# Rulemaking for Greenhouse **Gas**

**Emissions from Electric Utility Generating**  **Units** Update Briefing, February 26, 2014

# Agenda ► 

### Pr esiden t’ s Climate Action Plan ► 

### Af fe ct ed Sour ces ► 

### Section 111(b) and (d) Ov erview ► 

### St akeholder Outr each ► 

### Modified Sour ces ► 

### Re constructed Sour ces ► 

### Exis ting Sour ces ► 

### Ques tions/Commen ts ► 

### Appendix A – St ate & Local Governments P otentially Subject to Regulation

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# Re ducing Carbon P ollution fr om P ower Plan ts **The President ’s** **D irective**  **to EP A:**  ► 

### Set fle xible c arbon pollution st andards, regulations or guidelines, as appr opriat e, for power plan ts under section 111 of the Clean Air Act ► 

### Fo cus on the following elemen ts when developing the st andards and guidelines ► St akeholder eng agement on progr am design ► Fle xibilities in the pr ogr am design ► Cos ts ► Continued importance of relying on a r ange of energy sources ► Other r egula tions tha t affect the power sector

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# EP A’ s T ask: Using the Clean Air Act Authority 1. Issue carbon pollution s ta ndar ds for new power plants ► 

### Proposal published in the Federal Register on January 8, 2014 • Informed by the more than 2.5 million comments received on the April 2012 proposal 

### • Reflects recent developments and trends in the power sector 

### • Public hearing held in Washington, DC on February 6, 2014

– Ov er 150 people testified in 2 concurr ent sessions – representing indus try

, en vir onmental gr oups, faith gr oups and the general public 

### • Comments may be submitted through March 10, 2014 

### 2. Issue carbon pollution s ta ndar ds for modified and re constructed power plants ► 

### Pr oposal: June 2014 ► 

### Final: June 2015

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### 3. Issue carbon pollution guidelines for e xis ting power plants ► 

### Issue federal guidelines for s tate s • Wo rk in partnership with s tates 

### • St ates will dev elop plans that set s tandards for e xisting sour ces 

### • St ates use EP

A guidelines as a r efer ence ► 

### Fe deral guidelines should build on st ates’ leadership and ex perience with pr ograms that reduce GHGs ► 

### Pr oposal: June 2014 ► 

### Final: June 2015 ► 

### St ates submit implemen tation plans t o EP A: June 2016 

# EP A’ s T ask Using the Clean Air Act Authority (cont.)

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# Af fe ct ed Sour ces ► 

### Fo ssil fuel - fir ed s te am gener ating units and integr ate d ga sification combined cy cle (IGCC) units that: ► 

### Ha ve a design heat input great er than 73 MW (250MMBtu/h) heat input of fossil fuel (either alone or in c ombination with an y other fuel); ► 

### Combust fossil fuel for mor e than 10% per cent of the a verag e annual heat input during a 3 - year r olling a verag e basis; and ► 

### We re co nstructed fo r the purpose of supplying, and supply , one third or more of its pot en tial electric output and more than 219,000 MWh net - electric output t o a utility distribution s ystem on an annual basis ► 

### Fossil fuel means natural g as, petr oleum, c oal, and an y form of solid, liquid or g aseous fuel derived fr om such mat erial for the purpose of creating useful heat

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# Af fe ct ed Sour ces (cont.) ► 

### Natur al g as - fir ed s tationary combustion turbines that: ► 

### Ha ve a design heat input t o the turbine engine great er than 73 MW (250 MMBtu/h); ► 

### Combust over 90% natural g as on a heat input basis on a 3 - year ro lling a verag e basis; and ► 

### We re co nstructed fo r the purpose of supplying, and supply , one third or more of its pot en tial electric output and more than 219,000 MWh net - electric al output t o a utility distribution syste m on a 3 - year r olling a verag e basis

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# Af fe ct ed Sour ces (cont.) ► 

### ≈ 1,212 utility boiler s at 536 facilities ► 

### ≈ 827 c oal - fired boiler s at 373 facilities ► 

### ≈ 33 oil - fired boiler s at 17 facilities ► 

### ≈ 352 g as - fired boiler s at 172 facilities ► 

### 4 IGCC plan ts curr en tly oper ating in the U .S. ► 

### ≈ 1,516 stat ionary combustion turbines at 526 facilities ► 

### Includes in ve stor - owned, publicly - owned and rur al cooper ative EGUs ► 

### 175 st ate/local jurisdictions ar e estimated to own E GUs that ma y be affect ed by this action ► 

### See Appendix A for list of pot en tially impact ed st ate/local jurisdictions

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# Po we r Plan ts Cov er ed by the E GU GHG Rule

