CLEAN POWER PLAN

Meeting State Goals

June 26, 2014
Outline

► Overview of Proposal

► CAA Section 111(d) State Plan Process

► Potential Approaches for State Plans

► State Plan Pathways

► Illustrative Example: Rate-Based Emission Limits

► Illustrative Example: Mass-based Emission Limits

► Illustrative Example: Portfolio Approach

► Evaluating the Sufficiency of Plans

► State Plan Components

► Timing of State Plan Emission Performance

► State Plan Considerations

► Treatment of Existing State Programs

► Monitoring and Verification for EE/RE

► Treatment of Interstate Emission Effects

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Overview of Proposal

► Proposal sets an interim (2020-2029) and final goal (2030) for affected EGUs in each 

state to reduce carbon pollution

► Rate-based performance level (lb CO2/MWh)

► Goal based on analysis of best system of emission reduction (BSER) and application 

of BSER to state-specific data

► Analysis looks at what states are already doing to improve energy efficiency and 

encourage reliance on low-carbon energy

► Goal is a target level of affected EGU performance state plans have to meet on 

average in 2020-2029 and by 2030

► EPA is not prescribing measures states need to implement to meet the goal

► States have flexibility to choose what goes into their plan – how and when to get the 

necessary reductions, provided the goals are met in established timeframe

► Choose form of goal (rate or translate to mass)

► Choose what works best in a state, tailored to state needs and policy objectives

► Opportunity to build on existing energy efficiency and renewable energy programs 

► Flexible over time and place – states can look across the electricity system to achieve 

reductions from affected EGUs, and have 10 years to meet the interim goal on 

average basis

► Option to work with other states through multi-state plan, which can lower costs

► Fits into existing state and utility electricity sector planning processes

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CAA Section 111(d) State Plan Process

► Under CAA Section 111(d), as applied in this context: 

► The state develops emission standards that implement its BSERderived goal and establishes those standards in its plan, along with 

implementing and enforcing measures

► The state applies those emission standards to the appropriate 

entities

► EPA recognizes the need for accountability and verifiability of attaining 

CO2 emission reductions

► EPA recognizes states’ requests for both flexibility and specificity

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

► EPA proposal allows and encourages multi-state and regional plans

► EPA proposal supports building off existing state programs 

► EPA recognizes states’ concerns regarding timing for submission of 

plans

► Opportunity for phased plan submittals

4
Potential Approaches for State Plans

► Multiple approaches might be taken for state plans

► These may include emission reduction measures identified in BSER 

building blocks and other approaches

► States not limited to measures considered by EPA to be BSER

► Approaches that EPA anticipates include the following, alone or in various 

combinations:

► Direct emission limits on EGUs (rate or mass)

► Regional emission reductions agreements, such as multi-state emission 

budget trading programs 

► State programs and requirements to deploy new, lower- or non-carbonemitting generation capacity, such as renewable energy (RE) sources (e.g., 

solar and wind), nuclear, and new natural gas combined cycle (NGCC)

► End-use energy efficiency (EE) and renewable energy ( RE) deployment 

programs 

► Legislation or regulations establishing EE resource standards (EERS) and/or 

renewable portfolio standards (RPS)

► Integrated Resource Plan (IRP)-type approaches for reducing utility fleet CO2

emissions

► Seeking feedback on how tribes that don’t have affected EGUs, but 

implement EE/RE and other programs that reduce CO2 emissions from 

affected EGUs might play a role

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State Plan Pathways

► Two basic state plan approaches:

► Emission Limits

► Portfolio Approach

► Four state plan pathways under these two approaches:

► Rate-based CO2 emission limits applied to affected EGUs

• May include adjustment or tradable credits for non- or low-emitting 

resources (e.g., EE/RE)

► Mass-based CO2 emission limits

• EE/RE could be a state strategy for meeting limit at lesser cost, but 

complementary to the plan

► Portfolio Approach

• Includes emission limits and other enforceable measures (e.g., EE/RE 

requirements applicable to non-EGU entities) necessary to achieve 

performance level

• Could be “utility-driven” or “state-driven” depending on electricity 

regulatory structure in a state (vertically integrated or restructured)

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Illustrative Example: Rate-Based Emission Limits

► State implements rate-based emission limits that apply directly to affected 

EGUs

► Limits are sufficient to achieve the state goal

► Could include averaging or trading, at discretion of the state

► Affected EGUs are responsible for achieving required level of emission 

performance

► Measures that avoid EGU emissions, such as EE/RE and other low- or nonemitting generation, are incorporated through recognition of avoided 

emissions or generation 

► Used to adjust the CO2 emission rate of affected EGUs; 

• EPA taking comment on how to make this adjustment, based on avoided CO2

emissions or avoided MWh of generation (numerator or denominator adjustment)

