.>1: .

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STEVEN L. BESHEAR LEONARD K. PETERS GOVERNOR SECRETARY 1 d1IV` 

ENERGY AND ENVIRONMENT CABINET 

OFFICE OF THE SECRETARY

500 MERO STREET

12T" FLOOR, CAPITAL PLAZA TOWER

FRANKFORT, KY 40601

TELEPHONE: (502) 564-3350

FACSIMILE: (502) 564-3354

www.eec.ky.gov

October 22, 2013 ^, a '^. 

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Gina McCarthy, Administrator ^,^ v A 

US Environmental Protection Agency — ^ 	-s- ^?^ ``' a} 

1200 Pennsylvania Avenue, N.W. ^ r; 

Washington, DC 20460 a''

Dear Administrator McCarthy: 

First, thank you and your staff for meeting with Governor Beshear and me last month to discuss 

several issues of mutual concern. 

As you know, Kentucky has numerous problems and concerns with the EPA's proposed rule on 

CO,, emissions relating to new power plants, and we will be further voicing those concerns as that process 

unfolds.

In regard to the upcoming proposed rule concerning existing power plants, on behalf of Governor 

Beshear, I am providing a white paper for discussion of coinpliance options under Section 1 I I(d) ofthe 

Clean Air Act. As you indicated during our Septembei- 19, 2013 meeting, states will be an integral part of 

the EPA's process to develop guidelines for the existing source rule under Section 1 1 I(d). 

A framework such as the one outlined in the attached document provides needed flexibility, and 

yet is an effective, equitable, and cost-effective approach. It considers the vast differences among states in 

their resource potential and current generation portfolio; and more importantly for states like Kentucky, it 

does not lead to an al1-out replacement of coal-fired generation with natural gas generation, as we contend 

would occur under a less flexible approach. 

Since President Obama's goal is to reduce carbon dioxide emissions, and not simply favor one 

fossil fuel over another, compliance options that take into account demand and supply-side energy 

efficiency and renewable and other low-carbon generation sources must be allowed. This sample 

framework includes these options. Furthermore, our analyses demonstrate that greater emissions 

reductions can occur under such a flexible, mass-emissions approach (reducing total average emissions) 

when compared with a rigid standard that simply places an emissions threshold of tons per unit of energy 

on electric generating facilities. For national energy and economic security purposes, electric generation 

resource diversity is crucial, and the only way to ensure such diversity while reducing emissions is to 

avoid a rigid target. 

KentuckyUnbridledSpirit.com K^^^ An Equal Opportunity Employer M/F/D 

BRIOLED SPIRIT 
Gina McCarthy, Administrator 

October 22, 2013 

Page No. 2 

Kentucky is committed to reducing its greenhouse gas emissions, but we will not put our citizens 

and industries in the untenable position of having to forego economic prosperity to achieve these 

reductions. We are also committed to working with you and your staff in the coining weeks and months 

as you develop guidelines in advance of the June 2014 deadline. Our framework is not a formal proposal, 

per se—it is meant to guide our discussions with you and to demonstrate that we can achieve reductions 

to meet President Obama's goals in a meaningful mannei- that does not jeopardize our state's economy. 

As the state most-dependent on coal-fired generation and one with the most energy-intensive 

manufacturing economy, Kentucky has much at stake if national policies do not take into account the 

variations among the states in establishing existing source guidelines. We look forward to discussing the 

framework we have outlined at your earliest convenience. We truly appreciate your sincerity and 

willingness to consider a broad array of options to meet Section 1 1 1(d) guidelines. 

Sincerely yours, 

d^( ^jt7Z^^__ 

L%onard K. Peters 

Secretary 

LKP:wh 

Enclosure 

cc:	Robert Perciasepe, Deputy Administrator 

US Environmental Protection Agency 

Gwen Keyes-Fleming, Chief of Staff 

US Environmental Protection Agency 

Janet McCabe, Acting Assistant Administrator for the Office of Air and Radiation 

US Environmental Protection Agency

r
Greenhouse Gas Policy 

Implications for 

Kentucky under 

4&6 Section 111(d) of ,

N^..^^^t the Clean Air Act 

i

Commonwealth of Kentucky 

Energy and Environment Cabinet 

October 2013
Technical Contacts 

Several individuals contributed to this document; the principal authors are:


Kenya Stump, Division for Air Quality, Department for Environmental Protection; Aron Patrick, Department 


for Energy Development and Independence; and Karen Wilson, Energy and Environment Cabinet. 

Correspondence regarding the contents of this document may be addressed to: 


lohn Lyons


Email: John.lyonsCa?ky.gov
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013

TABLE OF CONTENTS 

Preface....................................................................................................................................................1 

1 ntroduction ............................................................................................................................................4 

CleanAir Act Section	111	..............................................................................................................4 

Rate-Based Versus Mass-Emissions Strategies ..............................................................................5 

Kentucky's Proposed	Framework ...........................................................................................................9 

ComplianceOptions .............................................................................................................................11 

Demand and Supply-Side Energy Efficiency .................................................................................12 

Renewable Electricity and	Fuel Switching ...................................................................................12 

CarbonOffsets .............................................................................................................................12 

Identified	EPA Opportunities for State Flexibility .................................................................................13 

NSR/PSD	Regulatory	Issues	.........................................................................................................13 

Regional or National Market Based on COZ Programs .................................................................14 

Verification and Quantification of EE ...........................................................................................14 

Conclusions..........................................................................................................................................15 

AppendixA	...........................................................................................................................................16 

Kentucky's Current COZ Performance Status ...............................................................................16 

Proposed Kentucky Fossil Fleet Changes .....................................................................................17 

AppendixB	..........................................................................................................................................18 

Kentucky's Current and Future Estimates of Fossil Fleet CO 2 Mass Emission Reductions ........... 18 

Analyses.......................................................................................................................................18 

For 2020, state/regional target emission rate ....................................................................19 

For 2025 and thereafter, state/regional rate target emission rate .....................................19 

Table5	Calculations .....................................................................................................................19 

AppendixC	...........................................................................................................................................21 

Current	Large-Scale CCS	Projects .................................................................................................21

TABLES AND FIGURES 

Table 1: Electricity Intensity by State, 2012 ............................................................................................ 3 

Table 2: Total Emissions Reductions Estimated Through Possible Compliance Options by 2020.........13 

