# Y -M_

pennsylvania
DEPARTMENT OF ENVIRONMENTAL

PROTECTION Written Testimony of Vincent Brisini, Deputy Secretary Office of Waste, Air, Radiation and Remediation Pennsylvania Department of Environmental Protection on EPA's Proposed Carbon Pollution Emission Guidelines for Existing Stationary Sources; Electric Utility Generating Units ("Proposed Clean Power Plan Rule")
Docket ID No. EPA-HQ-OAR-2013-0602

July 31, 2014
Good Morning. I am Vince Brisini, Deputy Secretary for the Office of Waste, Air, Radiation and Remediation in Pennsylvania's Department of Environmental Protection (PA DEP). Thank you for the opportunity to testify on EPA's proposed Clean Power Plan Rule. This proposed rule was published in the Federal Register on June 18, 2014, underSection 111(d) of the Clean Air Act (CAA) to reduce carbon dioxide emissions from fossil fuelfired electric generating units (EGUs). The overall national target is equivalent to a 30 percent reduction from 2005 emissions from existing fossil fuel-fired EGUs. However, the proposed emission reduction goals for each state are established based on the 2012 emission intensity expressed as pounds of carbon dioxide (CO 2 ) per megawatt-hour of fossil fuel-fired electric generation. In Pennsylvania significant CO 2

emission reductions from EGUs have been achieved prior to 2012. EPA determined each individual state's emission reduction target using 2012 data for several "building blocks," including: 6 percent heat rate improvements at existing coal plants; redispatching existing natural gas combined-cycle plants to 70 percent capacity; increasing the use of renewable energy; ensuring the continued operation of nuclear plants; and enhancing energy efficiency programs. EPA's plan emphasizes that states will have flexibility in the means chosen to meet the carbon dioxide target goals, through these and other measures. However, with the exception of the heat rate improvements, the other measures only serve to shift generation away from existing coal-fired EGUs. Pennsylvania recognizes EPA's limited authority to regulate carbon dioxide emissions under the CAA. Our concerns relate to establishing CO 2 reduction targets under Section 111(d) that force the development of a State Energy Plan rather than the regulation of affected fossil
1fuel-fired EGUs. This is an unprecedented method of establishing control requirements for

existing sources from a source category that is subject to New Source Performance Standards under Section 111(b) of the CAA. Simply stated, Pennsylvania believes the Section 111(d) state plan should not be the State Energy Plan; rather, the Section 111(d) plan should be part of a state's energy plan. Pennsylvania has developed a White Paper entitled Recommended Framework for the Section 111(d) Emissions Guidelines Addressing Carbon Dioxide Standards for Existing Fossil Fuel

- Fired Power Plants. This White Paper was sent to EPA Administrator Gina McCarthy on April 10, 2014, and has received a significant amount of attention in the national press. In that paper we recommend, and now urge, that EPA establish emission guideline targets based upon actions that can be taken directly by operators at existing sources that would actually be subject to the Section 111(d) emission guidelines. This approach is consistent with previous emissions guidelines promulgated under the CAA by EPA for other source categories. We urge EPA to limit their definition of "Best System of Emission Reduction" (BSER) to actions that can be taken at the affected existing fossil fuel-fired EGUs, without redefining the source. That interpretation is consistent with how the U.S. Supreme Court recently viewed best available control technology in the UARG v. EPA case, which overturned EPA's Tailoring Rule. The court found that EPA guidance acknowledged that best available control technology may not be used to require reductions in a facility's demand for energy from the electric grid, which is the basis for the vast majority of the emissions reduction targets in the proposed emission guidelines. Historically, Section 111(d) emission guidelines mandated the BSER for each source. This approach would make each coal-fired EGU cleaner. However, under the proposed Clean Power Plan Rule EPA says it also means taking steps to replace coal-fired EGUs with other sources of electricity: more use of natural gas plants; more use of low carbon generators like hydro, nuclear, wind, and solar; and lowering electricity demand through energy efficiency from sources. Simply stated, EPA's interpretation of BSER is to force generation away from coal-fired power plants to other means of generating electricity and the elimination of some level of market demand for electricity. Pennsylvania questions EPA's authority to interpret the terms "best available control technology" and "best system of emission reduction" differently for the purpose of regulating a source under the CAA to reduce carbon dioxide emissions. It seems that both of these terms need to be interpreted consistently to ensure conformance with the CAA. Pennsylvania believes that EPA needs to carefully weigh this interpretation as it would establish a precedent for environmental regulation that would allow environmental regulatory agencies to establish programs that are more related to achieving desired social and economic outcomes rather than developing and implementing performance standards to achieve emission reductions from existing units. Pennsylvania believes these types of social and economic decisions should be made by elected officials. Pennsylvania is concerned that the Clean Power Plan Rule has moved EPA away from its traditional mission of environmental protection; the Agency is instead developing energy and social policy. For example, EPA's attempt to mandate a level of CO 2 emission reduction that isunachievable by existing power plants under Section 111(d) will force states to pursue "outsidethe-fence" emission reductions from non-affected sources and measures, such as renewable 2energy and demand-side energy efficiency mandates as the key compliance options. Using

