COVAND 

Powering Today. Protecting Tomorrow.

Paula Soos 

VP Government Relations 

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Covanta 

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445 South Street 

Morristown, NJ 07960 

Tel: 862.345.5348 

Fax: 862. 345.5170 

psoos@covanta.com

May 13, 2014 

The Honorable Gina McCarthy 

Administrator, Environmental Protection Agency 

1200 Pennsylvania Avenue, NW, Washington DC 20460 

Dear Administrator McCarthy, 

As you prepare to release a draft rule to address carbon pollution from existing 

power plants under section 111(d) of the Clean Air Act, I wanted to follow up on the 

January meeting many of your staff had with local governments who utilize waste-toenergy plants. Our client communities said that Acting Administrator McCabe and 

Mr. Goffman indicated they wanted to hear from States about the need for WTE as a 

tool in the 111(d) proposed rule. Over the past several months, dozens of letters 

have been sent to your office by local government officials, state legislators, and 

state regulatory agencies expressing their view that Waste-to-Energy (WTE) could 

play a valuable and constructive role in reducing greenhouse gas emissions through 

the 111(d) rulemaking. 

I have attached a list of the government entities that we know have sent letters 

requesting Waste-to-Energy be included as a compliance tool in your forthcoming 

guidance to the states. These entities include Mayors from across the country 

including CT, CA and MI, County Commissions, State Legislators and other 

stakeholders. Importantly, they also include letters from the executive agencies of 

MN, HI, OR, AL and PA. 

Below are a few specific requests of governments who rely on existing waste-toenergy facilities as critical to their GHG programs: 

"The Southeast Resource Recovery Facility in Long Beach plays an important 

role in mitigating greenhouse gas emissions in this region, and we strongly 

encourage the EPA to recognize Waste-to-Energy facilities as infrastructure 

in the federal government's "toolbox" for reducing greenhouse gas 

emissions." 

- Mayor Foster, Long Beach, CA

® 

Recycled Paper
"Kent County and its local government partners have invested hundreds of millions of 

dollars in a waste-to-energy facility. I urge your agency to allow states to use these 

greenhouse gas reductions in their state plans." 

- Mayor George Heartwell, Grand Rapids, MI 

"ADEM recommends that EPA provide for and quantify credits from waste-to-energy 

(WTE) plants and from recycling programs. 

With respect to WTE facilities, EPA has published a study which concludes that each ton 

of municipal solid waste not landfilled as a result of being processed through a WTE 

facility prevents the equivalent release of a ton of CO2. 

(www.epa.gov/epawaste/nonhaz/municipal/wte/airem.htm#7) " 

Lance R. LeFleur, Director 

Alabama Department of Environmental Management 

We ask that as you give final consideration to the draft guidance that you take into 

account the importance that states and local governments place on the greenhouse gas 

mitigation benefits of their waste-to-energy plants. 

Bestregard , 

Pau a Soos 

Vice President, Government Relations 

Cc:	Janet McCabe, Acting Assistant Administrator 

Joseph Goffman, Senior Counsel
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OFFICE OF THE MAYOR 

G EORGE K. HEARTWELL 

MAYOR

March 21, 2013 

The Honorable Gina McCarthy 

Administrator, Environmental Prote.ction Agency 

1200 Pennsylvania Avenue, N.W. 

Washington, DC 20460 

Re: Carbon Pollution Standards for Existing Power Plants 

Dear Administrator McCarthy: 

As EPA begins to develop Carbon Pollution Standards for Existing Power Plants, 1 encourage the EPA to 

recognize the long-standing international treatment of Waste-to-Energy (WTE) as a GHG initigation technology 

and include new and existing WTE in the compliance toolbox. 

Waste-to-Energy is recognized as a GI4G mitigation technology by the Intergovernmental Panel on Climate 

Change (IPCC), the World Economic Forum and European Union and WTE has been able to sell carbon offsets 

through the Clean Development Mechanism (CDM) of the Kyoto Protocol. In the United States, the Lee and 

Hillsborough County Resource Recovery Facilities in Florida are both generating carbon offset credits under the 

Voluntary Carbon Standard. The EPA-sponsored models (WARM and DST) llave both found that Waste-toEnergy facilities compared to landfilling reduce the total amount of GHGs in the atmosphere. 

The President's Climate Action Plan states, "Curbing emissions of inethane is critical to our overall effort 

to address global climate change." With the increased focus on niethane, state plans should be encouraged to 

prioritize technologies that reduce methane from landfills and avoid CO2 from fossil fuels. To ensure that the 

benefit of inethane mitigation is recognized, EPA should recommend that states use the US EPA municipal solid 

waste decision support tool (MSW-DST) for avoided emissions from Waste-to-Energy facilities. 

Kent County and its local governmental partner 'have invested liundreds of inillions of dollars in a wasteto-energy facility. I urge your agency to allow states to use these greenliouse gas reductions in their state plans. 

Thank vou for accepting comments on the Car Joll tion Standards for Existing Power Plants and for your 

consideration.

11 

cc: Mark Rupp, Deputy Associate AdOlnistrator 

Office of Congressional and Intergovkrnmental Relations 

300 MONROE AVENUE. N.W. • GRAND RAPIDS, MICHIGAN 49503 • (616) 456-316B • FAX (616) 456-3111 • gheartwe®grcity.us
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OFFICE OF THE MAYOR 

G EORGE K. HEARTWELL 

MAYOR

March 21, 2013 

Ms. Janet McCabe 

Acting Assistant Administrator for Air and Radiation 

U.S. Environmental Protection Agency 

1200 Pennsylvania Avenue NW 

Mail Code: 6101A 

Washington, DC. 20460 

Re: Carbon Pollution Standards for Existing Power Plants 

Dear Ms. McCabe: 

As EPA begins to develop Carbon Pollution Standards for Existing Power Plants, I encourage the EPA to 

recognize the long standing international treat(nent of Waste-to-Energy (WTE) as a GHG mitigation technology 

and include new and existing WTE in the compliance toolbox" 

Waste-to-Energy is recognized as a GHG mitigation technology by the Intergovernmental Panel on Climate 

Change (IPCC), the World Economic Forum and European Union and WTE has been able to sell carbon offsets 

through the Clean Developnient Mechanism (CDM) of the Kyoto Protocol. In the United States, the Lee and 

Hillsborough County Resource Recovery Facilities in Florida are both generating carbon offset credits under the 

Voluntary Carbon Standard. The EPA-sponsored models (WARM and DST) have both found that Waste-toEnergy facilities compared to landfilling reduce the total amount of GHGs in the atmosphere. 

The President's Climate Action Plan states, "Curbing emissions of inethane is critical to our overall effort 

to address global climate change." With the increased focus on metliane, state plaiis should be encouraged to 

prioritize technologies that reduce metliane from landfills and avoid CO2 from fossil fuels. To ensure that the 

benefit of inethane mitigation is recognized, EPA should recomniend that states use the US EPA municipal solid 

waste decision support tool (MSW-DST) for avoided emissions from Waste-to-Energy facilities. 

Kent County and its local governmental partners 

to-energy facility. l urge your agency to allow states to 

Thank you for accepting comments on the Carbon Poll^ 

consideration.	 /^l \

have invested hundreds of millions of dollars in a waste- 

(se these geenhouse gas reductions in their state plans. 

ion Standards for Existing Power Plants and for your 

^ 

CC: Mark Rupp, Deputy Associate Admi 

Office of Congressional and Intergovernr 

300 MONROE AVENUE, N.W- • GRAND RAPIDS. MICHIGAN 49503 • (616) 456-3168 • FAX (616) 456-3111 • gheartwe®grcity.us
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IVIA.YOR BOB FOSTER 

Cin Or	11!:A^-H 

November 27, 2013 

The Honorabie Gina McCarthv 

Administrator, Environmental Protection Agency 

1200 Pennsylvania Avenue, N.W. 

Washington, DC 20460 

Re: City of Long Beach Comments — Carbon Pollution Standards for Existitig Power Plants 

Dear Administrator McCarthy: 

On behalf of the City of Long Beach, I urge the US EPA to include Waste-to-Energy (WTE) 

facilities as a compliance n7echanism in programs developed by the federal government to reduce 

carbon pollution from existing energy facilities in the United States. As a city of the State of 

California, which has the most developed greenhouse gas (GHG) reduction measures in the nation, 

Long Beach owns and manages the Southeast Resource Recovery P'acility (SERRF). SERRF is a 

WTE facility that plays an important role in mitigating GHG emissions in the Long BeachlLos 

Angeles region. 

It is critical that as the EPA begins to develop Carbon Pollution Standards for Existing Power 

Plants, the Agency recognize the long-standing international treatment of WTE as a rnitigation 

technology. Waste-to-Energy is recognized internationally as a mitigation technology by the 

Intergovernmental Panel on Climate Change (IPCC), the World Economic Forum and European 

Union. WTE facilities have also been able to sell carbon offsets through the Clean Development 

Mechanism (CDM) of the Kyoto Protocol. 

The President's Cliniate Action Plan states, "Curbing emissions of inethane is critical to our 

overall effort to address global climate change." As currently recognized by the EPA, WTE 

reduces GHG emissions by approximately one ton of carbon dioxide equivalents (CO 2e) for every 

ton of waste processed. These reductions result from prevention of uncollected fugitive emissions 

of landfill methane; avoiding fossil fuel combustion associated with grid electrical production; and 

the recovery of ferrous and non-ferrous metals for recycling, which reduces the greenhouse gas 

emissions associated with the production of these metals from raw materials. With the increased 

focus on methane, waste-to-energy should be included in the EPA's "toolbox" because of the cobenefit of reducing methane from landfills and reducing CO2 from fossil fuels. 

333 WEST OC:EAN BovLEVARD, )_.ONC, BFJtCFi, CALIFORNIA 90802 


TELZPHONE 562-570-6801 FAx 562-570-6538 h1AYOR@L0NGBEACH.GOv

^,.
Carbon Pollution Standards for Existing Power Plants 

November 27, 2013 

Page 2 

We respectfully request that EPA's Carbon Pollution Standards for Existing Power Plants include 

the following components: 

• As a compliance mechanism, new and existing renewables technologies should be 

specifically included as a compliance mechanism in all state programs; and State plans 

should use the broadest definition of renewable energy to ensure that viable and effective 

tools are not excluded. The definition of "renewable energy" found in Section 203 of the 

Energy Policy Act of 2005 and Executive Order 13514, which both include WTE, should 

be used as a base definition in EPA's Carbon Pollution Standards for Existing Power 

Plans. At a minimum, existing waste-to-energy facilities that have the co-benefit of 

mitigating methane gas must be included, regardless of placed-in-service date. 

• The Carbon Pollution Standards for Existing Power Plants should also direct states to 

determine the true value of renewables by assessing co-benefits, such as the significant 

mitigation of landfill methane achieved through WTE. This should be done utilizing an 

avoided emissions approach using recognized tools such as the EPA's Municipal Solid 

Waste Deeision Support Tool (MSW-DST) for evaluating the life-cycle environmental 

tradeoffs and fulI costs of solid waste management. 

• Standards should be based on the net greenhouse gas value determined, and encourage 

states to tie incentives to greenhouse gas benefit achieved. 

• They should require state renewable energy programs to avoid technology bias, set a 

minimum floor price for all renewables, and require a balance between base-load and 

intermittent renewables. 

• Last but not least, the EPA's Carbon Pollution Standards for Existing Power Plants should 

be eonsistent with the Agency's proposed carbon rule for new sources and specifically 

exempt municipal waste combustors from the definition of fossil fuel electric generating 

unit. 