**9 Source:**  National Electric Energy Data System (NEEDS 5.13) (EPA, November 2013) **Note:** This map displays facilities that are included in the NEEDS 5.13 database and that contain at least one coal, oil or gas - fired steam generating unit, or combustion turbine that generates more than 25 megawatts of power. This includes coal - fired units that burn petroleum coke and that turn coal into gas before burning (using integrated gasification combined cycle or IGCC). NEEDS reflects available capacity on - line by the end of 2015; this includes committed new builds and committed retirements of old units. In areas with a dense concentration of facilities, the facilities on the map may overlap and some may be impossible to see.

# Clean Air Act Section 111 ► 

### Authoriz ed in 1970 ► 

### Es ta blishes a mechanism fo r contr olling air pollution fr om stat ionary sour ces ► 

### Applies t o sour ces for which the Administr ato r, in her judgmen t, finds “ca uses, or c on tribut es signific an tly t o, air pollution which ma y r easonably be an ticipated to endanger public health or welfar e” ► 

### Can apply t o new

, e xisting , modified and rec onstruct ed sour ces ► 

### Mor e than 70 s tationary sour ce categories and subcategories ar e curr en tly r egulated under section 111 ► 

### A full list of sour ces regulated under section 111 c an be found in 40 CFR P art 60

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## CAA Section 111(b) for Modified & R econs truct ed Sour ces ► 

### Fe deral st andards for rec onstruct ed and modified sour ces are set fo llowing the same pr ocess used t o set st andards fo r new sour ces ► 

### St andards reflect the degree of emission limit ation achiev able thr ough the applic ation of the best s ystem of emission reduction (BSER) that the Administr ato r det ermines has been adequat ely demonstrated ► EP A ma y dis tinguish among classes, types and siz es of sour ces ► In determining BSER, EP A ma y take into account: • Te chnical feasibility of the s ystem • Implementation costs • Amount of emission r eductions • Promotion of adv anced t echnology ► 

### Modific ation – a ph ys ic al chang e that increases the sour ce’ s maximum achiev able hourly ra te of emissions ► 

### Re co nstruction – when a single pr oject replaces c omponen ts and exc eeds 50 per cent of the fixed c apit al c os t that would be required to co nstruct a c omparable en tirely new facility , and it is t echnologic ally and ec onomic ally feasible t o meet the applic able standards

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# CAA Section 111(d) fo r Exis ting Sour ces ► 

### Emission guidelines for e xis ting sour ces ar e set by EP A ► 

### Dif fe rent appr oach for achieving emission reductions than the appr oach used for new

, r ec onstruct ed and modified sour ces ► 

### EP A est ablishes (1) a pr ocedure for s tate s t o issue performance sta ndards fo r e xisting sour ces and (2) guidance about the appr opriat e level of the st andard ► 

### EP A has est ablished section 111(d) regulations for 5 sour ce cate gorie s • Sulfuric acid plants (acid mist) • Phosphate fertiliz er plants (fluorides) • Primary aluminum plants (fluorides) • Kraft pulp plants (total reduced sulfur) • Municipal solid waste landfills (landfill ga ses)

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# CAA Section 111(d) fo r Exis ting Sour ces (cont.) ► 

### Emission guidelines (cont.) ► 

### Common elemen ts of past guidelines • Description of Best System of Emission R eduction (BSER) that has been adequately demonstr ated • Degr ee of emission limit ation achiev able, costs and en vironmental impacts of application • Time r equir ed to implement • Other information to facilitate dev elopment of state plans • A goal for r eductions – or “sta ndar d of performance” – based on a BSER analysis ► 

### Section 111(d) is br oad by design ► 

### Re co gnition that e xisting sour ces do not ha ve as much fle xibility as new ones t o build emission c on tr ols in to their design ► 

### Pr ovides greater fle xibility t o EP A and st ates to design a pr ogram in co nsult ation with a diver se rang e of s ta ke holder s

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# CAA Section 111(d) fo r Exis ting Sour ces (cont.) ► 

### How section 111(d) has worked: ► 

### Pr eviously est ablished guidelines ha ve not prescribed t echnology that must be used t o c omply ► 

### Once EP

A set the guidelines, st ates developed section 111(d) plans establishing standards of performance for the c overed sour ces in their st ate ► 