Table 3: Kentucky Fossil Fuel Baseline Generation, 2012 .....................................................................16 

Table 4: Kentucky Fossil Fleet Target Emission Rate under NRDC Proposal .........................................16 

Table 5: Kentucky Current CO2 Emission Rate Profile ........................................................................... 16 

Table 6: Projected Fossil Fleet Generation Changes .............................................................................17 

Table 7: Kentucky Projected Fleet CO z Profile Compared to NRDC Proposal .......................................17 

Table 8: 2012 MW-h and CO z Emissions by Fuel Type ..........................................................................20 

Figure 1: Electricity Consumption per State GDP Dollar ......................................................................... 2 

Figure 2: CCS Cost Variation Among Different Generating Sources ........................................................6 

Figure 3: Emission Reductions Based on NRDC Benchmarks, Fossil Fleet Only ......................................7 

Figure 4: Emission Reduction Requirements by State Based on NRDC COz Emission Benchmarks, 

TotalFleet ......................................................................................................................................8 

Figure 5: U.S. COz Emissions Forecasts, 1990-2050 .............................................................................. 10 
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean AirAct 

October 2013

PREFACE 

As a cornerstone of his Climate Action Plan, President Barack Obama has directed the U.S. Environmental 

Protection Agency to establish carbon dioxide emission standards for new and existing power plants. EPA 

has indicated it is seeking state input in developing these standards under Section 111(d) of the Clean 

Air Act for existing power plants. In response, Kentucky presents the following framework, developed 

through extensive analysis and economic modeling. This framework complies with the legal provisions of 

Section 111(d) while ensuring Kentucky can reduce emissions in the most cost-effective manner. 

By comparing two divergent approaches to an emissions re- 

"The flexibility afforded to states	

duction program—a rate-based versus a mass emissions—our 

under Section 111(d) is crucial to crafting analyses demonstrate why the latter is not only more effecgreenhouse gas regulations and poli-	

tive at achieving stated goals for reducing emissions but does 

cies that enable strong state economies	

so in a more equitable manner considering the differences 

while capitalizing on diversity among the among states with their existing generating portfolios. The 

states."	

flexibility afforded to states under Section 111(d) is crucial to 

crafting greenhouse gas regulations and policies that enable 

strong state economies while capitalizing on diversity among the states. The framework details strategies that reduce greenhouse gas (GHG) emissions to meet the President's goals through a combination 

of demand-side energy efficiency and conservation, electric generating unit (EGU) process upgrades and 

improvements, fuel switching and EGU diversification, and carbon offsets. 

Kentucky's position urging EPA to adopt a mass-emissions approach over a rate-based approach arises 

from a thorough analysis of how variations in states' generating portfolios, energy intensity and leading 

economic sectors are intricately linked. Each state and its economy are different and unique. One way of 

measuring these differences is through the amount of electricity required to generate a dollar of state 

gross domestic product (SGDP). It is intuitive that manufacturing states and those with a substantial industrial component will be higher by this measure. Consumer states without a significant manufacturing 

base will benefit from those energy expenditures in states with a strong manufacturing base, and these 

more service-oriented states will have lower state electricity generation and consumption. 

These differences among producer and consumer states have resulted from numerous historic factors, 

and they illustrate how states have developed based on their geographic and natural resource srrengths. 

Kentucky is an example of this—with vast coal resources allowing for low-cost and reliable electricity and 

with the geographic accessibility to major population centers, energy-intensive industries have located 

within the state. These industries provide a large share of the manufactured products used throughout 

the country. A state like New York has thrived through a more service-oriented economy. Each state's 

strengths provide benefits nationally, and actions that are detrimental to an economic engine in one 

state can have negative impacts throughout the country. 

Figure 1 and Table 1(on Pages 2 and 3) show this aspect of individual state economies over several decades. In Figure 1, each dot represents the kilowatt hour per dollar of SGDP (kw-h/$SGDP) for each state 

in each year. This measure varies more than four-fold from the highest to the lowest. Producer states 

like Kentucky cluster on the high end at about 0.5 kw-h/$SGDP, while primarily consumer states like New 

York and California are on the low end at about 0.13 kw-h/$SGDP. 

Page 1
91

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Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013 

It is a likely corollary that if these producer states did not have low electricity rates there would be even 

less manufacturing in the U.S. today. It is incumbent that, as federal policies for greenhouse gas (GHG) 

emissions reductions are proposed and implemented, these differences among the states be an essential element of the discussions and deliberations. Given President Obama has stressed rejuvenating the 

nation's manufacturing economy, which must rely heavily on reliable, affordable electricity, these considerations align with the overall objectives of the administration. 

Kentucky's historically low and stable electricity prices have fostered the most electricity-intensive 

manufacturing economy in the United States, making Kentucky particularly vulnerable to future electricity price increases. A 2012 study predicted a 25 percent increase in electricity prices would be associated 

with a net loss of 30,000 full-time jobs, primarily in the manufacturing sector.' Greater increases in 

electricity prices would have even greater impacts on job losses. 

Figure 1: Electricity Consumption per State GDP Dollar 

Electricity Consumption per State GDP Dollar, 1963-2012


Kentucky vs. the United States 

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Kentucky Energy Database, EEC-DEDI, 2013 

Data Source: EIA Forms 861 & 826 & BEA GDP by State 

1 Kentucky Energy and Environment Cabinet. (2012). The Vulnerability of Kentucky's Manufacturing Economy to Increasing 

Electricity Prices. Department for Energy Development and Independence, Frankfort. 

http://energy.kv.zov/Programs/Documents/Vulnerability%20of%20Kentucky's%20ManufacturinQ%20Economy.pdf

