UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

OFFICE OF 

AIR AND RADIATION 

MEMORANDUM 

Subject: 

From: 

To: 

Summary of Stakeholder Meetings 

Carissa Cyran 

Dockets EPA-HQ-OAR-2013-0602, EPA-HQ-OAR-2013-0603, and EPA-HQOAR-2013-0495 

This memorandum summarizes meetings with stakeholders during the week of March 9, 2015. 

On March 9, Associate Assistant Administrator for Climate and Senior Counsel for Air and 

Radiation Joseph Goffman met with representatives from the Clean Air Task Force. Sign-in 

sheet and presentation are attached. 

On March 9, Acting Assistant Administrator for Air and Radiation Janet McCabe and Associate 

Assistant Administrator for Climate and Senior Counsel for Air and Radiation Joseph GotTman 

participated in a Clean Power Plan Compliance Workshop with state officials, organized by the 

Georgetown Climate Center. 

On March 1 0, Associate Assistant Administrator for Climate and Senior Counsel for Air and 

Radiation Joseph Goffman met with representatives from the World Coal Association. Sign-in 

sheet and handout are attached. 

On March 10, Acting Assistant Administrator for Air and Radiation Janet McCabe and Associate 

Assistant Administrator for Climate and Senior Counsel for Air and Radiation Joseph Goffman 

participated in a dialogue with states, power companies and non-govemmental organizations on 

Clean Power Plan Implementation, organized by the Georgetown Climate Center. 

On March 12, Acting Assistant Administrator for Air and Radiation Janet McCabe met with 

representatives from the American Chemistry Council. Sign-in sheet attached. 

On March 12, Associate Assistant Administrator for Climate and Senior Counsel for Air and 

Radiation Joseph Goffman met with Tim Profeta, of the Nicholas Institute for Environmental 

Policy Solutions at Duke University. 

On March 13, Acting Assistant Administrator for Air and Radiation Janet McCabe and Associate 

Assistant Administrator for Climate and Senior Counsel for Air and Radiation Joseph Goffman 

met with representatives from Edison Electric Institute. Sign-in sheet attached. 

Internet Address (URL) • http 1/www epa gov 

Recycled/Recyclable • Prmted woth Vegetable Ool Based Inks on 100% Postconsumer. Process Chlonne Free Recycled Paper 
On March 13, Acting Assistant Administrator for Air and Radiation Janet McCabe and Associate 

Assistant Administrator for Climate and Senior Counsel for Air and Radiation Joseph Goffman 

met with representatives from Adirondack Council. Sign-in sheet attached. 
Date: March 9, 2015 

Meeting: Clean Power Plan 

Rule(s) Discussed: 9P 

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TOPICS 

• Form of emission goal: 

- Mass goals should be required or at least strongly facilitated 

- Mass goals should cover both existing and new sources 

- The method for translating rate to mass goals should be presc

- Load growth true-up for mass goals 

• Inter-state trading of emission credits 

- Benefits of broad national trading: enhanced reliability and low

- Need for clarifying guidance to facilitate trading between sourc

contiguous states 

• CATF's goals for the final rule 

• CATF's outreach 
FORM OF GOAL Mass Goals should be Preferred to 

There are many reasons to prefer mass goals over (blended) rate goals

Problems with Rate Goals Advantages of 

• No limit on emissions, which rebound after 2030 • Facilitates EE and 

• Lower wholesale prices may • Allowance allocatio

~ Increase the cost of state policy supports for mitigation and/or ot

auction revenues RE and EE programs 

• Avoids the emission 

~ Push some nuclear units into premature problems associate

retirement, raising emissions 

• Familiar to stakeho

• Requires EE EMV showing to demonstrate credit. 

Risks "phantom" reductions if EE EMV accounting • Simplicity facilitates 

and reporting issues not effectively resolved compliance and cre

• Requires special interstate trading rules for RECs • Consistent with like

Complicated for states to engage in interstate policies • 

trading. 

