## Summary	of	Interagency	Working	Comments	on	Draft Language	under

EO12866/13563	Interagency	Review.		Subject	to	Further	Policy	Review.
**Incentives for EGU Modification and Reconstruction Pages: ES** **- 4 and 6**  **- 2, and throughout document**  Page ES -4 States: “ Historically, the EPA has been notified of very few EGU NSPS modifications (for criteria pollutants) or reconstructions. As such, the EPA anticipates few covered units will trigger the reconstruction or modification provisions in the period of analysis. Therefore, based on the analysis presented in Chapter 4 of thi s RIA, the EPA anticipates that the EGU New, Modified, and Reconstructed Source GHG Standards will result in negligible CO 2 emission changes, energy impacts, quantified benefits, costs, and economic impacts by 2022. Accordingly, the EPA also does not antic ipate this rule will have any significant impacts on the price of electricity, employment or labor markets, or the US economy.” (Restated on 1 - 1 and 1 -4) Page 6 - 2 states: “ The EPA does not have sufficient information at this time to predict the full array of actions that existing steam generating units may undertake, including those in response to applicable requirements under an approved CAA section 111(d) plan. ” Some commenters are concerned that using historical data on modifications and reconstruction s may not be an accurate way to assess future decisions about reconstruction or modifications because incentives in the future may differ from historical incentives. Specifically, the commenters believe that forthcoming 111 (d) power sector regulations may change incentives that could cause historical data on EGU modifications and reconstructions to underestimate the number of future modifications and reconstructions that could occur . On page 6 - 2, EPA acknowledges that it does not have sufficient informati on to predict how existing units will respond to the disparity between standards for existing and new/modified/reconstructed plants. However, EPA does not discuss the possibility that if proposed 111 (d) standards for existing units are finalized at more s tringent levels than the 111 (b) standards for modified/reconstructed units, there would be a new incentive to trigger NSPS provisions that has not existed historically. This could result in motivation for existing steam units to make modifications that tr igger them to be subject to a less stringent standard (e.g. a modification or reconstruction). Commenters would appreciate seeing the data on which units have qualified as reconstructed and modified under NSPS section 111(b) and the PSD/NSR program, what actions those units took to qualify as modified or reconstructed, and the hourly CO 2 emission data if it is available . If EPA is un able to predict the range of actions that an existing unit might take, then in turn it does not seem plausibl e for EPA to be able to estimate that t he magnitude of the change in emissions due to these unknown actions is less than 10 percent . **RESPONSE:** EPA has chosen not to set a standard at this time for modifications with an impact on emissions of less than 10 percent, due in part to the lack of information on potential modifications. EPA

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Page **2** of **11** may choose to set a standard at a later time if sufficient data become available to support such a standard. This would include the behavioral changes suggested by the commenters. **Consideration of Enhanced Oil Recovery Page**  **s: 2 -**  **35 and 5**  **- 9**  (second instance) “Although the regulatory impact analysis for this rule relies on GS in deep saline formations, the EPA also recognizes the potential for securely s equestering CO2 via EOR.” “Furthermore, EPA believes the opportunity to engage in EOR opportunities is not significantly limited by the location of those opportunities or the current CO2 pipeline infrastructure (12 states currently have existing or under construction CO2 pipelines). Provision of electric power does not require coal- fired facilities to be co - located with the demand it is intended to serve.” In the preamble, EPA uses this same reasoning to show that geologic storage can be considered universally available since all facilities are either located in an area favorable to geologic storage or the electricity can be generated somewhere that is favorable to geologic storage . T he electricity can then be used to meet demand elsewhere. In the preamble, the cost for storage is taken into account for all CCS units. Therefore, based on the quote above it is reasonable to assume EOR is universally available in the same way that geologic storage is, and therefore the revenue from CO 2 sold for use in EOR should be taken into account for all CCS units. **RESPONSE:** In the illustrative analysis, we incorporate a range of costs both with and without EOR revenue. This shows the full range of pote ntial impacts, accounting for the possibility that the operators of a particular unit may choose not to sell CO 2 for use in EOR. However, we agree that it is most likely an operator would choose to use CCS to take advantage of the opportunity to see CO 2 fo r use in EOR. TECHNICAL COMMENTS **Page: 2 -**  **8, Footnote** “These three network interconnections are the western US and Canada, corresponding approximately to the area west of the Rocky Mountains; eastern US and Canada, not including most of Texas; and a third network operating in most of Texas. These are commonly referred to as the Western Interconnect Region, Eastern Interconnect Region, and ERCOT, respectively.” Suggest revising to clarify how the interconnections are defined. See edits that follow:

