: 

$54 billion to $89 billion

► Costs: $7.3 billion to $8.8 billion

► Net benefits: $47 billion to $80 billion

► National average retail electricity prices: roughly 2.7% to 3.1% increase

► National average impact on electric bills: roughly 8% lower

► Retirements

► EPA’s analysis projects that 19% of all coal-fired capacity would become 

uneconomic to maintain – only about 5% of all power generating capacity projected 

to be in service (or about 46 to 49 GW of coal-fired capacity)

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Ranges reflect Option 1 Regional and State illustrative compliance scenarios.
Determination of Guidelines and 

Implementation Process

Under CAA section 111(d): 

► EPA determines BSER

► Key factors in BSER determination for existing power plants

– Feasibility

– Costs

– Size of reductions 

– Technology

► EPA applies BSER

► In the proposal, by using state-specific data to derive the 

emissions rate that represents the state goal for covered sources 

reflecting BSER

► State develops standards of performance that implement that 

goal and establishes those standards in its plan, along with 

implementing and enforcing measures

► The state applies that standard as appropriate

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Building Blocks and BSER

► EPA identified four categories of carbon-reducing measures 

that together constitute BSER

1. Lowering the carbon intensity of generation at individual existing EGUs 

through heat rate improvements

2. Reducing emissions of the most carbon-intensive existing EGUs by 

shifting generation to less carbon-intensive existing fossil fuel-fired 

EGUs

3. Reducing emissions of carbon-emitting EGUs by expanding the amount 

of new, lower (or no) carbon-intensity generation 

4. Reducing emissions of carbon-emitting EGUs by increasing demandside energy efficiency

► For each building block, EPA identified a target level of 

performance that reflects more or less aggressive 

performance

► EPA applied assumptions to state-specific data (e.g. existing 

generation mix) to set state-specific targets

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Building Block Technologies Translated to State Goals

Technology/BSER Building Block Option 1 Option 2

1. Heat rate improvement (Avg. 

Reduction for Coal) 6% 4%

2. Dispatch to existing and underconstruction NGCCUtilization of NGCC 

up to 70% capacity factor

Utilization of NGCC 

up to 65% capacity factor

3. Dispatch to new clean electric 

generation

Includes new nuclear generation under construction, 

moderate deployment of new renewable generation, 

and continued use of existing nuclear generation 

4. Demand-side Energy Efficiency 

(% annual incremental electricity savings) 1.5% annually 1.5% annually

Goal Option 1 Option 2

Average nationwide goal for covered 

sources (lbs/MWh)

25% to 30% below 2005 

levels

20% to 25% below 2005 

levels

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State Goals

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State CO2 emissions from fossil fuel fired power plants (lbs)

State electricity generation (MWh)

 Each state goal is a rate 

 encompasses the dynamic variables in the power system that ultimately 

determine how much carbon pollution is emitted by fossil fuel power plants

 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

 Each state’s goal is different because each state has a unique mix of fossilfuel and other power sources, emissions, and energy efficiency 

opportunities

Basic formula 

for state rate-based goal

(coal gen. x coal emission rate)+ (OG gen. x og emission rate) + (NGCC gen. x NGCC emission rate) +”Other” emissions

Total Fossil Generation MWh + Nuclear MWh + RE MWh + EE MWh

Detailed 

formula
State Goals – Calculations

Methodology:

A state’s historical emission rate is broken into its technology components:

Historical fossil rate = (coal gen. x coal emission rate)+ (OG gen. x og emission rate) + (NGCC gen. x NGCC emission rate) + “Other*” emissions

Total Fossil Generation

• Block #1: Adjust each state’s coal emission rate down by 6% to reflect a fleet-wide average HR improvement

• Block #2: Adjust each state’s coal and O/G steam generation downwards, and NGCC generation upward, to 

reflect re-dispatch to natural gas up to 70% (plan to request comment on whether regional re-dispatch is more 

appropriate)

– Total state-level fossil generation from coal/OG steam, & NGCC remains the same; only change is its 

apportionment among the three technologies

• Block #3: Add MWh from under construction nuclear, at-risk nuclear, and renewable into denominator.