these options from sources and activities that are not affected by Section 111(d) indicates a move away from traditional environmental regulations to the establishment of an overarching energy policy that picks winners and losers in the marketplace. Pennsylvania would ask EPA to consider if it is appropriate to use its regulatory authority in a manner that manipulates the free market that has reduced and continues to reduce CO 2 emissions. One of the principles of Pennsylvania's White Paper is the need for EPA to recognize state leadership and authority to regulate pollutants within their borders. This would ensure the preservation of the states' discretion in the development and implementation of flexible emission control programs that are consistent with the Congressional intent of Section 111(d) of the CAA. EPA has stated repeatedly that there is flexibility in the proposed Clean Power Plan Rule in that it allows states to develop their own compliance plans. Those compliance plans may, but are not required to, utilize any combination of the four "building blocks" identified in the proposed Clean Power Plan. However, Pennsylvania is concerned that any purported flexibility is illusory, and asks how flexibility can be achieved when EPA has already demonstrated that Pennsylvania will need to use all four building blocks to achieve an overall 31 percent reduction from the 2012 emission intensity to 1,052 pounds of CO 2 per megawatt-hour. It must be recognized that the proposed emission reduction goals for Pennsylvania cannot be achieved solely by inside-the-fence-line improvements at existing fossil fuel-fired EGUs, which is the only legal method to achieve these CO 2 emission reductions. From a practical standpoint, when EPA used all available measures to establish CO 2 emission reduction targets that are so far beyond the reductions that can be achieved by fossil fuel-fired power plants, the states have no other option than to use those same measures in the development of the State Energy Plan that would be required under the proposed Section 111(d) program. The Pennsylvania White Paper relates the importance of recognizing the inherent differences in rate-based versus competitive energy markets and the need to provide for electric grid reliability. The proposed Clean Power Plan Rule's natural gas redispatch, energy efficiency, and renewable energy "building blocks" are areas traditionally reserved to the sovereign authority of the states. To date, Congress has been unwilling to develop national renewable energy standards, recognizing the wide diversity of state laws in existence, and the disparate capabilities to deploy renewable resources among states. EGUs in states like Pennsylvania operate in a competitive energy market while EGUs in states like West Virginia operate in a rate-based market. This is one of many issues that need to be considered by EPA in a balanced way. For example, how will the Clean Power Plan Rule achieve economic and regulatory parity based on the expanding zone of influence that Regional Transmission Organizations have today? As an agency constrained by its statutory authority, how does EPA extend its regulatory reach to influence the decisions made by Regional Transmission Organizations? How does EPA expect state administrative agencies, like the PA DEP, to influence or regulate the decisions of these organizations?

3Importantly, Pennsylvania does not believe that environmental agencies should regulate

or influence energy markets and that energy markets should not be in the business of environmental regulation. Pennsylvania appreciates the opportunity to testify on the Clean Power Plan Rule. While the White Paper demonstrates that Pennsylvania does support efforts to reduce CO 2 emissions, we believe it must be done in a lawful manner that results in cleaner air, more jobs, and lower prices for consumers. If done in that fashion, the program could result in benefits to the entire economy — and the market then decides who will continue to operate, as only the most efficient and lowest emitting sources will be competitive. By unleashing efficiency improvements, emission reductions at existing power plants and other industrial sources will continue so long as a competitive marketplace continues to exist. I request that you include this detailed written testimony in the record along with a copy of the Pennsylvania White Paper, the Fact Sheet, and the PowerPoint slides for my testimony before the Pennsylvania Senate Environmental Resources and Energy Committee on June 27, 2014. Once again, thank you for providing the opportunity for Pennsylvania to testify on the proposed Clean Power Plan Rule. We will submit detailed comments on the proposed rule to EPA in October 2014.

