Disparate Impacts of the 111(d) Rule on States

At the Crossroads Energy & Climate Policy Summit

November 20, 2015

Mike Nasi mnasi@jw.com 512.236.2216

Existing & Modified/Reconstructed Standards More Stringent Than New Unit Standards

*New unit standard is 1,400 lb CO2/MWh; Reconstructed standard is 1,800 1,400 lb CO2/MWh. Sources: EPA, Final 111(d) and 111(b) Rules; “Typical Units” based on existing industry knowledge and experience. 2

Theexis(ngunitstandards(under111(d))aremorestringentthanthenewunitstandards(under111(b)).Thisisirreconcilable,illogical,andunprecedented.

GasCCGTUnitEmissionRates(lbCO2/MWh)

TypicalExis>ngUnits

Exis>ngUnit

Standard111(d)

NewUnit

Standard111(b)

CoalGenera>onUnitEmissionRates(lbCO2/MWh)

TypicalExis>ngUnits

Exis>ngUnit

Standard111(d)

New/Re-Constructed*Standard111(b)

2,650

If EPA’s Clean Power Plan Applied to Cars

Clean Power Plan Family MPG Requirement

3

•  Standard for NEW plants – 1400 lb/ MWhr CO2 (EPA admits that retrofits cannot beat 1800)

•  Standard for EXISTING plants – 1305 lb/MWhr CO2 (Tx was 237)

•  Tx budget 1042 (some in 900s) (EPA assumes fuel switching from fossil to renewable & coal to gas)

•  Existing renewable energy is not credited toward compliance

•  EPA sets MPG standard for NEW cars at 60 MPG (EPA admits that retrofits cannot beat 40)

•  EPA then imposes a 70 MPG on your family’s EXISTING cars

•  EPA assumes you can buy an EV, take bus, or work from home; so sets your MPG req. at 80 MPG

•  You cannot count the Prius you bought in 2011 toward the goal

Sources: Proposal - Goal Computation TSD; Final - EPA “State at a Glance” Documents.

4

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%Washington

Arizo

na

SouthCarolina

Oregon

New

Ham

pshire

Georgia

Arkansas

New

York

New

Jersey

Minne

sota

NorthCarolina

Louisia

na

Tenn

essee

Texas

Florida

Virginia

MassachuseQ

sMississippi

Maryland

Oklahom

aCo

lorado

SouthDa

kota

Nevada

Wisc

onsin

New

Mexico

Illinois

Idaho

Delaware

Michigan

Penn

sylvania

Conn

ecVcut

Ohio

Utah

Alabam

aNeb

raska

California

Kansas

Missou

riMon

tana

Indiana

WestV

irginia

Wyoming

Kentucky

Iowa

Rhod

eIsland

Maine

NorthDakota

Comparison of State CO2 Rate Reduction Targets Proposal v. Final Rule (% of rate reduction)

Comparison of State CO2 Reduction Targets Proposal v. Final Rule (“rate-based” reductions converted to tons)

Preliminaryanalysis;subjecttorevision.Sources:Proposal–GoalComputaVonTSD,GoalComputaVon–Appendix1;Final–EmissionPerformanceRateandGoalComputaVon,GoalComputaVonAppendix1-5. 5

-10,000,000

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000Texas

Florida

Arizo

na

Illinois

Arkansas

Louisia

na

Oklahom

aGe

orgia

Michigan

Penn

sylvania

Alabam

aMinne

sota

Missou

riCo

lorado

Indiana

Wisc

onsin

Ohio

NorthCarolina

Iowa

SouthCarolina

New

York

Utah

Kentucky

Mississippi

Tenn

essee

WestV

irginia

New

Mexico

Washington

Nevada

Wyoming

Neb

raska

NorthDakota

Kansas

New

Jersey

Oregon

Maryland

MassachuseQ

sSouthDa

kota

Mon

tana

New

Ham

pshire

Delaware

Virginia

Conn

ecVcut

Maine

Idaho

Rhod

eIsland

California

TOTALTONSTHATMUSTBEREDUCEDGIVENBUDGETEDRATESCALEMATTERS:Howmuchstuffmustyoubuild?