Thank you for accepting the City of Long Beach's comments on Carbon Pollution Standards for 

Existing Power Plants, The Southeast Resource Recovery Facility in Long Beach plays an 

important role in mitigating greenhouse gas emissions in this region, and we strongly encourage 

the EPA to recognize Waste-to-Energy facilities as infrastt-ucture in the federal government's 

"toolbox" for reducing greenhouse gas eniissions. 

Should you have any questions, please feel free to contact Tom Modica, Deputy City Manager at 

(562) 570-5091. 

Sin	y, 

yor B	ster


City of L g Beach 

cc:	Janet McCabe, EPA Acting Assistant Administrator 

Joseph Goffman, EPA Senior Counsel
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NERMINA MORITA 

GOVERNOa t	! )	^ CHAIR 

MICHAEL E. CHAMPLEY 

COMMISSIONER 

LoaaruNE H. AxiBA 

STATE OF HAINAII COb1MISSIONfR 

PUBLIC UT1LITiES COMMISSION 

5 2G27	 DEPARTMENT OF BUDGET AND FINANCE 

465 S. KING STREET, #103 -'- fn au	Ha.:a : PUC.,.	 .	•.:	,:	. HONOLULU, HAWAII 96813

November 27, 2013 

Ms. Deborah Jordan 

Direction Air Division (Attention: Air-1) 

United States Environmental Protection Agency 

75 Hawthorne Street 

San Francisco, California 94105 

Subject: Comments on EPA's Action to Develop Carbon Pollution Guidelines for 

Existing Power Plants under Section 111(d) 

Dear Ms. Jordan: 

The Hawaii Public Utilities Commission regulates Hawaii's electric utilities and the 

implementation of state laws requiring increased use of renewable resources for the 

production of electricity, increased efficiency of electricity use, and reduced reliance on 

fossil fuels. As the Chair of the Commission, I am keenly aware of the importance of 

well-designed and effective regulation on the electric utility sector. 

Also, as the forrner Chair of the House Energy and Environmental Protection Committee 

of the Hawaii State Legislature in 2007 when Hawaii's Greenhouse Gas Emissions Law 

(Act 234, Session Laws of Hawaii 2007) was enacted, I have a strong interest in 

achieving, as it says in Act 234, "the maximum practically and technically feasible and 

cost-effective reductions in greenhouse gas emissions," 

Therefore, I am pleased to have had the opportunity to work with the Hawaii State 

Department of Health and the Hawaii State Department of Business, Economic 

Development and Tourism on the attached Comments document. 

For Hawaii to be able to continue to achieve its energy and carbon reduction goals, 

which are critical to the health of our economy and the well-being of Hawaii's people, we 

need to work together to align both Federal and State regulations with Hawaii's unique 

options and challenges. 

Hawaii Dlstricl Office - 688 Kinaole Street, 4106, Hllo, Hawail 96720 • Telephone: (808) 974-4533, Facsimile: (608) 974-4534

Kauai Dislrict Office • 3060 Eiwa Street, #302-C. Lshue, Hawaii 96766 • Telephone: (808) 274-3232, Facsirrile: (808) 274-3233

(MaiEing address: Kauai District Ofiice • 3060 Eiwa Street, Suite 307, Lihue, Hawaii 96766)

Maui District Office • State Office Building 91, 54 South High Street, #218, Waifuku, Hawaii 96793 • Telephone: (808) 964-8182, Facsimiie: (808) 989-8183 
Ms. Deborah Jordan 

November 27, 2013 

Page 2 

I hope you find our suggestions and stated concerns to be helpful as you develop the 

guidelines. 1f I may be of help in any way, please do not hesitate to contact me. 

Sincere{y, 

Hermina Morita 

Chair 

HM:MLT:rs 

Enclosure
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N['L A6ERCAOMBiE 	' E ^	;	 IORETTA J. PUDDY, A.0 S.W . tA P hi 

STATE OF HAWAII

DEPARTMENT OF NEALTH


P t} BOX 3375


H NuLUL U, HI 56801 •3378 

November 27, 2013

13-991 E CAB 

Ms. Deborah Jordan 

Direction Air Division (Attn: Air-1) 

U.S. Environmental Protection Agency (EPA), Region 9 

75 Hawthorne Street 

San Francisco, California 94105 

Dear Ms. Jordan 

Subject: Comments on EPA's Actions to Develop Carbon Pollution Guidelines for 


Existing Power Plants under Section I11(d) of the Clean Air Act 

The Hawaii Department of Health (DOH) appreciates the opport.unity to comment on EPA's 

actions to develop guidelines for reducing carbon pollution from existing power plants. The DOH 

has been activeiy working with State partners including the Hawaii Department of Business, 

Economic Development, and Tourism (DBEDT) and the Hawaii Public Utilities Commission 

(PUC) to reduce greenhouse gas (GHG) emissions. Adverse effects from emissions that 

contribute to globai warming and climate change are a concern in Hawaii and the State has 

been developing strategies to mitigate GHGs. These strategies were developed both before 

and after Hawaii Act 234 was passed in 2007 to regulate GHG emissions by faw. 

Hawaii established the Renewab{e Portfolio Standard (RPS) in 2004, the Hawaii Clean Energy 

Initiative (HCEI) in 2008, and more recentiy, the GHG Rules that are currently being routed for 

approval to implement. The RPS, HCEI, and GHG Rules, described briefly in the attached GHG 

Reduction Strategies, were developed as combined measures to reduce GHGs. 

Comments in developing carbon pollution guidelines for existing power piants are provided in the 

attached Consofidated Comments with support letters from the Hawaii DBEDT and PUC. The 

comments are a coflaborative response among the Hawaii DOH, DBEDT, and PUC, to address 

State and National goals in reducing GHGs. 

If you have any questions regarding this matter, please contact Mr. Nolan Hirai of the Ciean Air 

Branch at (808) 586-4200.

Sincere{y, 

Y GILL 

Deputy Director for Environmental Health 

MM:nn 

Enclosures
GHG REDUCTION STRATEGIES 

RPS 

Hawaii established a Renewable Portfolio Goal (PRG) in 2001 that was replaced with an 

enforceable RPS in 2004. The RPS appiies to all electric utility companies selling electricity for 

consumption in the state. The Hawaii RPS requires the foflowing net renewable electricity sales: 

10% by December 31, 2010; 

15% by December 31, 2015; 

25% by December 31, 2020; and 

40% by December 31, 2030. 

HCEI 

In 2008, the U.S. Department of Energy and the Governor of the State of Hawaii signed a 

memorandum to initiate the HCEI. The HCEI was designed to be a partnership among key 

stakeholders in Hawaii, including the government, nongovernmental organizations, the private 

sector, and universities. The HCEI was established to meet 70°Jo of Hawaii's energy needs by 

2030 through energy efficiency and renewable energy. 

GHG Rules 

The DOH amended the Hawaii Administrative Rules to regulate GHGs from large permitted 

sources as a backstop to the RPS and HCEI emission reduction strategies. Simi{ar to the 

Prevention of Significant Deterioration regulations, the GHG Rules are based on a carbon 

dioxide equivalent (CO2e) threshofd of emission reduction rather than on a CO 2 mass threshoid. 

The GHG rufes will require existing faciiities with potential CO 2 e emissions greater than or equal 

to 100,000 short tons per year to establish a faci{ity-wide CO2e emissions cap. The purpose of 

the rules is to reduce 2010 base{ine actual GHG emissions from each affected facility to at least 

16% by 2020. The 16°lo reduction percentage is based on GHG emissions inventory data for 

1990 and 2010. To implement GHG reductions, the emissions cap will be incorporated into the 

permits of affected facilities providing a mechanism to guarantee GHG reductions. Violation of 

the cap will be subject to enforcement action. The cap requirement will affect power plants, 

refineries, and large commercial operations. These facilities represent about 88°!0 of Hawaii's 

stationary source GHG emissions. The cap excludes municipal solid waste landfills with gas 

collection and control systems and municipal waste combustion operations. A GHG control 

assessment, similar to a best availabie control technofogy (BACT) analysis, is required from 

facifities proposing an alternate cap that is iess than 16%. 

The GHG Rules provide a number of options for affected facilities to reduce GHG emissions. 

lncreasing plant efficiency is one option for reducing GHGs. Affected facilities may also use an 

aiternate fuel that emits lower GHGs than the primary fuel to achieve the needed emission 

reductions. Biogenic COzemissions are excluded from the GHG cap requirements, which 

promote use of biofuels as an additional means to meet GHG reduction goals. Options are 

available to replace fossil fuel combustion with renewable energy such as wind and solar power. 

Affected facilities may also combine their facility-wide GHG emission caps to leverage emission 

reductions among partnering faciiities in meeting an overali 16% GHG emissions cap. 

Statewide GHG emissions will be tracked from the date the rules are issued untiV 2020 and 

beyond to determine whether or not Hawaii's GHG reduction goals are being met. The GHG 

Rules may be amended to specify a different GHG cap reduction percentage depending on what 

is shown from the statewide GHG emissions inventory.

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CONSOLIDATED COMMENTS


From the State of Hawaii's 

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a•®.ccp•^rDepartment of Health 

and 

Public Utilities Commission 

and 

Department of Business, Economic Development, and Tourism


To the U.S. Environmental Protection Agency 

Regarding


Considerations in the


Design of a Program to


Reduce Carbon Pollution


from


Existing Power Plants 

November, 2013
The State of Hawaii appreciates the opportunity to work with EPA in developing guidelines for 

State Pians to reduce carbon pollution from existing power plants. 

Available information from EPA indicates Section 111(d) will require state plans for existing 

sources of noncriteria pollutants whenever EPA promulgates a standard for a new source. 

These are referred to as Section 111(d) plans that must be approved by EPA. 

An EPA fact sheet specifies Section 111(d) as a state-based program for existing sources, 

with EPA establishing guidelines for states to deveiop pians to achieve the needed 

reductions. 

Hawaii has already developed a variety of strategies for its electricity sector, including 

increasing energy efficiency, significantly increasing the use of renewable resources for 

electricity generation, and reducing greenhouse gases (GHGs) to below 1990 leveis by the 

year 2020. 

Hawaii's standards are measurable, verifiable, and are on track to meet the requirements. 

The EPA held a video conference on November 1, 2013 at the Hawaii State Department of 

Heaith (DOH) to soiicit input from Hawaii on the design of a program to reduce carbon 

poilution from existing power plants. 

This document contains a consolidated set of comments developed by the Hawaii DOH, the 

Hawaii State Public Utilities Commission (PUC), and the Hawaii Department of Business, 

Economic Development, and Tourism (DBEDT) regarding guidelines for state plans to meet 

Federal carbon emission reduction targets for existing eiectricity generation units. 

Letters from the participating agencies are being transmitted with this document.
!?A E 1IiZZj 13 

1. What is State and stakeholder experience with programs that 

reduce COz emissions in the electric power sector? 

In 2000, Hawaii's statewide energy objectives were amended to include: "Reduction, 

avoidance, or sequestration of greenhouse gas emissions from energy supply and use.i1 

In 2001, Hawaii enacted a Renewable Portfolio Standards (RPS) requirement. 2 The current 

law requires 40% of Hawaii's electricity to be generated from renewable sources by 2030. A 

related measure, the Energy Efficiency Portfolio Standards (EEPS) law, requires a significant 

portion of Hawaii's projected electricity needs to be displaced by energy efficiency measures 

by 2030.3 

In 2007, Hawai'i became one of the first states in the nation to enact major climate change 

legislation, requiring statewide greenhouse gas (GHG) emissions to be at or below 1990 

levels by lanuary 1, 2020.° 

Hawaii's policies have been -- and are projected to continue to be -- effective, with 

electricity-sector greenhouse gases at or below 1990 levels before 2020. 