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# DEP 111(d) Recommendation pennsylvania
DEPARTMENT OF ENVIRONMENTAL PROTECTION 

# Cleaner Air, Lower Prices, More Jobs

What is DEP proposing?

• The U.S. Environmental Protection Agency (EPA) is developing carbon dioxide (CO 2 ) pollution standards for both new and existing fossil fuel-fired power plants. The EPA proposal for existing fossil fuel-fired plants is expected to be available June 1, 2014, with a final rulemaking due by June 2015.
• In anticipation of EPA's proposal, Pennsylvania submitted a plan for consideration that would achieve lower emissions from existing power plants, which would lead to cleaner air, by removing obstacles and encouraging efficiency projects. This plan is critical to maintaining the stable and diverse supply of electricity vital to our economy and national security.
• At the heart of Pennsylvania's plan is efficiency and the preservation of states' authority and discretion in the development and implementation of emissions control programs. 

### Why is this important?

• An EPA mandate that does not provide for an "all of the above" energy approach does not recognize Pennsylvania's diverse energy resources and would compromise electric grid reliability, increase the cost of energy and result in significant job loss. 

### A Creative Path Forward

• Under Governor Tom Corbett's leadership, Pennsylvania is continuing to make great progress in its efforts to position the state as a world leader in the new energy economy while ensuring that we continue improving our air quality and protecting public health.
• The key to the success of any effort to reduce CO 2 is optimizing and maximizing the benefits of efficiency projects. Pennsylvania's plan would put an end to penalizing efficient plants for increased demand. 

### Cleaner air, lower prices, more jobs at the same time?

• Pennsylvania is committed to meeting all of its environmental needs in a fashion that allows us to best serve the needs of our citizens.
• The best way to achieve this is to implement a plan that focuses on state leadership, provides flexibility and takes advantage of a wide range of energy resources and technologies towards building a cleaner power sector.

• Specifically, the Pennsylvania plan has identified that: 0 Emissions guidelines must be developed in close consultation with the states. 0 EPA must establish guidelines for reductions, rather than establish mandate pathways to achieve them. 0 EPA must recognize the different makeup of the existing power generation fleets in each state. 0 Modifications to New Source Review must be accomplished so efficient plants are not penalized for increased demand as a result of investments in energy efficiency. 

### An "Everybody Wins" Solution

• A flexible, state-by-state approach preserves fuel diversity and grid reliability.

• Investments in efficiency result in lower operating costs, cheaper energy for consumers and improved air quality through lower emissions of all pollutants, not just CO 2 . This proposal allows all sectors to invest in and benefit from efficiency improvements.
• An efficient, stable, diverse supply of energy improves competitiveness, preserves existing jobs, creates new jobs and expands the Pennsylvania economy.