### St ates submitte d section 111(d) plans t o EP A for r eview and appr ov al ► 

### Aft er ev aluating the plans, EP A t ook action thr ough notice and co mmen t rulemaking ► 

### EP A has authority t o pr escribe a plan for a st ate in c ases wher e the state fa ils t o submit a satisfact ory plan and t o enfor ce the pr ovisions of a plan in c ases wher e the st ate fails t o enfor ce them

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# CAA Section 111(d) fo r Exis ting Sour ces (cont.) ► 

### How state plans ha ve worked: ► 

### St ates determine the c ombination of measures that will meet the guidelines ► 

### St ate plans set st andards of performance • Can be identical to EP

A’ s guidelines 

### • Can differ from, but be equiv alent to , EP A’ s guidelines ► 

### St ate plans pr ovide for implemen tation and enfor cement • St ates ha ve had fle xibility when applying the s tandard of performance in their plans to take into consider at ion, among other fact ors, the re maining useful life of the sour ce ► 

### Timeframe to submit st ate plans has been set by EP A in the guidelines

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# St akeholder Outr each ► 

### EP A has eng ag ed in e xt ensiv e stakeholder outr each ► 

### Will inform the emission guidelines and st andards development ► 

### EP A held 11 public list ening sessions in Oct ober & November 2013 • Mor e than 1,600 people spoke ► 

### EP A pr ovided multiple opportunities t o eng ag e with each st ate • EP A officials met with s tate leaders, including gov ernors, en vironmental commissioners, energy officers, public utility commissioners and air dir ect ors ► 

### Other st akeholder s EP

A officials ha ve met with include: • Electric utility associa tions 

### • Electric grid oper ators 

### • Labor unions

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# St akeholder Outr each (con t.) ► 

### Other st akeholder s (c on t.): • Leaders r epr esenting large and small indus tries

– Utilities and utility industry r epr esentativ es

– Energy industry r epr esentativ es (e.g., coal and natur al g as interests)

– Companies of

fe ring te chnologies to reduce/prevent carbon pollution (e.g., r enewable energy and energy ef ficiency interests)

– Re pr esentativ es of energy intensiv e indus tries (e.g., ir on and steel, and aluminum) 

### • En vironmental justice org aniz at ions 

### • En vironmental gr oups 

### • Re ligious orga niz at ions ► 

### EP A es ta blished a new email account called “Carbon P ollution Input ” to which over 2,000 emails pr oviding stakeholder input ha ve been submitte d

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# St akeholder Outr each (con t.) ► 

### Ke y messag es fr om st akeholder s ► Broad agr eement that opportunities e xist to lower the carbon emissions of power generat ion thr ough a wide r ange of measur es • Measur es implement able at the sour ce • Measur es implement able acr oss the br oader power generation system ► Multiple opinions about how br oader system measur es could fact or into pr ogr ams • Syste m - wide measur es factored into the goals EP A establishes • Syste m - wide measur es allowed fo r compliance, but not factored into goals ► Va ried views reg ar ding form and s tringency of sta ndar ds • Rate - based versus mass - based • Provide states flexibility to choose among multiple forms of the goals or to set their own goals • Goal stringency should vary by st ate to account for differ ent cir cumstances

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# St akeholder Outr each (con t.) ► 

### Ke y messag es (cont.) ► Gener al support for giving s tates fle xibility • Re cogniz e e xisting pr ograms and achievements in r educing CO 2 emissions

– Allow state plans to take into account the reductions already achieved • Allow compliance options that permit the use of appr oaches that ar e outside the facility fence line (e.g., demand - side management) ► Broad agr eement that states need mor e time t o dev elop and submit plans • Necessary due to legislative/r egulatory schedule in man y states • Wo uld allow and pr omot e multi - state and r egional pr ograms and cooper ation ► Support for fle xibility in the timing of s tate plan implementation and compliance with goals • Accommodat es diverse CO 2 re duction pot ential • Supports appr oaches that ar e mor e cost - effective ► Gener al concern that rulemaking could ha ve neg at iv e impacts on: • Jobs and r atepa ye rs • Re liability of power • Utilities (e. g., stranded generation assets) **19**

# Modified Sour ces ► 

### Tr igg er : Ph ysical chang e that r esults in an incr ease in the ma ximum potential hourly emission rate ► 

### Po te nt ial r egulatory appr oaches ► 

### Boiler s/IGCC units • EG U case - specific numerical standard • National standard ► 

### Combustion turbines • Numerical sta ndar d ► 

### EP A doesn’t pr oject an y modified EGUs ► 

### Historically

, few EGUs ha ve notified EP A that they ha ve modified - an increase in the hourly r ate for pollut an ts most oft en r esults fr om an increase in the ability t o c ombust fuel ► 