► Requires evaluation, measurement, and verification (EM&V) for energy savings and 

energy generation related to EE/RE

• May also require provisions for assessing avoided emissions related to EE/RE 

measures and process for tracking emission reductions

► EE/RE measures are enforceable components of state plan

► Necessary to provide assurance that sufficient emissions reductions from EE/RE 

measures are available to enable EGU compliance with rate limits

► Necessary to assure proper EM&V conducted for EE/RE measures

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Illustrative Example: Mass-based Emission Limits 

► State implements mass-based limits that apply directly to affected EGUs

► Limits are sufficient to achieve the state goal

► Affected EGUs are responsible for achieving required level of emission 

performance

► Measures that avoid EGU CO2 emissions, such as EE/RE, are: 

► Complementary programs that help the state achieve the mass 

emission limit at lower cost

• Not included in the state plan

• No need for special EM&V and tracking of these program effects on avoided 

CO2 emissions

► EE/RE measures (i.e., complementary measures) are not enforceable 

components of a state plan 

► May be part of state strategy for meeting state plan emission goal at 

lower cost, but do not need to be included in a plan

► Assurance of plan performance based on enforceable emissions budget

• States assess need for complementary measures as part of budget setting

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Illustrative Example: Portfolio Approach

► A portfolio of requirements and programs are used to reduce affected 

EGU CO2 emissions

► Could take a rate-based or mass-based approach

► Includes emission limits that apply to affected EGUs, but these limits alone are not 

sufficient to achieve the state goal

► Also includes other enforceable measures, such as RPS, EERS, utility EE/RE 

deployment programs, etc.

► Mix of entities is responsible for achieving the required level of 

emissions performance

► Affected EGUs 

► EE/RE program administrators (if responsibility assigned by state); distribution utility 

required to meet EERS or RPS or administer EE/RE deployment programs; other

► State-driven approach more likely in states with restructured electricity 

sector, where state regulated utilities do not own EGUs

► Utility-driven approach more likely in vertically integrated, “cost-ofservice” states, where state regulated utilities own affected EGUs

► Same company takes actions that apply directly to affected EGUs it owns, and is also 

responsible for other enforceable actions

► Portfolio of measures likely developed through Integrated Resource Planning (IRP)-

type process and approved by state PUC

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Evaluating the Sufficiency of Plans

► The EPA will evaluate the sufficiency of each plan based on the 

plan addressing the twelve required plan components (next slide) 

and on four general criteria to determine whether a state’s plan is 

“satisfactory” under CAA section 111(d)(2)(A). 

► Four general criteria 

1. A state plan must contain enforceable measures that reduce CO2

emissions from affected EGUs. 

2. Measures in the plan must be projected to achieve emission 

performance equivalent to or better than the applicable statespecific CO2 goal on a timeline equivalent to that in the emission 

guidelines.

3. EGU CO2 emission performance under the state plan must be 

quantifiable and verifiable. 

4. The state plan must include a process for state reporting of plan 

implementation (at the level of the affected entity), CO2 emission 

performance outcomes, and implementation of corrective 

measures, if necessary. 

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State Plan Components

► Emission guidelines include a list of 12 components that must be 

included in a state plan:

► Identification of affected entities (affected EGUs and other responsible 

parties)

► 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 corrective measures

► Identification of emission standards and any other measures 

► Demonstration that each emission standard is quantifiable, nonduplicative, permanent, verifiable, and enforceable (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 11
Timing of State Plan Emission Performance

► Timing of emission 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

► 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 emission 

performance consistent with interim 2020-2029 goal and final 2030 goal

► Goal represents the average CO2 emission rate of all affected EGUs in a state (adjusted to 

reflect the potential to achieve emissions reductions by avoiding fossil generation); a state 

may translate its rate goal into a mass-based goal

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

average rate basis (or cumulative tonnage basis, if applicable), as states ramp up programs 

to meet their final goals 

• This 10-year interim performance period provides timing flexibility for states to recognize 

specific implementation differences; milestone requirements and emissions reporting are 

proposed to track interim progress and enable corrective action if necessary

► States must achieve and maintain final goal after 2029; a three-year rolling average period 

(beginning with 2030-2032) is proposed for demonstration that final goal is achieved

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

• Preamble takes comment on alternate mechanisms for maintaining performance

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10-year State Plan Performance

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Basis for state goal –

Emission performance

pathway reflecting 

application of BSER 

building blocks

 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

 

State plan emission performance

trajectory
State Plan Considerations

► Key State Plan Considerations include:

► Enforceability for measures that apply to non-EGU affected entities

► Treatment of existing state programs

► Monitoring and verification of actions implemented by non-EGU 

entities (e.g., evaluation, monitoring, and verification of EE/RE 

measures)

► Process for adjusting CO2 emission rate, based on non-emitting or 

low-emitting resources (e.g., EE/RE)

► Treatment of interstate emission effects

► Process for converting from a rate-based goal to a mass-based goal, 

and projecting EGU emission performance that will be achieved 

under a plan

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Treatment of Existing State Programs