– Renewable includes both existing RE and new RE

• Block #4: Add MWh of avoided generation into denominator due to EE for 2020 and 2030 respectively

– % values vary by state

After these adjustments are made: the equation is rolled into a single emission rate that constitutes 

the state emission rate goal. The resulting state goal is no longer just a fossil rate, but includes 

non-fossil/zero-emitting sources. State goal is provided in lbs/net MWh

State Emission Rate Goal = (coal gen. x coal emission rate)+ (OG gen. x og emission rate) + (NGCC gen. x NGCC emission rate) +”Other” emissions

Total Fossil Generation + Nuclear MWh + RE MWh + EE MWh

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*”Other” includes sources covered under 111(d) applicability, but not subject to redispatch (e.g., IGCC, low utilization CTs, and useful thermal output from cogeneration units).
Application of BSER to North Carolina

Technology/BSER Building Block Application to NC

1. Heat rate improvement (Avg. 

Reduction for Coal)

Improve the heat rate at existing coal units 6% to reduce 

the emission rate from 2,268 lbs/MWh to 2,132 lbs/MWh

2. Dispatch to existing and underconstruction NGCC

Shift generation from fossil-fired boilers to NGCC units up 

to a 70% capacity factor, increasing NGCC generation from 

26,782 GWh to 52,152 GWh

3. Dispatch to new clean electric 

generation

Increase generation from renewable sources from 1,698

GWh in 2012 to 3,663 GWh in 2030. Incentivize 

preservation of 1,818 GWh of generation (~5.8%) from 

historic nuclear fleet

4. Demand-side Energy Efficiency 

(% annual incremental electricity savings)

Improve end-use energy efficiency to decrease electricity 

demand 9,216 GWh, equivalent to avoiding 11.4% of 

projected electricity sales in 2030

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Historical Emission 

Rate

Interim Goal Final Goal

Proposed Option 1,772 1,077 992

Alternative Option 1,772 1,199 1,156
Section 111(d) State Plan Process

► State develops standards of performance to implement its 

goal; establishes the standards in a plan, along with 

implementing and enforcing measures

• EPA recognizes states’ requests for both flexibility and 

specificity

– States can choose to meet rate- or mass-based goal

– EPA would allow and encourage multi-state and regional plans

– EPA would support building off existing reduction programs 

• EPA recognizes states’ concerns regarding timing for 

submission of plans

– Phased plan submittals considered

► The state applies the standard to the appropriate entities

• EPA recognizes the need for accountability and 

verifiability of attaining CO2 emission reductions

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Potential Pathways for State Plans

► Multiple pathways exist for states’ plans

► May include emissions reduction measures identified in 

building blocks or others

► Examples that EPA anticipates, alone or in various 

combinations:

► Direct emission limits on EGUs

► Collaboration with RTOs and ISOs regarding re-dispatch 

prioritization

► State policies to deploy new, lower- or non-carbon-emitting 

generation capacity, such as NGCC sources, renewable energy 

(RE) sources such as solar and wind, and/or nuclear

► Energy efficiency (EE) deployment programs 

► Legislation or regulations establishing EE resource standards 

(EERS) and/or renewable portfolio standards (RPS)

► Regional emissions reductions agreements 

► Integrated Resource Plan-type approaches for reducing utility fleet 

CO2 emissions

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BSER and Compliance Options Compared

Building Block BSER 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., Parish in 

TX)

2. Use lower emitting power 

sources more

Dispatch changes to 

existing natural gas CC

Dispatch changes to existing 

natural gas CC

3. Build more renewable 

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

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State Plan Components

► Emission guidelines would include a list of state plan components

► Recommendation: Require state plans to include:

► Identification of affected entities 

► Description of plan approach and geographic scope

► Identification of state emission performance level 

► Demonstration that plan is projected to achieve emission performance 

level

► Identification of milestones

► Identification of backstop measures

► Identification of standards of performance 

► Demonstration that each standard of performance is enforceable, 

quantifiable, surplus, permanent and verifiable (recognizing nontraditional nature of some potentially affected entities) 

► Identification of monitoring, reporting and recordkeeping requirements 

► Description of state reporting 

► Certification of hearing on state plan 

► Supporting material 

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Timing for State Plan Submittals 

