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.Jr"TATE OF WEST vIRGINIA 

OFFICE OF THE GOVERNOR 

1 900 KANAWHA BOULEVARU, EA:ST 

CHARLESTON, WV ^.^g305 

(304) 558-2000 

EARL RAY TOM6LIN 

GOVERNOR

Fcbtuary' 21, 2014 

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^111CCCcly', 

F.arl Rsly Tor .alirt 

(loA'eralr)r
west virginia department of envlronmental protection 

Executive Office Earl Ray Tomblin. Govemor 

601 57`" Street Sk. Randy C. Huffman, Cabinet Secretan 

Charleston, WV 25304 dep.wv.gov

West Virginia's Principles to Consider in Establishing 


Carbon Dioxide Emission Guidelines for Existing Power Plants 

February 20, 2014 

I. SUMMARY OF PRINCIPLES'r0 CONSIDER 

Under the direction of President Obama, the U.S. Environmental Protection Agency (EPA) 

proposed standards in September 2013 that would limit carbon dioxide (CO 2) from new fossilfileled power plants. The agency is using its authority under the Clean Air Act (CAA) Section 

111(b) to set limits for new coal-fired plants, which would require at least partial carbon capture 

and sequestration (CCS). Standards for natural gas-ftred plants would not require any level of 

CCS. Under its air permitting programs, EPA already regulates CO2 as one of six greenhouse 

gases that may contribute to man-made global warming. 

Concurrently, EPA also solicited input from a wide variety of stakeholders on how it should 

regulate CO2 from existing power plants under CAA Section 111(d). The agency conducted 

"listening sessions" around the nation to hear ideas about potential regulatory considerations 

from states, industry, environmental groups and others. No coal states were chosen for session 

locations. EPA posed a number of questions but has expressly avoided taking any firm positions 

to date. The agency has acknowledged that the President's overarching 17 percent reduction goal 

of greenhouse gases from 2005 to 2020 should not be interpreted as applying directly to the 

power generation sector. Indeed, as explained herein, the chosen regulatory mechanism [CAA 

§ 111(d)) places significant constraints on EPA's authority; the factors which states must consider 

in developing implementation plans; and, ultimately, the level of emission reductions that can be 

legally and practically achieved. 

The outcome of any regulatory requirements that reduce CO2 emissions from existing coal-fired 

power plants will have profound, far-reaching effects on West Virginia and other states that 

depend heavily on coal production and coal-powered electricity generation. Put simply, if the 

wrong programs are put into place, the results could be devastating to the state economy and 

cascade West Virginia into a severe recession from which it may never recover. Other coal 

dependent states could be similarly impacted and the cumulative effect could significantly 

damage the national economy for many years. 

West Virginia presents the following five principles for consideration in establishing COZ 

emission guidelines for existing power plants. 

Promoting a healthy environment.
A. EPA should regulate COz emissions from existing electric generating units (EGUs) under 

provisions for the protection of public welfare because CO2 has not been demonstrated to 

have any direct adverse impact on public health. The agency should make a formal 

finding that adverse effects on public health have not been demonstrated as specifted in 

40 CFR §60.22(d)(1), and acknowledge that the provisions of 40 CFR §60.24(d) apply. 

This would provide maximum state flexibility in developing state CAA § 111 plans. 

B. EPA should establish mass-based emission guidelines in terms of reductions from a 2005 

base year. The agency is required to consider the different sizes, types and classes of 

existing units, reflective of the level of emission control achievable through the 

application of the site-specific Best System of Emission Reduction (BSER) at all 

designated facilities. The guidelines should reflect the use of practical and cost-effective 

CO2 control measures achievable within the fence-line. 

C. EPA should establish CO2 emission guidelines that allow maximum flexibility by states 

to meet emission reduction targets. Moreover, the agency must fully consider the wide 

range of variation among the existing power plant fleet and recognize that states have 

broad discretion to balance ihe emission guidelines and compliance times against other 

factors of public concern in establishing emission standards, compliance schedules and 

variances. For example, sorne states may want to credit GHG reductions realized through 

other policies and any other state mandated programs such as demand-side energy 

efficiency improvements. 

D. EPA should extend the deadline for submission of state plans under CAA § 111(d) to 

three years, so as to parallel the requirements for State Implernentation Plans (SIPs) under 

CAA § 110 and provide states adequate time for plan development. CAA § 111(d) does 

not specify any specific time frame for plan submittal, and 40 CFR § 60.27(a) provides 

that the Administrator my, whenever he deems necessary, extend the period for 

submission. CAA § I 11(d) also does not specify any time frames or milestones to achieve 

any related state emission reductions. EPA must recognize that climate change is a longterm, multi-national problem that requires long-term solutions (measured in multiple 

decades) and there is no quick fix available. Compliance milestones should be extended 

accordingly. 

E. EPA must allow states to take into consideration, among other factors, the remaining 

useful life oJ'the existing sources whcn cstablishing performance standards, as required 

by CAA § 111(d)(B). 

The rationale for these principles is set forth below. 