Examples of Hawaii's greenhouse gas and energy laws are provided, in part, below; 

sources and links are provided in footnotes. 

HAWAII'S GREENHOUSE GAS EMISSIONS LAW. `' 

§342B-71 Statewide greenhouse gas emissions limit, adoption. A statewide greenhouse gas 

emissions fimit to be achieved by 2020 is hereby established that is equal to or below the level of 

the statewide greenhouse gas emissions in 1990, as determined by section 3 of Act 234, Session 

Laws of Hawaii 2007; provided that for the purposes of this Act greenhouse gas emissions from 

airplanes shall not be incfuded. 

OBJECTIVES AND POLICIES FOR ENERGY6 

§226-18 Objectives and policies for facility systems--energy. 

(a)	Planning for the State's faci{ity systems with regard to energy shall be directed toward 

the achievement of the following objectives, giving due consideration to all: 

(1) Dependable, efficient, and economical statewide energy systems capable of 

supporting the needs of the people; 

(2) Increased energy self-sufficiency where the ratio of indigenous to imported 

energy use is increased; 

(3) Greater energy security and diversification in the face of threats to Hawaii's 

energy supplies and systems; and 

(4) Reduction, avoidance, or sequestration of greenhouse gas emissions from 

energy supply and use. 

1 Act 176, Session Laws of Hawaii 2000 

2 Act 272, Session Laws of Hawaii 2001. 

3 Act 155, Session Laws of Hawaii 2009. 

" Act 234, Session Laws of Hawaii 2007 

5 Hawaii Revised Statutes ("HRS") §342B-71 to 73, htto://www.capitol.hawaii.Qov/hrscurrentNo106 Ch0321- 

0344/HRS0342B/HRS 0342B-0071.htm 

6 HRS Chapter 226, htt0://www.capitol.hawaii.¢ov/hrscurre nt o104 Ch0201-0257/HRS0226/HRS 0226-.htm
DATF_ Y.f/1,173 

§269 [PART V. RENEWABLE PORTFOLIO STANDARDS] 

§269-91 [Definitions.] For the purposes of this [part]: 

"Renewable electrical energy" means:' 

(1) Electrlcal energy generated using renewable energy as the source, and beginning 

January 1, 2015, includes customer-sited, grid-connected renewable energy 

generation; and 

(2) Electrical energy savings brought about by: 

(A) The use of renewable displacement or off-set technologies, including solar 

water heating, sea-water air-conditioning district cooling systems, solar airconditioning, and customer-sited, grid-connected renewabie energy systems; 

provided that, beginning January 1, 2015, electrical energy savings shall not 

include customer-sited, grid-connected renewable-energy systems; or 

(B) The use of energy efficiency technologies, inciuding heat pump water heating, 

ice storage, ratepayer-funded energy efficiency programs, and use of rejected 

heat from co-generation and combined heat and power systems, exciuding 

fossil-fueled qualifying facilities that sell electricity to electric utility companies 

and centraf station power projects. 

"Renewable energy" means energy generated or produced using the following sources: B 

(1) Wind; 

(2) The sun; 

(3) Falling water; 

(4) Biogas, including landfill and sewage-based digester gas; 

(5) Geothermal; 

(6) Ocean water, currents, and waves, including ocean thermal energy conversion; 

(7) Biomass, including biomass crops, agricultural and animal residues and wastes, and 

municipal sofid waste and other solid waste; 

(8) Biofuels; and 

(9) Hydrogen produced from renewable energy sources. 

"Renewable portfolio standard" means the percentage of electrical energy sales that is represented 

by renewable electrical energy. 

§269-92 Renewable portfolio standards.9 

(a)	Each electric utility company that sells electricity for consumption in the State shall 

establish a renewable portfolio standard of: 

(1) Ten per cent of its net electricity sales by December 31, 2010; 

(2) Fifteen per cent of its net electricity sales by December 31, 2015; 

(3) Twenty-five per cent of its net electricity saies by December 31, 2020; and 

(4) Forty per cent of its net electricity sales by December 31, 2030. 

[§269-96] Energy-efficiency portfolio standards.10 

(a) The public utilities commission shall establish energy-efficiency portfolio standards 

that will maximize cost-effective energy-efficiency programs and technologies. 

(b) The energy-efficiency portfolio standards shall be designed to achieve four thousand 

three hundred gigawatt hours of electricity use reductions statewide by 2030; provided 

that the commission shafl establish interim goals for electricity use reduction to be 

achieved by 2015, 2020, and 2025 and may also adjust the 2030 standard by rule or 

order to maximize cost-effective energy-efficiency programs and technologies. 

HRS §269-91, http://www.caoitol.hawaii.Qov/hrscurrent/Vo105 Ch0261-0319/HRS0269/HRS 0269-0091.htm 

" HRS §269-91, htto:11www.caoito1.hawaii.ttov/hrscurrentNo105 Ch0261-0319/HR50269/HRS 0269-0091.htm 

9 HRS§269-92, http;//` www.capitol.hawaii.gov/hrscurrentivoIO5 00261-0319/1-IR502691HRS 0269-0092.htm 

10 HRS §Z69-96. httD:/lwww.caDitol.hawaii.Rov/hrscurrentNo105 Ch0261-03191HR50269/1-IRS 0269-0096.htm 

4
■ Efficiency 

Solar Hot Water 

Solar (PV net metered) 

Solar (PV IPP) 

Wind 

• Hydro 

• Geothermal 

• Biomass 

Biofuels 

• Fossil 

12,000	— 

10,000 

N	8,000 

L 

7 C 

L	6,000 ^ Y ^ 3 ^	4,000 

t7

2,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

7,482,839

7,099,533

2011 

^

a 

10,000,000 

m 

5

	8,000,000 

v W 

p	6,000,000 

u	 IN ^	4,000,000 

V

2,000,000 

^

0

f 

2012 

Soun:e: USEPA, httn:l/Qhadata.ena.eov/¢hrto/main.do

r,A7E' J1/2:.'11, 

The Hawaii Clean Energy Initiative (HCEI) calls for 70% clean energy (energy efficiency 

and renewable energy) for the electricity and ground transportation sectors by 2030." 

PROGRESS TO DATE. 

Hawaii's poiicies have been effective. As shown in the graph below, electricity sources 

(including efficiency) have become more diverse and less carbon intensive over the past 

several years.'`

Sources Used to Meet Hawaii's Electricity Needs 

Source Renewabie Portfolio Standards Reports fded with the Public Utilities Commission 

A correspondingly si9nificant reduction in carbon dioxide eguivaient emissions has 

been observed for large power plants in Hawaii, as reported in the Facility Level 

Information on GreenHouse gases Tool (FLIGHT)" and shown in the graph below. 

Greenhouse Gas Emissions Reported by


Large Power Plants in Hawaii 

tt HCE1 website, htto://www.hawaiicleanenergyinitiative.orp./ Last accessed November 18, 2013. 

12 Hawaii PUC, httu://auc.hawaii.Rov/reaorts/enerrtv-reoorts/renewable-portfolio-standards-ros-annual-reoorts/ 

' s U S. Environmental Protection Agency, http://Qhadata.epa.Qov/QhAp/main.do

5
2. How should EPA set the performance standard for state 111(d) 

plans? 

Federal requirements should be statewide and flexible to allow for systems-based reduction 

measures such as renewable energy generation and energy efficiency to be included. 

States should be required to provide projections of 2020 greenhouse gas emissions from 

either 1) existing in-state electrical generation units; 1 " or 2) total electricity (including 

existing, new, and zero-emission) sources.ls 

States should show that, with their plans impfemented, greenhouse gas emissions are 

projected to decrease. 

Credit should be given for efficiency measures that are verifiable. 

a. The EPA shoufd aliow states to incorporate existing programs as a basis for their 

Section 111(d) plan to regulate GHG emissions. Hawaii's current efforts (RPS, 

EEPS, HCEI, and GHG law) were developed with consideration of Hawaii's unique 

energy generation infrastructure and energy resources. Power plants in Hawaii rely 

aimost exclusively on imported oil and the infrastructure for importing liquefied natural 

gas (LNG) for farge scale power generation does not yet exist. As it develops its 

guidelines, the EPA should consider existing state laws and ongoing, complex, 

comprehensive utility regulatory initiatives and the unique energy challenges facing 

each state. 

b. Basing Section 111(d) plans on existing state programs will also reduce the burden 

on permitting agencies and affected facilities in dealing with multiple regulatory 

requirements. 

c. In Hawaii, numerous programs and projects to increase efficiency and renewabfe 

energy are under way in the electricity sector. Ongoing Public Utility Commission 

dockets include those relating to integrated resource planning (2012-0036); energy 

efficiency portfolio standards (2010-0037); as-available renewable electricity 

generation (2011-0225); investigating whether an Oahu-Maui interisland transmission 

system may be in the public interest (2013-0169); investigating the implementation of 

reliability standards (2011-0206); demand response (2007-0341); review of feed-in 

tariffs (2013-0194); the public benefit fee (energy efficiency) program (2007-0323); 

on-bill financing (201 1-01 136); rate cases; decoupling mechanisms; requests for 

proposals for renewable energy production; and a variety of other interconnection, 

financial, and tariff-related matters. 

d. There is a concern that delays, additional complexity, or uncertainty due to EPA 

section 111(d) regufation could reduce the momentum and rate of progress in Hawaii. 

14 From September 23, 2013 version of EPA's Considerations in the Design of a Program to Reduce Corbon Pollution from 

Ezisting Power Plonts: "Congress recognized that the opportunity to build emissions controls into a source's design is 

greater for new sources than for existing sources. Pardy for that reason, section 111 ailows for new source standards 

and existing source standards to be quite different" As described below, existing facilities may need to support new 

generation facilities, including those with zero carbon emissions. 

15 If it is necessary to use a baseline year, it should be the year 2010, since all states have access to a consistent data 

source for that year. There does not appear to be a nationwide database of 2005 emissions.
narF II/z2,"l3 

Delays and loss of momentum could slow the rate of improvement, resulting in 

increased carbon emissions. 

These concerns could be reduced to the extent that: 

- EPA guidelines are simple and clear; 

- If a state shows that its existing laws and activities are leading to reduced 

carbon emissions, it will be allowed to continue its programs without having 

new or different requirements imposed by the EPA; and 

- EPA's approval of the state plan is provided quickly. 

This would also allow EPA to focus more regulatory effort on states which are not yet 

engaged in energy efficiency, renewable energy, or greenhouse gas reduction efforts. 

e. In Hawaii, we view electricity generation, transmission, distribution, and use as one 

complex, integrated system. 16 " Components of the system include energy efficiency, 

demand response, a variety of grid management techniques and energy storage 

options, and all feasible e{ectricity generation technologies, energy sources, and 

fuels. 

It may be ineffective and possibiy counter-productive for the EPA to focus on the 

emissions of individual generation facilities, since increased emissions at one location 

may be in support of lower emissions — or zero emissions — from non-combustion 

technologies e{sewhere on the system. 18 Therefore, allowing flexibility to include 

systems-based approaches is needed. 

