2011 IEA Energy Conference Environmental Panel September 16, 2011

1. 2011 IEA Energy ConferenceEnvironmental Panel September 16, 2011 Thomas W. Easterly, P.E., BCEE, QEP Commissioner, Indiana Department of Environmental Management

2. REMARKABLE AND CURIOUS TIMES • Power plants are getting cleaner and cleaner. • Air quality is getting better and better. • The economy is on its back. • Worldwide debate over the future of energy policy. • Increasing restrictions on the mining and burning of coal and the disposal of coal ash. • An avalanche of new action directly against power generation in general and coal-fired generation, in particular.

3. UNPRECEDENTED FEDERAL INITIATIVES Clean Air Act • CAIR (Clean Air Interstate Rule)/Transport rule/CSAPR (Cross State Air Pollution Rule) • NAAQS revisions—SO2, NOx, Ozone, PM2.5 • Mercury / HAPS (Hazardous Air Pollutants) • Greenhouse Gasses including CO2 Clean Water Act • Intake structures (316(b)) • Effluent guidelines Resource Conservation and Recovery Act (RCRA) • Coal combustion residuals (CCR)

4. IN Air Quality Progress • At the end of 2009, for the first time since ambient air quality standards were developed, all of Indiana met all of the health based ambient air quality standards (including the 0.075 ozone standard). • During 2010, the new 0.15 microgram per cubic meter lead standard became effective and almost 700 people may be breathing air above that new standard. IDEM is working to make sure that those Hoosiers have clean air to breathe.

7. CAIR/Transport Rule/CSAPR IDEM expected to meet the Transport Rule Statewide caps for 2012 without additional controls, CSAPR reduced those caps by 29%--not currently attainable. IDEM expected that we would need one current project completed and another source controlled to meet the 2014 caps. CSAPR reduced the caps by 20%. The wording of the rule does not appear to match U.S. EPA’s description of how the rule will be implemented. CSAPR annual cost estimated to be $2.4 billion.

8. CAIR/Transport Rule/CSAPR U.S. EPA is implementing CSAPR through a Federal Implementation Plan (FIP) before allowing the States to implement the rule. The State has no role in CSAPR unless we modify our State Implementation Plan (SIP). U.S. EPA has told us that they will approve our requests to redesignate the State of Indiana to attainment for PM2.5 now that CSAPR is in effect. This rule will also allow U.S. EPA to approve our BART SIP submission.

9. NAAQS Revisions At the end of 2009, all of Indiana met every currently effective NAAQS for the first time since NAAQS were established in the 1970’s. • New 75 ppb 1 hour SO2 Air Quality Standard. • New 100 ppb short term NOx Air Quality Standard. • U.S. EPA reconsideration of 0.075 ppm ozone Air Quality Standard. • U.S. EPA review of the 15 microgram/cubic meter annual PM2.5 Air Quality Standard.

10. 1-Hour Sulfur Dioxide (SO2) – Maximum 1-Hour Design Value Trends

11. Indiana Preliminary Designation Recommendations SO2 1-Hour Standard June 6, 2010: U.S. EPA Announced A New SO2 1-Hour Standard Set At 75 ppb

12. NAAQS REVISIONS - OZONE • Administrator Jackson stated that the current 0.075 ppm (8 hour average)ozone standard did not protect public health and would be reconsidered. • On January 19, 2010 U.S. EPA proposed a new standard (0.060 – 0.070 ppm). • Good news: On September 2, 2011, President Obama cancelled the reconsideration—next ozone standard revision will be on the normal schedule (2013).

13. Ozone – Maximum Design Value Trends

16. March 15, 2010: U.S. EPA Announced It Would Reconsider The Annual PM2.5 Standard Within ARange Of 11-14 µg/m3 PM2.5 Annual Design Values (3-yr Average) Based on 2008-2010 Monitoring Data Standard at 13 µg/m3

17. Fine Particle (PM2.5) – Maximum Annual Design Value Trends

20. MERCURY MACT (NESHAP) Proposal Published: May 3, 2011 Final Deadline: November 16, 2011 • Annual rule cost $10.9 billion. • Annual rule HAP benefit $5,000 to $6,000,000 (0.00209 IQ points per exposed person or 510.8 IQ points per year in US out of 31 billion IQ points) • Rule cost is between $1,211 and $2,180,000 per $1 of HAP benefit. • Estimated annual co-benefits $53 to $140 billion.

21. MERCURY MACT (NESHAP) • HAPS: Hg, HCL, PM, THC, Dioxins / Furans • Rule requires about 90% reduction in mercury emissions. • No MACT trading (except units at a single site). • Mercury emissions in Indiana have decreased by approximately 20% over the past 14 years, but measured mercury deposition has decreased by only 7% and there is no apparent change in mercury fish concentrations in Indiana.

25. CO2 (Green House Gasses) U.S. EPA Clean Air Act initiatives: • Mandatory reporting rule – annual report for facilities emitting more than 25,000 TPY. • Light duty vehicle rule – GHG’s become “regulated NRS pollutants” triggering PSD. • Tailoring rule – GHG permitting for facilities emitting more than 25,000 TPY. • BACT Guidance issued November 2010. • Other initiatives temporarily tabled.

26. CO2 (Green House Gasses) The National Academy of Sciences report, “America’s Climate Choices” recommends that actions be taken now to start reducing U.S. greenhouse gas emissions to levels between 50% and 80% below 1990 levels. • Achieving an 80% reduction from 1990 levels would require a 81.4% reduction from 1999 levels. • If we converted all U.S. fossil fuel use from coal and oil to natural gas, we would achieve a 23.9% reduction from 1999 levels.

27. CO2 (Green House Gasses) • The remaining emissions would need to be reduced by 73.8% to reach the 80% target. • Apparent choices are: • Energy conservation. • Increasing non-hydro renewable energy sources from the current 5.5% market share. • Carbon sequestration. • Nuclear electricity. • Is it possible to achieve the additional 73.8% reduction?

28. Clean Water Act – (316(b)) Proposed: April 20, 2011 Good news: Does not mandate retrofitting closed-cycle cooling to address entrainment at all facilities covered by the rule. Bad news: Inflexible one-size-fits-all approach to minimizing impacts due to impingement of aquatic organisms by cooling water systems.

29. CLEAN WATER ACT – EFFLUENT GUIDELINES (technology based effluent limits) Notice of plan availability: December 28, 2009 (74 Fed. Reg. 8599) Request for information: March 9, 2010 (75 Fed. Reg. 10791) Highlights: • “high levels” of toxic weighted pollutants • Caused by air pollution control systems • Various wastewater treatment systems under investigation

30. Coal Combustion Residuals (CCR) Proposed rule: June 21, 2010 (75 Fed. Reg. 35127) • Beville amendment and actual waste characteristics have historically exempted CCR from Subtitle C (hazardous waste) regulation . • December 2008 coal ash spill in Tennessee has caused that exemption to be reviewed • Options being considered include: - phase out all surface impoundments in favor of landfills. - allow surface impoundments, but with stricter controls.

31. Coal Combustion Residuals IDEM data indicates that CCR do not exhibit hazardous characteristics, therefore, they should not be regulated under Subtitle C. IDEM believes that U.S. EPA should develop reasonable minimum national management standards for surface impoundments and landfills under Subtitle D. Due to volume of public comments, U.S. EPA will not publish a final rule until sometime in 2012.

32. Questions?