Page 2
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013 

Table 1: Electricity Intensity by State, 2012 

Rank State

Electricity Intensity 

kWh of E/ectricity 

Consumption per Real 

GDP

Rank State

Electricity Intensity 

kWh of E/ectricity 

Consumption per Reol 

GDP 

1 Kentucky 0.541 27 Nevada 0.277 

2 Mississippi 0.503 28 Texas 0.274 

3 Alabama 0.496 29 Michigan 0.274 

4 West Virginia 0.468 30 Washington 0.260 

5 South Carolina 0.467 31 Virginia 0.259 

6 Wyoming 0.465 32 Pennsylvania 0.253 

7 Arkansas 0.449 33 United States 0.249 

8 Idaho 0.424 34 Oregon 0.247 

9 Oklahoma 0.386 35 Minnesota 0.240 

10 Indiana 0.368 36 Utah 0.240 

11 Tennessee 0.368 37 Maine 0.227 

12 Louisiana 0.366 38 Illinois 0.216 

13 Montana 0.359 39 Vermont 0.212 

14 Missouri 0.336 40 Colorado 0.207 

15 North Dakota 0.334 41 Maryland 0.205 

16 Georgia 0.320 42 Delaware 0.185 

17 Nebraska 0.318 43 New Hampshire 0.177 

18 lowa 0.316 44 Rhode Island 0159 

19 Ohio 0.314 45 New Jersey 0.157 

20 New Mexico 0.304 46 Massachusetts 0.142 

21 Kansas 0.304 47 Hawaii 0.140 

22 Florida 0.296 48 California 0.136 

23 North Carolina 0.296 49 Connecticut 0.135 

24 Arizona 0.296 50 Alaska 0.130 

25 South Dakota 0.294 51 New York 0.124 

26 Wisconsin 0.277 52 District of Columbia 0.108

Page 3
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013

INTRODUCTION 

In developing our proposed framework, we analyzed the potential implications on Kentucky and other 

states for addressing carbon dioxide emissions from existing power plants using various policy options, 

with the assumptions that: 

• Each major GHG emissions sector will contribute proportionately to any overall emissions 

reduction strategy. 

• Greenhouse gas emissions from transportation sources will be handled through federal regulations such as Corporate Average Fuel Economy (CAFE) standards. 

• Proportionate GHG emissions from other non-electric generating unit (EGU) emitting sources 

will be handled under other EPA-proposed regulations. 

• EGU-equivalent emission reductions in Kentucky will be met through emission reductions at the 

source, reductions through efficiency and conservation, and carbon offsets. 

"The transition to lower emission 

sources should not be a sole trade-off 

between one type of carbon fuel (coa1) 

for another (natural gas)."

As with other landmark environmental policies, greenhouse 

gas regulations for the electricity generating sector will be 

a pivotal point for many states as they transition to cleaner 

sources of energy. However, the transition to lower emission 

sources should not be a sole trade-off between one type of 

carbon fuel (coal) for another (natural gas). Our proposed 

framework avoids such a scenario as it encompasses flexible mechanisms that ultimately favor a diverse 

energy portfolio that will include renewable and other low-carbon sources and energy efficiency. 

Kentucky, as with many other states, is already implementing policies and programs that lead to reduced 

greenhouse gas emissions across sectors. These activities include a substantial emphasis on energy 

efficiency as it is the least-cost method for reducing emissions across end-use sectors. For example, 

Kentucky's stated goal of ineeting 18 percent of electricity demand through energy efficiency by the year 

2025 is well on target. Our proposal builds upon these activities and aligns them with Section 111(d) 

regulatory obligations. In addition to programs and policies, electricity market forces combined with 

regulations on other air emissions are moving Kentucky's generation portfolio toward reduced greenhouse gas emissions. 

With these combined factors, Kentucky and many other states are positioned to achieve the President's 

stated greenhouse gas emission reduction goals when combined with what we urge are flexible, achievable standards through requirements for existing plants under Section 111(d). From 2005 emission 

(evels, Kentucky's fossil fueled power plants have achieved 7 percent reductions as of 2012 (see Appendix B). A mass-emission reduction standard affords all states the maximum flexibility to use each state's 

unique current and future energy resources to support the economies of each state. 

Clean Air Act Section 111(d) 

Section 111(d) obligates EPA to prescribe regulations for a state to submit a plan to establish standards of 

performance for any existing sources. Under Section 111(d), EPA sets guidelines for these standards, but 

the states have the responsibility to apply the requirements for existing sources. States have broad

Page 4
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013 

flexibility to implement Section 111(d) standards; however, EPA retains approval authority and the 

ability to regulate if a state fails to submit a satisfactory plan. To ensure flexibility is afforded in establishing standards, Section 111(d)(1)(B) states that EPA shall allow the state to take into consideration, among 

other factors, the remaining useful life of the existing source when applying a standard of performance. 

Ultimately, the state-specific plan is submitted as a State Implementation Plan (SIP) to EPA for approval. 

A key element to Section 111 is the definition for "standard of performance" 

The term "standard of performance" means a standard for emissions of air pollutants which reflects the 

degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any non-air quality health and 

environmental impact and energy requirements) the administrator determines has been adequately 

demonstrated. (CAASection 111(a)) 

"While Carbon Capture and Sequestration (CCS) technology is criticol to 

the reduction of C01 levels from fossil 

fuel-based power plants, it is not yet 

commercially proven in the primary 

large-scole application for which it is

Of note are the terms "achievable" and "adequately demonstrated" For greenhouse gases under Section 111(d), any 

control technology requirements proposed by EPA would 

have to meet these conditions, and EPA would have to provide justification on why it believes technology exists to allow 

the sector to meet a particular standard. 

envisioned—electric power plants fueled Of concern is whether the technologies to capture and seby coal or natural gas."	

quester COZ from existing sources will be deemed achievable 

and adequately demonstrated by the EPA in establishing the 

Section 111(d) standards. While Carbon Capture and Sequestration (CCS) technology is critical to the reduction of COz levels from fossil fuel-based power plants, it is not yet commercially proven in the primary 

large-scale application for which it is envisioned—electric power plants fueled by coal or natural gas. See 

Appendix C for the status of current carbon capture projects in the United States. 

The energy requirements of current CO z capture systems are roughly 10 to 100 times greater than those 

of other environmental control systems employed at a modern electric power plant. For existing power 

plants, such as those in Kentucky, the feasibility and cost of retrofitting CO z capture systems depend 

heavily on site-specific factors such as the plant size, age, efficiency, type and design of existing air pollution control systems, and availability of space to accommodate a capture unit. To obtain comparable 

GHG emission reductions, the cost of retrofitting an existing power plant with CCS technology is higher 

than the cost of a new NGCC without CCS ($116 per MWh versus $77 per MWh) (Figure 2). 