Howmanyassetsmustyoustrand? Howmanycustomersmustpayforit? Howmanybusinesseswillleave?

FadedBlueBars:ReducVonfromProposaltoFinalRedBars:IncreasesfromProposaltoFinal

Comparison of State CO2 Reduction Targets Proposal v. Final Rule (“mass-based” reductions in tons)

Preliminary analysis; subject to revision. Existing units only. Sources: Proposal – CPP NODA, Rate to Mass Translation Data File TSD; Final – Emission Performance Rate and Goal Computation, Goal Computation Appendix 1, EPA “State at a Glance” Documents.

6

-10,000,000

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000Texas

Florida

Penn

sylvania

Illinois

Georgia

Ohio

Michigan

Arizo

na

Indiana

Alabam

aLouisia

na

Oklahom

aSouthCarolina

NorthCarolina

Arkansas

Missou

riTenn

essee

New

York

Wisc

onsin

Co

lorado

WestV

irginia

Kentucky

Minne

sota

Iowa

California

Wyoming

Utah

Kansas

Mississippi

Maryland

Neb

raska

Virginia

New

Mexico

New

Jersey

Nevada

MassachuseQ

sWashington

Mon

tana

Oregon

NorthDakota

New

Ham

pshire

Conn

ecVcut

SouthDa

kota

Delaware

Rhod

eIsland

Maine

Idaho

Texas-791lbs/MWh17.55%

Florida-740lbs/MWh8.77%

Arizona-702lbs/MWh5.15%

Illinois-1,271lbs/MWh4.30%

Arkansas-910lbs/MWh4.25%

Louisiana-883lbs/MWh4.18%

Oklahoma-895lbs/MWh3.85%Georgia-834lbs/MWh

3.61%Michigan-1,161lbs/MWh

3.52%

Pennsylvania-1,052lbs/MWh3.18%

Alabama-1,059lbs/MWh2.86%

Minnesota-873lbs/MWh2.72%

Missouri-1,544lbs/MWh2.67%

Colorado-1,108lbs/MWh2.65%

Indiana-1,531lbs/MWh2.42%

Wisconsin-1,203lbs/MWh2.39%

Ohio-1,338lbs/MWh2.31%

NorthCarolina-992lbs/MWh2.25%

PROPOSAL

States’ Proportion of Total CO2 Reductions (“rate-based” reductions converted to tons)

Remainingstateshavereduc>onsinCO2lessthan2%oftotalU.S.emissions.

Preliminaryanalysis;subjecttorevision.Sources:Proposal–GoalComputaVonTSD,GoalComputaVon–Appendix1;Final–EmissionPerformanceRateandGoalComputaVon,GoalComputaVonAppendix1-5.

7

Texas-1,042lbs/MWh10.82%

Indiana-1,242lbs/MWh5.95%

Pennsylvania-1,095lbs/MWh5.52%

Kentucky-1,286lbs/MWh5.29%

Ohio-1,190lbs/MWh5.15%

Illinois-1,245lbs/MWh4.79%

Missouri-1,272lbs/MWh4.31%

Michigan-1,169lbs/MWh4.14%

WestVirginia-1,305lbs/MWh4.01%

Alabama-1,018lbs/MWh3.75%

Florida-919lbs/MWh3.73%

Wyoming-1,299lbs/MWh3.29%

Georgia-1,049lbs/MWh2.73%

Wisconsin-1,176lbs/MWh2.62%

Oklahoma-1,068lbs/MWh2.53%

Iowa-1,283lbs/MWh2.39%

Colorado-1,174lbs/MWh2.23%

NorthDakota-1,305lbs/MWh2.22%

Kansas-1,293lbs/MWh2.22%

Tennessee-1,211lbs/MWh2.18%

Arizona-1,031lbs/MWh2.05%

FINAL

Comparison of State CO2 Emission Rates – Baseline Raw Data (lbs/MWh)

Source:EPADataFile-2012Unit-LevelDataUsingtheeGRIDMethodology;IncludesVermont,whichisnotsubjecttoExisVng-SourceGHGRule.