WVDEP Principles to Consider in Establishing COz Emission Guidelines for Existing Power Plants Page 2 of 17
1I. COAL, ELECTRICITY AND THE ECONOMY 

A. Coal and Electricity Production 

Coal-fired electricity generation accounted for more than one-third (37.4 percent) of the total 

electricity generated in the U.S. in 2012, more than any other source, and electricity production 

accounted for 91.5 percent of the U.S. coal consumption. Coal is projected to provide 39.4 

percent of total U.S. electricity generation in 2013, 40.2 percent of the total in 2014, and is 

expected to remain the dominant source of electricity through 2040.1 

As Senator Joe Manchin stated in his testimony before the Subcommittee on Energy and Power 

of the House Energy and Commerce Cornmittee 2, on November 14, 2013: 

We need a diverse energy portfolio — a true "all-of-the-above " mix of natural gas, 

nuclear, renewables, orl and coal. ... 

Right now, coal provides 37 percent of all the electricity generated in the United 

States, and the Department of Ener^ry projects coal will provide at least that much ,

through 2040. Right now, we sinTply can't make up the difference with renewables. 

That's just wishful thinkfng. 

So, if we just standby and do nothing and let EPA eliminate coal from our energy mix, 

we're going to see the stabilfry of our electrical grid threatened and see the price of' 

electricity rise dramatically, jeopardizing America's economy and countless jobs with 

no real environmental benefit. . . . 

It's time the EPA started working as our partner, not our adversary, to achieve that 

balance. . . . 

B. Summary of Direct, Indirect and Induced Economic Impacts of the Coal Industry in 

West Virginia 

In 2011, West Virginia was the largest coal producer east of the Mississippi River and second 

only to Wyoming in the U.S., accounting for nearly one-third of U.S. coaI production east of 

the Mississippi River and 12 percent of total U.S. coal production. Coal-fired electric power 

plants accounted for 96 percent of West Virginia's net electricity generation in 2011, with 

renewable energy sources, primarily hydro and wind, contributing 3.3 percent. West Virginia is 

an exporter of energy — in 2010, 79 percent of the coal mined 'tn West Virginia was shipped to 

other states, 90 percent of the coal consumed in West Virginia was used for electricity 

generation and 56 percent of the net electricity generated was consumed outside the state. West 

Virginia ranks second in the U.S. after Pennsylvania in net interstate electricity exports.3 

In 2012, the CO2 emissions from West Virginia's power plants were 19 percent lower than 

they were in 2005. These reductions can be attributed, in part, to the permanent shutdown, 

since 2005, of nine (9) coal-fired units, totaling 1,189 MW of lost generating capacity, 

predominately as a result of other environmental regulations. By 2015, as sources comply with 

the federal Mercury Air Toxics rule (MATS), an additional nine coal-fired units, totaling 1,630 

MW of generating capacity, are scheduled to shutdown. These 18 units, totaling 2,819 MW, 

accounted for nearly one-fifth (18 percent) of West Virginia's generating capacity. 

WVDEP Principles to Consider in Establishing Coz Emission Guidelines for Existing Power Plants Page 3 of 17
1. ErnploXment Impacts° 

With 63,896 employees, the combined employment impacts of the coal industry, associated 

transportation and power generation industries account for 11.3 percent of employment by 

private industry in West Virginia. 

Employment Impacts of the Coal Industry in West Virginia 

Direct lndirect and 

lnduced

'I'otal 

Coal Mining lndustry Impact 22,570 27,468 50,038 

Additional Impacts

Rail Transportation 2,669 4,109 6,778 

Water Transportation 374 614 988 

WV Coal-Sased Electricity Generation 1,900 4,192 6,092 

Total 27,513 36,383	

1 63,896 

2. Value Added Impacts5 

The value added economic impact of the coal industry represents the contribution to Gross 

State Product (GSP). At $6 billion, the combined direct impacts amount to nearly 9 percent 

of GSP. When including the multiplier effect of spending by these industries and households 

employed by the industry, the impact amounts to $8.8 billion or 12.7 percent of GSP. 

Value Added Impacts of the Coal Industry in West Virginia 

(milllon S - 2012 basis) 

Direct Indirect and 

Induced

Total 

Coal Mining ]ndustry Impact $4,563 $2,175 $6,737 

Additional Inipacts

Rail Transportation $413 $271 $684 

Water Transportation $67 1	$40 $107 

WV Coal-Based );lectricity Generation $945 $306 $1,251 

Total $5;987 $2,792 $8,779

WVDEP Principles to Consider in Establishing CO 2 Emission Guidelines for Existing Power Plants Page 4 of 17 
Labor Income Impacts6 

With cornbined labor income irnpacts of $3.9 billion the coal industry and associated 

transportation and power generation industries account for 17.5 percent of income paid by 

private industry. 

Labor Incorne Impacts of the Coal Industry in West Virginia 

(million S - 2012 basis) 

Direct Indirect and 

Induced

Total 

Coal Mining Industry Impact $1,913 $1,070 $2,983 

Additional Impacts

Rail Transportation $243 $171 $414 

Water Transportation $30 $23 $54 

WV Coal-Based Electricity Generation $232 $179 $410 

Total $2,418 $1,443 $3,861 

4. Tax Imaact7 

Taxes paid by the coal industry are estimated at $638 million in 2012. These include property 

taxes, severance taxes, workers' compensation, net income, and personal income taxes paid 

by industry employees and others. 