Rate-Based versus Mass Emissions Strategies 

Traditional performance standards have been technology-based and ultimately tied to achieving the 

National Ambient Air Quality Standard (NAAQS) for a pollutant. In the case of CO z and existing coal 

electricity generating units, there is no NAAQS or readily available technology to guide any CO z performance standard. In the absence of a NAAQS, much discussion is focused on a rate-based approach, with 

emission levels from a natural gas combined cycle unit (which are one-half the emissions of a typical coal 

unit) serving as a surrogate target. 

Page 5
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean AirAct 

October 2013 

Figure 2: CCS Cost Variation Among Different Generating Sources Z 

■ LCOE w/o CCS, S/Mwn 

160 150	

151	

■ LCOE w/CCS, $/MWh 

140	

Avoided Cost, $/tonne CO2 

140

121

114	

116 

120 11

103 

95 ^,u 100 

L 85	85 ^ 0 77 

80 68 

o u° 60 

V -p 

- ^ 60 

-o 

> Q

40 27 

20 

0

New IGCC New Post- New Oxy- New NGCC RetrofitPostCombustion	Cornbustion	 Combustion 

ICOE--leveii:ed Cost of Eleetricity is a cost of ge nerating eietricity for a particular system. It is an economic assessment of tix cost of the 

energy-generating system inciuding atl the costs over its lif et-me: initial investme nt, ope rations and maintenance, cost of fuel, cost of capitai.

An emission rate standard is one where the emission level is established in relationship to a raw material input or production output. An example of this approach is one where the rate-based standard is 

expressed as allowable CO Z emissions per unit of electricity generation output (MW-h) as has been done 

with the recently proposed NSPS for new EGUs. These types of standards are in comparison to the second option of a mass-emission reduction standard. A mass-emission standard establishes a quantity or 

mass of pollutant to be reduced from a baseline level. Mass-emissions standards are often expressed as 

a percent reduction of the mass (tons) of pollutant (CO). 

Our analyses (see details in Appendix A), using benchmarks established in the Natural Resources Defense 

Council's (NRDC) 2013 report Closing the Power Plant Carbon Pollution Loophole, show that Kentucky's 

economy would be negatively affected by a traditional rate-based emissions threshold, and more importantly, we will have not achieved the level of emissions reductions that could occur through a more 

flexible mass-emissions reduction strategy. Kentucky is not alone in this regard. Therefore, we urge EPA 

to examine the results of this analysis and consider the implications in its rulemaking for existing sources. 

The traditional rate-based approach would likely force Kentucky's utilities to retire their coal units— 

which currently provide more than 90 percent of Kentucky's electricity—and build new natural gas fired 

generation. Kentucky would simply go from being primarily dependent on one fossil energy source (coal) 

2 Report of the Interagency Task Force on Carbon Capture and Storage, August 2010.

Page 6 
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013 

to being primarily dependent on another fossil energy source (natural gas). The costs for ratepayers 

would be high, renewable and efficiency opportunities would not achieve their full potential, and the 

amount of greenhouse gas emission reductions achieved in the aggregate would be less than that specified by the President's goal. 

Our analyses also show that Kentucky and a few other states carry a disproportionate burden relative to 

other states. The charts are based on benchmarks applied to the fossil-fuel portion of a state's electricity 

generation fleet (Figure 3) and to an entire fleet, including renewables (Figure 4). 

Figure 3: Emission Reductions Based on NRDC Benchmarks, Fossil Fleet Only 3 

NRDC Carbon Dioxide Emission Reduction Requirements by State, 2012-2030 

^ 50 , 

^ ND. f41T. WY, KS !	46 - 49% 

Q a) 

ct^ KY ♦ 44°r° 

(n

rz 

2 40

IL, NE, IA. SD , IN, WV, MO 38 - 44% 

U 

7

WI, CO. MN, NM 

^ • 

^ ND, MT, WY, KS. IL ' 31 - 36% TN. OH. UT. MD • 

cn AR, AZ. MI, SC, NC .	

30 - 36% 

^ 30 KY it 30.3%

^ NE. IA. CO. SD. WI, MO 1 

E

25 - 30% IN, WV, MN, NM i 

w

N

ND • 23%	

° TN. AZ ; 22 - 23 h GA. PA, OK. TX • 21 - 24% i 0 () `ZQ MT, WY, KS 1-21 % OH. AR • 20%

AL, WA 

^ IL	17%	 j UT, MD, MI 

^

°	 18 - 19% KY	

16.s^ 0 LA .	1s^ sc• 16°r° 

N NE. CO, IA, SD, WI ^ 13 - 16%	

TX, NC, OK j 12 - 14% NH .	13.5% 

LL l 0 MO, IN, NM, MN, AZ, WV	10 - 11%	

WA , 10°6 FL •	10% 

a)^ ^

LA• 8% TN. AR ^ 6- 8%	

GA, PA 1-^6.5% • MS •	

o 6 /o 

c AL. NHf -5% 

V OH, TX, MI, UT. MD ^ 2- 5% OR, VA •	3% 

a Q 24 States • 0%	 15 States . 0% 11 States .	0% 

2020	2025 2030 

Kentucky Energy Database, EEC-DEDI, 2013 

Percentage Change Required from 2012 EPA Ciean Air Markets Program Data, Queried 9/1/2013

3 Figure 3 illustrates the approximate minimum percentage reductfon of total simple carbon dioxide emissions from utility-scale 

electricity generation in 2012 required for each state to be able to achieve the emission rates proposed by the NRDC in each 

benchmark year from 2020 to 2030 and beyond. Emissions data for 2012 were collected by state and year from the Continuous Emissions Monitoring Systems available in the EPA Clean Air Markets Program Database. The effective NRDC emission rates 

benchmarks for each state were calculated using the formula specified in Appendix A and 2005 net electricity generation data 

from fossit fuel units (coal, natural gas, and petroleum) per the Power Plant Operations Report available in the U.S. Energy Information Administration, Form EIA-923. Alaska and Hawaii were excluded from this analysis because comparable 2012 emissions 

data were not available for these states from the EPA Clean Air Markets Program Database. 