“These three network interconnections are the Western Interconnection, comprising the western parts of both the US and Canada (approximately the area to the west of the Rocky Mountains), the Eastern Interconnection, comprising the eastern parts of both the US and Canada (except those part of eastern Canada that are in the Quebec Interconnection), and the Electric Reliability Council of Texas (ERCOT) Interconnection, comprising most of Texas. ” [ Also suggest adding link to map of the interconnections, e.g., http://www.nerc.com/AboutNERC/keyplayers/Documents/NERC_Interconnections_Color_072512.jpg ]

## Summary	of	Interagency	Working	Comments	on	Draft	Language	under

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Page **3** of **11 RESPONSE:**  Text suggestions included in RIA. **Page : 2**  **- 9**  Th e statement “Transmission has generally been developed by the larger vertically integrated utilities that typically operate generation and distribution networks ” is not entirely accurate. Commenters s uggest revising the following paragraph as indicated below for accuracy with respect to changes in the industry.

“ Over the last couple of decades, several jurisdictions in the United States began restructuring the power industry to separate transmission and distribution from generation, ownersh ip, and operation . Historically, the transmission system ha d been developed by vertically integrated utilities , establishing much of the existing transmission infrastructure. However, as parts of the country have restructured the industry, transmission in

frastructure has also been developed by transmission utilities, electric cooperatives, and merchant transm ission companies, among others . Distribution, also historically developed by vertically integrated utilities, is now o ften managed by a number of utilities that purchase and sell electricity, but do not generate it. As discussed below, electricity restructuring has focused primarily on efforts to reorganize the industry to encourage competition in the generation segment of the industry, including ensuring open access of generation to the transmission and distribution services needed to deliver power to consumers. In many states, such efforts have also included separating generation assets from transmission and distribution assets to form distinct economic entities. Transmission and distribution remain price - regulated throughout the country based on the cost of service.” **RESPONSE:** Text suggestions included in RIA. **Page: 2**  **- 23**  “Table 2 -5 and Figure 2 - 17 show the CO2 emissions from the power sector relative to other major economic sectors.” Also, th e table and figure refer to GHG emissions rather than CO 2 emissions — please clarify . Also, the figure numbering (e.g. Figure 2 - 17) appears to be incorrect. **RESPONSE:** Text and figure numbering corrected in RIA. **Page: 2 -**  **30** “The only other industrial-scale electricity power sector CCS project currently under construction is the W.A. Parish Petra Nova CCS Project near Houston, Texas.” Please clarify if this is the only other project in the U.S. or in the world. DO E suggests revising as follows:

## Summary	of	Interagency	Working	Comments	on	Draft	Language	under

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Page **4** of **11** “The only other industrial-scale electricity power sector CCS project currently under construction **in the United States**  is the W.A. Parish Petra Nova CCS Project near Houston, Texas.” **RESPONSE:** Text suggestions included in RIA. **Page: 2 -**  **35** Commenters recommend that EPA update its IPM input assumptions on CO 2 storage costs and CO 2 transportation costs. In comments submitted to EPA on the on the Draft Rule, the Clean Air Task Force (CATF) provided a possible methodology for estimating 

### CO 2 storage costs that may better reflect the value of CO 2 used for EOR in different regions. 1 Commenters recommend that EPA consider a similar approach. Specifically, the value of CO 2 used for EOR range s from 1.25% to 2.5% of the price of a barrel of crude oil is cited in the literature (i.e. the CO 2 price in $/MCF is approximately 2% of the price of a barrel of crude oil), and t his approach is also supported by a number of sources reference d in the CATF c omment s . In addition, Advanced Resources International produced a 2011 report for NETL that provides an approximation of the relationship between crude oil prices and CO 2 market prices. Finally, commenters also recommend that EPA updat e the CO 2 transport at ion cost as sumptions in IPM. A NETL spreadsheet model for CO 2 transportation costs is available at the following location: http://www.netl.doe.gov/research/energy
- analysis/analytical
-tools - and - data/co2
-transport **RESPONSE:** Because the IPM basecase used in the RIA does not predict any non - compliant units will be built, incorporating these changes in the IPM basecase a t this t ime would have no material effect on the analysis or conclusions in the RIA. These comments and suggested data sources will be considered for inclusion in the next version (Ver 6.x) of IPM.