► Existing state requirements, programs, and measures could be 

recognized in a state plan

► Only the emission reductions from these existing programs occurring 

during a plan period would be recognized (i.e., emissions reductions 

occurring as of 2020)

► Actions taken under existing state programs from the date of the 

proposal of the emission guidelines (June 2014) could be recognized 

during a plan period

► For example, emission reductions in 2020 from energy-efficient 

refrigerators installed under a utility EE program in June 2014 could be 

recognized

► Allows states to get a “rolling start” in meeting emission goals and 

recognizes states that have already taken action to reduce emissions

► Note: the June 2014 start date limitation does not apply to renewable 

energy measures

► RE generating capacity installed prior to June 2014 could be recognized 

if reducing emissions in 2020 and subsequent years

► Treatment recognizes construction of building block #3

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Monitoring and Verification for EE/RE

► EPA’s proposal builds from current state EM&V practices 

► Rigorous and transparent Evaluation, Measurement, and Verification 

(EM&V) is an important element of state plans that incorporate demandside energy efficiency (EE) and renewable energy (RE) requirements, 

programs, and measures

► Current practice with EM&V in the U.S. is primarily defined by state 

public utility commission (PUC) requirements

• Leading states have decades of experience with EM&V

• States getting started can leverage industry-standard approaches, 

resources, and infrastructure already in place

• Significant ongoing effort to enhance EM&V consistency among states with 

EE programs 

► EPA’s proposed EM&V approach seeks to:

• Build from and leverage current practices and existing resources

• Establish a clear and consistent EM&V path for including EE/RE in state 

plans 

• Appropriately consider and balance key criteria (e.g., accuracy, cost, 

flexibility, etc.) 

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Monitoring and Verification for EE/RE

► Proposed EM&V approach – four key provisions:

► 1. EM&V Guidance: EPA is proposing to develop guidance that specifies acceptable 

EM&V approaches and minimum requirements

► Applies to states and other entities with enforceable obligations under a state plan

► 2. EM&V Plan: EPA is proposing that state plans that include enforceable EE/RE 

measures must include an EM&V plan 

► Explains how EE/RE impacts will be determined during plan implementation 

► Specifies the methods, assumptions, and data sources that will be used 

► Is subject to EPA review and approval 

► 3. Eligible EE/RE Programs: EPA is proposing not to limit the types of EE/RE programs 

and measures that can be included in a state plan

► All EE/RE measures in a state plan must be evaluated per EPA’s EM&V guidance

► Accommodates differences among EE/RE programs and measures: 

• Implementation history and experience

• Existence of applicable EM&V protocols and methods

• Nature and type of program oversight (e.g., PUC review)

► 4. Impacts Reporting: EPA is proposing reporting and recordkeeping requirements for 

entities implementing enforceable EE/RE measures in a state plan

► EPA is seeking comment on key aspects of each of these EM&V 

provisions 

► For details, see discussion in Section VIII.F.3-4 of the Preamble and in State Plans Considerations 

TSD

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Treatment of Interstate Emission Effects

► For Energy Efficiency (EE) programs and measures:

► A state may take into account in its plan only those CO2 emission reductions from 

affected EGUs occurring in the state that result from demand-side energy efficiency 

programs and measures implemented in the state

► States participating in multi-state plans would have the flexibility to attribute the CO2

emission reductions from EE programs among states in the multi-state area

► States could jointly demonstrate CO2 emission performance by affected EGUs 

through a multi-state plan in a contiguous electric grid region, in which case attribution 

among states of emission reductions from demand-side energy efficiency measures 

would not be necessary

► For Renewable Energy (RE) programs and measures:

► Consistent with existing state RPS policies, a state could take into account all of the 

CO2 emision reductions from affected EGUs due to renewable energy programs and 

measures implemented by the state, whether they occur in the state and/or in other 

states

► States participating in multi-state plans would have the flexibility to attribute the CO2

emission reductions among states in the multi-state area.

► States could jointly demonstrate CO2 emission performance by affected EGUs through 

a multi-state plan in a contiguous electric grid region, in which case attribution among 

states of emission reductions from renewable energy measures would not be 

necessary

► See discussion in State Plan Considerations TSD for more information

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Regional Contacts

Region Name Email Phone

1 Shutsu Wong wong.shutsu@epa.gov 617-918-1078

2 Gavin Lau lau.gavin@epa.gov 212-637-3708

3 Mike Gordon gordon.mike@epa.gov 215-814-2039

4 Ken Mitchell mitchell.ken@epa.gov 404-562-9065

5 Alexis Cain cain.alexis@epa.gov 312-886-7018

6 Rob Lawrence lawrence.rob@epa.gov 214-665-6580

7 Ward Burns burns.ward@epa.gov 913-551-7960

8 Laura Farris farris.laura@epa.gov 303-312-6388

9 Ray Saracino saracino.ray@epa.gov 415-972-3361

10 Madonna Narvaez narvaez.madonna@epa.gov 206-553-2117