2051.5

1158.9 1138.0

167.0

0.0

500.0

1000.0

1500.0

2000.0

2500.0

Kentucky

Wyoming

WestV

irginia

NorthDakota

Indiana

Utah

Missou

riNeb

raska

Colorado

Kansas

Ohio

New

Mexico

Hawaii

Iowa

Michigan

Wisc

onsin

Oklahom

aMon

tana

Minne

sota

Arkansas

Florida

Maryland

NaV

onalAverage

Georgia

Alaska

Texas(#25)

Delaware

Tenn

essee

NorthCarolina

Louisia

na

Alabam

aPe

nnsylvania

Mississippi

Illinois

MassachuseQ

sSouthCarolina

Rhod

eIsland

Nevada

Maine

Virginia

Arizo

na

New

Ham

pshire

California

New

York

SouthDa

kota

New

Jersey

Conn

ecVcut

Idaho

Oregon

Washington

Verm

ont

8

EPA-Assumed Increase in Renewable Generation (2012-2030)

Sources: EPA, Greenhouse Gas Mitigation Measures TSD (Final Rule); EPA, GHG Abatement Measures TSD (Rule Proposal). Assumes: 2012 baseline capacity is apportioned, by technology, at EPA’s modeled historic distribution; average acre/MW (5 MW/KM2) from NREL, U.S. Renewable Energy Technical Potentials: A GIS-Based Analysis, July 2012; state areas from U.S. Census, Geography, State Area Measurements; 2012 Projected Installed Wind Capacity

from U.S. EIA, Annual Energy Outlook 2015, Table 58.

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

900,000,000

1,000,000,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

9

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2010 2011 2012 2013 2014

ActualOnshoreWindGrowth2012Boom/2013Cliff(MWInstalled)

92%Drop

GeothermalConcentraVngSolarPowerHydropower

OnshoreWind

Solar

HistoricMaximumGrowth“Franken-Fleet”

AverageHistoricGrowth

Megaw

ab-Hou

rsofD

ispa

tch

EPAassumestheconstrucVonof104,317MWofwindcapacityfrom2022-30.Thisequals45,0002.3-MWturbinesandover5.2millionacres;greaterthanthecombinedlandareaofRhodeIsland,Delaware,andConnecVcut(beyondthe82,000+MWexpectedtobeinstalledasof2021–another4.1millionacres).

EPA’s Assumed Build-out of Renewable Energy (RE) For Top 10 RE States (By 2030)

Preliminary analysis; subject to revision. WA and OR, at 10 & 11 million MWh, respectively, showed lower RE needs per EPA IPM modeling of the Final rule (excl. hydro). Source: Proposed Rule EPA Data File, Goal Computation, Appendix 1; GHG Abatement Measures TSD; Final rule;

IPM model runs. Depicts top 10 states based upon 2012 renewable generation, excluding existing hydro resources. 10

0.0 20.0 40.0 60.0 80.0 100.0

NorthDakotaColoradoOregon

WashingtonIllinois

OklahomaMinnesota

IowaCalifornia

Texas

MillionMWh/yr

2012RenewablesAddiVonspertheProposedRuleFurtherAddiVonsPerFinalRuleIPM

PUTTING EPA’S ASSUMED WIND & SOLAR BUILD IN PERSPECTIVE (2013-2030 U.S. Build v. Current World)

Applies EPA’s incremental growth targets under the final CPP and assumes EPA’s modeled historic distribution of generation from 2013 through 2021. Sources: EPA Greenhouse Gas Mitigation Measures TSD; EIA, International Energy

Statistics, Renewables, 2012.