1 See, Clean Air Task Force, “ Comments and Technical Appendices for the Clean Power Plan - Carbon Pollution Emissions Guidelines for Existing EGUs, 79 Fed. Reg. 34,8 30 ,” P. 4, available at: http://www.catf.us/resources/filings/EGU_GHG_NSPS_Rule/CCS%20Assumptions%20Appendix%20A.pdf .

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Page **5** of **11 Page:**  **2 -**  **36** “An additional 23 states are within 150 miles of current EOR operations.” commenters suggest explain ing why 150 miles is used as the metric to identify states that are near current EOR operations. For example, are there currently a significant number of CO 2 pipelines that transport CO 2 at least 15 0 miles from source to sink? **RESPONSE:** We have revised the text to a distance of 100 kilometers (62 miles), which reflects the assumptions used in the NETL cost estimates. **Page: 3 -**  **2** , paragraph 2 Consider providing an example of research that makes a direct connection between climate change directly and human health and impacts. For example , consider adding the following sentence to the paragraph that cites the National Climate Assessment: “ Impacts on human health could include increased mortality and morbidity due to excessive heat, as well as a decline in labor capacity as a result of human heat stress in a warming world.” P otential references below: Fischer, E. M., and R. Knutti (2015), Anthropogenic contribution to global occurrenc e of heavy precipitation and high -temperature extremes, Nature Climate Change, 5(6), 560–564, doi:10.1038/nclimate2617. Dunne, J. P., R. J. Stouffer, and J. G. John (2013), Reductions in labour capacity from heat stress under climate warming, Nature Clima te Change, 3(4), 1–4, doi:10.1038/nclimate1827. RESPONSE: EPA prefers to cite only the major climate assessments (IPCC, NCA/USGCRP, NRC), which synthesize the literature, rather than choosing one or two specific articles on a given topic to represent the entirety of scientific knowledge on the topic. The quote already included in the RIA is the NCA’s key finding on health impacts in the U.S. Moreover, as noted in the first sentence of this paragraph, “The preamble also summarizes new scientific assessme nts and recent climatic observations.” The preamble provides discussion about heat wave impacts. However, we can also include a statement about IPCC’s findings on health impacts, e.g.: “The IPCC reported similar conclusions in its Fifth Assessment Report, finding that it is likely that adverse health impacts related to heat exposure are already being exacerbated by climate change and that, if unabated, climate change will lead to a greater risk of morbidity and mortality due to more intense heat waves, und ernutrition, and increased prevalence of food - and water- borne illnesses.” **Page: 3 -**  **7, Table 3**  **- 1** 

## Summary	of	Interagency	Working	Comments	on	Draft	Language	under

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Page **6** of **11** Commenters request that EPA check the 95% numbers presented in Table 3 - 1 . It appears that the rounding may have been slightly off when these numbers were converted to 2011 year dollars. In addition, were these numbers converted from 2008 to 2011 year dollar s or from 2007 to 2011 year dollar s? DOE recommends explaining what yea r dollar conversion was employed given the correction that will be released on these estimates in the near future. RESPONSE: Estimates were inflated from 2007$ to 2011$ using GDP implicit price deflator (1.061) and rounded to two significant digits in the table, consistent with other RIAs. Updated footnotes to clarify. **Page s**  **: 4** **- 2**  **to 4 -**  **3** “The natural gas combustion turbine standard, however, will only apply to units that will exceed a sales threshold on the amount of electricity generated that is sold to the electric grid. The purpose of the sales threshold criterion is to permit gas - fired combustion turbines that will operate as a combined heat and power (CHP) unit and only sell a small portion of the gross electricity generated to the grid to not have to meet the same emission standard as a combustion turbine unit designed primarily to generate electricity to be sold to the grid.” The commenter’s understanding of the Final Draft Rule preamble was that the sales threshold criterion is also intended to exem pt simple cycle peakers. Suggested edit: “The purpose of the sales threshold criterion is to permit gas -fired simple cycle combustion turbines and gas -fired combustion turbines that will operate as a combined heat and power (CHP) unit and only sell a small portion of the gross electricity generated to the grid to not have to meet the same emission standard as a combustion turbine unit designed primar ily to generate base and intermediate levels of electricity to be sold to the grid.” RESPONSE: Suggested text incorporated in the RIA. In addition it is unclear how the formula used for applicability ensures that CHP units described are excluded from the standard. Commenters request further clarity on how the applicability criteria achieve the purpose described here – specifically, how a unit designed primarily to generate electricity to be sold to the grid will meet the criteria but other units will not. RESPONSE: This section was revised in the RIA to more generally describe the purpose of the sales threshold (e.g., discussion no longer focused on CHP). A detailed description of applicability criteria can be found in the preamble. **Page: 4 -**  **1** Commente rs note that new builds for power plants tend to take 2 to 10 years to complete , depending on the technology and other issues, such as the time needed to site and permit the project . This analysis looks out 8 years into the future.