TOM CORBETT, GOVERNOR I E. CHRISTOPHER ABRUZZO, SECRETARY

# Recommended Framework for the Section 111(d)

Emissions Guidelines Addressing Carbon Dioxide Standards

for Existing Fossil Fuel-Fired Power Plants



# or4r , pennsylvania
DEPARTMENT OF ENVIRONMENTAL

PROTECTION Tom Corbett, Governor E. Christopher Abruzzo, Secretary

### April 10, 2014

Gina McCarthy, Administrator Environmental Protection Agency Ariel Rios Building 1200 Pennsylvania Avenue, NW Washington, DC 20460 Dear Administrator McCarthy: Pennsylvania is making great progress in its efforts to position the state as a world leader in the new energy economy. A key part of this plan is maintaining the stable and diverse supply of electricity that is vital to our economy and national security. To that end, I am pleased to provide you with a copy of a new Pennsylvania white paper that presents an innovative and flexible framework for achieving lower carbon dioxide (CO2) emissions from existing fossil fuel-fired power plants. At the heart of this plan is the preservation of states' authority and discretion in the development and implementation of flexible emission control programs. EPA should establish targets for reductions, rather than mandate pathways to achieve them. A flexible approach avoids picking "winners and losers" and empowers states to design the most cost-effective compliance options for their constituents. As stated in our white paper, Pennsylvania believes that a key to the success of any effort to reduce CO2 is optimizing and maximizing the benefits of energy efficiency projects. For that to occur, it is critical for EPA to endorse, adopt and implement our proposal to modify the New Source Review applicability test. If this change is made, a paradigm shift would be accomplished that would result in considerable investment in energy efficiency efforts not just in the fossil fuel-fired electric generating sector but throughout the entire U.S. economy. Companies paying to make energy efficiency improvements would benefit economically through lower operating costs, which results in lower prices for consumers while achieving lower CO2 emissions. This change would provide an incentive to companies to make investments that would result in emissions reductions, including CO2, from all emitting sources without the need of a regulation to force the reduction. Pennsylvania is committed to achieving the goals that would be established under a flexible CO2 program in a fashion that allows us to best serve the needs of our citizens. We look forward to hearing your feedback on our proposal and pledge our commitment to work in partnership with your staff as you craft a plan to meet President Obama's directive to build on state leadership, provide flexibility and take advantage of a wide range of energy sources and technologies towards building a cleaner power sector. Sincerely,

E. Christopher Abruzzo Secretary

Secretary Rachel Carson State Office Building I P.O. Box 2063 I Harrisburg, PA 17105-2063 I 717.787.2814 I www.depweb.state.pa.us

## Commonwealth of Pennsylvania's Recommended Framework for

the Section 111(d) Emissions Guidelines Addressing Carbon Dioxide Standards for Existing Fossil Fuel-Fired Power Plants

If EPA develops emissions guidelines, it should be done under Section 111(d). Section 111(d) of the Clean Air Act (CAA) is applicable for air pollutants that are neither regulated as a National Ambient Air Quality Standard (NAAQS) nor as a hazardous air pollutant (HAP) and where a New Source Performance Standard (NSPS) would apply for new affected sources. This section specifies that the U.S. Environmental Protection Agency (EPA) shall develop regulations establishing a procedure similar to the state implementation plan process which must be followed by the states. Further, this section obligates the states to prepare and implement plans that establish standards of performance for existing sources as well as provide for the implementation and enforcement of such standards. Under Section 111(d), states have the authority to devise flexible programs for existing units that achieve the federal guidelines using provisions that work best for the individual states. Considering the dramatic differences among the states relative to fuel diversity and the market differences between rate-based markets and restructured markets, this state flexibility is critical. Therefore, Section 111(d) would be the most appropriate section of the CAA to regulate carbon dioxide (CO2) emissions from existing large fossil fuel-fired electric utility steam generating units (EGUs) and fossil fuel-fired combustion turbines. Using the guidelines, states would be required to develop Section 111(d) plans for existing sources. These requirements can and should be less stringent than the NSPS, taking into account, among other factors, the remaining useful life of the existing source to which the standards of performance apply, additional environmental benefits of a fuel source, and other important considerations including market impacts and electric grid reliability. Emissions guidelines should be developed in close consultation with the states. The EPA must recognize state leadership and authority to regulate pollutants within their borders and should ensure preservation of states' discretion in the development and implementation of flexible emission control programs that are consistent with Section 111(d) provisions. The EPA should develop emissions guidelines that provide for maximum flexibility to the states in meeting those guidelines. The emissions guidelines should establish targets, not mandate how to achieve the established targets. Only the states have the authority to design and implement pollution control programs to meet the requirements adopted to regulate carbon dioxide in accordance with Section 111(d), except in areas where the authority has been delegated to a local agency, or a state has failed to submit the necessary plan.