Although a system approach is recommended, Hawaii's pending GHG Rules would 

regulate emissions on a facility basis, to ensure that emission reductions are 

occurring at the largest facilities. Individual affected facilities are provided the 

opportunity to propose alternative caps that could include credit for measures that 

contribute to system-based reductions. Affected facilities are also offered the 

opportunity to partner with other affected facilities to propose separate facility 

reductions that meet a total combined 16% GHG reduction. 19 Emission reductions 

16 Integrated Resource Planning considers all demand and supply-side resources; see dockets 2009-0108 and 2012-0036. 

" Energy efficiency and renewable displacement technologies are both counted towards Hawaii's Renewable Portfolio 

Standards. See Hawaii Revised Statutes, §269-91 et seq., http://www.capitol.hawaii.Rov/hrscurrent/Vo105 Ch0261- 

0319/HRS0269/ 

1e For example, new generation may be provided by facilities (solar, wind) with zero carbon emissions but variabie and 

intermittent electrical output. It may be necessary for an existing fossil unit to provide firming (i.e. ramp up and down 

quickly, or start up and shut down more often) to support the use of these variable sources. This may mean increased 

emissions from that specific fossil unit, in support of a reduction in overall electricity-sector emissions. If a fossil source 

is precluded from providing the needed firming services, the renewables may be curtailed, resulting in higher emissions 

overall. See the November, 2013 report by the North American Efectric Reliabitity Corporation and the California 

Independent System Operator Corporation, here. 

http://www.nerc.com/pa/RAPA/ra/Reliabilitv%20Assessments%20DUNERC-CAISO VG Assessment Final.pdf . Please 

note that some of Hawaii's grids are already above 50% penetration of renewables, especially at times of tow load, so 

this may be a significant issue for some units. 

19 However, the Hawaii PUC and DBEDT believe that reducing the ability of specific generators to be called on to support 

variable generation such as wind and solar may reduce the abdity of the grid to accept those sources of generation, 

which woutd be counterproductive to overall efPorts to reduce greenhouse gases. Further, facility-by-facility regulation 

of large and most cost-effective facilities may cause Hawan s already high electricity prices to increase. This may result 

in the unintended consequence of electricity customers seeking iower cost options to leave the grid and to install their 

own non-regufated on-site diesel or other fossil fuel generators, thus increasing overall pollution, not only of 

greenhouse gases but of criteria pollutants as well Therefore, a systems approach appears to be preferable in achieving 

emssions reduction.
!)A7E:li 22113 

occurring from systems-based measures will complement and be credited under the 

pending GHG Rules. 

The determination of compliance with Federal requirements should be on a statewide 

basis. Doing so would be consistent with and supportive of the current Hawaii 

greenhouse gas law,` =' which established "a statewide greenhouse gas emissions 

limit," as well as Hawaii's energy laws, which allow related cornpanies (i.e. Hawaiian 

Electric Company, Maui Electric Company, and Hawaii Electric Light Company) to 

aggregate their data when calculating compliance with the Renewable Portfolio 

Standards. Z' 

g. States should be required to provide projections of 2020 greenhouse gas emissions 

from either 1) existing in-state electrical generation units; or 2) total electricity 

(including existing, new, and zero-emission) sources.22 

Flexibility should be allowed in what modeling approach or projections are used, since 

they may have been done on a system-wide basis (an assessment of future 

emissions from existing facilities only may not have been performed). 

h. The "best system of emissions reduction" (BSER) would include: 

• Flexibility — to take into account changes in technologies, costs, market 

conditions, and policy developments. 

• Transparency — to enable policy-makers, regulators, service providers, and 

investors to understand and participate in Hawaii's energy market. 

• Predictability — to reduce financial risks, potential stranded investment, and 

unnecessary costs to Hawaii's ratepayers and taxpayers. 

• Consistency with State laws, including Hawaii's greenhouse gas and energy 

laws and objectives — to reduce regulatory burden, reward progress to date, 

and maintain current momentum. 

i. Carbon pollution guidelines for existing power plants should exempt municipal waste 

combustors (MWCs) from GHG reductions. 23 Burning municipal solid waste for power 

production dispiaces the use of fossil fuels and ultimately lowers GHG emissions by 

avoiding the methane production that could occur if that waste were to go into landfills 

instead.24 

Hawaii's greenhouse gas law includes consideration of what is feasible and cost 

effective: "practically and technically feasible and cost-effective reductions in 

greenhouse gas emissions." 

20 Hawaii Revised Statutes ("HRS") §342B-71 to 73, htto://www.caaitol.hawaii.Qov/hrscurrent/Vo106 Ch0321- 

0344/HRS0342B/HRS 0342B-0071.htm 

zl "An electric utility company and its electric utiiity affiliates may aggregate their renewable portfolios to achieve the 

renewabfe portfol o standard," Hawaii Revised Statutes (HRS) §269-93, 

htti)://www.capitol.hawaii.gov/hrscurrent/Vo105 Ch0261-0319/HRS0269/HRS 0269-0093.htm 

22 From September 23, 2013 version of EPA's Considerations in the Design of a Program to Reduce Carbon Pollution from 

Existrng Power Plants "Congress recognized that the opportunity to build emissions controls into a source's design is 

greater for new sources than for existing sources. Partly for that reason, section 111 allows for new source standards 

and existing source standards to be quite different." As described below, existing facilities may need to support new 

generation facilities, including those with zero carbon emissions. 

23 This is consistent with EPA's proposed standards for new power plants and Hawaii's proposed GHG rules. 

20 Also, exempting MWCs was projected to have a minor effect on the percentage of GHG reductions needed to achieve 

the 1990 statewide GHG emissions level by 2020.
.'1 2,f13 

While DOH determined that Life Cycle Assessment (LCA) should not be included in 

Hawaii's GHG rules because LCA standards and formulas had not yet been fully 

developed for stationary sources, the DOH recognizes the potential merits of LCA and 

its appiicability to alternate fuels Because of the unique nature of Hawaii's energy 

generation infrastructure and energy resources. biofuels have received significant 

attention for potential use in electricity generation. The DOH anticipates that LCA 

standards for stationary sources couid be developed by EPA in the future and looks 

forward to clarification from EPA on implementation. For its local biofuel purchase. a 

Hawaii utility requested that suppliers comply with the Roundtable for Sustainable 

Blofuels principles.z5 

3. What requirements should state plans meet and what flexibility 

should be provided to states in developing their plans? 

Hawaii has laws to reduce greenhouse gases, 26 increase energy efficiency, and increase the 

use of renewable sources for electricity generation. 

Federal guidelines should allow those laws and plans to be accepted as the State Plan. 

Emissions should be tracked using reporting mechanisms already in place and data from 

statewide emission inventories. 

a. States should be allowed to propose plans that reflect activities already under way. 

b. EPA should not develop guidelines or implement requirements that would be likely to 

lead to states and stakeholders delaying or interrupting actions that are already 

leading to greenhouse gas reductions. 

c. State plans should specify annual GHG emission estimates out to 2020, and beyond. 

d. Proposed measures should be verifiable and quantifiable. 

e. Annual state- or system-wide emission targets should be stated in the plan. 

f. If emission targets are not met, states should be able to perform a ten-year lookback 

to determine if previous carbon emission reductions could be used to generate 

credits. If so, states should be able to make use of those credits. 

g. If sufficient credits are not available, states should propose plan adjustments or 

remedies. Remedies may include measures such as partnering with other state or 

regional GHG trading regimes, estabiishing carbon sinks, planting trees, or paying 

fees to support the establishment of carbon reductions or carbon sinks elsewhere. 

h. After the target compliance date has been reached, if emissions targets are not met 

for three years in a row, and sufficient credits are not available, the EPA should 

propose plan adjustments, remedies, or fees. 

25 Hawaiian Electric Company, Request for Proposals - Biofuel Supply, httr)://www.heco.com/heco/CleanEnerstv/Renewable-Energy-Basics/Biofuels, accessed on November 19, 2013. 

26 Hawan s greenhouse gas law is comprehensive. It includes emiss ons from utility, transportation, and industrial sectors.
DaTE. 11 22113 

4. What can EPA do to facilitate state plan development and 

implementation? 

The EPA should be careful not to inadvertently slow or interrupt regulatory progress being 

made at the state level in energy system transformation. 

State plan development and implementation could be facilitated by EPA funding and 

technical assistance to update Hawaii's energy and greenhouse gas modeling tools. 

The tools coutd serve as a basis for models in other states or regions. 

a. Greenhouse gas inventories and modeling work have been done in previous years. 

Updates would be useful for evaluating and comparing the projected greenhouse gas 

emissions of power production scenarios currently under consideration. 

b. As Hawaii is a relatively small area with well-defined boundaries, models may be 

relatively simple. The modeling toois used in Hawaii couid serve as an example, with 

further development for use in other states or regions. 

c. Recent work by the University of Hawaii's Economic Research Organization could 

provide a starting point and serve as a data resource. From the website of the 

University of Hawaii's Economic Research Organization: 

ENERGY & GREENHOUSE GAS SOLUTIONS 

Mission: To provide rigorous and timely information to decisionmakers and the public regarding energy and greenhouse gas 

related policy in Hawaii and beyond. 

The Energy and Greenhouse Gas Solutions research program (EGGS) was launched in 2007 

by the University of Hawai'i Economic Research Organi2ation (UHERO). It serves as a 

resource for those interested in issues of energy and greenhouse gas emissions reduction in 

Hawau and beyond EGGS takes a transdisciplinary approach to research by bringing together 

economists, planners, engineers and system modeling experts to address urgent issues of 

energy and climate change mitigation. 

EGGS CORE GOALS 

1. Engage in rigorous analysis that contributes to a global community of scholars. 

2. Develop and maintain data and models on Hawai'i's energy. economy, and resulting 

greenhouse gas emissions. 

3. Develop solution-oriented analyses for decision-makers and energy-related stakeholders. 

4. Design interactive education and outreach programs for a variety of audiences 

5. Showcase Hawai'i-based energy policy solutions that may benefit other jurisdictions, 

includinq olher States, the U.S., and island areas. 

10
^ 

March 10, 2014

JOHN A. KITZHABER, MD 

Governor 

Ms. Gina McCarthy, Administrator 

U.S. Environmental Protection Agency 

1200 Pennsylvania Avenue, N.W. 

Washington, D.C. 20460 

Dear Administrator McCarthy: 

I appreciate the invitation to provide comment to the U.S. Environmental Protection Agency 

(EPA) as the agency designs a Clean Air Act ("CAA" or "Act") Section I I I(d) program to 

reduce greenhouse gas pollution from existing power plants. I am writing to share Oregon's 

successes in emissions reduction and highlight key considerations for Oregon and other states 

similarly situated as substantial importers of greenhouse gas intensive electricity. As a party to 

collaborative initiatives addressing the proposed program, including ones led by the Georgetowrn 

Climate Center and the Attorneys General of multiple states, Oregon has provided joint 

comments to EPA on certain design considerations. My comments are supplemental and have 

been developed through consultation with staff of Oregon's Department of Environmental 

Quality, Department of Energy, and Public Utility Commission. 

Energy is the issue of our tiine, and no sinale issue will have a greater impact on our state or 

nation's economy, environment, and quality of life in the coming decade. The central question is 

whether we will shape our energy future through intentional investment and development, or 

whether it will shape us. Oregon has a track record of successfully pursuing clean energy policy, 

programs, and practices that reduce energy use and promote renewable alternatives to fossil 

fuels. On December 5, 2012, I released Oregon's Ten Year Energy Action Plan l to build on 

existing programs and to provide the state a pathway to a clean energy future. As we move away 

from a boom and bust cycle that depletes our natural capital and leaves us vulnerable to 

fluctuations in global markets, this plan provides strategies to meld workforce development 

initiatives, higher education opportunities, and local job creation with clean energy priorities. 