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Page **7** of **11 RESPONSE:**  The 8 year analysis period was selected based on the timeframe for review and revision of NSPS standards. While the primary analysis focuses on this 8 year timeframe, results are provided out to 2030 that support the conclusions in the RIA. **Pages: 4 -**  **1 and 4 -**  **7** “Some new coal-

fired units with federally-supported carbon capture and storage (CCS) are forecast to be constructed, though these units are expected to be compliant with their standards under this rule.” Suggest clarifying that these new units are not entirely federally funded. RESPONSE : RIA text amended to identify partial federal financial support. **Page: 4 -**  **8** “This has been a consistent finding in the AEO, which led EIA to conclude that “the low capital expense, technical maturity, and dispatchability of natural gas generation are likely to dominate investment decisions under current policies and projected prices.” This sentence contains a quote attributed to EIA. However, the footnote accompanying the quote cites the DOE’s 2011 Q uadrennial Technology Review, rather than an EIA document . The commenters suggest attributing this quote to DOE, as the quote appears to be a DOE characte rization of EIA’s projection . Further, the commenters note that the study referenced was published in 2011. RESPONSE : RI A text amended to reference it is a DOE conclusion and reference. **Page s**  **: 4 -** **9 to 4 -**  **13** If results are available, c onsider showing scenario modeling results th rough 2040 as this is the horiz on for the EIA’s Annual Energy Outlook (AEO) . RESPONSE : While IPM does create projections for 2040 and 2050, EPA consistently views these out years are less reliable than the IPM projections for 2020 to 2030. Because IPM is a forward looking optimization model assuming perfect foresig ht it is necessary to run the mod el for additional years beyond the time period needed for the analysis. **Page: 4 -**  **9 Table 4 -**  **1** Consider explaining the major differences in cumulative capacity additi ons comparing EPA (2020) and AE O 2014 reference case at 2020.

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EO12866/13563	Interagency	Review.		Subject	to	Further	Policy	Review.

Page **8** of **11** Comments: AEO 2014 de fines “distributed generation” as “primarily peak - load capacity fueled by natural gas” whereas this term is sometimes also used to refer to residential and commercial sector renewable energy capacity such as rooftop photovoltaic generation. Commenters reco mmend defining “distributed generation” in a footnote for clarity. RESPONSE: Footnote incorporated. The commenter also recommends defining in footnote 15 the technologies covered under the “Renewables” category for both IPM and AEO and indicating that this does not include residential and commercial scale renewable deployment. RESPONSE: Additional information added to footnote. The commenter believes that , unlike the AEO, IPM does not model distributed generation capacity expansion. If this is the case we recommend replacing the zero under EPA 2020 distributed generation with an “N/A” or a “– “ with text in the table footnote that reads: “IPM v5.14 does not model distributed generation capacity additions”. RESPONSE: Change made in RIA . **Page 4 -**  **11**

“ These measures, in conjunction with Federal financial incentives, are **among the** key drivers of the significant growth in n ew renewable energy seen over the past few years and expected over the next decade. ”

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Page **9** of **11** The commenter suggests editing text as indicated above. RPS and Federal incentives are not the only key drivers of renewable growth and projected growth. Capital cost decr eases and increases in performance of renewable technologies are also a major factor. Recommend adding text indicated above. 