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### The emissions guidelines should address CO2 emission reductions achieved by the affected

sources. Emissions guidelines should establish targets based upon actions that can be taken directly by and at existing sources affected by a Section 111(d) CO2 program. This approach is consistent with EPA's previous emissions guidelines promulgated for other source categories under the CAA. Furthermore, the EPA should limit the definition of "best system of emission reduction" (BSER) to actions that can be taken by the affected existing source without redefining the source. This will require the consideration of the inherent differences within the universe of existing boilers and combustors that are included in the fleet of fossil-fuel fired electric generation sources. If an energy-efficiency project or some other project with unique environmental benefits (e.g., municipal waste-to-energy projects) associated with a "non-affected" source is to be granted a "credit" under a Section 111(d) program, the "credited" reductions must be quantifiable and enforceable consistent with the quantification by a source affected under the program. The owner, operator or entity receiving credit for actions taken at a non-affected source must be responsible for ensuring that the CO2

reductions continue at the credited level. To ensure the integrity of Section 111(d) programs which include actions taken by non-affected sources, it is critical to have very high data quality standards. Absent high quality data, the effectiveness of the program would be compromised to the economic benefit of some and detriment of others. Consequently, it is suggested that the quantification methods for credits awarded to non-affected sources be standardized by or be required to receive approval from the EPA when using reductions from non-affected sources in a Section 111(d) program. It is important to note that energy efficiency projects not associated with existing sources or facilities are actually emissions avoidance efforts and not emissions reduction efforts. Consequently, only energy efficiency efforts at existing sources or facilities, or new energy efficiency projects that are coupled with the replacement or retirement of an existing source or facility, should be considered for crediting toward a Section 111(d) program. In the case of a project with unique environmental benefits, the amount of credit should be demonstrated on a continuous basis. Because of the complications of a program that includes non-affected sources, EPA should establish Section 111(d) guidelines for CO2 emissions that only consider currently available and economically feasible technologies that improve energy efficiency at affected sources. Emissions guidelines should provide for unit averaging for a rate-based program or accumulation of emissions from multiple sources if the program is mass-based. Also, because CO2 is not a pollutantfor which a short-term ambient air quality standard is necessary or desirable, a multi-year (e.g., fiveyear) rolling average can be used to demonstrate compliance. This methodology provides recognition of year-to-year variations in operations without requiring the use of emission allowances.After the close of the reporting period, a "true up" period should be provided to allow "overemitters" and "under-emitters" to reach a negotiated settlement that provides for "net" compliance with emissions obligations. This approach may be a very desirable option for restructured energy markets as it provides for flexibility without picking "winners and losers," as can occur with allowance-based programs. These opportunities would enable states to design the most flexible
2programs and the owners and operators of affected sources to select the most cost-effective

compliance options for meeting their compliance obligations. States must be allowed to join with other states in multi-state or regional programs. States must have the opportunity to collaborate with other states in either formal or ad-hoc forums while developing compliance demonstration options. The opportunity to collaborate should also be provided to the owners and operators of affected sources to allow them flexibility in achieving the most effective compliance options. This collaborative process should be provided for, but not obligated in the guidelines developed by EPA. The most critical aspect of having creditable and high-functioning programs is the quantification of the emissions. In the case of EGUs, monitoring provisions are consistent and specified under federal regulation. This consistent quantification of emissions obviates the need of emission allowances for the success of multi-state trading programs. However, the decision to utilize an emission allowance-based program should be at the state's discretion. Importantly, the emission allowance-based program must also be reliant upon the consistent quantification of emissions. EPA must recognize the different makeup of existing power generation in each state and recognize flexible compliance pathways or mechanisms. The existing power generation fleet in Pennsylvania is extremely diverse in terms of fuel sources, combustion technology, and vintage. As the Commonwealth is intimately familiar with the exact composition of the fleet, Pennsylvania is best suited to design the plan to meet the final emissions guidelines promulgated by EPA and also to be adequately flexible to accommodate Pennsylvania's diverse resources. This is true for all state and local agencies. Importantly, states should also have the ability to exclude certain electric generators that have environmental benefits that are beyond the CO2 emissions from those sources. Examples of fuel sources that this may apply to are coal refuse and coal bed methane. An excellent example of an electric generation source category with multi-media benefits is coal refuse combustion units. In Pennsylvania, large piles of coal refuse are a legacy issue and these facilities turn this refuse into electricity in a controlled combustion process rather than through uncontrolled burning, which occurs due to the exposure of coal refuse piles to air. The exposure of a mining refuse pile to atmospheric oxygen and pressure promotes heat generating reactions, primarily oxidation of the coal refuse itself (i.e., the coal refuse piles are slowly burning), releasing CO2 emissions as well as sulfur oxides, particulate matter, and other pollutants associated with poor combustion. The benefits of utilizing this fuel source are that it is essentially carbon neutral, emissions of other pollutants from coal refuse-fired sources are well controlled, and sources of acid mine drainage and ground water pollution are removed. Additionally, the use of coal refuse reduces the emissions from use of "new" coal or natural gas from being combusted to generate electricity in an amount that would reflect the amount of electricity generated by the coal refuse-fired combustion units.