► Individual and multi-state plans due June 30, 2016 

► Proposal provides states with additional time to submit 

complete plans if justified and if states provide specific 

information

► Some states may reasonably need additional time to submit 

complete plans, due to factors such as timing of legislative approval 

process and complexities associated with regional approaches

► 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) 

• Multi-state plans: a two-year extension (June 30, 2018)

 Would submit a progress report on June 30, 2017

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By June 30, 2016

State submits initial multistate implementation 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 implementation 

plan

by June 30, 2018

States submits multistate implementation 

plan

State submits Negative Declaration

State submits complete Implementation Plan by June 30, 2016

State submits Initial Implementation Plan by June 30, 2016 and requests 1-year extension

EG Promulgation

June 1, 2015

by June 30, 2016

State submits negative 

declaration

State submits multi-state Implementation Plan by June 30, 2016 and requests 2-year extension

EPA publishes FR notice

by June 30, 2016

State submits 

implementation plan

by June 30, 2016

State submits initial 

implementation plan and 

request for 1-year extension

EPA reviews initial plan and 

determines if extension is 

warranted within 

by June 30, 2017

State submits complete 

implementation plan

Compliance 

period begins

2020

2015 2019

Clean Power Plan Implementation Timeline

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

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Timing of Reductions

► Timing of reductions can vary, depending on a state's situation

► Some states have existing programs that are achieving results

► Some measures are more easily implemented and/or may obtain reductions 

promptly; others may require longer to implement and/or realize reductions

► Early emphasis on effective implementation of EE programs could allow more 

EE to substitute for other, more expensive measures

► New multi-state programs (or additions to existing multi-state programs) would 

need time to achieve goals

► State plans must be designed to achieve and maintain affected EGU 

emissions performance consistent with final post-2029 goal, as well as an 

interim goal

► Interim emissions performance goals apply during the years 2020-2029 on a 10-

year average or cumulative basis, as states ramp up programs to meet their final 

goals 

• Milestone requirements and emissions reporting are proposed to track interim progress 

and enable corrective action if necessary

► States must achieve and maintain final goals after 2029; a three-year averaging 

period (2030-2032) is proposed for demonstration that final goal will be initially 

achieved

► States must maintain the final-goal level of performance over time

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APPENDIX

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Clean Air Act Section 111 – Excerpts

► Section 111(a)(1) (Definitions):

► “The term ‘standard of performance’ means a standard for emissions of air 

pollutants which reflects the degree of emission limitation achievable through the 

application of the best system of emission reduction which (taking into account 

the cost of achieving such reduction and any non-air quality health and 

environmental impact and energy requirements) the Administrator determines 

has been adequately demonstrated.” 

► Section 111(d)(1) (Standards of performance for existing sources; remaining 

useful life of source):

► “The Administrator shall prescribe regulations which shall establish a procedure 

similar to that provided by section 7410 of this title under which each state shall 

submit to the Administrator a plan which 

• (A) establishes standards of performance for any existing source for any air pollutant (i) 

for which air quality criteria have not been issued or which is not included on a list 

published under section 7408 (a) of this title or emitted from a source category which is 

regulated under section 7412 of this title but (ii) to which a standard of performance 

under this section would apply if such existing source were a new source, and 

• (B) provides for the implementation and enforcement of such standards of 

performance. Regulations of the Administrator under this paragraph shall permit the 

state in applying a standard of performance to any particular source under a plan 

submitted under this paragraph to take into consideration, among other factors, the 

remaining useful life of the existing source to which such standard applies.” 

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Clean Air Act Section 111 – Excerpts (cont.)

► Section 111(d)(2) (Standards of performance for existing sources; 

remaining useful life of source):

► “The Administrator shall have the same authority

• (A) to prescribe a plan for a state in cases where the state fails to submit 

a satisfactory plan as he would have under section 7410 (c) of this title in 

the case of failure to submit an implementation plan, and 

• (B) to enforce the provisions of such plan in cases where the state fails 

to enforce them as he would have under sections 7413 and 7414 of this 

title with respect to an implementation plan. 

► In promulgating a standard of performance under a plan prescribed 

under this paragraph, the Administrator shall take into consideration, 

among other factors, remaining useful lives of the sources in the 

category of sources to which such standard applies.”

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