• May raise production costs due to seams conflicts 

across neighboring states 

--------- - ------------···-·- -----

Consequently, mass goals should be required or at least strongly facilitat
FORM OF GOAL Total Electric Secto

3500.00 1 

3000.00 

2500.00 -1-----------

ON2000.00 I ............... ~ - --~ --- ·-

0 

1-

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:E 

1500.00 -

1000.00 +---------------------------

500.00 +------ -------------------- - oo ~ 

2016 2018 2020 2025 

' 

2030 2040 2050 

- E

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Po

IP
FORM OF GOAL Facilitate 

Mass goals should be facilitated: 

• Appropriately structuring the implementation milestones and co

action requirements for rate-based and mass-based programs ~ Well designed mass programs should be self-correcting, avoid 

milestone and corrective action requirements, allow for extens

and therefore offer greater compliance flexibility. ~ In contrast, rate-based programs, due in part to the need for re

complex compliance procedures, may require more stringent o

• Consider a load growth true-up mechanism for mass goal progr

that outlined later in these materials. 

• Retain requirement that rate-based states "blend" their rates in 

with each other. 
FORM OF GOAL Goals Should Cover Existing & 

A mass goal covering only existing sources is problematic from several 

• Electric Markets - Inefficient Operations 

Bifurcating emission sources would result in a price on emissions from exis

no price on emissions from new sources 

- This would allow new but less efficient gas plants to dispatch before existin

efficient gas plants, leading to inefficient operations 

• New Entry and Emissions - Inefficient Entry and Emission Rebo

- The unequal treatment of existing and new gas would create an incentive f

enter the market when that would not otherwise occur 

- To the extent this caused new gas generation to displace existing gas gene

would be little if any meaningful emission reductions on a total system basi

Excessive new entry could depress the carbon prices, reducing the value o

abatement and causing overall emissions to rebound. 

• Long Term Policy - Transition Hurdle 

Most long term policy structures, such as carbon taxes or cap and trade me

intended to cover both existing and new sources on a mass basis 

Regulating some sources on a mass basis and other sources on a rate bas

inconsistent with that and could hinder the transition to a longer term policy

As a consequence, mass goals should cover both existing and new sources
FORM OF GOAL Translation Method should be 

While providing states with compliance flexibility is important, allowing th

how to translate rates into mass goals would undermine the emission be

As shown below, this could lower the emissions benefits (relative to 201

13o/o -a reduction in emission benefits of almost 25°/o. 

Lower 48 Covered Emissions Budget 

Million Metric Reduction from Redu

Tonnes 2005 

GDC with Load Growth 1,536 32% 

IPM Results 1,600 29% 

Higher of the Two 1,677 26% 

--·--··-

To prevent this, the method for translating rate goals into mass goals sh

prescribed. 

Note: Taken from "Translating Emission Rate Goals to Mass Goals Under EPA's Clean Power Plan", B

Kaplan, The NorthBridge Group, December 201 4 
FORM OF GOAL Load Gro

• The most common question raised by states and generating compan

desirability of mass goals is whether they might constrain economic g

• In part, this is based on misunderstandings-

- that carbon emissions are necessarily tied to economic growth 

- that mass translation methods do not incorporate expectations o

• Nonetheless, to the extent the issue has to do with different growth e

allowing a mass goal to be adjusted over time could address this iss

• This could be done using a "true-up" mechanism 

• To ensure the resulting mass goals remain preferable to a rate goal -

- The emission rate and generation inputs would need to be care

- The mechanism would need to terminate in 2030 
FORM OF GOAL True-Up M

• Up-Front Decision: Made by a state as part of its implementation pl

• Goal Adjustment: 

- General: Adjustment = (actual minus expected load) x emission rate 

- Load Difference: The difference between actual load and load under 

estimated in the initial rate to mass goal translation calculation (net o

- Emission Rate: 

• The emission rate would be the same as in the rate to mass g

methodology. 

• The adjusted mass goal would be consistent with the original m

it been based on what turned out to be actual load growth. 

