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EPA’S DRAFT GUIDELINES TO STATES FOR THE DEVELOPMENT OF STATE 111(d) PLANS
MIDWESTERN POWER SECTOR COLLABORATIVEJUNE 17, 2014
FRANZ LITZPROGRAM CONSULTANT
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The Federal-State Framework• EPA issues standards for new sources
(under §111(b) of the Clean Air Act)• EPA’s guidelines under 111(d)• State 111(d) plans:
– Single state plans; or– Regional plans
• If state fails to submit plan, or the plan is inadequate, EPA must impose federal plan
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Summary of EPA 111(d) Guidelines• Dubbed EPA’s “Clean Power Plan”• Sets minimum stringency for a state—called “state
goals” that apply in aggregate to the state’s “affected” electric generating units
• Establishes a compliance time period of ten years, with an interim target to apply on average between 2020 and 2029, and a final target in 2030
• Guidelines give states very broad flexibility to achieve state goals through any “efficacious means”
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Source: Bloomberg New Energy Finance
State Goals as Tons Reduced from 2012
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State Goals as % Reduction from 2012
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Source: Bloomberg New Energy Finance
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“Adjusted Output-Weighted Average CO2 Emission Rates”
TOTAL CO2 EMISSIONSfrom Coal-, Oil- & Gas-fired Steam,
Natural Gas Combined Cycle & “Other” Units (Affected EGUs)
TOTAL NET ENERGY OUTPUTFrom Affected EGUs
+ Renewables + New Nuclear + 6% at-risk nuclear + cumulative annual EE savings
Lbs
MWh
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Heat Rate Improvements at Coal Plants6% through both O&M and plant upgrades
Increased Utilization of Existing Natural Gas PlantsDial up existing NGCC to 70% capacity factor
Increased Utilization of Zero Carbon Resources,Including Nuclear and Renewables
Operate New Nuclear Plants, Preserve the 6% of Existing Nuclear capacity that EIA projects would retire; & Achieve renewables generation consistent with average regional
renewables target
Achieve 1.5% Energy Savings through End-Use Energy Efficiency
Starting where a state is, increase energy savings at a rate of 0.2% per year until state reaches 1.5%
BUILDING BLOCKS
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Heat Rate Improvements at Coal Plants
Increased Utilization of Existing Natural Gas Plants
Increased Utilization of Zero Carbon Resources,Including Nuclear and Renewables
Achieve 1.5% Energy Savings through End-Use Energy Efficiency
OTHER “BUILDING BLOCKS”
Co-firing lower carbon fuels
Retirements
New Natural Gas Plants
Distributed Generation, Combined Heat and Power
Carbon capture & storage (e.g. EOR-related)
Gains from Trade/Regional Compliance
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State Approaches in 111(d) Plans• Work with rate-based goal or
convert rate to mass-based goal;• Broad flexibility in the approach taken
by states• EPA says flexibility allows states to
recognize “remaining useful life”
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Direct vs. “Portfolio” Measures• Direct emissions limits apply to
affected units.• “Portfolio” measures are enforceable
obligations on a 3rd party—either a private or govt. entity that is not the owner/operator of affected units; they present enforcement issues
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Rulemaking Timeline
• Draft guideline published in Federal Register (6-18-2014)
• 120-day Public Comment Period (≈10-16-2014)
• Final Rule June 2015
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Required Elements in State PlanFrom the Preamble (p.117):1. Enforceable measures that reduce EGU CO2 emissions;
2. Projected achievement of emission performance equivalent to goals established by the EPA, on a timeline equivalent to that in the emission guidelines;
3. Quantifiable and verifiable emission reductions;4. A process for reporting on plan implementation,
progress toward achieving CO2 goals, and implementation of corrective actions, if necessary.
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State Planning Timeline
• Final Rule June 2015• State plan timing:
– Initial state submittal in June 2016– One-year extension possible for adopting single-
state plans – Two-year extension possible for adopting regional
plans• Programs go into effect upon adoption of
state plans, unless superseded by federal plan