The Ten Year Energy Action Plan spurs investment in clean energy, helps to develop homegrown renewable energy resources and keeps capital circulating in our region through local 

sourcing and supply chains while reducing our dependence on carbon-intensive fiaels and foreign 

I "Oregon's Ten Year Energy Action Plan", December 5, 2012: 

http://w^N,".orep,on.g,ov,'energ,yi"Ien Year/Ten Year EnerpN , Action Plan Final.pdf 

254 STATE CAPITOL, SALEM OR 97301-4047 (503) 378-3111 FAX (503) 378-8970


WWW.OREGON.GOV
Ms. Gina McCarthy 

March 10, 2014 

Page 2 

oil. Creating this pathway and supporting programs is as much an economic development 

strategy as it is an energy strategy — it helps position Oregon in a way that we can keep energy 

costs low, diversify our energy portfolio, and take advantage of market opportunities to ensure 

that our citizens and businesses will not be left holding the bag as we wean ourselves off of fossil 

fuels. 

In addition, I participate in the Pacific Coast Collaborative in partnership with British Columbia, 

Washington State, and California. With a combined population of 52 million and a GDP of $2.5 

trillion, we are poised to emerge as a mega-region and global economic powerhouse driven by 

innovation, energy, geographic location, and sustainable resource management. On October 28, 

2013, I joined the Premier and Governors to sign the Pacific Coast Action Plan on Climate and 

Energy. 2 In this action plan, we support the President's federal actions to combat climate change 

and list a suite of policy items we have identified that will create a model west-coast-wide clean 

economy. In addition, we commissioned a study that analyzes the job creation and economic 

impacts of our action plan. The analysis indicates that progressive policy actions could expand 

the clean economy GDP contributions in the region to $142.7 billion by 2020, and could grow 

clean economy jobs by more than 200% over current numbers by 2020, equal to an estimated 

1.03 million new jobs (net). Realizing the economic benefits of clean economy is the single 

most important global opportunity on the medium-term horizon, with revenues expected to reach 

$2.3 trillion by 2020, and we, along the entire West Coast, want to ensure that we are ideally 

positioned to realize the economic, social, and environmental benefits of clean economic 

growth.' 

I conunend the President for moving forward with his Climate Action Plan and for EPA's action 

to create a new standard under CAA 111(d). However, it is important to recognize that EPA's 

action is not stand-alone; it is part of a broader economic and energy strategy to protect our 

nation from the global volatility of fossil fuels and to help us transition to a more resilient and 

energy independent economy. In conjunction with EPA's action on I 11(d), we commend the 

President and the Administration in advance for supporting efforts to link this important step by 

EPA with other critical actions that states and regions are taking now, or could take, to realize 

the opportunities of a clean economy. This could involve helping states develop their own long-

'- "Pacific Coast Action Plan on Climate and Energy", October 28. 2014: 

http: //www.p aci fi ccoastcollaborative. oro/Docmnents/Pac.ific%20Co ast%20Climate%20Action°io20Plan.pdf 

'"The West Coast Clean Economy: Opportunities for Investment & Accelerated Job Creation", March 2012: 

http://,A,ww.pacificcoastcollaborative.orp—/Documents/Reports%20and%20Action°'a20Iteins/WCCE Report WEB F 

1NAL.pdf
Ms. Gina McCarthv 

March 10, 2014 

Page 3 

term energy strategies to ensure that the nation continues to benefit from economically 

competitive energy prices and providing technical assistance, and ensure that resilient 

infrastructure systems are accelerated to deal with the effects of drought and extreme weather. 

I strongly encourage EPA to meaningfully address the harmful effects of climate change in its 

CAA 111(d) guidelines by achieving significant, cost-effective emission reductions from 

existing power plants through facility upgrades, improvements in end-use energy efficiency, and 

increased reliance on renewable energy generation. EPA's regulatory framework will achieve 

the most significant, cost-effective emission reductions if States, utilities, and power plants have 

flexibility to choose from a range of emission reduction methods, engage in multi-state 

cooperation, and build on emission reduction accomplishments gained through the leadership of 

local governments and states like Oregon. EPA's CAA 111(d) guidelines should include three 

key components: 

(1) A broad definition of the Best System of Emission Reduction (BSER) that encompasses 

the interconnected power system with flexibility to use a broad range of attendant 

compliance tools to achieve meaningful and eost-effective emission reduetions; 

(2) Strong incentives, clear criteria, and model rules for multi-state planning and cooperation 

that leverages the regional nature of our Nation's power system to encourage the greatest 

emission reduction at the lowest cost: and 

(3) Recognition of the progress of states, investments of utilities, and emission reductions 

already achieved through early action. 

Broadlv Define BSER and Compliance Tools for Meaningful and Cost-Effective Emission 

Reductions 

Through its guidelines, EPA has authority to define the BSER broadly with a system-based 

approach that is achieved by regulated sources using system-based emission reduction 

compliance tools. EPA also has the authority to deem a state plan satisfactory if it allows 

regulated sources to use those system-based emission reduction compliance tools. As a matter of 

policy, EPA should acknowledge the full breadth of reductions available throughout the power 

system. To leverage the most significant a.nd cost-effective emission reduction opportunities for 

existing power plants. EPA has the responsibility to define the BSER as the interconnected, 

interstate power generation and consumption system ("power system"). A less-effective. sourcebased approach would limit the range of emission reduction opportunities to those available 

inside a power plant's fence line. Furthen-nore, a source-based definition of the BSER coupled 

with system-based emission reduction compliance tools would not achieve meaningful emission 

reductions and may be detrimental to current efforts to address the harmful effects of climate
Ms. Gina McCarthy 

March 10, 2014 

Page 4 

change. Our Nation's electricity sector operates as complex, interconnected, regional power 

systems across multiple states. EPA's 111(d) regulatory framework must be flexible and include 

a broad range of compliance tools to successfully meet the challenges of an interconnected 

power system with plants that generate electricity to serve demand across multi-state energy 

markets. 

In defining the BSER and attendant compliance tools through a system-based approach, existing 

power plants will be afforded greater flexibility in least-cost methods to reduce emissions. In 

addition to reducing emissions at existing power plants through facility upgrades, emission 

reductions could be achieved through end-use electricity demand reduction and cleaner 

electricity generatiori. Proven flexible and cost-effective methods to reduce power plant 

emissions in Oregon have included increased solar, wind, and geothermal energy generation 

through our Renewable Portfolio Standard and decreased energy demand through building codes, 

end-use energy efficiency programs, and Energy Trust of Oregon retrofit investnients. Energy 

efficiency and renewable energy policies have resulted in added benefits of saving business and 

ratepayer money and creating jobs as part of a clean energy economv in Oregon. 

The best system of reducing emissions must account for the full extent of emission reduction 

measures available throughout the power system. The most cost-effective methods to achieve 

significant emission reductions at existing power plants include end-use energy efficiency 

measures, such as appliance standards and weatherization investnients, and transitioning to 

renewable energy sources, such a.s solar, wind, geothermal, and waste-to-energy generation. 

Therefore, EPA's guidelines should define the BSER and a range of emission reduction 

compliance tools through a system-based approach. 

Greatest and Lowest Cost Emission Reduction through Strong Incentives for Multi-State 

Cooperation 

The interconnected, regional nature of our power system requires considerable coordination 

across state lines to leverage significant and lowest cost emissions reduction potential from 

existing power plants. According to research by McKinsey & Company, approximately half of 

all cost effective greenhouse gas reduction measures in the U.S. are available from end-use 

energy efficiency and changes to the electricity generation mix of the power sector. Multi-state 

cooperation is necessary to realize substantial energy efficiency opportunities and utilize 

renewable energy generation in states. like Oregon, that largely import electricity produced in 

other states with greenhouse gas intensive power plants.
Ms. Gina McCarthy 

March 10, 2014 

Page 5 

Multi-state planning and cooperation would introduce an opportunity to harmonize the EPA's 

regional haze rule with this CAA 111(d) rulemaking. Doing so would allow for efficiencies in 

power plant emission reduction opportunities and regulatory implementation. Through the 

regional haze rule, states will be producing plans to establish goals and emission reduction 

strategies to improve visibility, strategies that likely include existing power plants, similar to 

state plans produced through this CAA 111(d) rulemaking. In addition, EPA has encouraged 

states to form regional partnerships to develop and implement multi-state strategies to reduce 

emissions of visibility impairing fine particle pollution under the regional haze rule, which could 

be combined with a regional approach to reduce greenhouse gas emissions in this rulemaking. 

The nine northeastern states participating in the Regional Greenhouse Gas Initiative have 

reduced emissions from their collective power sectors by 40% from 2005 levels, largely by 

investing proceeds from auctioned emission allowances in end-use energy efficiency and 

renewable energy generation. Similar regional concepts could be implemented through a 

Regional Transmission Operator's or a multi-state utility's service territory. For example, 

Oregon is part of the Multi-State Process, which includes Idaho, Utah, Wyoming, and 

Washington as part of PacifiCorp's service territory. These states currently work together to 

negotiate regulatory policies that assign or allocate system costs and wholesale revenues related 

to PacifiCorp's generation, transmission, and distribution among the states. EPA guidelines 

should incent state plans to build on existing regional protocols for multi-state utilities or 

regional organizations to encourage cooperation across state lines for the greatest emission 

reduction. 

Multi-state coordination will be vital for power plants to employ the most cost-effective emission 

reductions with regulatory certainty in regions, like the Northwest and Intermountain West, with 

significant exchanges of electricity between states. EPA guidelines should strongly encourage 

regional planning and cooperation among states by providing incentives to develop multi-state 

pla.ns, criteria for multi-state plans to demonstrate compliance, and model rules for connecting 

state plans together. As a result, the guidelines would provide regulatory certainty and greater 

uniformity across state lines and encourage cost effective methods to significantly reduce 

emissions. 

Reco2nition of Early Action to Reduce Emissions 

When identifying cost-effective emission reductions available throughout the power svstem. 

EPA should consider the successes already achieved by states and utilities through investments 

in energy efficiency, renewable portfolio standards, and other programs to reduce power plant 

emissions beyond standard business practice. Recognition of these successes and investments 

should be provided by accounting for action already taken by states, utilities, and power plant
Ms. Gina McCarthy 

March 10, 2014 

Page 6 

operators in the assignment of emission reduction obligations. For example, Oregon passed 

landmark state legislation in 1999 to require a three percent charge on electric bills to provide 

stable funding for energy efficiency and renewable energy investments, which should be 

recognized as early action in settina an emission reduction obligation. Recognition of early 

action credit should be provided for achieving energy efficiency savings, renewable portfolio 

standards, clean distributed generation targets, and other programs that states and local 

governments enacted that reduce greenhouse gas emissions. In designing a fair regulatory 

system to achieve meaningful emission reductions, EPA should recognize the progress of states, 

investments of utilities, and emission reductions already achieved through early action. 

Many of the proposed goals and action items in the President's Climate Action Plan are 

ambitious. I believe, however, that because the stakes are high for our nation, we must be bold 

in our vision and committed to a full and honest examination of these and other issues as we 

build the consensus necessary to secure our common future. 