Estimated Taxes Paid by the Coal Industry in West Virginia 

2008 2012 

Coal Ivlining Industry and Employees $676 million $638 million 

Share of State Budget 17.5% 15.3%

III. FUNDAMENTAL EMISSION REDUCTION CONSIDERATIONS 

A. Reduction of CO2 Emissions from EGUs 

The purpose of establishing regulations that govern the emissions of CO2 from existing power 

plants is to reduce the amount of CO2 emitted to the atmosphere, which in turn is expected to 

help slow climate change. EPA must bear the burden of proof that the reductions yield a 

significant net national benefit, while accounting for potential consequent global emissions 

increases. That is, some international emissions inereases may occur in response to domestic 

actions, thereby diminishing some of the benefits of U.S. reductions. For example, if electricity 

WVDEP Principles to Consider in Establishing CO2 Emission Guidelines for Existing Power Plants Page 5 of 17 
prices adversely affect domestic primary aluminum production, other nations may increase 

production, thereby increasing their electricity demand and related emissions. There are two 

means of reducing COz emissions from EGUs — improve energy efficiency or reduce the 

emission rate of CO2. 

1. Efficiency Improvement Options 

T'here are two basic ways to reduce the generation of electricity from existing power plants — 

supply-side efficiency improvements or denland-szde efficiency improvements. Supply-side 

efficiency improvements include site specific energy efficiency measures that improve heat 

rate (MMBtu/MW-hr) and therefore, lower CO 2 emissions at the plant. Conversely, demandside electricity reductions are the result of efficiency improvements that result in the use of 

less electricity by the consumer — industrial, conimercial or residential. These demand-side 

energy efftciency measures can include, among other things, the use of more efficient 

lighting, air conditioning systems, heating systems, or the installation of insulation, energy 

efficient windows or doors. Demand-side efficiency improvements may often be outside the 

control of the source and, therefore, may present limited applicability as control options. 

2. COa Emission Rate Reductions 

There are two basic ways to reduce the emission rate of CO2 from existing power plants — the 

addition of add-on, or post-combustion, controls or fuel switching to a lower emitting fuel. 

Greenhouse gas emissions have not been regulated in the past, so existing power plants are 

not equipped with post-combustion CO2 controls. CCS has not been adequately demonstrated 

at full scale on an existing power plant. There have been short term pilot tests, including one 

in West Virginia, where a small percentage (less than 2 percent) of the flue gas was diverted 

and a fraction of the CO2 was captured and sequestered. However, this process has not been 

implemented on a commercial scale nor for extended periods. As EPA has verbally 

acknowledged, CCS is not a viable control option for existing sources. There are no 

adequately demonstrated add-on controls for COz. 

Another option for reducing CO2 emissions is switching to a fuel which emits less CO2. 

Historically, EPA has not considered redefining the design of a source when considering 

available control options. Therefore, fuel switching generally cannot be considered an 

available control option. 

3. Preferred Option 

For existing power plants, BSER, the "best system of' emission reduction which ... has been 

adequately demonstrated for designated facilities" (emphasis added) cannot include CCS, 

fuel switching or demand-side electricity reductions. BSER must, therefore, strictly be 

limited to include energy efficiency measures inside the fence-line to achieve lower COZ 

emissions at the facility. 

WVDEP Principles to Consider in Establishing CO2 Emission Guidelines for Existing Power Plants Page 6 of 17
B.	Regulatory Framework 

The CAA invokes the principle of cooperative federalism — under which the federal and state 

governments are partners that share responsibility in the exercise of governmental authority. 

The CAA clearly delineates separate roles for EPA and the states. For example, under CAA 

§110, EPA sets the NAAQS and states develop SIPs to achieve and maintain the National 

Ambient Air Quality Standards (NAAQS). Under CAA §lll(d), EPA establishes emission 

guidelines incorporating BSER, and states develop standards of performance that achieve 

emission reductions that meet the requirements of CAA § 1 l 1(d). 

1. Responsibilities under CAA Section 11 I(d) 

EPA has formally posed the question, How should EPA set the performance standards for 

state plans? g The simple answer is: EPA should not set the performance standards for state 

plans. In fact, EPA is not authorized to do so, except when a state fails to submit a 

"satisfactory" plan.g 

CAA §1I1(d) of the CAA does not authorize EPA to set performance standards for existing 

sources. That authority is instead conferred to the states. The section authorizes each state to 

develop a plan establishing performance standards for existing sources and directs EPA to 

provide, through regulation, a procedure for states to follow when developing and submitting 

those plans. The requirements parallel those which states follow to develop and submit SIPs 

to fulfill their obligations in achieving and maintaining the NAAQS under CAA § 110. 

2. 40 CFR Part 60, Subpart B 

EPA established a procedure, similar to that provided under CAA §110, for the submittal and 

approval of state plans under CAA § 111(d), which is set forth in 40 CFR Part 60, Subpart B. 

