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Overview of EPA’s Final Clean Air Act Section 111(d) Emissions Guidelines for Greenhouse Gas Emissions from Existing Ele

This session provides an overview of the EPA's guidelines for reducing greenhouse gas emissions from existing electric generating units and discusses North Carolina's historical emissions, authority, approach, interim and final goals, timeline, state plan components, emissions trading, reliability assurance, and community involvement.

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Overview of EPA’s Final Clean Air Act Section 111(d) Emissions Guidelines for Greenhouse Gas Emissions from Existing Ele

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  1. Overview of EPA’s Final Clean Air Act Section 111(d) Emissions Guidelines for Greenhouse Gas Emissions from Existing Electric Generating Units Air Quality Committee Special Information Session September 9, 2015 Sushma Masemore, PE Planning Section Chief Division of Air Quality Department of Environment and Natural Resources

  2. Topics Covered • North Carolina’s Historical Emissions • Authority • Approach • Interim and Final Goals • Timeline • State Plan Components • Emissions Trading • Reliability Assurance • Community Involvement

  3. Key Terms • Carbon Dioxide (CO2) mass emissions = ton of CO2 emitted from Electric Generating Units (EGUs) • Net Electric Output = gross electric generation minus electricity used to operate plant equipment and includes transformer losses at the point of sale • CO2 Rate = CO2 mass emissions ÷ Net Electric Output • Heat Rate = energy input to the boiler ÷ Net Electric Output • Heat Rate Improvement = any measures taken inside the footprint of the EGU facility to decrease the heat rate of the affected unit • Equipment repairs, modifications, replacements, or upgrades • Changes to processes or control systems • Changes to management practices such as maintenance procedures and load management • Utilization of thermal energy produced from combined heat and power system • Others

  4. Key Terms • NGCC = natural gas combined cycle power plants • RE = renewable energy generation from zero to no carbon emitting sources such as solar and wind • EE = energy efficiency achieved through actions by end-users such as lighting improvements and the use of more efficient appliances • BSER = Best System of Emissions Reductions available to an affected source to achieve emissions reductions after considering cost, technical feasibility, useful life, etc.

  5. Historical Trends in NC’s CO2 Rate and Emissions Reductions Already Achieved: Relative to 2005 Rate: 18.8% Mass: 25.8% Relative to 2012 Rate: 7.8% Mass: 1.6% Source: Energy Information Administration

  6. Clean Power plan: Authority

  7. Authority Cited in EPA’s Clean Power Plan • Clean Air Act section 111(d) • 40 Code of Federal Regulations (CFR) Part 60 • Applies to fossil fuel-fired electric generating units (EGUs) that began construction on or before January 8, 2014 • Signed August 3, 2015 http://www2.epa.gov/cleanpowerplan/clean-power-plan-existing-power-plants • Requires reductions in CO2 rate or mass emissions by 2030 relative to 2012 levels • EPA applied BSER (considering cost, size of reductions, technology, feasibility) to develop guidelines for states to achieve

  8. Affected Sources in North Carolina

  9. Rule Content and Supporting Documents • Final Rule (1,560 pgs) • Regulatory Impact Analysis (343 pgs) • Technical Documents • Power Sector Modeling (322 pgs + many spreadsheets) • Legal Memorandum for Certain Issues (152 pgs) • Emission Performance Rate and Goal Computation (50 pgs + spreadsheet) • New Source Compliments to Mass Goals (10 pgs + spreadsheet) • GHG Mitigation measures (274 pgs + spreadsheet) • Resource Adequacy and Reliability Analysis (57 pgs) • Incorporating Renewable Energy and Energy Efficiency into State Plans (20 pgs) • Demand-Side Energy Efficiency (105 pgs + spreadsheets) • Fact sheets

  10. Clean power plan: EPA’S Approach

  11. Determination of Best System of Emissions Reductions (BSER) • System = network of electrical grid connecting power sources • BSER based on three building blocks • BSER applied to three interconnections to create: Uniform emission performance rate for: • Fossil Steam (Coal + Oil) units • Natural gas combined cycle (NGCC) units State rate goal State mass goal 1 2 3

  12. Goal Setting Method • Regional 2012 Baseline Emission Rate • (fossil steam, NGCC) • Adjusted 2012 Baseline Emissions for Each State • (coal, oil, NGCC) • 2012 Baseline Emissions for Each State • (coal, oil, NGCC) Under construction units added • Building Block 1 Heat Rate Improvement 3 • State Mass Goal • (aggregate) • Building Block 3 Renewable Energy shifts fossil steam and NGCC Excess Building Block generation not needed to meet performance rate goal • Building Block 2 • 75% NGCC capacity further shifts fossil steam 1 2 • State Rate Goal • (aggregate) • Emission Performance Rates • (fossil steam, NGCC) • Regional Rates • For Three Interconnections • (fossil steam, NGCC) Least stringent regional rate used