- The resulting tonnage adjustment would be symmetrical (it could inc

decrease the mass goal) 

• Timing: 

- Prospective Adjustment- for example, a true-up determined in 202

2021 actual load data would adjust the 2023 mass goal 

- Could be done annually or periodically (every second or third year) 

- Final adjustment made as part of setting the 2030 goal 

• Example: (1 02 TWh actual load - 100 TWh estimated load) * 1000 

2000 lbs/short ton = 1 ,000,000 tons 
BROAD INTER-STATE TRADING Two A

• Broad inter-state trading offers many benefits; most importantly, it can he

key concerns expressed by others about the impact of the proposed CP

)> Electric reliability 

)> Compliance costs 

• While the CPP proposal offers several ways to trade, these generally inv

establishing multi-state programs with neighboring states -which could 

)11> The effort required to join or develop such programs can be considerable. 

)11> There may be a loss of control over some elements of state plans. 

)11> The most promising trading opportunities may be with states outside of the lo

• SOLUTIONS: 

1. Our preferred policy would be for EPA to establish a national tradin

patterned off of the NOx SIP call 

2. Alternately, at a minimum, EPA should facilitate a streamlined mas

for states with mass goals to trade on a bilateral basis without joini

programs. 
BROAD INTER-STATE TRADING Bilateral Trading - Im

• There are currently several impediments for states considering bilateral tra

)> The EPA has not publically acknowledged this form of trading 

)> An inter-regional or national tracking system has not been offered 

)> The CPP does not directly address the minimum conditions under wh

sources between approved state programs through bilateral trade wo

acceptable 

• This is relevant because price cap, supplemental allowance and borrowin

migrate across state programs and impact program performance. 

)> The CPP's program implementation language may be controlling alth

is not clear 

• " ... a state plan must (i) specify a process for annual reporting ... and (ii) 

and schedule for implementing corrective measures if ... " needed 

• plans may not need corrective measures if they include "self-correcting m

which "inherently require both interim progress and the full level of required 

performance ... " 

• This raises numerous questions for states and the resulting uncertainty ma

likely they will pursue this form of trading. 
BROAD INTER-STATE TRADING Bilateral Trading 

EPA should facilitate this form of trading by providing clarifying guidance on a 

features: 

• Explicitly acknowledge that states with mass programs may trade credits 

basis without joining or developing a multi-state program 

• Offer to track credits and trades if requested by states 

• Clarify policy concerning several key features, including units (metric ton

tons), compliance periods, banking and borrowing provisions, and price c

~ Confirm that trading programs in states without price caps 

Are self-correcting mechanisms, may use a single 2020- 2029 init

in which banking and borrowing is extensive ~ Describe the provisions that states with price caps would need to adopt in 

programs to be considered self-correcting 

These might include the level of the price caps, supplemental allow

provisions 

This would also allow for a single initial compliance period and exte

• Confirm that trading between any of these states would be allowable. 
INTERIM GOALS: Address without loss of environmen

States and stakeholders concerned about interim goals are pushing a va

to the proposal including: 

• Price caps 

• Reliability triggers • Glide paths (vs. "cliffs") 

• Delay of interim goals 

• Eliminating interim goals 

All of these are aimed at the 2020 interim goals. [Notably, there is almos

on the 2030 goals.] 

EPA should resist. The goals are not too stringent and states can pursue 

mechanisms to fully mitigate these concerns: 

1. Mass-based compliance with borrowing under the cap. 

2. Broader interstate trading 

These would facilitate compliance without giving up environmental perfor
CATF GOALS FOR THE FINAL RULE 

• Form of emission goal 

- Mass goals should be required or, if not, at least strongly facilitated 

- Mass goals should cover both existing and new sources 

- The method for translating rate to mass goals should be prescribed 

• Inter-state trading 

- Prefer broad national trading platform, similar in structure to the NO

- Alternately, EPA should: 

1. Acknowledge that states may trade without joining or developing a new m

2. Clarify policy concerning minimum key features: units, banking/borrowing

3. Offer to track credits 

• The FIP should include these same goal and trading provisions 

• Other issues for later discussion: 

- Role of CCUS 

- Nuclear fix 

- Biomass 

- Other elements of a FIP 
CATF OUTEACH 

• State outreach 

- Regional stakeholder groups 

- Foundation initiatives 

• Industry outreach 

• Legal support 

• CRA support 
Date: March 10, 2015 

Meeting: World Coal Association 

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Telephone: 202-566-1744 

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