The ftrst requirement that EPA set forth in its procedure was a requirement, or commitment, 

for itself. The agency commits to publishing a draft guideline document containing 

information pertinent to control of the designated pollutant,from designated facilities.10 

3. Emission Guidelines 

EPA must: (a) in the guideline documents make a determination of whether CO 2 emissions 

from EGUs may cause vr contribute to endangermerrt of public welfare and whether or not 

adverse effects on public health have not been demonstrated; (b) address subcategories of 

different sizes, types, and classes of existing sources when costs of control, physical 

limitations, geographical location, or similar factors warrant the application of difTering 

guidelines; and, (c) set emission guidelines based on BSER which has been adequately 

demonstrated for existing facilities. 

a. Endangerment of Public Welfare or Public Health 

The first item that EPA must include in the draft guideline documents is information 

regarding whether C42 is causing or contributing only to endangerment of public welfare, 

WVDEP Principles to Consider in Establishing CO2 Emission Guidelines for Existing Power Plants Page 7 of 17
or whether it also endangers public health. 40 CFR §60.22(d)(1) requires that if the EPA 

Adrninistrator determines that CO2 rnay cause or contribute to endangerment of ` public 

welfare, but that adverse e^'1'ects on public health have not been demonstrated he will 

include the determination in the draft guideline document. ...(emphasis added). This is a 

critical finding. EPA's deterrnination of whether or not there are demonstrated adverse 

health effects determines the degree of flexibility available to states in developing their 

11 I (d) plans. 

EPA's own Greenhouse Gas Endangerment Finding does not make a demonstration of 

direct adverse health effects. Instead, EPA relies on a series of conjectures that infer rises in 

ozone and PM2. 5 concentrations, as a result of increased heat waves and drought. However, 

ozone and PM2.5 are criteria pollutants regulated through the establishment of NAAQS 

under CAA § 110. These health-based standards must, by law, adequately protect human 

health, including that of sensitive populations. Therefore, it is inappropriate for EPA to 

consider further reductions in criteria pollutants as a justification for additional GHG 

regulation in this situation. EPA has not identifted any GHG as a criteria pollutant nor has 

the agency established a related primary NAAQS which is associated with human health. 

Moreover, EPA has failed to make a direct correlation to specific concentrations of GHG, 

including CO2, that would directly affect ground-level ozone or PM2.5 concentrations. 

Otherwise, EPA would be compelled to consider these substances as pollutant precursors 

and regulate them under a NAAQS. 

Because COZ emissions have not been demonstrated to directly cause adverse public health 

effects, EPA is forced to determine that CO2 may cause or contribute to endangerment of 

public welfare, but thcrt adver.se effects on pt<blic health have not been demonstrated. This 

finding would allow the states to exercise maximum flexibility in developing suitable plans 

under 40 CFR §60.24(d) which provides that States may balance the emission guidelines, 

compliance times, and other information provided in the applicable guideline document 

against other factors of public concern in establishing enzission standards, conrpliance 

schedules, and variances. 

b. Adequately Demonstrated Systems of Reduction, Degree of Emissions Reduction, Time 

for Design, Installation, and Startup of Systems of Reductions 

EPA is also committed to providing a description of the systems of emissions reductions 

that have been adequately demonstrated, the degree of emission reduction achievable from 

the various systems, and the time required for the design, installation and startup of the 

various systems. 

c. F.mission Guideliries that Reflect the Best System of'Emission Reduction (BSER) 

EPA is required to propose an emission guideline that refects the application of the best 

system of emission reduction (considering the cosi of such reduction) that has been 

adequately demonstrated for designated facilitie.s, and the time within which corrtpliance 

with emission siandards vf equivalent stringency can be achieved. EPA is also required to 

specify different emission guidelines or campliance times or bath for different sizes, types, 

WVDEP Principles to Consider in Establishing CO 2 Emission Guidelines for Existing Power Plants Page 8 of 17
and classes of the designated facilities when costs of control, physical limitations, 

geographical location, or similar factors make subcategorization appropriate.I I 

The regulatory framework requires that EPA specify different emission guidelines and/or 

compliance times for different sizes, types and classes of existing facilities. The framework 

recognizes the diversity of the current fleet and provides the mechanism for the 

maintenance of the remaining generating infrastructure, the majority of which is comprised 

of fossil-fuel fired generation. EPA has a long history of not requiring the redefinition of a 

source when considering available control options. 12 EPA cannot require states to set 

performance standards based on changing the fundamental nature of the sou.rce or 

mandating a different mix of generating resources. In establishing the different emission 

guidelines, EPA should subcategorize by fuel-type and take into account a broad range of 

plant-specific factors, including the generating technology, size and age of the unit. The 

guidelines must recognize the need for the continued use of coal at coal-fired plants, oil at 

oil-fired plants, and gas at gas-fired plants, in order to preserve capacity and maintain grid 

reliability. 

The nation's existing electric generating fleet is undergoing rapid and significant change 

due to increased environmental requirements and a dynamic energy market. These changes 

are expected to accelerate over the next few years as a significant number of coal-fired 

units are retired and new generation comes on liae to replace lost capacity. Much of the 

new generation is expected to be natural gas-fred combined cycle (NGCC) combustion 

turbines and to a lesser extent, renewables, such as wind and solar. The national CO2 

emission rate for EGUs has been decreasing, with the national 2012 CO 2 emission rate 11 

percent lower than the 2005 rate, while EGU CO2 emissions have decreased 13 percent 

over the same time period. This decrease is a result of the shutdown of existing coal-fired 

units, the addition and increased utilization of NGCC units, the building of renewable 

generation sources, the building of new efficient coaI-fired units, efficiency improvements 

at existing fossil-fuel fired units and energy efficiency improvements at the industrial, 

commercial and residential level. 