Thank you for the opportunity to provide preliminary comment about this important opportunity 

to combat climate change through EPA's CAA 111(d) guidelines. I have directed my staff at 

Oregon's Department of Environmental Quality, Department of Energy, and Public Utility 

Commission to be available to you for any questions that arise regarding the policy 

recommendations in my comments. My energy policy advisor, Margi Hoffmann, wil] contact 

your office to follow up on this letter. 

Sincerely, 

hn A. Kitzhaber, M.D. 

Governor 

JAK:mh
Kecommenaea rrameworK ror tne 5ection lll^a) 

Emissions Guidelines Addressing Carbon Dioxide Standards 

for Existing Fossil Fuel-Fired Power Plants 

^ ^ 

pennsylvania 

DEPARTMENT OF ENVIRONMENTAL


PROTECTION 

Bureau of Air Quality 

2700-UK-DEP4446

0
Commonwealth of Pennsylvania's Recommended Framework for

the Section 111(d) Emissions Guidelines Addressing Carbon

Dioxide Standards for Existing Fossil Fuel-Fired Power Plants 

If EPA develops emissions guidelines, it should be done under Section 111(d). 

Section 111(d) of the Clean Air Act (CAA) is applicable for air pollutants that are neither 

regulated as a National Ambient Air Quality Standard (NAAQS) nor as a hazardous air pollutant 

(HAP) and where a New Source Perfonnance Standard (NSPS) would apply for new affected 

sources. This section specifies that the U.S. Environmental Protection Agency (EPA) shall 

develop regulations establishing a procedure similar to the state implementation plan process 

which must be followed by the states. Further, this section obligates the states to prepare and 

impleinent plans that establish standards of performance for existing sources as well as provide 

for the implementation and enforcement of such standards. Under Section 111(d), states have 

the authority to devise flexible programs for existing units that achieve the federal guidelines 

using provisions that work best for the individual states. Considering the dramatic differences 

among the states relative to fuel diversity and the market differences between rate-based markets 

and restructured markets, this state flexibility is critical. Therefore, Section 1 11(d) would be the 

most appropriate section of the CAA to regulate carbon dioxide (COz) emissions from existing 

large fossil fuel-fired electric utility steam generating units (EGUs) and fossil fuel-fired 

combustion turbines. Using the guidelines, states would be required to develop Section 111(d) 

plans for existing sources. These requirements can and should be less stringent than the NSPS, 

taking into account, among other factors, the remaining useful life of the existing source to 

which the standards of performance apply, additional environmental benefits of a fuel source, 

and other iinportant considerations including market impacts and electric grid reliability. 

Emissions guidelines should be developed in close consultation with the states. 

The EPA must recognize state leadership and authority to regulate pollutants within their borders 

and should ensure preservation of states' discretion in the development and implementation of 

flexible emission control programs that are consistent with Section 1 1 1(d) provisions. The EPA 

should develop emissions guidelines that provide for maximum flexibility to the states in 

meeting those guidelines. The emissions guidelines should establish targets, not mandate how to 

achieve the established targets. Only the states have the authority to design and implement 

pollution control programs to meet the requirements adopted to regulate carbon dioxide in 

accordance with Section 1 11(d), except in areas where the authority has been delegated to a local 

agency, or a state has failed to submit the necessary plan.
The emissions guidelines should address COZ emission reductions achieved by the affected 

sou rces. 

Emissions guidelines should establish targets based upon actions that can be taken directly by 

and at existing sources affected by a Section 11 1(d) COz program. This approach is consistent 

with EPA's previous emissions guidelines promulgated for other source categories under the 

CAA. Furthermore, the EPA should limit the definition of '`best system of emission reduction" 

(BSER) to actions that ean be taken by the affected existing source without redefining the source. 

This will require the consideration of the inherent differences within the universe of existing 

boilers and combustors that are included in the fleet of fossil-fuel fired electric generation 

sources. 

If an energy-efficiency project or some other project with unique environmental benefits (e.g., 

municipal waste-to-energy projects) associated witll a"non -affected" source is to be granted a 

"credit" under a Section I 11(d) program, the "credited" reductions must be quantifiable and 

enforceable consistent with the quantification by a souree affected under the program. The 

owner, operator or entity receiving credit for actions taken at a non-affected source must be 

responsible for ensuring that the COz reductions continue at the credited level. To ensure the 

integrity of Section 111(d) programs which include actions taken by non-affected sources, it is 

critical to have very high data quality standards. Absent high quality data, the effectiveness of 

the program would be compromised to the economic benefit of some and detriment of others. 

Consequently, it is suggested that the quantification methods for credits awarded to non-affected 

sources be standardized by or be required to receive approval from the EPA when using 

reductions from non-affected sources in a Section 111(d) program. 

It is important to note that energy efficiency projects not associated with existing sourees or 

facilities are actually emissions avoidance efforts and not emissions reduction efforts. 

Consequently, only energy efficiency efforts at existing sources or faeilities, or new energy 

efficiency projects that are coupled with the replacement or retirement of an existing souree or 

facility, should be cor►sidered for crediting toward a Section 111(d) program. In the case of a 

project with unique environmental benefits, the amount of credit should be demonstrated on a 

continuous basis. Because of the complications of a program that includes non-affected sources.. 

EPA should establish Section 11 1(d) guidelines for CO, emissions that only consider currently 

available and economically feasible technologies that improve energy efficiency at affected 

sources. 

Emissions guidelines should provide for unit averaging for a rate-based program or accumulation 

of emissions from multiple sources if the program is mass-based. Also, because CO, is not a 

pollutant for which a short-term ambient air quality standard is ►necessary or desirable, a multiyear (e.g., five-year) rolling average can be used to demonstrate compliance. This methodology 

provides recognition of year-to-year variations in operations without requiring the use of 

emission allowances. After the close of the reporting period, a"true up" period should be 

^
provided to allow "over-e►nitters" and "under-emitters" to reach a negotiated settlement that 

provides for "net" compliance with emissions obligations. This approach may be a very 

desirable option for restructured energy markets as it provides for flexibility without picking 

"winners and losers," as can oceur with allowance-based programs. These opportunities would 

enable states to design the most flexible programs and the owners and operators of affected 

sources to select the most cost-effective compliance options for meeting their compliance 

obligations. 

States must be allowed to join with other states in multi-state or regional programs. 

States must have the opportunity to collaborate with other states in either formal or ad-hoc 

forums while developing compliance demonstration options. The opportunity to collaborate 

should also be provided to t11e owners and operators of affected sources to allow them flexibility 

in achieving the most effeetive compliance options. This collaborative process should be 

provided for, but not obligated in the guidelines developed by EPA. The most critica) aspect of 

having creditable and high-functioning programs is the quantification of the emissions. In the 

case of EGUs, monitoring provisions are consistent and specified under federal regulation. This 

consistent quantification of emissions obviates the need of emission allowances for the success 

of multi-state trading programs. However, the decision to utilize an emission allowance-based 

program should be at the state's discretion. Importantly, the emission allowance-based program 

must also be reliant upon the consistent quantification of emissions. 

EPA must recognize the different makeup of existing power generation in each state and 

recognize flexible compliance pathways or mechanisms. 

The existing power generation fleet in Pennsylvania is extremely diverse in terms of fuel 

sources, combustion technology, and vintage. As the Commonwealth is intimately familiar with 

the exact composition of the fleet, Pennsylvania is best suited to design the plan to meet the final 

emissions guidelines promulgated by EPA and also to be adequately flexible to accommodate 

Pennsylvania's diverse resources. This is true for all state and local agencies. 

Importantly, states should also have the ability to exclude certain electric generators that have 

environmental benefits that are beyond the COz emissions from those sources. Exainples of fuel 

sources that this may apply to are coal refuse and coal bed methane. 

An excellent example of an electric generation source category with multi-media benefifs is coal 

refuse combustion units. In Pennsylvania, large piles of coal refuse are a legacy issue and these 

facilities turn this refuse into electrieity in a controlled combustion process rather than through 

uncontrolled burning, which occurs due to the exposure of coal refuse piles to air. The exposure 

of a mining refuse pile to atmospheric oxygen and pressure promotes heat generating reactions, 

primarily oxidation of the coal refuse itself (i.e., the coal refuse piles are slowly burning), 

releasing CO2 emissions as well as sulfur oxides, particulate matter.. and other pollutants 

3
associated with poor combustion. The benefits of utilizing this fuel source are that it is 

essentially carbon neutral, emissions of other pollutants from coal refuse-fired sources are well 

controlled, and sources of acid mine drainage and ground water pollution are removed. 

Additionally, the use of coal refuse reduces the emissions from use of "new" coal or natural gas 

from being combusted to generate electricity in an amount that would reflect the amount of 

electricity generated by the eoal refuse-fired coinbustion units. 

Because the ash from the controlled combustion of coal refuse is used to remediate the site where 

the coal refuse pile was located, these areas are reclaimed without any funding necessary from 

Pennsylvania taxpayers. At this point, over 7,200 acres of affected land in Pennsylvania have 

been reclaimed through the use of this fuel source. This represents savings to Pennsylvania 

taxpayers of $140 to $220 million dollars while providing jobs, environmental benefits, and 

taxes to the localities where these coal refuse-fired facilities operate. For perspective, tihe 

industry estimates there are still approxi►nately 170,000 acres affected by coal refuse remaining 

in the Commonwealth. 

Emissions guidelines should provide for emission reductions compared to a designated 

baseline period. 

Regulating greenhouse gas such as CO, is unique when compared to criteria pollutants. Section 

11 I(d) of the CAA allows EPA to consider flexible approaches when establishing the guidelines 

and allows states to utilize flexible approaches for compliance demonstrations. Potential 

strategies include state budgets, multi-year averaging, and early reductions. EPA should 

establish specific goals for the states based on standards of performance.. recognizing that 

existing sources have very limited options when compared to new sources. New sources have 

the opportunity to incorporate emissions controls and efficiency improvements into their design 

much easier than existing sources. Further confounding the installation of controls on existing 

units is the New Source Review (NSR) proeess specified in the CAA and the regulations. EPA 

should address the NSR ramifications of the installation of controls or modifications on existing 

units used to meet the standards of perfonnance established under the guidelines. NSR 

ramifications should not impede the maximum possible implementation of energy efficiency 

improvement projects at these affected sources. 

Pennsylvania recommends the EPA's emissions guidelines provide for a state budget approach 

option for only existing sources being regulated for CO, under a Section 1 1 I(d) program. This is 

beeause new affected sources will be regulated under Section I l l(b) through the New Source 

Performance Standards (NSPS), which, as proposed, establish unit-specific CO, limits. Under 

Section I 1 1(d), EPA should provide for a state budget based on achievable rate-based standards 

of performance which can then be converted to a mass-based target by multiplying the baseline 

year energy output (i.e., the gross output in MWh for the baseline year) multiplied by the ratebased standard (expressed in Ibs/MWh (gross)) to determine the mass-based target in tons per 

4
year. Pennsylvania recommends that the EPA use 2005 as the appropriate baseline year as 

suggested by President Obama's Climate Change Action Plan. The emission guidelines should 

allow compliance with the budget to be demonstrated using system-wide averaging or 

accumulation on a rolling five-year basis for facilities under common control. This system of 

implementation would provide states the ability to recognize and use all quantifiable and 

enforceable reductions including, but not limited to, source retirements, permanent eurtailments, 

and early reductions. 

EPA must recognize the differences inherent in regulated versus competitive energy 

markets and the need to provide for electric grid reliability. 

