From: Higgins, Cortney [mailto:Cortney_Higgins@omb.eop.gov]

Sent: Monday, May 19, 2014 9:10 PM

To: Wayland, Robertj Subject: FW: TIME TO MEET: 111(d) Rule

Hi Bob,

Again, here’s information we received today.

Regards, Cortney

From: Jennifer Kefer [mailto:jennifer@dgardiner.com]

Sent: Wednesday, May 14, 2014 12:35 PM

To: Echols, Mabel E.

Cc: David Gardiner Subject: RE: TIME TO MEET: 111(d) Rule

Mabel – David and I look forward to meeting with OMB to discuss the forthcoming GHG rule next week. As we know that you are aiming to finalize and publish the rule by June 1, we thought it would be a good idea to share the language we are hoping to discuss in advance of our conversation. We are proposing a few paragraphs to incorporate into the preamble, which highlights EPA’s support for combined heat and power (“CHP”), lays out some of its benefits, notes how policies that support greater deployment are consistent with other efforts that the Administration is taking, and then notes a number of existing resources that states will be able to use to help incorporate CHP into their compliance plans. I understand that other stakeholders (particularly NARUC, NACAA and NASEO) ha ve developed similar language elaborating the benefits of energy efficiency generally. While we are confident that these benefits extend to CHP, we think it is important the EPA explicitly address CHP in the preamble. We plan to talk through this language when we meet next week, but were hoping you could share it with the appropriate people beforehand.

Thanks in advance for your consideration. Please let me know if I can provide any additional background before we meet next Wednesday.

Jennifer

<< Preamble Language_Submitted 5_14_2014.pdf >>David Gar diner & Associates, LLC | 2609 11 th St. North | Arlington, VA 22201 | 202.463.6363 | www.dgardiner.com/alliance 

# Industrial Efficiency The Alliance for

May 14, 2014

To Whom It May Concern:

In recent Clean Air Act rulemakings , EPA has consistently supported policies that advance support energy efficiency generally and combined heat and power and waste heat to power in particular. We are hopeful that the forthcoming GHG NSPS for New Power Plants will likewise
embrace these technologies. We believe it is essential that the rule explicitly highlight the benefits of CHP and WHP, as many states do not consider these supply

- side measures when thinking of energy efficiency. To ensure that these technologies are not overlooked , we propose the following language be incorporated into the preamble :

“ In addition to end

- use energy efficiency, the rule encourages states to make the commercial, industrial and institutional sectors more efficient through the use of combined heat and power (CHP) and waste heat to power (WHP). Conventional power generation is only about 3 5 percent efficient, which means that nearly two

- thirds of fuel inputs are simply vented into the atmosphere. CHP and WHP virtually eliminate that

waste. By producing both heat and power from a single fuel sourc e (CHP) and by capturing otherwise wasted heat from industrial processes to generate additional electricity (WHP), CHP and WHP dramatically lower energy use and associated
emissions , while also delivering economic benefits . In fact, CHP can deliver the sa me amount of useful energy and produce one

- half the carbon dioxide (CO 2 ) emissions of

t raditional power generation

. WHP produces electricity with no additional combustion
and no incremental carbon emissions

.

“ At the same time, these technologies reduce the burden on the existing transmission system, keep energy prices low, improve national security, increase resilience to extreme weather events, and enhance manufacturing competitiveness. As noted in the
A dministration’s Hurricane Sandy Rebuilding Task Forc e, b ecause CHP systems generate power locally and use the grid as a backup, i f the grid were to go down, these systems can operate without connection to local electricity infrastructure. This reduces the burden on transmission and distribution systems and increases electric reliability

. By ensuring highly efficient use of fuels, especially natural gas, CHP reduces demand, enhances America’s energy independence, and keeps prices low. When instal led at manufacturing and other facilities, it enhances their competitiveness by cutting energy

costs by reducing energy use

. Indeed, the industrial sector accounts for the largest share of energy consumption in the United States and the majority of energy growth over
the next decade will occur in the industrial sector. For this reason , supporting policiesDavid Gardiner & Associates, LLC | 2609 11 th St. North | Arlington, VA 22201 | 202.463.6363 | www.dgardiner.com/alliance that improve efficiency at these facilities can have a significant impact on reducing the amount of energy used in the United States. Because it provide s all these benefits, t he Administration strongly supports the use of CHP and WHP ; President Obama recently established a national goal of increasing deployment by 40 gigawatts (50 percent).

“ States can serve as partners in achieving this goal by embracin g favorable policies in their compliance plans. States can adopt a variety of policies to support deployment of CHP and WHP, incorporating CHP and WHP in state energy portfolio standards, offering innovative financing to support projects, overcoming utili ty barriers through modified standby rates and simplified interconnection standards, requiring consideration of CHP in critical infrastructure, and offering a streamlined permitting process for relatively small CHP and WHP projects . The State and Local En ergy Efficiency Action Network has identified a number of these best practices, which can be incorporated into state compliance plans. 1

“ CHP’s chief benefit is that it produces both thermal and electric energy from a single
fuel source. To account for the emission benefits from these systems, it is therefore essential that states credit all of the electric and thermal energy produced by these systems. EPA has developed a variety of tools to enable states to measure energy produced and to determine avoided e missions. These include a guide to Accounting for CHP in Output

- Based Regulations , a Fuel and Carbon Dioxide Savings Calculation Methodology for Combined Heat and Power Systems, and the AVoided Emissions geneRation Tool (AVERT)

. 2 ”

We look forw ard to discussing this proposed text with you in person. Please let us know if we

can provide any additional background.

Sincerely,

David Gardiner Jennifer Kefer

1 See, e.g. SEEAction

, March 2013, Guide to the Successful Implementation of State Combined Heat and Power Policies ( http://www1.eere.energy.gov/seeaction/pdfs/see_action_chp_policies_guide.pdf ); SEE Action, March 2014, Industrial Energy Efficiency: Designing Effective State Program s for the Industrial Sector ( http://www1.eere.energy.gov/seeaction/pdfs/industrial_energy_efficiency.pdf ).

2 U.S. EPA, CHP Partnership, Feb. 2013, Accounting for CH P in Output

- Based Regulations (( http://www.epa.gov/chp/documents/accounting.pdf ); U.S. EPA, CHP Partnership, Aug. 2012, Fuel and Carbon Dioxide Savings Calculation Methodology for Combined Heat and Power Systems ( http://www.epa.gov/chp/documents/fuel_and_co2_savings.pdf ); Avoided Emissions geneRation Tool (AVERT) ( http://epa.gov/av ert/ ).