Clean Power Plan Clean Air Act 111(d) and 111(b) Rule. A Quick Comparison of What Changed

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Anda Ray

Environment, VP and Chief Sustainability Officer August 4, 2015

San Francisco, CA

“Clean Power Plan”

Clean Air Act

§

111(d) and 111(b) Rule

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Clean Air Act (CAA) Final Rules



September 20, 2013 – Clean Air Act (CAA)

111(b) proposed rule issued – Applies to new,

modified and reconstructed generating units



June 2, 2014 – Clean Air Act (CAA) 111(d)

proposed rule issued – Applies to existing

sources (aka “

Clean Power Plan

”)



Over 4.3 million comments

August 3, 2015

– Final Rules issues: CAA 111(b) and 111(d),

and Federal Implementation Plan for 111(d)

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Initial Reflections on the Final 111(b) Rule for New Sources

Less Stringent Emissions Limits



Less Stringent Emissions Limit

–

Coal: 1000 lb/MWh-gross → 1400 lb/MWh

–

Gas: 1000 lb/MWh-gross (no change)

–

CCS is not required

, but reaffirmed it is a Best

System of Emissions Reduction (BSER)



Other Compliant technologies might now

include options without CCS

–

Ultra-super critical coal with gas co-firing

–

IGCC with partial separation of CO

₂

or gas co-firing

–

Citing high costs of 50% carbon capture required by

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Initial Reflections on the Final 111(d) Rule for Existing Sources

Coal Units Heat

Rate

Improvements

NGCC Units

Re-dispatch

Expansion of

Renewable

and

Nuclear Energy

Use of Energy

Efficiency

“Building Blocks” – The Best System of Emission Reduction (BSER)

Heat Rate

_• _6%

→

_{Range: 2.1%, 2.3% and 4.3% (~ 30% to 50% lower)}

NGCC

• Re-dispatch Coal to “Existing” NGCC @ 70% CF Nameplate → 75% CF Net Summer

• New NGCC is not a BSER for direct replacement of coal [New NGCC is under 111(b)]

• Conversion of Coal plant to Gas plant is a compliance option

• Biomass (co-firing or other) still not considered

Nuclear Power

• No longer used in setting goals (Not a BSER)

• New, in-construction and uprates can be used in compliance

Renewable

• New renewable energy plays larger role in goal setting – optimized costs

• Clean Energy Incentive Plan (CEIP): “Allowances” or “Emissions Reduction Credit”

• Incentive for early adoption – Emissions Reduction Credits (ERCs) 2020-2021

Energy Efficiency

• No longer used in goal setting, but still valid for compliance

• Incentive for early adoption. ERCs accrued in 2020-2021– After State Plan submitted

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Other Aspects of the Rule

NY 70% PA 30% NJ 58% OR 55% WA 87% AZ 39% NV 65%

UT 22% CO 19% NM 6% ID 56% WY 18% MT 1% CA -17% ND -4% SD 1% NE -43% KS -1% MN 60% IA 23% MO -10% TX 38%

OK 37% AR 19% LA 42%

WI 41% MI 24% IL 20% IN 21%OH 24%WV 15%

KY -6% TN 36% MS 55%

AL 32%GA 43% FL 31% SC 47% NC 33% VA 67% DE 72% MD 37% RI -101% ME 95% NH 80% MA 69% CT 55% VT

EPA Estimated CO2 Reduction by State 2005 to 2030

≤ 0% 1% - 25% 26% - 50% > 50%

Initial Reflections on the Final 111(d) Rule for Existing Sources

Continued

Compliance Date

• 2020 → 2022

• CO₂ Target in 2030 28%

→

32% (Below 2005)

• 2022-2029 Glide path smoother (no cliff in first year) – Must have “step-downs”

• Smoother glide path, helps to prevent “rush to gas”

Other (non-BSER)

Compliance Options

• Renewables, Demand Energy Efficiency, Combined Heat and Power, Waste

Energy, Transmission & Distribution Improvements (Transportation Electrification, specifically excluded as compliance)

State Interactions

• “Trading Ready” – under mass approach, could opt in when market ready

• Interstate/regional agreements no longer required

Reliability

• States responsible to demonstrate reliability maintained

• “Safety Valve” in the event that actions under this rule impact system reliability

Other

• Health co-benefits preserved (requires additional analysis)

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Selected State Comparison –

Needs More Analysis!

More Narrow Range of State Emissions

Proposed Rule

(lbs/MWh)

Final Rule

(lbs/MWh)

West Virginia

1620

1305

North Dakota

1783

1305

Kentucky

1763

1286

Washington

215

983 California

537

828 Arizona

702 1031

Changes in State 2030 Goal

Goals loosened

in less

carbon-intensive states

Note: No targets for Alaska, Hawaii, Puerto Rico, Guam – Will come later

Goals tightened

in

carbon-intensive states

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Clean Power Plan Cost and Benefits

Benefits Decreased, Primarily due to Changing Assumptions

Proposed Rule

Final Rule

Co-Benefits

(Particulates, etc.)

$23 to $62

$11 to $34

Climate Benefits

(Includes Social Cost of

Carbon)

$30

$20

Power Sector Costs

($7) to ($9)

($5) to ($8)

NET

$46 to $84

$25 to $45

Summary

Monetized Cost & Benefits in 2030

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Initial Reflections on the CAA § 111(d) Federal Plan – Proposed



90-day Comment Period



Plan for final rule by summer 2016



EPA would promulgate a federal plan in any state

that does not submit an

approvable

plan and then

implement the plan on power companies.



EPA is proposing and seeking comment on:

1. A rate-based federal plan for each state

based

on model rule

2. A mass-based federal plan for each state

based on model rule

EPA intends to finalize

a single

federal plan type

(rate or mass) based on comments.

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EPRI Relevant Programs

Sector No. Program

Environment 102 103 178

Energy and Climate Policy

Energy & Environmental Policy Analysis and Company Strategy Market Analysis and Integrated Portfolio Planning

Generation 66 165 79 88 194 193

Fossil Fleet for Tomorrow

CO₂ Capture, Utilization and Storage Combined Cycle Turbomachinery

Combined Cycle HRSG and Balance of Plant Heat Rate Improvement

Renewable Generation

Nuclear 41 Nuclear Programs

Power Delivery & Utilization – Distribution Utilization 174 180 18 94 170 182 199

Integration of Distributed Energy Resources Distribution Systems

Electric Transportation

Energy Storage and Distributed Generation

End-Use Energy Efficiency and Demand Response Understanding Electric Utility Customers

Electrification for Customer Productivity

Power Delivery & Utilization – Transmission 39 40 173 Grid Operations Grid Planning

Bulk Power System Integration of Variable Generation

EPRI Role:

1. Inform Public Policy

2. Identify and Act on Research

Needs

3. Support Members through EPRI

Analysis

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Final Rule – Instant “Take Away”

Evolution of the Final Plan

1. Higher Emissions Rates for New Fossil – 111(b)

2. Carbon Reduction Goal is higher – 111(d)

3. New NGCC’s now excluded from rate-based plans

4. Nuclear out for goal setting, but some role for compliance

5. Safety Valve for Reliability included.

6. Energy Efficiency no longer part of target, but still part of compliance

7. Guidance on trading credits across state lines – “Trading Ready”

8. 2020 date extended to 2022 and glide path for future years more smooth – Slows the

“Dash for Gas”

9. Mass approach gets more full billing and EPA support

Sept 6, 2016 Sept 8, 2018 2020-2021 2022 - 2029