  13. 2012 Baseline CO2 Rates NC’s Coal Plants had the lowest CO2 Emission Rate in 2012 2012 Regional Fossil Steam Rate range 2012 Regional NGCC Rate range

  14. Summary of North Carolina’s Interim and Final Targets 1 2 3

  15. Building blocks

  16. Building Block 1: Heat Rate Improvements at Affected Coal Units • Regionally derived heat improvement used to reduce CO2 emissions from affected coal-fired EGUs in each interconnection region • Eastern = 4.3% • Western = 2.1% • Texas = 2.3% • Goals cannot be met solely through heat rate improvement

  17. Building Block 3: Renewable Energy (RE) • Applied before Building Block 2 • RE = onshore wind, solar (utility scale/concentrated, geothermal, hydroelectric) • Existing RE not counted, only the incremental amount • RE Generation Potential calculated based on economic modeling of each interconnection region • Excess RE from Western and Texas interconnections calculated using a model. Accounts for portion not needed to meet less stringent performance rates in the Eastern interconnection. • RE Generation replaces 64% of coal generation and 36% of NGCC generation in the Eastern Interconnection

  18. Building Block 2: NGCC Capacity Increased to 75% • Used as a ceiling to further reduce fossil steam generation • NGCC generation at 75% capacity factor reduces additional fossil steam generation beyond those already replaced through renewable energy in Building Block 3 • States can specify their own glide paths to achieve 75% NGCC capacity by 2030

  19. Other BSER Options Outlined in EPA’s Guidelines • Demand side energy efficiency • New or uprated nuclear generation • Other types of renewables (distributed solar, offshore wind) • Sustainable biomass • Combined heat & power, waste heat power • Transmissions and distribution improvements • Inclusion of new NGCC for mass-based goal

  20. Compliance Timeline under EPA’s Clean Power plan

  21. Key Dates Under EPA’s Clean Power Plan • Sept. 6, 2016 – Final Plan or Initial Submittal (with request for extension) • Sept. 6, 2017 – Initial Submittal update due if extension granted • Sept. 6, 2018 – Final Plan due if extension granted • July 1, 2021 – Milestone status report due • 2022-2029: Interim goal to be achieved • July 1, 2025: meet Interim Step 1 Goal for 2022-2024 • July 1, 2028: meet Interim Step 2 Goal for 2025-2027 • July 1, 2030: meet Interim Step 3 Goal for 2028-2029 • 2030: Final goal to be achieved • July 1, 2032 and every 2 years beyond

  22. State plan components

  23. Initial Plan Components(If Final Plan is not submitted by Sept. 6, 2016) • Explanation why the state requires additional time • Final Plan approach under consideration, including progress made to date • Demonstration of public engagement (including vulnerable communities) • If interested, non-binding statement of interest in the Clean Energy Incentive Program (CEIP)

  24. Types of Final State Plans • Must define whether the state will achieve • Federal emission performance rates or • State rate-based goal or • State mass-based goal • Choose between 2 types of Plans • Emissions Standards Plan • State Measures Plan 24

  25. Emissions Standards Plan & State Measures Plan • Emissions Standards Plan • Performance Rate • State Rate-Based • Regulates only the owners/operators of covered EGUs • EGUs must meet their required performance rate or state-specific rate-based goal • Similar to other Clean Air Act programs • Consists of federally enforceable or combination of federally enforceable and state only enforceable requirements • Must result in EGUs meeting the EPA’s or state’s mass-based goal • Must be “quantifiable, verifiable, enforceable, non-duplicative and permanent” • States can impose requirements on non-EGUs through state law • Examples: renewable energy, energy efficiency • Not federally enforceable • If state measures don’t perform as planned, federally enforceable backstop (e.g., final model rule) kicks in • State Measures • Plan • Mass-Based

  26. Final Plan Components Non-Enforceable (Not Codified) 40 CFR 60.5745 Paragraphs (a)1-13 Federally Enforceable (Codified) 40 CFR 60.5740 Sections 1-5 +

  27. Other componentsEmissions tradingReliability assurancecommunity involvement

  28. Key Summary Points • States must choose their approach: • Federal emission performance rates or • State rate-based goal or • State mass-based goal • States must submit a Final Plan by Sept 6., 2016 or Sept. 6, 2018 (if extension is granted) • Final Plan must contain federally enforceable and state-only enforceable measures • Demonstration of compliance for each component must in be great detail to ensure interim and final goals will be met

  29. Visual Depiction of North Carolina’s Targets 1 2 3

  30. Questions? Contact Sushma Masemore, PE Division of Air Quality 919-707-8700 sushma.masemore@ncdenr.gov

  31. Additional Reference materials From EPA’s Clean Power plan

  32. Emission Performance Rates 1

  33. North Carolina’s Rate Goal 2 % State’s Generation from Fossil Steam & NGCC in 2012 Performance Rate State Rate Goal x =

  34. Rate Goal Comparisons with Other States 1,136 Fossil Steam Goal NGCC Goal 36% Note: Goals and % reductions are highly dependent on each State’s unique generation mix.