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

coal refuse pile was located, these areas are reclaimed without any funding necessary from Pennsylvania taxpayers. At this point, over 7,200 acres of affected land in Pennsylvania have been reclaimed through the use of this fuel source. This represents savings to Pennsylvania taxpayers of $140 to $220 million dollars while providing jobs, environmental benefits, and taxes to the localities where these coal refuse-fired facilities operate. For perspective, the industry estimates there are still approximately 170,000 acres affected by coal refuse remaining in the Commonwealth. Emissions guidelines should provide for emission reductions compared to a designated baseline period. Regulating greenhouse gas such as CO2 is unique when compared to criteria pollutants. Section 111(d) of the CAA allows EPA to consider flexible approaches when establishing the guidelines and allows states to utilize flexible approaches for compliance demonstrations. Potential strategies include state budgets, multi-year averaging, and early reductions. EPA should establish specific goals for the states based on standards of performance, recognizing that existing sources have very limited options when compared to new sources. New sources have the opportunity to incorporate emissions controls and efficiency improvements into their design much easier than existing sources. Further confounding the installation of controls on existing units is the New Source Review (NSR) process specified in the CAA and the regulations. EPA should address the NSR ramifications of the installation of controls or modifications on existing units used to meet the standards of performance established under the guidelines. NSR ramifications should not impede the maximum possible implementation of energy efficiency improvement projects at these affected sources. Pennsylvania recommends the EPA's emissions guidelines provide for a state budget approach option for only existing sources being regulated for CO, under a Section 111(d) program. This is because new affected sources will be regulated under Section 111(b) through the New Source Performance Standards (NSPS), which, as proposed, establish unit-specific CO2 limits. Under Section 111(d), EPA should provide for a state budget based on achievable rate-based standards of performance which can then be converted to a mass-based target by multiplying the baseline year energy output (i.e., the gross output in MWh for the baseline year) multiplied by the rate-based standard (expressed in lbs/MWh (gross)) to determine the mass-based target in tons per year. Pennsylvania recommends that the EPA use 2005 as the appropriate baseline year as suggested by President Obama's Climate Change Action Plan. The emission guidelines should allow compliancewith the budget to be demonstrated using system-wide averaging or accumulation on a rolling fiveyear basis for facilities under common control. This system of implementation would provide states the ability to recognize and use all quantifiable and enforceable reductions including, but not limited to, source retirements, permanent curtailments, and early reductions. EPA must recognize the differences inherent in regulated versus competitive energy markets and the need to provide for electric grid reliability. EGUs in Pennsylvania are participating in a competitive energy market. Therefore, the costs to

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

customers. On the other hand, EGUs participating in a regulated rate-based market can directly recover the costs of compliance after obtaining approval from the Public Utility Commission and will be compensated with a return on investment for costs associated with compliance efforts. EPA must recognize the fundamental differences in these marketplaces by recognizing the authority of the states to design and implement programs that best serve the affected sources located within their jurisdiction. Emissions guidelines mandating an electric grid system-based approach, i.e. the re-dispatch of EGUs based on a lower CO2 emission rate should not be part of a 111(d) program. This type of program could disrupt the competitive energy market and could place additional coal-fired EGUs at risk of early retirement, resulting in additional job losses and potential grid reliability issues. The dispatch of EGUs is beyond the scope of the EPA's authority, and the regulation of carbon dioxide emissions is beyond the authority of RTOs or ISOs. The operation of a competitive energy market is the role of RTOs and ISOs while the regulation of environmental pollution in Pennsylvania is the responsibility of the Pennsylvania Department of Environmental Protection. Changes to major New Source Review regulations should be considered to encourage efficiency improvements. Any physical change or change in the method of operation relating to efficiency improvements at an affected facility would trigger NSR applicability determinations. If NSR is triggered, the owner or operator may opt out of such efficiency improvement projects or choose not to optimize or maximize the benefits of the project, which is counter to the intent of the emissions guidelines. Therefore, we recommend that NSR regulations for EGUs be amended to redefine major modification as a modification that increases any regulated air pollutant emissions in terms of the lbs/MWh (gross), rather than the current threshold of tons per year. There are likely other provisions in the CAA that have "absurd results" when it is used to regulate CO2 or other greenhouse gases. Those provisions should all be identified and "tailored" to provide for the greatest opportunity to avoid unintended or negative consequences should this program for EGUs be implemented under Section 111(d) of the CAA. As previously addressed by EPA, circumstances that have absurd results should be corrected through regulatory amendments as was done under the "Tailoring Rule."