### RESPONSE : RIA text amended **Page 4 -**  **12** A significant decrease in the capital cost of wind and solar power since 2010 has also been a key factor contributing to the current unfavorable coal deployment environment. Commenters recommend adding a fourth bullet point:

“ Renewable Cost and Performance Improvements – Significant decreases in capital costs have occurred for both wind and solar photovoltaic (PV) technologies in recent years. Since 2009 capital costs have fallen by over a third since 2009 for utility - scale PV, 2 44–50% for distributed PV, 3 and 28% for wind. 4 In addition, improvements in wind technologies has resulted in increased capacity factors for wind projects deployed in lower quality wind resource areas. 3 These trends have contributed to the increased deployment of renewables over the last few years and will continue to drive renewable power to be more competitive with coal than in the past.” 

### RESPONSE : Bullet text and footnote added

2 M. Bolinger and S. Weaver, "Utility- Scale Solar 2013," Lawrence Berkeley National Laboratory, Berkeley, CA, 2014. http: //emp.lbl.gov/publications/utility
- scale - solar- 2013 - empirical - analysis - project - cost - performance - and - pricing - trends 3 G. Barbose, S. Weaver and N. Darghouth, "Tracking the Sun VII: A Historical Summary of the Installed Price of Photovoltaics i n the United S tates from 1998 to 2013," Lawrence Berkeley National Laboratory, Berkeley, CA, 2014. http://emp.lbl.gov/publications/tra cking - sun - vii historical - summary- installed - price - photovoltaics - united - states - 1998 - 20 4 R. Wiser and M. Bolinger, "2013 Wind Technologies Market Report," Lawrence Berkeley National Laboratory, Berkeley, CA, 2014. http://emp.lbl.gov/publications/2013
- wind - technologies - market - report

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Page **10** of **11 Page**  **: 4** **- 13** 

Comments: The AEO 2014 numbers for the “Non - Hydro Renewables” row represent numbe rs that do include hydroelectric capacity additions. The commenter recommends changing the name of this column to “Renewables” and adding a footnote to indicate which technologies are covered. RESPONSE : Note added to table **Page: 4 -**  **24** It appears that SCPC and IGCC do not receive consistent treatment in figure 4 - 3. IGCC is presented in one case without a CUA and without CCS. However, SCPC is not presented in these same terms. Consider showing each fossil steam generating technology with a consistent set of CUA and CCS assumptions. RESPONSE: Additional data incorporated in Figure 4 - 3 . CCS not included for IGCC because we do not expect IGCC to meet the standard using CCS. **Page 5 -**  **1** (first instance of the page number)

“As explained previously, the power se ctor has moved away from the construction of coal- fired power plants in favor of natural gas - fired power plants **and renewable energy facilities** due, in part, to the significant cost differential. ” The commenters suggest editing text as indicated above. This harmonizes with the reasoning recommended on page 4 - 12. RESPONSE : text added **Page: 5**  **- 3**  (first instance of the page number ) In Table 5 - 1, the emission rate for new NGCC is given as 800 lbs/MWh
- net. This is significantly lower than the standard of 1,0 00 lbs/MWh
- gross (or 1,080 lbs/MWh
- net) in the preamble.

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Page **11** of **11** RESPONSE : EPA is drafting text for the preamble responding to this issue. **Page: 5**  **- 5**  (second instance of the page number ) In footnote 11, the projected natural gas price for 2022 is taken from the r eference scenario for AEO2013. The commenters suggest using AEO2014 if possible since those are the EIA runs that are compared to IPM runs elsewhere in the RIA. RESPONSE : AEO 2014 prices, adjusted to 2011$ for consistency with rest of the RIA. **Pages: 5 -** **9 to 5**  **- 10**  “There are two EOR opportunities evaluated in this section – ‘High’ and ‘Low.’ The high EOR opportunity assumes a CO2 sale price of $40 per metric ton; the low EOR opportunity assumes a CO2 sale price of $20 per metric ton based on assumptions us ed by NETL in evaluating potential EOR opportunities. For either opportunity, it is assumed that the facility is only responsible for the costs of transmitting the captured CO2 to the fence line, as is currently the practice. Costs for the transportation, storage, and monitoring (TSM) of CO2 are included in this analysis. For non - EOR applications, TSM costs of ~$5
-$15 dollars per ton of CO2 are applied based on the level of capture.” Are these the cost estimates used in the IPM model? RESPONSE : The se EOR cost assumptions are not used in the IPM model. The LCOE analysis in this section is based entirely on the NETL LCOE methodology, and does not use IPM at all. Text was modified to make this clearer, as well as to address other comments from inter- agency review.