KY Dept. for Environmental Protection Climate Change

1. KY Dept. for Environmental Protection Climate Change Presentation to:Greater Louisville Inc. November 12, 2008 Department for Environmental ProtectionEnergy & Environment Cabinet To Protect and Enhance Kentucky’s Environment

2. CLIMATE CHANGE IN THE HEADLINES Kansas Coal-Fired Electricity Generating Plant • On October 18, 2007 the Kansas Department of Health and Environment became the first government agency in the United States to cite carbon dioxide emissions as the reason for rejecting an air permit for a proposed coal-fired electricity generating plant, saying that the greenhouse gas threatens public health and the environment. • The decision marks a victory for the environmental groups that are fighting proposals for new coal-fired plants around the country. • It may be the first of a series of similar state actions inspired by a Supreme Court decision in April 2007 that asserted that greenhouse gases such as carbon dioxide should be considered pollutants under the Clean Air Act.

3. CLIMATE CHANGE IN THE HEADLINES Sierra Club Objects to Permit for the Cash Creek Generation Station • On January 31, 2008, the Sierra Club petitioned that EPA object to the issuance of the proposed Title V Operating Permit for the Cash Creek Generation Station in Henderson, KY. • The Sierra Club argued; • That Carbon dioxide emissions and ensuing global warming effects clearly pose a threat to the health and welfare of humans, animals, and plants. • The permit must ensure that emissions of carbon dioxide from the proposed facility are adequately controlled to avoid such impacts, under 401 KAR 63:020, “Potentially Hazardous Matter or Toxic Substances.” However, neither KDAQ nor the applicant considered the impacts of carbon dioxide from the Cash Creek project. • Because Carbon Dioxide (CO2) has been regulated under the Clean Air Act since 1993, and will be emitted in a “significant” amount from the cash creek plant, the Title V permit for the facility must include a CO2 Best Available Control Technology (BACT) limit. • Congress specifically ordered EPA “to promulgate regulations” requiring that facilities covered by Title IV of the Act monitor and report their CO2 emissions in section 821. • On April 2, 2007, the Supreme Court reconfirmed that carbon dioxide and other greenhouse gases are “pollutants” under the Clean Air Act – clarifying that they are, indeed, “subject to regulation.” Massachusetts v. EPA, 127 S.Ct. 1438, 1460 (2007).

4. CLIMATE CHANGE IN THE HEADLINES Sierra Club Objects to Permit for the Cash Creek Generation Station • KYDAQ rejected Sierra Club’s comments on the lack of a CO2 BACT limit by stating: • No NAAQS or NSPS has been established for carbon dioxide (CO2),CO2 is not a Class I or II substance nor is it otherwise regulated under any provision of the CAA at this time. • Cash Creek announced it will capture carbon dioxide from the process and will pipe it to an undisclosed location for use in enhanced crude oil recovery.

5. WHAT’S GOING ON NATIONALLY? Regional Initiatives

6. WHAT’S GOING ON NATIONALLY?

7. WHAT’S GOING ON NATIONALLY? Dingell-Boucher Draft Climate Bill • Introduced on October 7, 2008 by Committee on Energy and Commerce Chairman John Dingell (D-MI) and Subcommittee on Energy and Air Quality Chairman Rick Boucher (R-VA). • This draft is the culmination of nearly two years of intensive work on climate change by the Committee. Examination of the issue began in January 2007. • The Committee held 27 hearings, released four white papers on different aspects of climate policy, conducted numerous workshops, and received thousands of pages of written responses to their letters and questions for the record. • Draft would amend the Clean Air Act to establish an economy-wide cap-and-trade program to reduce greenhouse gas emissions. • Would reduce covered emissions to 6 percent below 2005 levels by 2020, 44 percent below 2005 levels by 2030, and 80 percent below 2005 levels by 2050. • Hydrofluorocarbons are covered separately from other gases by amending Title VI of the Clean Air Act.