An additional concern is the potential stranding of costs (those which the company is 

unable to recoup because of changes in regulations) incurred to satisfy other environmental 

regulatory requirements. In the last few years, many plants have invested billions of dollars 

for nitrogen oxides (NOx) and sulfur dioxide (SOZ ) controls to meet the regulatory 

requirements of the NO,, SIP Cali and the federal Clean Air Interstate Rule (CAIR). EPA 

rnust consider all of the regulatory programs that already apply to power plants. The agency 

cannot ignore the complex, inter-related, and sometimes inconsistent regulatory 

requirements. Power plants have also addressed control retrofits to meet visibility goals 

(Best Available Retrofit Technology - BART) and SIP requirements established as part of 

plans to comply with more stringent Ozone and PM2.5 NAAQS. In addition, plants are 

currently working to meet the air toxics requirements of the MATS rule. In West Virginia, 

all the coal-fired units that are not equipped with advanced S0 2 controls [Flue Gas 

Desulfurization (FGD)] and high efficiency NO,, controls [Selective Catalytic Reduction 

(SCR) or Selective Non-Catalytic Reduction (SNCR)] are either permanently shutdown or 

scheduled to permanently shutdown by the 2015 MATS compliance deadline. EPA must 

WVDEP Principles to Consider in Establishing COZ Emission Guidelines for Existing Power Plants Page 9 of 17
recognize that existing power plants which meet CAIR, BART and MATS have remaining 

useful life, and cannot be forced to shut down as a result of COz etnission guidelines under 

CAA § 111(d). 

States must be allowed to take into account the substantial CO2 emissions reductions that 

have occurred since 2005 (i.e., the shutdown of nine (9) coal-fired units in West Virginia), 

and those which are scheduled to occur by 2015 (i.e., the shutdown of an additional nine 

(9) eoal-fired units in West Virginia). 

When establishing emission guidelines, EPA must balance the need for the control of 

criteria pollutants, which have scientifically demonstrated adverse public health effeets, 

with the need for control of CO2 , which has not been dernonstrated to have adverse effects 

on public health. The ageney must recognize that some criteria pollutant controls may 

result in higher CO2 ernissions. 

EPA must base the emission guidelines on COz control measures that can be applied within 

the fence-line of existing plants, taking into consideration costs of control, physical 

limitations, geographical loccrtion, or similar factors and remaining useful life. The basis 

of the emission guidelines should be inside the fence-line efficiency improvements over 

which companies have primary control. Demand-side reductions from outside the fenceline, over which companies have little or no control, should not be used to set the emission 

guidelines. Establishing ernission guidelines based on demand-side reductions does not 

allow sources certainty in their compliance options, nor does it allow states certainty in 

establishing standards of perforrnance. Further cornplicating the issue is the problem of 

quantifying demand-side reductions occurring in other states where the electricity 

generated would have been used. 

EPA, in the preamble to the proposed Standards of 1'erformance for Greenhouse Gas 

Emissions from New Stationary Sources: Electric Utility Generating Units, discussed the 

alternatives that were considered in the BSER analysis for new fossil-fuel fired stationary 

combustion turbines, which included modern, efficient NGCC units and modern, efficient 

NGCC units with CCS. EPA also discussed the alternatives that were considered in the 

BSER analysis for new fossil-fuel fired utility boilers and IGCC units, which included 

highly efficient new generation that does not include CCS technology, highly efficient new 

generation withfull capture CCS and highly efficient new generation wifih partial capture 

CCS. 

In the preamble, EPA stated ... NGCC with CCS is nol a configuration that is being built 

today. 7he EPA considered whether NGCC tivith CCS could be idenlifred as the BSER 

adeguately demonstrated .for new stationary combustion turbines, and we decided that it 

could nol. At this time, CCS has not been implemented for NGCC units, and we believe 

there is insuf^icient information to make a determination regarding the technical feasibility 

of implementing CCS at these types of tinits. 

WVDEP Principles to Consider in Establishing CO Z Emission Guidelines for Existing Power Plants Page 10 of 17
This same logic applies to the consideration of CCS at existing fossil-fuel fired utility 

boilers. A utility boiler equipped with CCS is not a configuration currently in use on 

existing utility boilers, and as such can not be considered as a candidate for BSER. 

The Best System of Emissions Reduction, upon which EPA bases the emission guidelines, 

a. should not mandate fuel switching; 

b. should not require the shutdown of plants equipped with FGD and SCR/SNCR; 

c. should not be based on reductions "outside the fence" over which companies have 

limited control; and, 

d. should not include CCS. 

The emission guidelines should be based on the application of BSER which has been 

adequately demonstrated, taking into account the different sizes, types and classes of 

existing sources, as well as eosts of control, physical limitations, geographical location and 

similar factors which make sub-categorization appropriate. 

4. State Flexibility 

Because there have been no demonstrated adverse health effects directly attributed to COZ, 

the Clean Air Act provides states great flexibility and discretion when developing state 

111(d) plans. Under the concept of cooperative federalism, CAA § 111(d)(1) requires states to 

submit ... a plan ... which establishes standards of performance for any existing source and 

directs EPA to permit the State in applying a standard of performance to any particular 

source ... to take into consideration, among other things, the remaining useful life of the 

existing source to which such standard applies. 