Page 7 
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013 

Figure 4: Emission Reduction Requirements by State Based on NRDC CO 2 Emission Benchmarks, Total Fleet 

NRDC Carbon Dioxide Emission Reduction Requirements by State, 2012-2030 

50 

^ 

=3 42.7% 0 KY 

^ a^ 40 403%0 wY 

^ 37 8% 0 MN 

C 36 8% ^♦ W 

^ 347% 0 ND 

U 

7

33.5%	RM 

^ 30 o'"o 29.1 %^ KY ze ^% i 

c 

^ 

N

25.5%	WY -24.0% ! OH NE. KS U _

E

224%	WV W 20 211%	

IN 

NM. ND O

-18.5% 

^ 15.3% 0 KY u 8% 0 co 

^ 13 5% 0 M0. UT -114%	M. OK 

f9 122% ^ N c 1 Q 107%^ qvy 

^ U 

a 56% ^ p! -6.0%, OH. NE. KS 6.3%	T% 5^ e^y 

3.5% ^ NM 3.2% ^ Mi 

20% ^ ND 21% ^ MT 

Q 0% • 43 States 0% 0 37 States 0% 0 30 states 

2020 2025 2030 

Kentucky Energy Database, EEC-DEDI, 2013 

Percentage Change Required from 2012 EPA Clean Air Markets Program Data, Queried 9/1/2013

"While natural gas is currently relatively 

inexpensive, locking ourselves into a 

single fuel economy poses significant 

risks in the future as natural gas prices 

increase, as they would be expected to 

do with a substantial increase in demand 

from the utility sector."

States should not be placed in a position of choosing between 

energy efficiency and renewable energy versus a fossil fueled 

fleet that becomes dependent on yet another single source 

of fuel, natural gas. In either of the rate-based approaches 

depicted in Figures 3 and 4, Kentucky is faced with significant 

challenges in meeting the 2020, 2025 and 2030 target fossil 

fleet rates. 

Such an approach is not realistic because it is not feasible or 

appropriate to assume that coal facilities would be in a position to cost effectively add on control equipment to reduce adequately the pounds of CO z generated per MW-h produced or have the means to 

sequester those emissions. Furthermore, a rate-based standard that uses natural gas—specifically combined cycle systems—as a surrogate for add-on CO z control technologies is one that unfairly advocates 

for a single fuel economy. This approach would force coal plant conversions to natural gas in the absence 

of available proven technology.

Page 8 
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013 

As shown, a rate-based standard can either be a force for electric generating unit efficiency upgrades or 

a push to an alternative fuel. At this time, the market favors the fuel of choice being natural gas. While 

natural gas is currently relatively inexpensive, locking ourselves into a single-fuel economy poses significant risks in the future as natural gas prices increase, as they would be expected to do with a substantial 

increase in demand from the utility sector. 

These scenarios not only have significant implications for the nation's manufacturing economy, but they 

also place a burden on many states that continue to struggle with a slow economic recovery. As the nation is only slowly emerging from a severe economic recession, such a regulatory scheme would not be 

in the best interests of the nation and does not offer states the amount of flexibility necessary to successfully implement Section 111(d). 

KENTUCKY'S PROPOSED FRAMEWORK 

Kentucky proposes an equitable and cost-effective approach that provides the needed flexibility to comply with a Section 111(d) plan. In the absence of control technology for existing EGUs, compliance options include offsets, demand-side energy efficiency, renewables and other low-carbon fuels, and supplyside efficiency improvements. Our proposed framework will diversify Kentucky's electricity generating 

portfolio, reduce emissions, and benefit the economy. 

Kentucky has identified the following objectives for the framework outlined below: 

• Utilize mass-emission reductions from the fossil fueled electricity generating sector as the 

primary mechanism for addressing greenhouse gases in Kentucky. 

• Ensure that the fossil fueled electricity generating sector has the time and resources necessary to 

transition to a cleaner fleet when necessary and appropriate. 

• Provide that the fossil fueled electricity generating sector has the flexibility to choose the leastcost method of achieving reductions. 

• Encourage diversity for Kentucky's electricity generation fleet. 

A mass-emission reduction standard provides state flexibility under Section 111(d) guidelines that 

encourage COz reduction from multiple pathways, achieves sustained greenhouse gas reductions, and 

encourages economic growth until the commercial availability of CCS technology has been demonstrated 

as feasible and cost effective on a large scale for the power sector. Such an approach also allows a state 

to take advantage of emission reductions achieved through coal-plant retirements and fuel-switching 

based on other existing Clean Air Act regulations. 

In a typical scenario, the EPA would set a NAAQS for greenhouse gases, and states would have at least 

three years to develop state implementation plans to demonstrate how they will attain and meet the 

NAAQS. These plans give states the flexibility to devise regulations to control sources within their own 

state. However, greenhouse gases, which are emitted from multiple sectors, including the transportation 

and industrial sectors, are unlike other pollutants where NAAQS have been established. Just as a NAAQS 

does not logically apply to regulating greenhouse gas emissions, a traditional rate-based regulatory 

framework has its limitations. 

Page 9
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013 

In the absence of a NAAQS, EPA is faced with calculating the amount of emission reductions required 

from the electricity generating sector to be protective of public health and the environment under 

111(d), taking into account other emission reduction sources and contributors. To date the only levels of 

overall emission reductions stated by the President have been a 17 percent reduction from 2005 levels 

by 2020 with an 80 percent reduction by 2050. EPA would still be in a position under 111(d) to demonstrate that these mass-emission reductions stabilize or reduce CO Z concentration in the atmosphere. 

Given the difficulty of this task and as an alternative, EPA could allow states the flexibility to determine 

emission reductions that are appropriate given each state's own fossil fuel portfolio mix, existing life of 

affected electricity generating units, market conditions, and renewable energy potential along with any 

quantifiable energy efficiency gains. This approach would help mitigate the potential adverse economic 

and social impacts to states that have a strong manufacturing base and allow a path forward to develop 

a plan that can ensure diversity in energy sources, cleaner sources of energy, as well as economic stability. 

Figure 5 illustrates that a mass-emission reduction standard is one that achieves sustainable reductions 

for the future, is not disproportionate among states, and can offer the tools for the development of 

state-specific programs considering state resources and economic conditions. Figure 5 juxtaposes the 

forecasted sum of state-level simple carbon dioxide emissions from electricity generation under the 

following three cases. The Reference case assumes that electricity generators in each state continue to 

emit COz at 2012 emissions rates, with anticipated growth, as calculated from the EPA Clean Air Markets 

Figure 5: U.S. COz Emission Forecasts, 1990-2050

Page 10
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013 

Program Database. The NRDC case assumes that fossil fuel generating stations in each state eniit carbon 

dioxide at the maximum rate proposed by the NRDC benchmarks using a 2005 baseline, while holding 

constant the proportion of each state's generating portfolio derived from fossil fuels to 2050. The Presidential Goal case assumes that each state achieves a 17 percent reduction by 2020, and 80 percent by 

2050, in simple carbon dioxide emissions from electricity generation from 2005 levels. 