### Increases in a pollut an t that ar e a result of the inst allation of a pollution c on tr ol t echnology ar e not c onsidered NSPS modific ations (pollution c on tr ol pr oject e xe mption ) **20**

# Re co ns truct ed Sour ces ► 

### Tr igg er: Fix ed capital cost of the new components for a single pr oject mus t ex ceed 50 per cen t of the fix ed capital cost that would be r equir ed t o construct a compar able new facility ► 

### Po te nt ial r egulatory appr oaches ► 

### Boiler s/IGCC units • Ef ficiency standard based on combustion technology • Considering separ ate standards based on EGU siz e ► 

### Combustion turbines • Numerical standard ► 

### EP A doesn’t pr oject an y r ec onstructed EGUs ► 

### Aware of one E GU that has trigg ered reconstruction and it was the result of an industrial accident (Hawthorn P ower Plan t in K ansas City , MO)

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# Exis ting Sour ces ► 

### Emission guidelines will set s tate - specific goals ► 

### Goals will likely be r ate - based ► 

### St ates wo uld be able t o c on vert t o mass - based goals ► 

### Wo uld pr ovide fle xibility and acc ommodat e ex isting st ate mass based pr ograms ► 

### Goals would not include an assumption of CCS ► 

### St ate plans including CCS would g et credit for it ► 

### Setting goals – Po te nt ial design appr oaches ► 

### Sour ce - based appr oach • Emission r eduction measur es tha t could be taken dir ectly by power plants ► 

### System - based appr oach • Broader portfolio of measures including those taken beyond power plants but s till re duce emissions atpower plants **22**

# Exis ting Sour ces (cont.) ► 

### Setting goals – Po te nt ial options to r educe emissions ► 

### Supply - side options • Actions a t power plants that reduce/avo id CO 2 emissions

– Heat rate improvements/energy efficiency at the E GU

– Fuel swit ching to a lower - emitting fuel or co - firing with a lower - emitting fuel

– Re - dispat ch of E GUs based on CO 2 emission rate

– Re new able energy portfolio r equir ements ► 

### Demand - side options • Actions a t locations wher e electricity is used, as well as tr ansmitted and dis tributed, that lower electricity demand

– End - use energy efficiency r equir ements and pr ograms

– Demand - side management pr ograms

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# Exis ting Sour ces (cont.) ► 

### Appr oach for s tate p lans -- consider ations ► 

### Timing of submitta ls ► 

### Use of e xisting state and multi - state pr ograms ► 

### Use of r egional plans/partner ships ► 

### Timing of r eductions -- consider ations ► 

### St ates ar e at different sta ge s in impr oving CO 2 

### emissions ► 

### Time needed to a tta in emission reductions v aries based on type of emission reduction measure used ► 

### Time needed fo r legislative appr ov al if r equired

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# Ques tions? ► Project/Progr am lead: Bob W ay land • (919)541 - 1045 • w ay land.r obertj@epa.gov ► Te chnical leads: Chris tian Fellner • (919)541 - 4003 • fe llner .chris tian@epa.gov Nick Hutson • ( 919)541 - 2968 • hutson.nick@epa.gov ► Feder alism Contact: Andr ew Hanson • (202)564 - 3664 • hanson.andr ew@epa. gov **25**

# Appendix A

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# St ate & Local Gov ernmen ts Po te ntially Subject

to R egulation **OWNERSHIP TYPE –**  **MUNICIP AL**  **tings Utilities (NE)** Alabama Municipal Electric Authority Chanute Municipal Electric Utility Floydada TX (City of) Alexandria LA (City of) Chaska Public Utilities Freeport Inc (Village of) Algona Municipal Utilities Chillicothe Municipal Utilities Fremont Department of Public Utilities Alta IA (City of) Clarksdale Water & Light Department Gainesville Regional Utilities American Municipal Power Inc. Coffeyville Municipal Light & Power Garland Power & Light Ames Municipal Electric System Colorado Springs Utilities Geneseo Municipal Utilities Anaheim CA (City of) Colton Electric Utility Department Gillette WY (City of) Atlantic Municipal Utilities Columbia Water & Light Glendale W ater & Power Austin Energy Connecticut Municipal Electric Energy Coop Graettinger Municipal Light Plant Austin Utilities Conway Corp Grand Haven Light & Power Azusa CA (City of) Coon Rapids IA (City of) Grand Island Utilities Bancroft Municipal Utilities CPS Energy Great Falls MT (City of) Banning Electric Division Dalton GA (City of) Greenville Electric Utility System Braintree Electric Light Department Delaware Municipal Electric Corp Hamilton Department of Public Utilities Brownfield Municipal Power & Light Detroit Public Lighting Harlan Municipal Utilities Brownsville Public Utility Board Dover DE (City of) Hastings Utilities (NE) Bryan Texas Utilities Eldridge IA (City of) Henderson Municipal Power & Light Burbank Water & Power Farmington NM (City of) Higginsville Municipal Utilities Cedar Falls Utilities Fayetteville Public Wo rks Commission Hingham Municipal Light Plant Cerritos (City of) Florida Municipal Power Agency Holland Board of Public W orks

