***E.O. 12866 Review– Draft– Do Not Cite, Quote, Or Release During Review ***

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**SECTION 2**  **CONTROL STRATEGIES 2**  **.1 Synopsis**  For this proposed GHG EGU NSPS , EPA considered a number of alternative emission control strategies. This section defines the source categories affected by the proposal, outlines regulatory actions considered in the analytical baseline, and describes the control strategies and regulatory alternatives for new, modified, reconstructed, and transitional sources. Existing EGU GHG sources are not addressed in this action , but will be the subject of a subsequent action by the EPA. **2 .2**  **Definition of Affected Sources 2** **.2.1 Electric Utility Generating Unit**  For the purposes of this rule, the EPA is proposing to define an EGU as any fossil fuel fired combustion unit that has the potential to produce more than 25 megawatts ( MW ) electrical output and serves a s a generator that produces electricity for sale, with the exception of simple cycle turbines. For this rule, the term EGU includes steam generating units (“boilers”), natural gas combined cycle (NGCC) combustion turbines and their associated heat recovery steam generator (HRSG) and duct burners, and Integrat ed Gasification Combined Cycle (IGCC, "coal gasification") units – including their combustion turbines and associated HRSGs. A unit that cogenerates steam and electricity or that cogenerates feedstocks (e.g., hydrogen or hydrocarbons from an IGCC) for chem ical or fuel production and supplies more than one -third of its potential electric output capacity and more than 25 MW output to any utility power distribution system for sale is also considered to be an EGU for purposes of this rule. **2 .2.2**  **New Sources** So urces affected by the new source provisions of the proposal are sources) that are both considered “EGUs” and are considered “new” as defined by this rule. In the general NSPS provisions (40 CFR Part 60) a new source is one that begins construction (or reco nstruction) after the date the provisions are proposed. For purposes of this rule the EPA is proposing several alternative definitions of “ new”. CAA section 111(a)(2) defines a “new source” as “any stationary source, the construction or modification of which is commenced after publication of regulations (or, if early, proposed regulations) prescribing a standard of performance under [CAA section 11 1] which will be applicable to such source.” In contrast, CAA section 111(a)(6) defines an “existing source” as***E.O. 12866 Review– Draft– Do Not Cite, Quote, Or Release During Review ***

2 - 2 11 -4 draft “any stationary source other than a new source.” The definition of a “new source” applies according to its terms for purposes of this rulemaking , except that special considerations come into play for sources undertaking physical or operational changes, transitional sources, and sources undertaking reconstruction. This proposal requires that all new fossil - fuel fired units of 25 megawatt or greater capacity be able to meet an emission rate standard of 1000 pounds of CO 2 per megawatt hour (lb CO 2/ MWh ) . It also proposes an alternative standard that would allow units to meet the 1000 lb CO 2/MWh standard using a 30 year averaging period. These standar ds could be met either by natural gas combined cycle generation or coal - fired generation using carbon capture and sequestration technology. **2 .2.3**  **Modified Sources** The EPA is not aware of any EGUs that would undertake actions defined as modifications. A modification is any physical change in, or change in the method of operation of, a source that increases the amount of any air pollutant emitted by the source or res ults in the emission of any air pollutant not previously emitted. However, the types of projects that these EGUs are most likely to undertake that could increase GHG emissions are projects that put on pollution controls required under other CAA provisions and that emit CO 2 as a byproduct, and those types of projects are specifically exempted from the definition of “modifications” under 40 CFR 60.14(e)(5). The EPA is soliciting comment on this issue, but in the meantime, the EPA is not proposing standards f or modifications. The EPA believes that it does not at present have adequate information as to the type of action, its costs, or the amount of its CO 2 emissions, to base a proposed standard of performance. Therefore, sources that undertake physical or oper ational changes that increase their maximum achievable hourly CO 2 emission rate will be treated as existing sources and thus not subject to the proposed EGU GHG NSPS requirements. **2 .2.4**  **Transitional Sources** In th is proposal, EPA identifies transitional sources as those sources that have received permits to construct, but have not actually commenced construction. EPA believes that there are approximately 18 such units (see Appendix 2 - A for a list of potential transi tional units) . Historically, obtaining a permit does not guarantee that a unit will end up being constructed. In the last 10 years, approximately 90 coal plants have been permitted. Of those, 40 (or less than half) have actually commenced construction. Thirty projects have been cancelled and approximately 18 sources (the transitional sources) have active permits. Based on this history, EPA believes that a number of units would not likely proceed to construction regardless of the***E.O. 12866 Review– Draft– Do Not Cite, Quote, Or Release During Review ***