Kentucky's framework contains the following provisions: 

1. Establish a statewide baseline COz level using the CO z emission from fossil fueled electric generating units from 2005. 

2. Establish the following baseline COZ reduction targets for 2020 (17 percent reduction), 2025 (28 

percent reduction), and 2030 (38 percent reduction). Beyond 2020, state-specific data as well 

as energy portfolio trends would be used to set additional reductions beyond 2020 achievable 

through demand-side and supply-side efficiencies, renewable and other low-carbon energy 

potential, offsets, and any control technology gains. The 2050 target is the 80 percent reduction 

goal proposed by President Obama. 

3. Obtain credit for CO2 reductions that have occurred from the baseline established in item 1, 

thereby allowing states to comply with baseline reduction targets established in item 2. 

4. Allow a suite of compliance options that would enable Kentucky to implement the least-cost 

method of ineeting reduction targets. These compliance options would include, but not be 

limited to: 

• Demand-side energy efficiency 

• Supply-side conservation or efficiency programs 

• Transmission upgrades 

• Renewable and other low-carbon energy projects at the affected source or at the 

consumer level 

• Carbon Capture and Sequestration (CCS) technology 

• Fuel switching to lower emitting fuels 

• Quantifiable and verifiable offsets 

• Participation in regional or national market-based CO Z credit-trading programs 

Establish an enforcement and monitoring mechanism whereby the state would be responsible 

for review, verification of emission estimates and reductions, and approval of the compliance 

options above. In addition, the state would be responsible for tracking statewide trends and 

projects. 

Compliance Options 

Potential compliance options available under Kentucky's 111(d) framework are outlined using findings 

from the Kentucky Climate Action Plan Council's (KCAPC) final report. ° The analyses used in developing 

the KCAPC report were conducted in partnership with the Center for Climate Strategies, and although 

some of the underlying assumptions have changed, the relative impact of various options' ability to 

reduce greenhouse gases and their relative cost are useful in understanding the benefits of a mass 

emission-based standard over a rate-based standard. Kentucky's Energy and Environment Cabinet is in 

4 Final report of the Kentucky Climate Action Plan Council, November 2011. httg://energv.kv.gov/carbon/r)ages/default.asr)x

Page 11
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013 

the process of developing the Kentucky Electricity Portfolio Model that will enable the agency to better understand the impact of changes to the state's electricity portfolio. Whether changes are driven by 

environmental regulations, state or federal policies, or economic market conditions, the cabinet will soon 

be able to determine the impact of the changes on price, fuel consumption, and ultimately jobs. 

Demand and Supply-Side Energy Efficiency 

Energy efficiency remains an essential element to Kentucky's 

framework because it is a cost-effective tool for reducing 

greenhouse gas emissions. When paired with more costly 

compliance strategies, the savings from energy efficiency can 

mitigate the cost of supply-side diversification. A standard 

that does not include efficiency as a primary compliance tool 

increases the compliance burden, as demonstrated in Table 2.

"Kentucky has a number of active 

energy-efficiency initiatives and has 

received broad stakeholder support for 

demand-side energy efficiency through 

its Stimulating Energy Efficiency in 

Kentucky (SEE-KV) program." 

Kentucky has a number of active energy-efficiency initiatives 

and has received broad stakeholder support for demand-side energy efficiency through its Stimulating 

Energy Efficiency in Kentucky (SEE-KY) program. As a result of this initiative, Kentucky, through the cooperation of utility and other stakeholders, is committed to reducing electricity generation by 1 percent 

annually between 2015 and 2020. 

Renewable Electricity and Fuel Switching 

Kentucky can realistically and cost-effectively increase its renewable electricity generation to 15 percent 

by 2030. Assuming Kentucky achieves just a third of this goal (5 percent) by 2020 and relies on mostly 

out-of-state wind along with some in-state hydro, wind, solar, and landfill gas-generated electricity, the 

state can avoid 7.4 MMt CO z e at a cost per ton of $11. 

Kentucky is already experiencing retirements of coal units, with much of the lost capacity being replaced 

by new natural gas combined cycle units. This level of fuel switching is realistic, even without stringent 

rate-based emissions standards. The table also includes estimated reductions of 800 MW of traditional 

coal generation were to be replaced with supercritical coal generation with 90 percent carbon capture 

and storage. 

Carbon Offsets 

Analyses on carbon sequestration through reforestation indicate this would be an achievable and affordable emission-reduction strategy. Reforestation of 22,700 acres of previously mined land by 2020 would 

avoid 0.02 MMt COZ e. An additional 142,000 acres of other (non-mined) land could be reforested in 

Kentucky by 2020 avoiding 0.55 MMt COz e by 2020. These reforestation estimates are conservative. We 

have initiated discussions with volunteer-driven organizations for reforesting 2 million acres over a 15 to 

20 year time period, with an estimated 2 to 3 tons of carbon dioxide capture per acre. 

Table 2 summarizes estimated emissions reductions and cost, based on analyses performed through the 

KCAP process, for each of these possible compliance options.

Page 12
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013 

Table 2: Total Emissions Reductions Estimated Through Possible Compliance Options by 2020 

Strategy MMt COze Avoided Cost/t COze ($2009) 

Supply-Side Efficiency 1.6 $8.0 

Demand-Side Efficiency 6.0 -$20 

Switch to 5% Renewable 

Electricity

7.4 $11 

Switch to 20% gas 8.7 $17 

Replace 800 MW with 

supercritical with CCS

2.3 $33 

Reforest Mine and Other Lands 1.6 $3.7 

Total 27.6 $9.3

These strategies demonstrate that a more holistic and less 

costly approach could be implemented to reduce overall 

greenhouse gas emissions, and offer a more effective tool 

than a rate-based emissions standard to help Kentucky 

achieve the President's stated emission reduction goals. In 

fact, a strategy that omits the benefits of supply and demand-

"Kentucky is positioned to spend less 

money while reducing more greenhouse 

goses using a suite of complionce 

options thot include effi'ciency ond 

carbon offsets." 

side efficiency and carbon offsets results in approximately 30 

percent less COz e reduced. Kentucky is positioned to spend less money while reducing more greenhouse 

gases using a suite of compliance options that include efficiency and carbon offsets. 