CAA § 111(d)(2) gives EPA the authority to determine if a plan is satisfactory, however, the 

definition of performance standard and the direction to consider among other factors, the 

remaining useful life provide criteria for EPA to use in their determination of whether or not 

a plan is satisfactory. The CAA provides states substantial discretion in the development of a 

plan which establishes standards of performance for existing sources. 

In recognizing the flexibility available to the states, EPA made a clear distinction between 

pollutants which pose a direct threat to human health as opposed to those that pose a threat to 

human welfare, but for which adverse public health effects have not been demonstrated. 

1Vtuch greater latitude is provided to the states when a pollutant has not been demonstrated to 

have adverse public health effects, since the provisions of 40 CFR §60.24(d) apply, which 

provides that States may balance the emissions guidelines, compliance times, and other 

information provided in the applicable guideline document against other factors of publrc 

concern in establishing emission standards, compliance schedules, and variances. Therefore, 

it is mandatory that EPA make such finding clear in the guideline documents. This finding 

would allow the states to exercise maximum flexibility in developing suitable plans. 

WVDEP Principles to Consider in Establishing CO Z Emission Guidelines for Existing Power Plants Page 11 of 17
C.	Form of the Emission Guidelines: Mass-Based or Rate-Based 

A mass-based emission standard establishes a quantity or mass of pollutant to be reduced from 

a baseline level. Mass standards are often expressed as a percent reduction in the mass of the 

pollutant from the baseline, which can be equated to specific number of tons, or an emissions 

cap (tons/year). In contrast, an emission rate-based standard is one in which the emission level 

is established in terms of the pollutant emissions per unit of heat input (lb CO 2/MMBtu) or per 

unit of electric production output (Ib COz/MW-hr). 

EPA insists it has no preconceived notions regarding how to implernent a CO 2 reduction 

program for existing EGUs, and has conducted "listening sessions" around the nation to hear 

ideas about potential considerations from states, industry, environmental groups and others. 

Some states, environmental groups and industry groups have already weighed in with 

considerations and proposals for EPA. 

1. Mass-Based Standard 

One such proposal focused on a mass-based standard 13 . This approach establishes a baseline, 

and specitic reduction targets for future years. A statewide baseline would be established 

using the CO2 emissions from fossil-fuel tired EGUs in 2005, and reduction targets would be 

set for 2020 (17 percent reduction), 2025 (28 percent reduction) and 2030 (38 percent 

reduction). This mass-based approach would allow credit for the shutdowns, and efficiency 

improvements that have been made at facilities since 2005. 

A significant fault with this proposal, no matter how well intentioned, is that it ignores the 

constraints which define BSER under CAA § 111(d), by setting target reductions based on the 

President's Climate Action Plan, rather than the application of BSER as dictated by the CAA. 

2. Rate-Based Standard 

Another proposal focused on a rate-based standard 14 , with emission levels from NGCC units 

serving as the target for fossil-fuel fired boilers. The CO 2 emissions frorn a NGCC unit are 

typically about half of those from a coal-fired boiler. The proposal would cut EGU CO2 

emissions by 25 percent (relative to 2005 emissions) by 2020 and 34 percent by 2025. These 

reductions would be achieved by setting state-speciftc emission rates based on the baseline 

share of coal and gas generation. EI'A would set a target emission rate for each state for 

2020, based on the state's baseline share of coal and gas generation. The state standards for 

2020 would be calculated by applying a rate of 1500 lbs of CO2/MW-hr for the baseline coal 

generation share and 1000 lbs of COZ/MW-hr for the baseline gas-fired generation share. The 

allowable emission rate would drop fitrther in 2025, with the rate applied to calculate the 

state allowable emission rate dropping for coal-fired generation from 1500 to 1200 lb 

CO2/MW-hr, while the rate applied for natural gas-fired generation would remain at 1000 lb 

COZ/M W-hr. 

This rate-based approach would impermissibly force the retirement of a significant portion of 

West Virginia's coal-fred units, which currently provide 97 percent of West Virginia's 

WVDEP Principles to Consider in Establishing COZ Emission Guidelines for Existing Power Plants Page 12 of 17
electric generation. In order to comply with the rate-based proposal by 2020, West Virginia 

would have to replace 43.5 percent of its generation through fuel switching to lower COz 

emitting fuels (that emit at the same rate as NGCC units), or replace 20.4 percent of its 

generation with renewables (zero-emitting sources), or some combination thereof. Such an 

approach is not realistic, nor is it feasible to assume that companies would be in a position to 

cost-effectively replace anywhere from 20 to 44 percent of their generation within less than 6 

years. To put this in perspective, the required level of reduction would require the installation 

of 15 — 500 Megawatt (MW) NGCC units by 2020, or the installation of nearly 2,500 — 2 

MW windmills, or some combination thereof. 

3. Baseline 

In the past, perforrnance standards have been technology-based and tied to achieving the 

NAAQS for a particular pollutant. However, for COZ there is no NAAQS or readily-available 

control technology on which to base emission guidelines. EPA must distinctively define 

BSER for the multitude of existing EGUs. The level of control should be considered from a 

2005 base year. The year 2005 is the appropriate base year for a number of reasons: it is the 

base year in the President's Climate Action Plan, it is representative of energy demand prior 

to the 2008-2009 recession, and 2005 has a robust emissions inventory because states were 

required to submit a full emissions inventory pursuant to the Air Emissions Reporting 

Requirements rule. 