2 - 3 11 -4 draft requirements of this r ule. For these units, this rule adds no costs. Furthermore, in its rule, EPA is proposing that as long as units commence construction within one year of the effective date of this proposal , construction can proceed without being affected by this rule. Fo r these units, this rule adds no additional costs and no benefits from the rule will accrue to society. EPA believes the units that are most likely to commence construction are those that have received government incentives to install CCS. These units wo uld be able to commence construction within the proposed rule time - frame. **2. 2** **.5 Reconstructed Sources**  The EPA’s CAA section 111 regulations provide that reconstructed sources are to be treated as new sources and, therefore, subject to new source standards of performance. The regulations define reconstructed sources as, in general, existing sources : (i) that replace components to such an extent that the capital costs of the new components exceed 50 percent of the capital costs of an entirely new fa cility, and (ii) for which compliance with standards of performance for new sources is technologically and economically feasible ( 40 CFR 60.15 ) . In theory existing power plants may reconstruct, however, EPA is not aware of any that have announced plans to do so. In addition to this provision being triggered rarely, t he costs associated with reconstructing unit s are likely similar to the cost of building a new unit . Thus , even if this provision is triggered, EPA believes that sources will make decisions that mimic those for new sources as previously discussed . **2.2.6 Existing Sources**  The affected source is any existing fossil fuel - fired EGU that is not a new EGU. For the purposes of this rule an existing EGU is defined as any fossil fuel - fired combustion unit that has the potential to produce more than 25 MW output and serves a generator that produces electricity for sale and was in operation or commenced construction on or before publi cation of this proposed rule. Existing sources are not covered in this proposed action , but will be addressed in a subsequent rulemaking by the EPA. **2.3 Analytical**  **Baseline** EPA used the Integrated Planning Model (IPM) v.4.10 to assess the baseline conditions described for the proposed new source performance standards . I PM is a dynamic linear programming model that can be used to examine the economic impacts of air pollution control policies for CO 2 and other air pollutants throughout the contiguous U.S. for the entire power system. The modeling conducted for this proposal is discussed more extensively in Section 7 of***E.O. 12866 Review– Draft– Do Not Cite, Quote, Or Release During Review ***

2 - 4 11 -4 draft this RIA. Documentation for IPM can be found in the docket for this rulemaking or at http://w ww.epa.gov/airmarkets/progsregs/epa

- ipm/index.html . For more information on the analytical baseline see Section 5 of this report. **2 .4**  **Control Strategies** This proposal requires that all new fossil - fuel fired units of 25 megawatt or greater capacity be abl e to meet an emission rate standard of 1000 pounds of CO 2 per megawatt hour (lbs CO 2/ MWh ) . It also proposes an alternative standard that would allow units to meet the 1000 lbs CO 2/MWh standard using a 30 year averaging period. These standards could be me t either by natural gas combined cycle generation or coal - fired generation using carbon capture and sequestration technology. **2 .5**  **Emission Reductions** As will be discussed in more detail in this RIA, the EPA does not anticipate that the proposed GHG EGU NSPS will r esult in notable CO 2 emission changes , energy impacts, benefits , costs , or economic impacts by 2020. T he EPA expects that owners of new units will choose technologies that meet these standards due to expected economic conditions in the mark etplace. Likewise, we believe this rule will no t have notable impact s the price of electricity, labor markets, or the general economy.***E.O. 12866 Review– Draft– Do Not Cite, Quote, Or Release During Review ***

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**Ap pendix 2**  **- A**  **– Transitional Units**  **Plant Name Size**  **CO 2**  **Mitigation Plan Location**  **Trailblazer 600 MW**  **CCS –**  **EOR (supercritical PC) TX**  **Taylorville 602 MW**  **CCS –**  **EOR/Geologic (IGCC) IL**  **Texas Clean Energy Project**  **400 MW CCS**  **– EOR (IGCC)**  **TX Sweeny Refinery**  **680 MW CCS**  **- EOR (IGCC, pet coke)**  **TX Cash Creek**  **Generation 761 MW**  **CCS -**  **IGCC KY**  **Power County Ad**  **vanced Energy Center**  **520 MW CCS**  **– EOR (IGCC)**  **ID Good Spring**  **270 MW CCS**  **– IGCC**  **PA Limestone 3**  **750 MW Ag**  **reement to capture or offset 50% of CO**  **2 (subcritical PC)**  **–**

**CCS ready TX**  **Holcomb 2 895 MW**  **None (supercritical PC) KS**  **White Stallion 1320 MW**  **None (subcritical CFB) TX**  **James De Young 78 MW**  **None (subcritical CFB) MI**  **Wolverine 600 MW**  **None (subcritical CFB) –**  **CCS ready**  **MI Coleto Creek**  **650 MW None (supercritical PC)**  **– CCS**  **ready TX**  **Las Brisas Energy Center**  **1320 MW None (subcritical CFB, pet coke)**  **TX Washington County**  **850 MW None (supercritical PC)**  **GA Longleaf**  **1200 MW None (subcritical PC)**  **GA Bonanza**  **110 MW None (subcritical CFB, waste**  **coal) UT**  **Two Elk 250 MW**  **None (subcritical PC, waste coal)**

**– CCS ready**  **WY** PC = pulverized coal CCS = carbon capture and storage CFB = circulating fluidized bed EOR = enhanced oil recovery IGCC = integrated gasification combined cycle***E.O. 12866 Review– Draft– Do Not Cite, Quote, Or Release During Review ***

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