CLEAN POWER PLANProposal to ReduceCarbon Pollution FromExisting Power PlantsPresentation to Congressional StaffJune 2, 2014This Proposal Deals With the LargestSource of GHG Emissions in the U.S.2Outline•Summary of Proposal•Background on Clean Air Act Section 111(d)•Pre-proposal Outreach & What We Heard•Setting State Goals•State Plans for Meeting Goals•Costs and Benefits•Next Steps3This proposal will:•Reduce carbon pollution from existing power plants,for which there arecurrently no national limits.•Maintain an affordable, reliable energy system.•By 2030, reduce nationwide carbon dioxide (CO2) emissions, from the powersector by approximately 30% from 2005 levels.•Significant reductions begin by 2020.•Cut hundreds of thousands of tons of harmful particle pollution, sulfurdioxide and nitrogen oxides as a co-benefit.•Provide important health protections to the most vulnerable, such aschildren and older Americans.•Lead to health and climate benefits worth an estimated $55 billion to $93billion in 2030.•From soot and smog reductions alone, for every dollar invested through theClean Power Plan – American families will see up to$7 in health benefits.4Summary•Build on actions states, cities and businesses acrossthe country arealready taking to address the risks of climate change.•Spur investment in cleaner and more efficient technologies, creating jobsand driving innovation.•Require a reasonable emission reduction glidepath starting in 2020.•Provide a flexible timeline—up to 15 years from guideline issuance—forall emission reduction measures to be fully implemented in 2030.•Recognizing that investments in infrastructure can take time to put inplace and•Avoiding stranded assets.•Provide an array of tools states can use to formulate approvable plans.Summary (Cont’d)5Background: Clean Air Act Section 111(d)Best System of Emission Reduction6•Previous EPA rules under this section of the Clean Air Act haveconsidered “add-on” control technologies – like scrubbers -- that aretechnically feasible to deploy at virtually any facility.•In contrast, there are a wide variety of ways to reduce carbon pollutionthat are commercially available, technically feasible, and cost effective.•The opportunities vary from state to state, depending on how electricityis generated, energy infrastructure, and other factors.•In this proposal, EPA took an approach that viewed the Clean Air Actfactors in determining Best System of Emission Reduction in light of theinterconnected nature of power generation.•BSER factors•Costs•Size of reductions•Technology•Feasibility•EPA conducted a robust pre-proposal stakeholderengagement process.•Participated in meetings with over 300 utility,consumer, labor and environmental groups sinceJune 2013.•Held 11 public listening sessions around thecountry.•3,300 people attended.•More than 1,600 people offered oralstatements.•Reached out to all 50 states.•Some states noted their programs to addresscarbon evolved because of:•The need to address carbon pollution;•Electric system that is dynamic, and in themidst of market changes; and•Modernizing the power sector is good for theeconomy.•Common themes included reliability, flexibility,affordability, time for plans and implementation.7Early Outreach Informed This ProposalState Actions are Foundation of Proposal•What we learned during the engagement process aboutwhat states arealready doing has informed EPA’s proposal.•State actions provide the foundation for our analysis.•10 states with market-based GHG emission programs .•38 states with renewable portfolio standards or goals.•47 states with utilities that run demand-side energy efficiency programs.•27 states with energy efficiency standards or goals.8States and Communities withPrograms That Reduce Carbon PollutionState programs that reduce carbon includecarbon cap and trade programs and energyefficiency and renewable energy standards orgoals.9EPA Sets the Goals10EPA Establishes a Goal for Every State•EPA analyzed the practical and affordable strategies that states and utilities arealready using to lower carbon pollution from the power sector.•Proposed goals are based on a consistent national formula, calculated with stateand regional specific information.•The result of the equation is the state goal.•Each state goal is a rate – a statewide number for the future carbon intensity ofcovered existing fossil-fuel-fired power plants ina state.•Encompasses the dynamic variables that ultimately determine how much carbon pollution isemitted by fossil fuel power plants.•Accommodates the fact that CO2emissions from fossil fuel-fired power plants are influencedby how efficiently they operate and by how much they operate.•The state goal rate is calculated to account for the mix of power sources in eachstate and the application of the “building blocks”that make up the best system ofemission reduction.•States will need to meet an interim goal and a final goal.11States Have FlexibilityBasis for state goal–Potential emissionspathway reflectingEPA’s analysis2020 2021 20222023 2024 20252026 2027 2028 2029A state can choose any trajectoryof emission improvement as longas the interim performance goal ismet on average over 10 years, andthe final goal is met by 203012