0

100

200

300

400

500

600

700

CPPUnitedStates

World UnitedStates

China CPPERCOT

Germany Spain Italy India UnitedKingdom

France Japan Canada

CPPASSUMESTHATU.S.WILLBUILD&DISPATCH6XMOREWIND&SOLARMWhBEFORE2030THANANYNATION’SCURRENTWIND/

SOLARFLEETDISPATCHES

TEXASALONEISASSUMEDTOADDASMUCHWIND&SOLARASANY

OTHERNATIONHASNOW

MillionMWh

11

Bloomberg Graphic Implies Wind on Par with Coal in Texas Market, but . . .

0

2000

4000

6000

8000

10000

12000

14000

16000

Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15

Coal’s Great Pains??? WindPowerGrowinginTexas;CoalSVllVitallyImportant

TexasNetPowerGeneraVonFromCoal(GWh)TexasNetPowerGeneraVonFromWind(GWh)

Source:U.S.EnergyInformaVonAdministraVon,ElectricityDataBrowser.IncludesallElectricPower,includingElectricUVlityandIndependentPowerProducers"

The REAL picture is quite different

Capacity Factor of Wind over Peak = 12% (Case Study – ERCOT - First Week of August 2015)

Sources: ERCOT, Daily Wind Integration Reports; ERCOT, Item 4.1: CEO Update.

MW

*New Peak Records: Aug. 5 – 68,459 (Wind Over Peak 2,501); August 6 – 68,912 (Wind Over Peak 3,418); August 10 – 69,783 (Wind Over Peak 2,242).

ERCOT 2015 installed wind capacity is 13,060 MW.

RemainingGeneraVonWindAtPeak IdleInstalledWind

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

1-Aug 2-Aug 3-Aug 4-Aug 5-Aug 6-Aug 7-Aug 8-Aug 9-Aug 10-Aug 11-Aug

60,903 61,87166,234 65,690

68,459* 68,912* 68,693 66,602 66,35269,783* 69,625

WindO

verPeak:1,066MW

14

ALL PAIN, NO GAIN Clean Power Plan Impacts

WORLD GAIN •  0.2% reduction in CO2 concentration (see pie

chart) •  Global temperature increase reduced by 0.01¡

F

•  Sea level rise reduced by less than 1/100th of an inch (less than the thickness of 2 sheets of paper or 1 or 2 human hairs)

•  In 2025, total annual US reductions will be offset by approximately 3 weeks of Chinese emissions

U.S. PAIN •  $220 to $292 billion increase in energy sector

expenditures between 2022 and 2033 •  Annual energy sector expenditures increase

between $29 to $39 billion per year • Double-digit electricity price increases in 40 states •  21% peak-year electricity price increase in Texas • Households will have $64 to $79 billion less to

spend •  47,000 megawatts of power plants forced to close

Modeled CO2 Reduction 0.98 ppm

15

Remaining CO2 Concentration 499.02 ppm

2050 GLOBAL CO2 CONCENTRATION

10°

20°

30°

40°50°

60°

IPCCProjectedIncreaseinGlobalAvg.Temp.–Upto3.6°F

0°

CurrentGlobalAvg.Temp.–58.24°F

ReducVonfromRuleBasedonEPAMethodology–0.01°F

“Pain”Sources:NERAEconomicConsulVng,EnergyandConsumerImpactsofEPA’sCleanPowerPlan,November7,2015;“Gain”Sources:“ClimateEffects”ofEPA’sFinalCleanPowerPlan,ACCCE,August2015(IntergovernmentalPanelonClimateChange(IPCC)projectedconcentraVonsofCO2in2050from450to600ppm);StatementofKarenHarbert,U.S.ChamberofCommerce,U.S.HouseofRepresentaVvesComm.onScience,Space,&Technology,April15,2015;NaVonalCentersforEnvironmentalInformaVon,NOAA,GlobalAnalysis–Annual2014.

StatesOpposingEPA

StatesInterveninginSupportofEPA

StatesThatHaveNotTakenAcVon

StatesWithInternalDisagreement(e.g.Governor,Legislature,AQorneyGeneral)

CleanPowerPlanLi>ga>onStateAcVons