8. WHAT’S GOING ON NATIONALLY? Climate Change Discussion Draft Legislation Continued • Sources “covered” by the cap include: power plants, producers and importers of petroleum and other fossil-based fuels, large industrial facilities, producers and importers of other bulk gases, natural gas local distribution companies, and geologic sequestration sites. • For smaller industries, U.S. EPA would have the authority to set limits on any plant that releases less than 25,000 tons per year of greenhouse gases. • Phases out all free allowances by 2026 and turn to an auction that recycles all of the revenue back to taxpayers. • Allows companies to bank away unused credits and also to borrow against credits they would receive in future years. • Sets up a special auction of "strategic reserve" allowances for companies if greenhouse gas market prices hit a to-be-determined level. • Gives authority to the Federal Energy Regulatory Commission to oversee the carbon market. • Prevents states from developing “state specific” programs. • Hearings and a legislative markup of Dingell's proposal will not come until 2009.

9. WHAT’S GOING ON NATIONALLY? Advance Notice of Proposed Rulemaking: Regulating Greenhouse Gas Emissions under the Clean Air Act • In April 2007, the Supreme Court concluded that Green House Gases meet the CAA definition of an air pollutant (Massachusetts v. Environmental Protection Agency). • On May 14, 2007, in response to the Supreme Court’s decision, the President issued an Executive Order to control GHG emissions from motor vehicles, nonroad vehicles, and nonroad engines. • With the enactment of the Energy Independence and Security Act (EISA) on December 19, 2007, the policy context for the response to the Supreme Court decision changed. • This ANPR accounts for those changes and asks the public to help EPA evaluate whether there is a regulatory path available through the Clean Air Act to control emissions of GHGs.

10. WHAT’S GOING ON NATIONALLY? Greenhouse Gas Reporting Rule • In its Fiscal Year 2008 Consolidated Appropriations Act (H.R. 2764; Public Law 110-161), Congress directed EPA to publish a mandatory greenhouse gas reporting rule, using the Agency’s existing authority under the Clean Air Act. • The rule will require mandatory reporting of GHGs “above appropriate thresholds in all sectors of the economy.” • EPA is responsible for determining those thresholds, as well as the frequency of reporting. • Congress requested EPA include reporting of emissions “resulting from upstream production and downstream sources,” to the extent that the Agency deems appropriate. • The Appropriations language instructs the Agency to publish a proposed rule within 9 months (e.g., September 2008), and a final rule within 18 months (e.g., June 2009). • U.S. EPA sent its proposed GHG reporting rule to the Office of Management and Budget October 24, 2008 for review. EPA missed its September 2008 statutory deadline to issue the proposed rule.

11. WHAT’S GOING ON NATIONALLY? Current and Near-Term Greenhouse Gas Reduction Initiatives • Across the Federal government, partnerships and programs promote opportunities to conserve fossil fuels, improve energy efficiency, recover methane and sequester carbon. The emissions reductions achieved through these initiatives will help the U.S. achieve its intensity goals.

12. EPA GREENHOUSE GAS REDUCTION INITIATIVES EPA plays a significant role in helping the United States reach its intensity goal through near-term initiatives that encourage voluntary reductions from large corporations, consumers, industrial and commercial buildings and many major industrial sectors.

13. EPA GREENHOUSE GAS REDUCTION INITIATIVES Clean Energy-Environment State Partnership A voluntary state-federal partnership that encourages states to develop and implement cost-effective clean energy and environmental strategies. Climate Leaders An EPA industry-government partnership that works with companies to develop comprehensive climate change strategies. Combines Heat and Power (CHP) Partnership A voluntary program to reduce the environmental impact of power generation by promoting the use of CHP. CHP is an efficient, clean and reliable approach to generating power and thermal energy from a single fuel source. Energy Star A voluntary labeling program designed to identify and promote energy-efficient products to reduce greenhouse gas emissions. EPA also offers the Energy Star partnership to businesses and organizations of all types and sizes including schools, hospitals, hotels, small businesses and congregations and to key industries such as auto manufacturing, petroleum refining and pharmaceuticals.

