Environmental Issues in Electricity Demand Response

1. Environmental Issues in Electricity Demand Response New England Demand Response Initiative July 17, 2002, Holyoke, MA Nancy L. Seidman Massachusetts Dept of Environmental Protection Bill White U.S. Environmental Protection Agency, Region 1 Ken Colburn Northeast States for Coordinated Air Use Management

2. Topics to Cover • Background • Pollutants of concern and their impacts • Progress to date • Remaining Environmental Challenges • Regulatory outlook and timeline • Regulatory framework: state and federal permitting • Distributed generation • Economy–Environment Convergence?

3. Pollutant of Concern and Regulatory Standards • 7 federal (US-EPA) public health standards • four important for power generation • SO2, NOx, CO and PM2.5 • Ozone and PM2.5 • levels and trends • next steps in federal programs • next steps in state programs • CO2 and Hg - emerging issues

4. Health Effects of Exposure to Ozone • Coughing • Nose, and throat irritation • Chest pain • Reduced lung function • Increased susceptibility to respiratory illnesses • Aggravation of asthma • Children and people with chronic lung diseases are particularly at risk

5. Health Effects of Exposure to Fine Particles • Premature death • Respiratory related hospital admissions and emergency room visits for cardiac and other conditions • Aggravated asthma • Acute respiratory symptoms • Chronic bronchitis • Decreased lung function (shortness of breath) • People with existing heart and lung disease, as well as the elderly and children, are particularly at risk

6. Fine particles, or haze, impairs health and visibility Hourly conc. of fine particles in the 9-11 g/m3 range The Boston skyline on a clear day (Jan. 12, 2001) The Boston skyline on a hazy day (March 8, 2001) Hourly conc. of fine particles 55.4 g/m3

7. CO2 emissions contribute to global climate change – which is projected to have serious and wide-ranging impacts on human health and the environment

8. Air Programs Have Made Great Progress • Automobile tailpipe, inspection & maintenance, and cleaner gasoline programs • VOC & NOx control requirements for industry • Power plant control strategies: • Acid rain program: SO2 and NOx • NOx RACT in 1995 • OTC’s NOx budget program -- 1999 and 2003 caps • Section 126 petitions and NOx - - SIP call reductions in 2004 • State multi-pollutant power plant programs – MA, CT and NH

9. Ozone: Downward Trend for Both Old 1-Hr and New 8-Hr Standards

10. SO2 Emissions From New England Power Plants

11. NOX Emissions From New England Power Plants

12. Improvement in U.S. New Car Emission Standards, 1965 - 2005 Source: NESCAUM

13. Outlook: Environmental Challenges yet to be Addressed • Implementation of eight-hour ozone national ambient air quality standard • Implementation of fine particulate standard and regional haze program • Acid rain • Mercury from coal burning • Greenhouse gas emissions

14. Fine Particles are a Significant Problem in California and in the East

15. Areas Recommended by the States as Not Meeting EPA’s Ozone Standard Based on 1997-1999 ozone data

16. Timeline for Implementing New Ozone and PM Standards 2003 EPA finalizes implementation guidance 2003-4 States recommend nonattainment designation and boundaries 2004-5 EPA finalizes nonattainment designations and boundaries 2007-8 States submit control strategy SIPs Mercury MACT requirements take effect? 2009-15 Attainment deadlines for ozone and PM 2015?-18? Requirements for CO2, and additional reductions in NOx and SOx? • ISO NE projects peak electricity demand to increase by 13-20+% in 2009-2015

17. How Does Permitting Work Today? • State and Federal permitting roles • Federal rules (large new sources – New Source Review/Prevention of Significant Deterioration) • State delegation – other sources • Federal Air Quality Standards link to permit limits • For large power plants dispersion modeling used to determine ground level impact • Differences among states in how small sources are handled

18. SIP – State Implementation Plan: Links federal and state efforts • SIP – state implementation plan • EPA designates areas that don’t meet health standards • SIP = state regulations and programs to bring areas into compliance with federal standards • Some measures are required, others are optional, i.e. up to each state • Approved by EPA

19. A State Implementation Plan

20. What’s in a SIP • Plans • Commitments • Regulations • Letters and Attestations • Administrative Documentation • Technical Support and Background Documentation

21. Considering Control Strategies • Review Emission Inventory • Review available Control Technologies • Provide costs (for regulated community, for state) • Determine Effectiveness of Controls and Programs

22. What is distributed generation and why is it growing? • Distributed Generation (DG) is electric generation on site • < 1 MW and up to 10 MW DG is growing because: • Need for greater reliability and power quality- tiny outages can cost millions of dollars • Load/demand response programs pay customers to shed load - often switching to on-site generators • High electricity prices mean on-site options more attractive

23. DG has the potential to create environmental benefits by . . . • Achieving efficiencies of 80% and higher through Combined Heat and Power (CHP) • Increasing the contribution of low to zero emissions technologies to power generation • Reducing the need to run older, dirtier reserve generating plants • Reducing line losses

24. Diesel IC engines are far worse polluters than new gas plants (10 lbs/ MWh) (10 lbs/ MWh) (tons/ MWh) (0.0000001 lbs/ MWh)

25. Even low levels of DG use can have big impacts on air quality Potential Emissions Impact in Connecticut(NOx tons on a given ozone season day) Source: Chris James, CT DEP (post-contingency) (price-driven) (price-driven) (capacity shortfall)

26. Some evidence that use of and emissions from DG are rising New Hampshire 1996 - 1999 • Share of electric generation ozone season NOx emissions grew from 3.8% to 14% - nearly a four fold increase • Total NOx emissions from small diesel IC engines doubled - from 278 tons to 576 tons - even as total NOx emissions from all electric generators were nearly halved, from 7314 tons to 3986 tons Source: Andy Bodnarik, NH DEP

27. Permitting Requirements - MA • No permit required < 3 MMBtu/hr fuel input - 300 kw • > 3 MMBtu/hr fuel input - best available control technology (BACT) • Emergency engine limits • See 310 CMR 7.02, 7.03

28. Permitting Requirements - CT • General permit language for emergency engines - valid until 12/03 • units > 500 hp • Annual tons per year limits - 5 tpy NOx, SOx, 3 tpy PM • Ultra low sulfur fuel required • SW CT - 52 towns can participate in load response

29. States and EPA are taking steps to meet the DG challenge • Ozone Transport Commission (OTC) Model Rule lowers applicability thresholds for DG • EPA and NESCAUM developing inventory of installed on-site capacity in the Northeast • Connecticut General Permit for Distributed Generation issued earlier this year • RAP model regulation

30. Bottom line: DG can be good for the air, as long as it’s clean • Update regulations to capture diesel IC engines generating electricity • Don’t increase use of emergency backup generators • Level the playing field for clean, efficient DG by removing regulatory and market barriers and creating incentives • Clean DG can help add capacity while reducing emissions

31. Simultaneous Economic Growth and Environmental Improvement Sources: 1970 - 1999 emissions data is from the National Air Pollutant Emissions Trend Report, (EPA, March 2000). Projections for SO2 and NOx are derived from the Integrated Planning Model (IPM). GDP data through 2000 is from the Bureau of Economic Analysis, GDP projections follow EIA’s assumptions in AEO 2001 of 3% growth per year.