4. Preferred Approach 

For the reasons described below, the best choice for the form of the emission guidelines is a 

mass-based approach that reflects the level of emission control achievable through the 

application of BSER at each and every designated (existing) facility in the state. 

A primary concern of either approach is quantifying and verifying CO2 emissions reductions. 

This is especially true if demand-side reductions are creditable. Compliance with an emission 

rate can allow for growth in production to exceed the reduction in rate, permitting higher 

mass emissions. In fact, there could be a point at which demand inereases outpace the 

emission rate decreases, leading to net CO2 emissions increases from the base year. 

A mass-based approach achieves the desired level of reduction in a more equitable fashion by 

taking into consideration the differences among states and their existing energy portfolios. 

The mass-based approach maintains the integrity of the electricity grid, with a diverse fuel 

mix, which is vital to grid security and reliability. Compliance with an overall emissions cap 

ensures the desired reductions actually occurred. EPA's Clean Air Markets Division already 

requires that EGUs monitor and report CO Z emissions as an integral part of other reporting 

mandates and could routinely track emissions just as they have done for other control 

programs such as CAIR. 

West Virginia does not specifically support the levels of control proposed in either the ratebased or mass-based approach outlined above. However, we do support the use of a massWVDEP Principles to Consider in Establishing CO2 Emission Guidelines for Existing Power Plants Page 13 of 17
based approach that is reflective of the level of emission control achievable through the 

application of BSER at all existing power plants. 

D. State Performance Standards 

States are given considerable latitude under CAA § l 11(d) in determining which approach to 

take when developing their plans and establishing standards of performance for existing 

sources. In accordance with 40 CFR §60.24(b)(1), "[e]mission standards shall either be based 

on an allowance system or prescribe allowable rates of emissions ...ls" 

A mass-based allowance system would automatically account for improved efficiency at the 

plant level, reduced demand resulting from demand-side energy efficiency improvements, load 

shifting to lower CO2 emitting generation, and the deployment of renewable (zero-emitting) 

energy sources. It appears that one of the most straight-forward approaches might parallel that 

of EPA's Acid Rain and CAIR trading programs. The federal agency could establish state CO2 

budgets, based on application of site-specific BSER. States could then allocate their budgets to 

their facilities using whatever methodology they choose (e.g. auction or historical activity). 

States would then have the option of allowing their sources to participate in an intrastate or 

interstate trading program. 

Some have suggested demand-side energy efficiency programs, which reward the consurner 

beyond cost reductions in their utility bill by allowing them to generate credits that could be 

traded on the CO2 market. While such a policy may have a lofty and admirable goal, such a 

course is not within the regulatory purview of many state environmental agencies when 

establishing standards of performance for existing EGUs. The same level of reduction can be 

achieved, with much less cornplexity, through the application of a supply-side (mass-based) 

trading program as outlined above. States and sources, by whatever rneans they determine as 

cost-effective, would still be free to encourage consumers to implement energy efficiency 

programs in their homes or businesses, thereby, reducing emissions though demand reduction. 

E. Timing of Plan Submission 

The regulation of CO2 from the fleet of existing EGUs is a monumental endeavor. Therefore, 

EPA should provide states and the regulated community adequate time to consider, comment 

on and develop state plans. The requirement to submit a state plan within 12 months of 

issuance of the finalized guidelines does not provide adequate time for states to develop a 

viable plan, and cornplete the state adoption procedures. The rule rnaking process in West 

Virginia can take from 12 to 18 months to complete, not including the time necessary for plan 

development. 

CAA § I 11(d) does not specify any specific time line, and 40 CFR §60.27(a) states: The 

Adminisn•ator may, whenever he determines necessary, extend the period f'or submrssion of any 

plan ur plan revision or portion thereaf: 

If EPA expects states to develop satisfactory plans, the agency must extcnd the deadline for the 

submission of state plans under CAA §1I 1(d) to three years, so as to parallel the requirements 

WVDEP Principles to Consider in Bstablishing CO2 Emission Guidelines for Existing Power Plants Page 14 of 17
for SIPs under CAA §110. Indeed, the plans of the former are likely to be much more difficult 

to develop than the latter. 

IV. CONCLUSION 

West Virginia is advocating that EPA follow CAA Section 111(d) requirements and the 

implementing regulations in 40 CFR Part 60, Subpart B, in establishing BSER. EPA should not 

start with a predetermined level of reduction and attempt to establish BSER to achieve that goal. 

Instead, the agency should establish the level of control achievable through the application of 

BSER from a bottom-up approach. That is the only legal mechanism to establish the level of 

reduction required. The President's stated goal of a 17 percent reduction in CO2 emissions by 

2020 has no bearing on the determination of BSER, nor in the application of BSER for 

determining the level of control achievable in the chosen regulatory approach. 

It cannot be overemphasized that coal currently provides about 40 percent of U.S. electricity 

generation and is expected to remain the dominant source of electricity through 2040. Any new 

regulation of existing coal-fired power plants must provide for the cost-effective operation of 

these plants to ensure the continued reliability and stability of the power grid. Finally, the likely 

adverse economic impacts, including potential unintended consequences, must be carefully 

weighed against the uncertain environmental benefits of U.S. power plant CO 2 emissions 

regulations. 