14. EPA GREENHOUSE GAS REDUCTION INITIATIVES Green Power Partnership A voluntary partnership between EPA and organizations that are interested in buying green power. Green power is an environmentally friendly electricity product that is generated from renewable energy sources. As a Green Power partner, an organization pledges to replace a portion of its electricity consumption with green power within a year of joining the Partnership. WasteWise A voluntary EPA program through which organizations eliminate costly municipal solid waste and select industrial wastes, benefiting their bottom line and reducing the amount of waste deposited in landfills. WasteWise is a flexible program that allows partners to design their own waste reduction programs tailored to their needs. Several other GHG reduction initiatives are listed on EPA’s website www.epa.gov/climatechange/policy/neartermghgreduction.html

15. Barack Obama’s Climate Change Policy Positions • Backs ambitious legislation to cut U.S. global-warming pollution 80% below 1990 levels by 2050. • Under Obama’s cap-and-trade proposal, the federal government would auction GHG emission credits to companies that want to continue to pollute. • Money from the auction would be used to develop clean-energy technologies, increase efficiency, and underwrite the labor costs of transitioning to new technologies.

16. WHAT IS KENTUCKY DOING? Kentucky has joined the Climate Registry • The Climate Registry is a non-profit 501(c)3 organization, founded by the participating state, tribes, and provinces. • A group of more than 30 states and several tribes have participated in this effort to standardize best practices in GHG emissions data reporting and management, establish a set of common protocols, and support a common reporting system. • The Climate Registry’s goals include: • creating a common standard for tracking and measuring GHG emissions; • standardizing best practices in GHG emissions reporting; • promoting full and public disclosure of GHG emissions; • lowering costs for states from pooled resources; • developing linkages between policies and management systems; and • establishing a common infrastructure to support current and future mandatory reporting programs.

17. WHAT IS KENTUCKY DOING? The Climate Registry Voluntary Reporting Process • The Registry’s reporting program, while voluntary to join, is rigorous in its reporting requirements to ensure that meaningful high quality data is reported. Voluntary reporting is a three step process: • Calculate. Each year all Members must calculate all GHG emissions (CO2, CH4, N2O, PFC, HFC, and SF6) from operations in North America (Canada, United States, and Mexico) using the General Reporting Protocol. • General Reporting Protocol. The Registry’s reporting requirements. • Industry Specific Reporting Protocols. To be developed. • Report. Members must enter their GHG emissions into the Climate Registry Information System (CRIS), an online GHG calculation, reporting, verification tool that enables public access to verified emission reports. • Climate Registry Information System (CRIS). Available Summer 2008. • Verify. After calculating and reporting GHG emissions, all Members must obtain third party verification annually to ensure the accuracy of the data. • Verification More information about verification. • General Verification Protocol. The Registry’s verification requirements. Available April 2008. • Industry Specific Verification Protocols. To be developed

18. WHAT IS KENTUCKY DOING? Climate Action Plan • Kentucky is in the initial stages of developing a State Climate Action Plan. • Some of the initial hurdles will involve: • Creating a task force to bring together experts within the state to develop a comprehensive strategy to address climate change. • Develop a greenhouse gas inventoryfor the state • Project future emissions based on expected population, economic growth and other factors • Identify areas where emissions could be reduced, and • Develop a greenhouse gas emission reduction goal • By taking this proactive approach to planning, Kentucky will lower greenhouse gas emissions, reduce energy costs, protect air quality and public health and improve the economy and environment.

19. WHAT IS KENTUCKY DOING? Good Resource for Developing Climate Action Plan The Center for Climate Strategies (CCS) The Center for Climate Strategies (CCS) helps many public officials and stakeholders from the United States, Mexico, and Canada respond to the challenges posed by global warming and related opportunities for economic development, clean energy, and a safer environment. The website provides an interactive map that shows climate action plans underway or completed by U.S. states since 2000, many through CCS processes. www.climatestrategies.us/ • In the Southeast; North and South Carolina have completed their Climate Action Plans while the Florida Action Team on Energy and Climate Change submitted Phase 2 of their report to the State Governor on October 15, 2008.

20. WHAT IS KENTUCKY DOING? • Kentucky will also be releasing a new Energy Policy in November 2008. • Air quality, energy and climate issues will all be included in this policy.

21. QUESTIONS