Identified EPA Opportunities for State Flexibility 

The framework outlined by Kentucky presents many opportunities for emissions reductions. The following discussion outlines areas of concern whereby EPA should provide flexibility under Section 111(d). 

NSR/PSD Regulatory Issues 

By establishing a flexible emission reduction framework, regulated entities are given an incentive to find 

the least-cost method to achieve compliance. Sources might invest in efficiency upgrades that would 

normally trigger PSD/NSR review. 

Kentucky is recommending that EPA consider implementing a mechanism for sources that opt to invest 

in efficiency upgrades and are not precluded from doing so by NSR/PSD permitting requirements, if 

those efficiency improvements are consistent with meeting Section 111(d) guidelines and do not jeopardize violation of an existing National Ambient Air Quality Standard. 

Page 13
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013 

Regional or National Market eased COz Programs 

Kentucky's proposed framework sets a statewide mass-emission limit that could be the foundation for 

an allocation program. If it is determined that allocating allowances is the best path forward in Kentucky, state authorities will have within its discretion to define if allowances will be sold (auctioned) or 

offered freely to the affected sources. In this program, holding of the allowances and credits becomes 

the de facto method of demonstrating compliance. In this policy scenario, sources that did not acquire 

sufficient auction allowances would be required to use the compliance options outlined to make up the 

difference between their auction allowances purchased and those allocated. 

Once the allowances are allocated to the source either via auction or free allocation, trading between 

the sources would be at the discretion of state authorities. Kentucky does not see an obvious benefit of 

a state-only trading program but believes that a federal or regional program potentially could provide 

added incentive for reductions among the sector. 

Kentucky's recommendation allows affected sources to participate in market-based programs. An EPA 

designed regional or national auction, banking, or trading program could help with state SIP development; however, Kentucky would encourage EPA to allow: 

• Offsets or credits within state boundaries that are consistent with the President's Climate Action 

Plan and the GHG Reporting Rule; 

• The ability to set a price floor on auction allowances; 

• The ability to determine a price ceiling on offsets; and 

• The ability of commonly owned affected sources to borrow credits among those under common 

ownership. 

Verification and Quantification of Energy Efficiency 

Kentucky's framework allows "credit" for energy efficiency programs. For approval of source compliance 

strategies as well as Section 111(d) SIP development, a more detailed approach on how to account for 

energy efficiency gains and how to translate them into CO 2 reductions must be developed. With no explicit guidance on how to accomplish this from EPA and no prior SIPs approved by EPA that include these 

measures, Kentucky would face significant hurdles in developing a strategy in the limited time between 

the final rule date of June 1, 2015, and the proposed June 30, 2016, SIP submittal date. 

Any strategy included in a proposal translates into a more formalized program to document, track and 

translate energy efficiency gains. For many states, this type of knowledge is not within state air quality 

programs. To lessen this gap, Kentucky is requesting EPA to develop specific approved methodologies for 

quantification and verification of energy efficiency program results. Without such methodologies, states 

are burdened with developing methods that may not be consistent nationwide.

Page 14
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013

CONCLUSIONS 

Without the flexibility afforded under the Clean Air Act Section 111(d) for a mass-emissions approach, 

Kentucky and other heavy manufacturing states will face serious economic impacts and job losses. We 

welcome the opportunity to engage the EPA with a framework that ensures Kentucky's economy and 

energy portfolios are not crippled by an unachievable, rigid performance standard and presents opportunities for a level playing field under Section 111(d). 

The market can be a powerful tool and provides needed flexibility for a sector that is faced with a lack 

of control options; however, market-based approaches can be labor intensive to operate and monitor in 

terms of the state's capacity to implement such a program. There is also great variability in market programs due to changing market conditions (technology advancement, price of fuels, renewable subsidies, 

etc.) which may yield unexpected results. These results ultimately may not be in line with state targets or 

goals. 

"It is imperative that EPA allow ample 

time and work in collaboration with 

states to design programs that are 

111(d) compliant but provide states the 

needed flexibility to ensure economic 

stability." 

increased diversity in Kentucky's electrii

— For Kentucky, this lends itself to a framework that places a 

priority on the flexibility of market systems such as declining 

caps, auctions, banking, trading, and offsets coupled with the 

enforceability of a mass-based emission limit both statewide 

and at the source. In the absence of control technology for 

existing EGUs, compliance options include offsets, energy effi 

ciency, renewables, and supply-side efficiency improvements. 

It is our expectation that this framework will yield results of 

:ity generating portfolio, a cleaner environment, and a thriving 

economy. 

However, in order to successfully implement the framework outlined, Kentucky also identifies that significant state resources must be utilized and that EPA guidance and flexibility on key issues would allow 

for a SIP development that is not overly burdensome on state agencies. It is imperative that EPA allow 

ample time and work in collaboration with states to design programs that are 111(d) compliant but provide states the needed flexibility to ensure economic stability. 

Page 15
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean AirAct 

October 2013

APPENDIX A 

Kentucky's Current COZ Performance Status 

Given that target emission rates are developed by including a state's baseline generation mix, the first 

task is to establish Kentucky's baseline fossil fuel generation. Table 3 represents what is currently operating (Year 2012) and does not include any speculation as to closures or fuel switching. 

Table 3: Kentucky Fossil Fuel Baseline Generation, 2012 

Fuel Type Generation MW-h % MW-h 

Coal 92,793,081 97.15% 

Diesel Oil 12,827 0.01% 

Pipeline Natural Gas 2,713,143 2.84% 

Total 95,519,051 100.00% 

The second task is to calculate Kentucky's fossil fleet average target emission rates using the NRDC 

proposal as a guideline. Table 4 shows Kentucky's NRDC emission target rates for 2020 and beyond 2025. 

Table 5 shows the weighted average for each fuel type in 2012. Table 5 also illustrates the best performing units in Kentucky by fuel type. For coal-based utilities, the best performing plant achieves 1,743 

pounds of COz per MW-h. For natural gas, the best performer achieves 1,094 pounds of COz per MW-h. 