WVDEP Principtes to Consider in Establishing COz Emission Guidelines for Existing Power Plants Page 15 of 17
ENDNOTES 

Data compiled from the following sources: U.S. Energy Infonnation Administration (EIA), 

Electric Power Monthly, Table 1.1. Net Generation by Energy Source 

(LiU-.//w^ ^ veiagQN cIe	tti ?:;rc-^ -=[-J^ Ltri(^Lit 4Z); Short Term Energy


Outlook, November 2013 LJ.S. Electricity Generation by Fuel, All Sectors 

(httL).//'x-,, wNN, .eiGt.gov/t'orecusts,/-^teo, , J i-ei)oj-t/electricitv.cft-n°/o2O?src^Electric;^); Annual 

Energy Outlook 2013, Table 15. Coal Supply, Disposition and Prices, Reference Case 

(	^AA%	/l'orecqsts/qe0/S0L1rCC coal.cftn); Annual Energy Outlook 2013, Coal's


share of electric power generation falls over the projection period 

(Lit	w.eja. gov/ lbrecast s/aeo/secto r electi-ic no\?,-cr a11.cJ'rn#cqa11-_) Lk^Lr e 

2. "Manchin Testifies at I-louse Hearing in Support of Legislation to Rein in EPA's Proposed 

Standards." !Atji_!,'\N w\,v.tiiaiiehin.sencite,Lov,,iiublic/'itidex.cf'nil'20131'1--li'niatic(iiii-testifies-at1)o-tls!^41eqrh lation-to-rein-LnIoLi-s- .ro c7, d-standards 

3. U.S. Energy Information Administration, West Virginia State Profile and Energy Estimates, 

Profile Overview. (Iltt 

4. Data provided by Christina Risch, Director for the Center for Business and Economic 

Research at Marshall University, in an email dated December 13, 2013, to Jeff Herholdt, 

Director of the West Virginia Department of Energy. Also supplemented by endnote I 

information. 

5. Ibid. 

6. Ibid. 

7. Ibid. 

8. U.S. EPA, "Considerations in the Design of a Program to Reduce Carbon Pollution from 

Existing Power Plants," September 23, 2013 version, httl)-./L^yw	olLution9. CAA§111(d)(2)(A),IlttLl:'/kvww.]Ltw.cc)riiell.CLILL/LISCOI.IC/text,,42/`7411 

10.40 CFR §60.22(a). littp:/^Lx)Lw.ccf ) 1.,g( _,^/c ^ 	, i-t /t.x - ^jtie _-L 

idx'.'S11)--161)39lOc41ccb35488884hf'87t'a424617&ii(.)d4 40:7.0.1.1.1.2,151.3& i-j,,ii^cliv8

11.40 CFR §60.22(b)(5).	i-hinAcmidx'?Slt)- . -61'dcd54611'444btl'-s d2'cca4Oc6I^62c&node =-, 40:7.0. 1.1 , L -2), I 5l,3&n,,nr---div8 

12.U.S. EPA, New Sout-ce Review Workshop Manual, Prevention qf Significant Deterioration 

and Nonattainment Area Permitting, Best Available Control Technology (BACT), October 

1990, pg. B.13. 

WVDEP Principles to Consider in Establishing CO2 Emission Guidelines for Existing Power Plants Page 16 of 17
13.Commonwealth of Kentucky, Energy and Environment Cabinet — Principat authors: Kenya 

Stump, Division of Air Quality, Department for Environmental Protection; Aron Patrick, 

Department for Energy Development and Independence; Karen Wilson, Energy and 

Environment Cabinet; Greenhouse Gas Policy Iinplicationsfor Kentucky under Section 

11 1(d) of the Clean A ir A cl, October 2013. 

littr)-,"/www.2ooPle.com!url'?sa =t&rct=i&o=&esrc=s&frm= I &source^-web&cd-- I &vcd=0(.(.' .... .... .. 

s(2IjAA&urj =htt 1Yo3A%21'%2Fcec.b _y, )o v%21'Docuni(.,nts%2F(iflCjl)//o25,20POlicy"!^252ORe 

t%25'0w'th%252OGina%212OMcCarthv%2520letter. . df&eir-ifacLJtF.5qdb&As^M=A1-Oi('NE5L71f'1hMiSKt^MfirA(,jz2Vkzn5OA&bN,ni=bv.57155469,d.aWc 

14.Daniel A. Lashof, et al., National Resource Defense Council, "Closing the Power Plant 

Carbon Pollution Loophole: Smart Ways the Clean Air Act Can Clean Up America's Biggest 

Climate Polluters," March 2013. qt ion-standards/del'ault.ast) 

15.40 CFR §60.24(b)(1) littp://wwwy.ecfr-.I,(-,)N,/cp-i-biTVtextidx"'Slf)="7a49da687aecOccb522a6bd84a8O3O9&ilode-.40:7.0.1.1.1.2.151.5&^i.L,ii=div8 

WVDEP Principles to Consider in Establishing CO2 Emission Guidelines for Existing Power Plants Page 17 of 17