  35. State Mass Goal Method 3 • Excess RE Potential from Western & Texas Interconnections developed using optimization algorithm • Excess RE is the portion not needed to meet the less stringent performance rates in Eastern interconnection • Apportion Excess RE Potential based on 2012 share of affected EGU generation • NC = 3% • New Source Compliment (not addressed today) – allows new sources subject to 111(b) standards to be moved under 111(d) State Mass Goal 2 X NC Excess RE State Rate Goal 2012 State Generation x + =

  36. North Carolina’s Mass Goal 3 Note 1: EPA’s 2015 Power Sector Modeling projects that NC’s CO2 emissions without the CPP will be 48,856,544 tons in 2020. Note 2: The 2014 Power Sector Modeling projected much higher emissions at 64,658,776 tons CO2 for 2020.

  37. Mass Goal Comparisons with Other States 51 12% Note: Goals and % reductions are highly dependent on each State’s unique generation mix.

  38. Federally Enforceable Components in the Final Plan Component 1 - Identify affected EGUs and their CO2 emissions Component 2 – Required for emission rate based goals • Identify all emission standards • Compliance periods for each emission standard • Demonstrate how CO2 emission performance rate or rate goal will be achieved • Corrective measures • Multiple triggers at interim steps Component 3 – Required for mass-based goals only • Federally enforceable backstop - emission standards for affected EGUs during interim & final periods • Triggers for backstop

  39. Federally Enforceable Components in the Final Plan(Cont’d) Component 4 - Required for all goal plans • Monitoring, reporting and recordkeeping for each affected EGU Component 5 – Required for all goal plans • Process, contents and schedule for state reporting • Report to EPA by July 1, 2021 that NC is on track to meet milestones defined in State Plan

  40. Non-Federally Enforceable Components in the Final Plan Component 1 – Define State Plan approach and geographic scope Component 2 – Identify emission performance rates or state rate goal or state mass goal for interim period, interim steps, and final period Component 3 – Demonstrate that affected EGUs are projected to achieve CO2 goals Component 4 – Demonstrate that affected EGU’s emission standard is quantifiable, non-duplicative, permanent, verifiable and enforceable

  41. Non-Federally Enforceable Components in the Final Plan (Cont’d) Component 5 – Demonstrate achievement of rate-based or mass-based goals Component 6 –State Measures Information • Descriptions of all state measures, including applicable state laws or regulations • Projected impacts • Parties implementing State Measures • Schedule and milestones • CO2 performance projection Component 7 – Demonstrate that reliability of the electrical grid has been considered

  42. Non-Federally Enforceable Components in the Final Plan (Cont’d) Component 8 – timeline of all milestone steps Component 9 – demonstrate state’s legal authority and funding to implement and enforce each component Component 10 – demonstrate each interim step goal will be met, include analytic process, tools, methods and assumptions Component 11 – certification that a public hearing of the State Plan was held Component 12 – documentation of community outreach and involvement

  43. Emissions Trading • Market based policy that creates financial incentive to reduce emissions where the costs of doing so are the lowest • States can design “trading ready” rate-based or mass-based plans • Allows EGUs to use creditable out-of-state reductions to achieve required CO2 reductions • EGUs meet their emission standards via emission rate credits – ERCs (for a rate-based standard) or allowances (for a mass-based standard)

  44. Reliability Safety Valve • EPA’s approach to avoid threats to grid reliability during implementation • State must demonstrate that it has considered reliability issues in developing its State Plan • Safety valve triggered on EGU when there is conflict between requirements of the State Plan and maintenance of electric system reliability due to unforeseen or catastrophic events • Source emissions will be excluded from applicable emissions standards for 90 days • During the 90-day period, the source must meet an alternative emission standard that will not jeopardize grid reliability

  45. Clean Energy Incentive Program • Optional for states • Early credit program for RE and EE programs started in 2020 and/or 2021 • Credits may be banked or traded • RE • Must generate electricity from wind or solar sources • For every 2 MWh generated, project receives 1 credit • EE • Must implement in low-income communities • Electricity savings must be quantified and verified • For every 2 MWh saved, project receives 2 credits

  46. Community Involvement & Environmental Justice • Plans must demonstrate engagement with communities as part of public participation process in formulating state plans • Assessment of localized and community impacts

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