Table 4: Kentucky Fossil Fleet Target Emission Rate under NRDC Proposal 

NRDC Kentucky 2015- NRDC Kentucky 2020- NRDC Kentucky 2025 & 2019 Target Emission 2024 Target Emission Beyond Target Emission Rate* (Ibs COZ/MW- Rate*(Ibs COZ/MW-h) Rate*(Ibs COZ/MW-h) h) 

1,777 1,485 1,194 

* Using a 2012 current fleet split of 97% Coal and 3% NG/Oil by MW-h 

generated 

Table 5: Kentucky Current COz Emission Rate Profile

Min (Ibs Max (Ibs 2012 Actual Fleet 2020 NRDC 2025 NRDC Target Fuel COZ/MW- COZ /MW- Averages* (Ibs Target Emission Emission Rate (Ibs Type h) h) COZ/MW-h) Rate (Ibs COZ/MW-h) COz/MW-h) 

Coal 1,743 2,472

Natural 1,094 1,836 Gas 

Oil 1,595 1,661 11	

11	f,

Fleet 1,951 1,485 1,194 Average

*Weighted average 

based on MW-h 

generated

Page 16 
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013 

Proposed Kentucky Fossil Fleet Changes 

Given what is known about future power plant retirements and speculative conversion, Table 6 updates 

Table 3 and shows projected fleet generation mix by fuel type. Table 7 builds upon the fossil fleet generation changes in Table 6 and shows the projected CO z emission rates by fuel type as compared to the 

NRDC targets. Table 4 calculated a baseline Kentucky fleet average of 1,950 pounds of CO z per MW-h. 

The fleet average in Table 7 of 1,800 pounds of CO2 per MW-h shows improvements; however, when 

compared to NRDC targets, a significant gap still remains. 

Table 6: Projected Fossil Fleet Generation Changes 

Fuel Type % of MW-h 

Coal 83.02% 

Diesel Oil 0.01% 

Pipeline Natural 

Gas

16.96% 

Grand Total 100.00% 

Table 7: Kentucky Projected Fleet CO Z Profile compared to NRDC Proposal 

Fuel Type	Projected 2020 NRDC Target 2025 NRDC Target 

Averages (Ibs Emission Rate (Ibs Emission Rate (Ibs 

COz/MW-h) COZ/MW-h) COz/MW-h) 

Coal	 •. ^	^r ^^	s 

Diesel Oil

Pipeline Natural

Gas

Fleet Average	1,800 1,485 1,194

Page 17
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013

APPENDIX B 

Kentucky's Current and Future Estimates of Fossil Fleet CO, Mass Emission Reductions 

2005 2012 Scenario #1* Scenario #2* Scenario #3** 

2020 2025 2030 

Million Tons 

of CO2 

Emission 

data from 100.2 93.2 80.30 72.94 62.11 

CAMD Acid 

Rain 

Database 

% Reduction ° -6.99/° -19.83% -27.23% -38.00 

from 2005

*Speculative changes in electricity generating portfolio based on internal discussions 

with stakeholders 

** Kentucky 111(d) framework target benchmark based on President's goal 

Analyses 

This paper utilizes NRDC's benchmarks to analyze a rate-based approach for analysis purposes. Under 

the rate-based approach analyzed, there is a statewide target fossil fleet average emission rate with specific benchmarks for coal and oil/gas units. States like Kentucky with more carbon-intensive fleets would 

have higher target emission rates but a greater differential between starting emission rates and their 

ta rgets. 

The NRDC benchmarks for state fossil fuel generation fleets established for 2015 to be met by 2020 

include 1,800 pounds of COz per MW-h for coal units and 1,035 pounds of COz per MW-h for natural 

gas and oil units. By 2025, the benchmarks are 1,500 pounds of COZ per MW-h for coal units and 1,000 

pounds of COz per MW-h for natural gas and oil units. By 2030, fleet coal units must achieve 1,200 

pounds of COz per MW-h and the natural gas benchmarks remain the same. The formula for calculating 

the state target emission rate is given below: 

1. For 2015-2019, state/regional rate =[1,800 Ibs/MW-h] x[baseline coal generation share of 

state region] +[1,035 Ibs/MW-h] x[baseline oil/gas generation share of state/region] 

2. For 2020-2024, state/regional rate =[1,500 Ibs/MW-h] x[baseline coal generation share of state 

region] +[1,000 Ibs/MW-h] x[baseline oil/gas generation share of state/region] 

3. For 2025 and thereafter, state/regional rate =[1,200 Ibs/MW-h] x[baseline coal generation share 

of state/region] +[1,000 Ibs/MW-h] x[baseline oil/gas generation share of state/region]

Page 18 
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act 

October 2013 

For 2020, state/regional target emission rate: 

=[1,500 Ibs/MW-h] x[baseline coal generation share of state/region] +[1,000 Ibs/MW-h] x 

[baseline oil/gas generation share of state/region] 

= (1500 Ibs/MW-h * 0.97) + (1000 Ibs/MW-h *0.03) 

= 1455 Ibs/MW-h + 30 Ibs/MW-h 

= 1,485 Ibs/MW-h 

For 2025 and thereafter, state/regional rate target emission rate: 

=[1,200 Ibs/MW-h] x[baseline coal generation share of state/region] +[1,000 Ibs/MW-h] x 

[baseline oil/gas generation share of state/region] 

=[1,200 Ibs/MW-h] x[baseline coal generation share of state/region] +[1,000 Ibs/MW-h] x 

[baseline oil/gas generation share of state/region] 

= (1200 Ibs/MW-h * 0.97) + (1000 Ibs/MW-h *0.03) 

= 1164 Ibs/MW-h + 30 Ibs/MW-h 

= 1,1941bs/MW-h 

Table 5 Caiculations 

The weighted mean of a set of data 1 X1 , X2 1 • • •i Xra f with non-negative weights 

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rx 

^i-1 uyixi x = n 

^i-1 wz 

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uy1 X1 + ZE12X2

+ . . . + 2Cl.nX.n 

^

w1

+ ?L12 -}- . . . + 'Z().11. 

For Table 5 calculations, the formula uses the MW-h for each fuel as the weight (W) and the individual 

fuel's Ibs COz/MW-H is the value (X) in the formula. This is illustrated with the 2012 data shown on Table 

8 on Page 21. For Table 7, the process is repeated using revised electricity generating fleet data to reflect 

shutdowns and conversions to natural gas. 

Page 19
Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean AirAct 

October 2013 

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Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean AirAct 

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