Carbon emissions from affected power plants in an example stateAs an example, states could do less in the early years, and more in the lateryears, as long as on average it meets the goalTiming of Power Plant Emission ReductionsBuilding Block Strategy EPA Used toCalculate the State GoalMaximum Flexibility:Examples of StateCompliance Measures1. Make fossil fuel-firedpower plants moreefficientEfficiency Improvements Efficiency improvementsCo-firing or switching to naturalgasCoal retirementsRetrofit CCS (e.g.,WA Parish inTexas)2. Use lower-emitting powersources moreDispatch changes toexisting natural gascombined cycle (CC)Dispatch changes to existingnatural gas CC3. Build more zero/lowemitting energy sourcesRenewable EnergyCertain NuclearNew NGCCRenewablesNuclear (new and up-rates)New coal with CCS4. Use electricity moreefficientlyDemand-side energyefficiency programsDemand-side energy efficiencyprogramsTransmission efficiencyimprovementsEnergy storage13States Meet the Goals14When States Plan, They Can:•Look broadly across the power sector for strategiesthat get reductions.•Choose to rely to varying degrees on measures thatEPA used tocalculate the goal, or on other measures that werenot part of the stategoal-setting analysis.•Invest in existing energy efficiency programs or create new ones.•Consider market trends toward improved energy efficiency and agreater reliance on lower carbon energy.•Tap into investments already being made to upgradeaginginfrastructure.•Expand renewable energy capacity.•Integrate their plans into existing power sector planning processes.•Design plans that use innovative, cost-effective regulatory strategies.•Develop a state-only plan or collaborate with eachother to developplans on a multi-state basis.•Decide how to treat plants nearing the end of theiruseful life and howto help plants avoid “stranded investments.”15Flexibilities Available To States•Timing:•Up to 15-year window in whichto plan for and achievereductions in carbon pollution.•Up to two or three years tosubmit final plans.•Form of goal: States can use eithera rate-based or mass-based goal.•Single or multi-state plans: Statescan collaborate and develop planson a multi-state basis.•Selection of measures:•States will choose how to meetthe goal through whatevercollection of measures reflectsits particular circumstances andpolicy objectives.•State measures may impact and,in fact may be explicitlydesigned to reduce, CO2emissions from utilities on aregional basis.•EPA would support building offexisting reduction programs.16States Choose How to Meet the Goals•Demand-side energy efficiencyprograms.*•Generating electricity fromlow/zero-emitting facilities.*•Expanding use of existing NGCCunits.*•Transmission efficiencyimprovements.•Energy storage technology.•Working with utilities to considerretiring units that are high emitting.•Energy conservation programs.•Retrofitting units with partial CCS.•Use of certain biomass.•Efficiency improvements at higheremitting plants.*•Market-based trading programs.•Building new renewables.•Dispatch changes.•Co-firing or switching to natural gas.•Building new natural gas combinedcycle units.*Measures EPA used in calculating the stategoals17Details About State Plans•EPA will provide a list of about a dozen componentsthat will need to beincluded in the plan.•Measures to meet the state’s interim goal and finalgoal.•Interim goal -- meet on average over a 10-year period from 2020-2029;•Final goal -- meet in 2030 and thereafter.•Individual and multi-state plans due June 30, 2016.•Proposed timing of extensions to submit a completeplan, if justified andsupported:•Submit initial plan by June 30, 2016;•Individual state plans: a one-year extension (June30, 2017); and•Multi-state plans: a two-year extension (June 30, 2018).18Benefits and Costs•Nationwide, by 2030, this rule would help reduce CO2emissions fromthe power sector by approximately 30% from 2005 levels.•Also by 2030, reduce by over 25% pollutants that contribute to the soot andsmog that make people sick.•These reductions will lead to public health and climate benefits worthan estimated $55 billion to $93 billion in 2030.•Proposal will avoid an estimated 2,700 to 6,600 premature deaths and140,000 to 150,000 asthma attacks in 2030.•Health and climate benefits far outweigh the estimated annual costs ofmeeting the standards.•Estimated at $7.3 billion to $8.8 billion in 2030.•Proposal protects children and other vulnerable Americans from thehealth threats posed by a range of pollutants.•Move us toward a cleaner, more stable environment for futuregenerations.•Ensures an ongoing supply of the reliable, affordable power needed foreconomic growth.19Other Impacts20Electricity bills down8% in 2030$0$20$40$60$80$100$1201990 1995 2000 2005 2010 2015 2020 2025 2030Monthly Residential Electricity Bills (2011$)Historical - Converted to 2011$Base CaseClean Power PlanAfter Proposal, Coal & Natural Gas RemainLeading Sources of Electricity Generation21Each more than 30% of projected generation in 2030[CATEGORYNAME][PERCENTAGE]Natural Gas32%[CATEGORYNAME][PERCENTAGE]Other Impacts22050100150200250300350400450500201220202030

Coal-Fired Generation Capacity (GW)YearPast and Projected Coal Generationin USBase CaseProposal -- Option 1 RegionalProposal -- Option 1 State23For More State-By-State Informationhttp://www.epa.gov/cleanpowerplanNext Steps•The proposed rule, as well as information about howto comment andsupporting technical information, are available online at:http://www.epa.gov/cleanpowerplan•EPA will hold 4 public hearings the week of July 28thin Denver, Atlanta,Pittsburgh and Washington, D.C.•There will be a 120-day public comment period on theproposal.•Comments on the proposal should be identified by Docket ID No.EPA-HQ-OAR-2013-0602.2425By June 30, 2016State submits initial multistate plan and request for 2-year extensionEPA reviews initial planand determines ifextension is warrantedby June 30, 2017State submits progressreport of planby June 30, 2018States submits multistate planState submits Negative DeclarationState submits complete implementation Plan by June30, 2016State submits initial Plan by June 30, 2016 and request 1-year extensionState submits initial multi-state Plan by June 30,2016 and request 2-year extensionEmissionGuidelinePromulgationJune 1, 2015by June 30, 2016State submits negativedeclarationEPA publishes FR noticeby June 30, 2016State submits planby June 30, 2016State submits initial planand request for 1-yearextensionEPA reviews initial plan anddetermines if extension iswarrantedby June 30, 2017State submits complete plan20152019Proposed Implementation TimelineComplianceperiod begins20202020EPA reviews plan andpublishes final decisionwithin 12 months onapproval/disapprovalEPA reviews plan andpublishes final decisionwithin 12 months onapproval/disapprovalEPA reviews plan andpublishes final decisionwithin 12 months onapproval/disapproval201620172018