5pennsylvania FM140,ENTAL =OIEC71, Bureau of Air Quality


# Energy Effects of EPA's Proposed Clean Power Plan
Pennsylvania Senate Environmental Resources and Energy Committee

Harrisburg, PA June 27, 2014



# EPA's Section 111(d) Proposal

• EPA proposed State Specific goals by 2020 and 2030

• EPA's Final rule by June 2015

• State Plans Due to EPA by June 2016

• EPA may grant extensions

— Individual State Plans for 1 year

— Multi State Plans for 2 Years

pennsylvania

PROTECTION F ENVIRONMEN TA 

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# EPA's Section 111(d) Proposal

• EPA proposed CO2 emission reduction goals for Pennsylvania.
o Interim Goal by 2020

o 37% from 2005 level

o 23% from 2012 level o Final Goal by year 2030 o 44% from 2005 level o 31% from 2012 level

IIIPP _, pennsylvania 

# a . DEPARTMENT OF ENVIRONMENTAL PROTECTION



# EPA's Section 111(d) Proposal

• EPA established CO2 emission targets using:

o Coal-fired boiler heat rate improvements (assumed 6%)

o Switching to natural gas fired units

o Switching to additional nuclear power

o More renewable energy

o Energy efficiency programs ("outside the fence") 

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# is fif DEPARTMENT OF ENVIRONMENTAL PROTECTION 7/30/2014

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# EPA's Section 111(d) Proposal

• The EPA's Clean Power Plan makes Section 111(d) the State Energy Plan, rather than a component of the State Energy Plan.

• EPA claims that these measures represent the "Best System of Emission Reduction" (BSER) which has been "adequately demonstrated."

pennsylvania

PROTECTION DEPARTMENT F ENVIRONMENTAL



# EPA's Section 111(d) Proposal

• EPA proposed Pennsylvania's final goal using the following rate reduction contributions:

— Redispatch of natural gas (11%)

—Redispatch of additional nuclear (7%)

— Renewable energy (43%)

— Energy efficiency programs (27%)

— Coal-fired heat rate improvements (11%)

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### r a i d ,JL PAN' M EN! 0' LNVIRONME N SAL ,tOrLt: ION 7/30/2014

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# EPA's Section 111(d) Proposal

• Pennsylvania's coal fleet annual capacity

Year Capacity Factor Coal Consumption Reduction in Coal Consumption from 2005 2005 73.4% 43.4 million tons N/A 2012 54.6% 33.0 million tons 24% 2020 23.7% 12.5 million tons 71% 2030 16.9% 10.5 million tons 76%

IIPIP _.4 pennsylvania DEPARTMENT OF ENVIRONMENTAL ■ - PROTECTION



# PA's Section 111(d) White Paper

• PA's White Paper offers a "no regrets" strategy. — Process efficiency improvements o Addresses the single greatest impediment to efficiency improvements o Framework is based on facilitating compliance

— Regulates only the truly affected sources

— CO 2 reductions achieved from other sectors



## Pt ;Pt, pennsylvania , DEPARTMENT OF ENVIRONMENTA, PROTECTION 7/30/2014

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# PA's Section 111(d) White Paper



# • PA's framework results in:

— Cleaner air

— A fuel diverse energy profile

— Lower electricity prices

— More jobs

pennsylvania



# rs ,, DEPARTMENT OF ENVIRONMENTAL PROTECTION



## A pennsylvania Bureau of Air Quality



# Vincent J. Brisini
Deputy Secretary for Waste, Air, Radiation

and Remediation PA Department of Environmental Protection

717-772-2725 vbrisini@pa.gov 7/30/2014

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