EGUs in Pennsylvania are participating in a competitive energy market. Therefore, the costs to 

comply with state plans implementing the emissions guidelines cannot be directly passed on to 

the customers. On the other hand, EGUs participating in a regulated rate-based market can 

directly reeover the costs of compliance after obtaining approval from the Public Utility 

Commission and will be compensated with a return on investment for costs associated with 

compliance efforts. EPA must recognize the fundamental differences in these marketplaces by 

recognizing the authority of the states to design and implement programs that best serve the 

affected sources located within their jurisdiction. 

Emissions guidelines mandating an electric grid system-based approach, which includes the redispatch of EGUs based on a lower CO, emission rate as proposed by regional transmission 

organizations (RTO), independent system operators (ISO), and the ISO/RTO Council (IRC) 

should not be used, as they further disrupt the competitive energy market. That type of 

interference would disproportionately affect coal-fired EGUs and place additional coal-fired 

EGUs at risk of early retirement, resulting in additional job losses and potential grid reliability 

issues. The dispatch of EGUs is beyond the scope of the EPA's authority, and the regulation of 

carbon dioxide emissions is beyond the authority of PJM or any other RTO or ISO. The 

operation of a competitive energy market is the role of RTOs and ISOs while the regulation of 

environmental pollution in Pennsylvania is the responsibility of the Pennsylvania Department of 

Environmental Protection. This type of interference by PJM would likely make it impossible for 

coal-fired EGUs to effectively and economically participate in the market, which can only impair 

the reliability and affordability of domestic energy supplies by diminishing the diversity of 

electricity generation sources that are vital to maintain the energy security and prosperity of the 

United States. 

Changes to major New Source Review regulations should be considered to encourage 

efficiency improvements. 

Any physical change or change in the method of operation relating to efficiency improvements at 

an affected facility would trigger NSR applicability deteniiinations. If NSR is triggered, the 

owner or operator may opt out of such efficiency improvement projects or choose not to 

5
optimize or maximize the benefits of the project, which is counter to the intent of the emissions 

guidelines. Therefore, we recommend that NSR regulations for EGUs be amended to redefine 

major modification as a modification that increases any regulated air pollutant emissions in terms 

of the Ibs/M Wh (gross), rather than the current threshold of tons per year. 

There are likely other provisions in the CAA that have ``absurd results" when it is used to 

regulate CO, or other greenhouse gases. Those provisions should all be identified and "tailored" 

to provide for the greatest opportunity to avoid unintended or negative consequences should this 

program for EGUs be implemented under Section 1 1 1(d) of the CAA. As previously addressed 

by EPA, circumstances that have absurd results should be corrected through regulatory 

amendments as was done under the "Tailoring Rule." 

0
:'V+ Minnesota Pollution Control Agency 

520 Lafayette Road North I St. Paul, Minnesota 55155-4194 1 651-296-6300 

800-657-3864 1 651-282-5332 T1Y I wwwpca.state.mn.us I Equal Opportunity Employer 

December 16, 2013 

Gina McCarthy, Administrator 

U.S. Environmental Protection Agency 

Williarn Jefferson Clinton Building 

1200 Pennsylvania Avenue Northwest 

Mail Code: 1101A 

Washington, DC 20460 

RE: Clean Air Act 111(d) Rules for Existing Power Plants 

Dear Administrator McCarthy: 

I am pieased to offer the comments of the Minnesota Pollution Control Agency (MPCA) on this very 

important work of addressing greenhouse gas (GHG) emissions from existing power piants. As Governor 

Dayton said in his letter this past summer to President Obama supporting his Climate Action Plan, we 

beiieve it is necessary for the U.S. Environmental Protection Agency (EPA) to work wfth states to deveiop 

and impiement a pian to address power piant emissions. Minnesota stands as a ready and wiiiing 

partner.

Minnesota has reduced power piant GHG emissions, and wili continue to do so. 

Minnesota has accompiished significant reductions in GHG emissions. This work has been accompiished 

through a number of strategies, invoiving the state legislature, Minnesota's Department of Commerce, 

Public Utilities Commission, the MPCA, and mighty efforts by Minnesota's eiectricity producers. By 2010, 

statewide GHG emissions have deciined by about 3 percent from 2005 emissions, the baseiine year of 

Minnesota's statutory GHG reduction goais. Minnesota's poiicies and programs that have been in piace 

over the last two decades have acted to reduce GHG emissions from the eiectricity generating sector. 

We describe the poiicies and programs, goais and implementation dates beiow. 

Demand Side Management 

Since 1982, Minnesota has administered a demand side management program caiied the Minnesota 

Conservation Improvement Program (CIP), which is administered by the Minnesota Department of 

Commerce. The demand-side management program was estabiished by Minnesota statute and modified 

over time to estabiish investment requirements, energy savings goais, and CIP pianning requirements. 

Minnesota's CIP program is a low cost energy resource in comparison to suppiy-side options. 

With passage of Minnesota's Next Generation Energy Act in 2007, a 1.5 percent Energy Efficiency 

Resource Standard (EERS) for utiiity conservation improvement programs was estabiished beginning in 

2010, meaning that utilities were required to deveiop pians to achieve savings of 1.5 percent of average 

annual retail saies annually . This standard remains one of the most aggressive standards in the country, 

especially considering that efficiency programs have been operating in Minnesota since the eariy 1980s. 

. Minnesota statute aiso describes the conditions under which the Department of Commerce can adjust the 

savings rate to no less than 1.0 percent.
Administrator McCarthy 

Page 2 

December 16, 2013 

Minnesota utilities operate a wide array of residentiai, commercial, and industrial CIP programs targeted 

to both retrofits as wefi as new construction. CIP programs also heip create and retain jobs in a variety 

of market sectors and customers spend fess money on energy, freeing up dollars for other uses. 

The establishment of the 1.5 percent EERS in CIP increased the need for accurate and verifiabie savings. 

To this end, the Minnesota Department of Commerce undertook three major initiatives aimed at 

developing standard measurement and verification from CIP pro]ects: 

• Developed measurement and verification protocols for large commerciai/industrial projects. 

• Developed a technicai reference manual providing standard algorithms and assumptions for 

caiculating savings from a wide array of energy efficiency measures. 

• Deveioped a ctoud-based piatform for CIP data collection and program operations. 

Through this system, Minnesota utiiities are provided with a pre-approved set of caicufators called 

SmartMeasures°", reducing program costs by each utiiity not having to create and maintain a set of 

calculators to demonstrate achieved energy savings. The Department of Commerce collects the results 

of the CIP from 174 utilities in Minnesota using its Energy Savings Platform (ESP), a cioud based data 

collection program. ESP ailows the state, utilities, trade partners, and stakehoiders to coliaborate on 

energy efficiency standards, programs and reporting. The Department of Commerce's evaivation costs 

are also reduced and results in higher confidence in the reported savings. 

The MPCA continues to support the Department of Commerce in encouraging and expanding these 

programs, because the CIP demonstrates a very efficient, low cost method to reduce energy use and 

GHG emissions. In 2011, Minnesota's statewide eiectric CIP program resulted in an incremental 

reduction of neariy 880,000 tons per year of CO 2 emissions. 

Repowering Projects in Minnesota 

Minnesota enacted an emissions reduction statute in 2001 that aliows special rate recovery 

consideration for air pollution controi projects, with the goal being to improve the emissions profile of 

Minnesota's aging coal fired utiiity boilers. Authorized in 2002, and finished in 2009, Xcel Energy, the 

state's (argest electric utifity, completed a project called the "Metro Emissions Reduction Project". The 

project repowered a 520 megawatt (MW) coal-fired power piant, lowering Its heat rate by 5 percent. 

The project aiso retired 642 MW of coal-fired electricity generation, repiacing it with 956 MW of 

intermediate load natural gas combined cycie generation. This emission reduction statute encouraged 

early action by Minnesota's utifities to seek multi-poliutant emission reductions that also resuited in 

reduced refiance upon coal-fired generation and reductions in GHG emissions. 

More changes in the fuel mix for Minnesota's electricity generation are in the works, with Minnesota 

Power announcing its Energy Forward pian to reduce their future suppiy mix to 33 percent from coai 

generation, down from 80 percent coal generation in 2013. Minnesota Power will repower about 175 

MW of coal-fired electricity generation to natural gas by 2015. 

Renewable Energy Objectives/Renewal Energy Standards 

Minnesota has undertaken a number of legislative efforts over the past 20 years to expand the use of 

renewable energy generation and lessen the reliance on fossil fuel in meeting Minnesota's electricity 

demand. It began in 1994, as a part of legislation authorizing above-ground cask storage of nuciear 

waste. At that time, the Minnesota Legislature directed Xcel Energy to develop 425 MW of wind power 

capacity and 125 MW of biomass-fired capacity (referred to as "Prairie Island" in our figures to
Administrator McCarthy 

Page 3 

December 16, 2013 

distinguish renewabie generation developed to meet this mandate). In subsequent Minnesota Pubtic 

Utllity Commission proceedings, Xcel Energy's wind mandate was raised to 825 MW. 

In 2001, Minnesota established Renewabie Energy Objectives which required electric utilities to "make a 

good faith effort" to obtain ten percent of their Minnesota retail energy sales from eligible energy 

sources by 2015, and to obtain 0.5 percent of their renewable energy from biomass technologies. In 

2007, the Next Generation Energy Act established Minnesota's Renewable Energy Standards (RES) that 

mandates that electric utilities generate or procure a specified level of energy from renewable sources. 

The RES contains targets for 2012, 2016, 2020 and an ultimate target of 25 percent renewable energy 

generation by 2025. Xcel Energy received a separate RES schedule with an ultimate target of 30 percent 

renewable energy generation by 2025. Minnesota now has about 2,800 MW of renewable energy 

installed, and based on the utilities long-range resource plans, is on track to meet this renewable 

generation requirement by 2025. 

Minnesota continues to expand'its renewable energy goals. This past year, the Minnesota Legislature 

added a goal to the RES that 10 percent of retail eiectric sales will be generated from solar energy by 

2030.

Next Generation Energy Act 

The Next Generation Energy Act (NGEA), adopted in 2007, represents the most significant public policy 

action in Minnesota to reduce the state's GHG emissions. The NGEA has bolstered investments in 

renewable power, increased energy conservation and decreased Minnesota's contribution to climate 

change. As mentioned previously, the NGEA established Minnesota's RES requirements and changed the 

CIP program requirements. The cornerstone of the NGEA was establishment of state-level GHG emission 

reduction targets of 15 percent from 2005 levels by 2015, 30 percent from 2005 levels by 2025 and 

80 percent by 2050. These emission reduction goals have driven significant attention to long-term 

planning for the GHG reductions in Minnesota's eiectric generation sector. 

In 2008, the MPCA began to biennialiy track the state's progress in meeting these GHG reduction 

targets. In tracking the GHG emissions from the eiectric power sector, the NGEA required the MPCA to 

include emissions from In-state generation plus emissions from net imports, including those associated 

with transmission and distribution losses. 

Total GHG Emissions Avoided 

Without the poiicies and actions described above, annual GHG emissions from the Minnesota eiectric 

power sector would now total some 65 million tons. However, because of public and private actions in 

Minnesota, the MPCA estimates that in 2011, emissions of 14.7 million COz-equivaient tons from the 

electric power sector were avoided, primarily due to demand-side management, power plant 

repowering, and Minnesota's RES. The 14.7 million CO2-equivalent tons avoided amount to an emission 

savings of 22 percent. 