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# St ate & Local Gov ernmen ts Po te ntially Subject

to R egulation (con t.) **OWNERSHIP TYPE –**  **MUNICIP AL**  **tings Utilities (NE)** Holyoke Gas & Electric Department Laurens IA (City of) North Attleborough Electric Department Hudson Light & Power Department Lincoln Electric System North Carolina Eastern Municipal Power Agency Hutchinson Utilities Commission Littleton MA (Town of) Northern Municipal Power Agency Illinois Municipal Electric Agency Los Alamos County Omaha Public Power District Imperial Irrigation District Los Angeles Department of Wa ter & Power Orlando Utilities Commission Independence MO (City of) Lubbock Power & Light Department Orrville OH (City of) Independence Power & Light Lyndonville Electric Department Osceola AR (City of) Indiana Municipal Power Agency Manitowoc Public Utilities Owensboro Municipal Utilities Intermountain Power Agency Marquette Board of Light & Power Pasadena W ater & Power Department Jamestown Board of Public Utilities Marshfield Electric & W ater Department Peabody Municipal Light Plant JEA Massachusetts Bay Transmission Authority Ponca City OK (City of) Jonesboro W ater & Light McPherson Board of Public Utilities Provo City Corp Kansas City Board of Public Utilities Michigan South Central Power Agency Redding Electric Utility Keys Energy Services Milford Municipal Utilities Reedy Creek Improvement District Kissimmee Utility Authority Montezuma Municipal Utilities Richmond Power & Light Lafayette Utilities System Morgan City LA (City of) Riverside Public Utilities Lake Worth Utilities Municipal Electric Authority of Georgia Rochester Department of Public Utilities Lakeland Department of Electric W ater Utilities Muscatine Power & W ater Roseville Electric Lamar Utilities Board Nebraska City Utilities Sacramento Power Authority Lansing Board of Wa ter & Light New Hampton Municipal Light Plant Santa Clara CA (City of)

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# St ate & Local Gov ernmen ts Po te ntially Subject

to R egulation (con t.) **OWNERSHIP TYPE –**  **MUNICIP AL**  Santee Cooper West Bend IA (City of) Sikeston Utilities West Memphis Utility Department South Eastern Electric Development Corp. Winfield KS (City of) Spencer Municipal Utilities WPPI Energy Springfield MO (City of) Wyoming Municipal Power Agency Springfield Water, Light & Power Department St George Department of W ater & Power Sumner Municipal Light Plant Tallahassee FL (City of) Taunton Municipal Lighting Plant Terrebonne Parish Consolidated Texas Municipal Power Agency Tipton IA (City of) Tulia TX (City of) Turlock Irrigation District Utah Municipal Power Agency Vero Beach Municipal Utilities Vineland NJ (City of) Waverly Light & Power Webster City IA (City of)

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# St ate & Local Gov ernmen ts Po te ntially Subject

to R egulation (con t.) **OWNERSHIP TYPE –**  **ST AT**  **E** California Department of Water Resources Grand River Dam Authority Lower Colorado River Authority Michigan Public Power Agency Missouri Joint Municipal Electric Utility Commission New York Power Authority Northern California Power Agency Oklahoma Municipal Power Authority **OWNERSHIP TYPE –**  **SUBDIVISION** Arkansas River Power Authority Calhoun Port Authority Connecticut Resource Recovery Authority Heartland Consumers Power District Kansas Power Pool Kentucky Municipal Power Agency Kings River Conservation District Lafayette Public Power Authority Louisiana Energy & Power Authority Massachusetts Municipal Wholesale Electric Co. Missouri River Energy Services Modesto Irrigation District Municipal Energy Agency of Nebraska Nebraska Public Power District Northern Illinois Municipal Power Agency Platte River Power Authority PUD No 1 of Clark County Sacramento Municipal Utility District Salt River Project Southern Nevada W ater Authority Utah Associated Municipal Power System Western Minnesota Municipal Power Agency

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