The MPCA has developed an electric power sector forecast out to 2025 that accounts for the emissionavoidance efPects of Minnesota's policies. Based on this analysis, the MPCA estimates that current 

policies and programs, if continued at present levels, in 2025 wili result in the avoidance of 23.8 million 

tons of GHG emissions, which would represent a 33 percent reduction in expected emissions. The MPCA 

apportions a reduction of 10.3 million CO2-e tons to Minnesota's RES; a reduction of 10.3 million COZequivalent tons to Minnesota's CIP program; and a reduction 3.2 miliion CO2-e tons from repowering 

projects in Minnesota.
Administrator McCarthy 

Page 4 

December 16, 2013 

The flgure below shows these various strategies and their associated reductions. 

Historic and Forecasted GHG Emissions and Forecasted Ernissions-avaded from the Electric 


Power through State Policy 

eo,000,000	— ----------- ------

Historic	I	Forecasted	^ 

70,000,000 , 

Ionart 

60,000,000 .	. .. 611G 

.	.	.^ MNrstonr 

\

-4trWdad 

50,000,000 . 

40,0013,000 

Y _^ ^• 

v

30'OW,0010	^MetropolitxnEmiss.cnReductlonProKct 

■ Prairie Island Mandate 

■ Renewahk Energy Standa rd/REO 

20,000,000	rJEneigyEffiidencyRequin-ment/[IP 

^ Net Electr7city Imports 

■iransrnlnion System 

10 000IDOO	■ MMSW/ROF/TOf 

0011 

Gas 

0 Coal 

I--	1990	1995	2000	2005	2030	2o15	102o	2025 

wa^ 

Considerations of a Performance Standard for State Plans 

Given the significant impacts of climate change, Minnesota believes that U.S. Environmental Protection 

Agency's (EPA) performance standard for existing power plants must result in meaningful GHG 

reductions from electricity generation in all states. 

Minnesota's reliance on a substantial amount of outstate generation to meet its electricity demand 

(roughly 27 percent) highlights the need for regional cooperation, as well as the need to rely on a range 

of strategies and programs. Minnesota supports EPA's efforts to allow for a mix of policies and programs 

as the "best system of emission reductions" in addressing GHG emissions. Our experience and analysis 

shows that state level actions can potentially achieve a 20-30 percent reduction in GHG emission 

through generating source improvements, renewable energy development and demand side 

management programs. Based on Minnesota's experience, these emission reductions can be 

accomplished over periods as short as 10 to 15 years. 

Because of the reductions that have already been achieved in Minnesota as well as other states, with a 

considerable investment of time, capital and effort, it is vitally important that past actions be taken into 

account when establishing reduction goals or requirements. EPA's best system of emission reductions 

should provide a means of granting credit to early actions which resulted in GHG emission reductions 

from a state's electric generation profile.	 '
Administrator McCarthy 

Page 5 

December 16, 2013 

Additionally, if EPA decides to credit emission-reductions from coal-to-natural gas conversions, EPA 

should take every action to control methane emissions from upstream natural gas production activities, 

including ernissions during hydraulic fracturing production of natural gas. 

State 111(d) Plan Guidelines 

Minnesota shares President Obama's commitment to reduce GHG emissions, as already demonstrated 

above in our detailing of current state programs and policies. Continued reductions will rely on 

successful implementation of a federal prograrn for existing power plants to ensure GHG emission 

reductions nationwide. Recognizing that each state in effect is responsible for the implementation of a 

federal program, the MPCA believes that there are a number of aspects that are required for an 

effective, equitable national reduction program: 

It is important that EPA's 111(d) program should be flexible. It should allow plant retirements, 

refueling, renewable energy (including biomass) and energy efficiency to be used to 

demonstrate compliance. It is aiso important that in EPA's consideration of alternative energy 

sources, EPA should consider how to address state-to-state differences. The definition of a 

renewable energy source is likely to be different based on current state laws or rules. 

EPA must consider that giving states one year to develop State 111(d) plans, even under the 

simplest of scenarios, is not enough time for many states to make statutory changes or adopt 

administrative rules. If states want to take more innovative or multi-state approaches, even 

more time will be needed to negotiate the details and adopt the necessary changes. EPA should 

develop a 111(d) plan approval process that allows states and EPA to meet the one year 

deadline outiined in the President's plan, while still providing states the opportunity to take 

additional time to develop a more flexible, innovative and cost-effective approach to 

implementing the guidelines. To accomplish this approach, the following suggestions are 

provided: 

• Promulgate a"model rule" for states to use initially; it would be very useful in 

streamlining initial 111(d) plans if EPA were to develop a model rule for data collection 

and identify alternative emission control strategies that EPA considers sufficient for 

meeting the rule. 

• Identify preferred procedures for "parallel" processing of 111(d) plans prior to rule 

proposal. EPA has a means of conditionally approving SIPs called "parallel processing" 

allowing states to submit an early plan that has compliance schedules, demonstration of 

legal authorities, etc. followed by a final plan that contains emission limits, enforcement 

mechanisms and other regulatory and legal requirements. Developing a sirnilar process 

for 111(d) plans would aid in states being able to provide initial plans on time. 

• Identify preferred procedures related to emissions quantification and other accounting 

requirements that recognize e.xisting data reporting mechanisms and procedures. This 

issue is critical to the overall success of any program, and will take some time for states 

to develop, particularly if other states are like Minnesota where state agencies other 

than the designated Clean Air Act agencies are collecting energy generation information 

that would be relied on to demonstrate GHG reductions. This would aid states in 

developing initial programs within the flrst year, and potentially avoid duplication of 

efPort for both states and utilities. As mentioned above, Minnesota would rely on energy 

information that the Minnesota Legislature has already determined is the responsibility 

of an agency other than the MPCA to collect and verify (e.g. Minnesota's 

SmartMeasuresT"' mentioned above). Having to seek legislative action to redirect this
Administrator McCarthy 

Page 6 

December 16, 2013 

work would be make implementation of a 111(d) rule in Minnesota in a reasonable 

timeframe very challenging. 

o Provide as much guidance as necessary to allow for plan revisions, especially as 

technologies for carbon capture improve or costs change in response to marlcet 

changes. 

• The two-step approach is potentially applicable to the schedule for securing GHG reductions. 

EPA has already promulgated rules for emission guidelines stating that it will amend rules for 

existing sources should new information become available. EPA appears to have the authority to 

require reductions in the near term to reflect what states are currently demonstrating as 

achievable. These program requirements can then be followed by longer-term, deeper 

reductions that may be necessary to address the environmental impacts of climate change. 

• EPA must also ensure that EPA's regional offices work in concert with one another, having 

similar training, guidance and approaches to approving state plans, since multi-state plans could 

cross EPA region boundaries. EPA must also ensure consistency in the review and approval of 

state plans across EPA regions to ensure that state plans are consistently and expeditiously 

approved. 

• EPA's definition of best system of emission reductions should consider the impacts of such 

regulations on the transition of jobs from carbon-intensive energy sources to green energy 

sources. 

• EPA should also consider the critical need for carbon emission regulations to protect citizens 

who may be disproportionately impacted by the efFects of a changing climate and air pollution. 

The MPCA looks forward to EPA promulgating the new source performance standards for new fossil-fuel 

power plants. It is critical that should the United States continue to invest in expanded coal or naturalgas electricity generation, the CO2 emissions be rigorously controlled. 

I understand that EPA has asked many interested and affected parties for their input, and that there are 

many complex legal, policy and technical issues. While recognizing all of these issues, EPA should strive 

to develop rules for both existing and new fossil-fuel electricity generation that minimizes compliance 

costs, maintains electricity reliability, and maximizes economic and environmental benefits. 

Along with the concerned citizens of Minnesota, I support EPA's careful, important work in developing 

these GHG control standards. If there are any questions, please contact Assistant Commissioner David 

Thornton at 651-757-2018. 

Sincerely, 

in Lin_c Stilne 

Commissioner 

1LS/AJ:Id 

cc:	lanet McCabe, Assistant Administrator (Acting), office of Air and Radiation 

Susan Hedman, Regional Director, EPA Region V 

George Czerniak, Alr and Radiation Director, EPA Region V
Administrator McCarthy 

Page 7 

December 16, 2013 

Minnesota Pollution Control Agency Comments to Administrator McCarthy 


December 2013


Appendix 

Table 1. Policies In Place in Minnesota that have reduced povuer sector GHG emissions 

year of 

starting compiiance or 

target ievei year completion 

Erwrgy Effidency (Minn. Stat. 216B.241) 

Conservation 

Improvement En.ergy savings goal: 1.5% average of 3 prior 

Program years' retaii sates, 2010 onward 2010

Various 

1.5 to 2.0% of gross operating expenses 

committed to eiectric demand-side 

management programs,1994-2009 

Coal-to-NGCC repowering (Minn. Stat. 2168.1692) 

Metropolitan 

Emission Reduction convert 642 MW coal to NGCC (956 MW); 2009 

Project (MERP) repower 528 MW coal 2002 

Renewabie Energy Devetopment (Minn. Stat. 21613.1691) 

1% of retail saies 2005-2009 

Renewable Energy 10% of retail saies 2010 REO: 2005; Various 

Standard (RES) 1% of retail saies 2011 RES: 2007

biomass: 2007 

Prairie Island Mandate 825 MW wind, 125 MW biomass 1995 wind: 2008 

Green Pricing voiuntary program 1998 None 

0.5% 2005, 2% 2006-2008, 4% 2009, 5% 

2010-2011 in eiectric utility-owned engines Various 

Biodiesei Mandate and turbines 2005 

Solar Generation 10 percent of retail saies 2030
Administrator McCarthy 

Page 8 

December 16, 2013 

Table 2. MWH of Electriclty-Saved through the CIP or Generated with Renewable Energy Sources from 

Mlnnesota Policies and Programs 

2000 2005 2010 2011

cumuiative, 

1990-2011 

Energy Efficienry 2,782,220 4,351,286 5,337,063 5,305,347 63,548,565 

Renewable Energy 

Prairie Island Mandate(a) 719,769 1,690,061 - 8,722,810 

Renewable Energy 

Standard (b) - - 7,606,126 9,138,452 34,743,571 

Biodiesel Mandate 4,159 7,580 7,055 90,522 

Green Power Pricing - - 65,270 73,809 291,224 

(a) State statute allows renewable electricity generation to be counted under its renewable energy standard. 

After 2006, renewable generation stemming from the Prairie Island mandate is counted under the RES. 

(b) Includes generation at all renewable energy facllities within Minnesota that can generate Renewable 

Energy Credits (RECs) for use In meeting the State's RES requirements. 

Table 3. Principal Data Sources Used in Minnesota to Evaluate Emissions-Avoided Effects of Historic 

and Current Day Policies and Actions

Data Source Years of Availabillty 

Facility emissions 

MPCA GHG emission inventory 1990-2011 

MPCA consolidated emission inventory 2010-2012 

US EPA CAMD database 1996-2012 

EPA MRR data 2010-2011 

Facility and Unit Level Net Generation 

EIA Form 923, EIA Form 906, EIA Form-759 1990-2012 

M-RETs 2008-2012 

MN Department of Commerce Annual Electric Report most years, 1990-2012 

Independent Power Producer Sales to Grid 

FERC Form-1	 1990-2012 

DSM Energy Savings 

EIA Form-861	 1990-2012 

Green Pricing MWH-sales 

EIA Form-861	 2007-2012 

Renewabte Energy Standard/Renewable Energy Credit retirements, saies, purchases, baiances, and 

ownership 

M-RETs	 2008-2012 

Annual Compliance filings with Minnesota Public Utilities Commission various, 2007-2012 

Regional Marginal Emission Avoided factor 

M. Silar-Evans, etal. (2012)	 2006-2011
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