EPA Releases Final Clean Power Plan

On August 3, President Obama announced the U.S. Environmental Protection Agency’s (EPA) final Clean Power Plan (CPP).  First proposed in June, 2014 the goal of the CPP is to reduce carbon dioxide (CO2) emissions from existing power plants 32% from 2005 levels by 2030.  This is an increase from the originally proposed goal of a 30% reduction; and not the only change from proposed rule.  Before reviewing other key changes between the proposed and final rule let’s recap what sources are covered by the CPP.

CPP - PowerSectorCO2Emissions

Source: U.S. EPA

The CPP covers larger electric generating units (EGUs) that sell power to a utility distribution system.  Covered EGUs include any boiler, integrated gasification combined cycle, or combustion turbines (simple or combined cycle) that:

  1. is capable of combusting 250 million BTUs per hour or more
  2. combusts fossil fuel for 10% or more of its total annual heat input
  3. sells the greater of 219,000 MWh per year and one third of its potential electrical output
  4. was in operation or had commenced construction as of January 8, 2014

Given the electrical production numbers above, and assuming a capacity factor of 100%, the smallest possible generating unit that would be covered is 25 MW.  More realistically, covered EGUs will be at least twice this size.

Key Changes in the Final CPP

Mass-Based State Goals: One of the key changes from the proposed to the final rule is the addition of mass-based goal in addition to rate-based goals for each state.  The proposed rule only included rate-based goals. Mass-based goals were added to expand options for states when developing their plans, in particular it facilitates states’ use of mass-based trading programs.

Trading-Ready Mechanisms:  states have the option of developing trading-ready programs, which means EGUs can trade creditable reductions between states without the need for an interstate agreement to be in place beforehand.  EPA is committed to facilitate trading by helping states track emissions and credits.

Compliance Glide Path: one of the biggest criticisms of the proposed rule was the compliance cliff in 2029.  The final rule phases in EGU performance rates over three time periods: 2022-2024, 2025-2027, and 2028-2029; with final compliance in 2030.

BSER made up of Supply Side Building Blocks: EPA sets the level of reductions for EGUs by looking at the Best System of Emission Reductions (BSER) demonstrated for a pollutant.  In the proposed rule the BSER was made of four building blocks, including energy efficiency, a demand-side block.  The final rule only includes the supply-side building blocks shown below:

  • Improved Efficiency at Power Plants
  • Shift Generation from Higher Emitting Coal to Lower Emitting Natural Gas
  • Shift Generation to Zero-Emitting Renewables

Revised Building Block Assumptions: in addition to removing the demand-side building block EPA also revised the assumptions for the remaining supply-side building blocks based on feedback received on the proposed rule.

Building Block Proposed Rule Final Rule
Improved Efficiency at Power Plants Assumes a 6% improvement is possible for coal units 2.1% – 4.3% depending on region of the U.S.
Shift Generation from Higher Emitting Coal to Lower Emitting Natural Gas Increase the capacity factor to 70% for natural gas combined cycle EGUs 75% of net summer capacity
Shift Generation to Zero-Emitting Renewables increase use of renewable resources Assumes more renewables due to falling costs – excludes existing nuclear and renewables

For a complete overview of all the key changes see the EPA fact sheet Clean Power Plan: Key Changes and Improvements; a full list of EPA fact sheets on the CPP is at the bottom of the article.

Implementation and Compliance Timeline

In addition to increasing state flexibility and encouraging trading as a compliance tool the EPA also pushed back the first compliance milestone from 2020 to 2022.  The timeline for submitting plans has been pushed back two months, with at least an initial plan due by September 6, 2016.

CPP - Timeline2

Source: U.S. EPA

The extended timeline may give states greater flexibility in that it will give more time for economic fuel switching from coal to natural gas to continue to play out in the electric generation sector.  Just last week the Energy Information Administration (EIA) announced that power sector CO2 emissions hit a 27 year low in April.  The EIA notes that April is typically the month with the lowest CO2 emissions, and that April 2015 was the lowest of any month since April, 1988.  Comparing these two months 27 years apart the EIA notes that:

  • Natural gas consumption in the sector has tripled
  • Renewable energy consumption doubled
  • Nuclear energy consumption increased 47%
  • Coal consumption decreased 17%

All of these trends have naturally led to a less carbon intense power sector with generation up 44% over the period, but energy use increasing only 33% and CO2 emissions up just 4%.  The graph below shows that the monthly power sector carbon emissions have been trending down since 2005. The full EIA piece is here: Monthly power sector carbon dioxide emissions reach 27-year low in April.

 

 

EPA Clean Power Plan Fact Sheets:

EU Increases Climate Commitment

Global_European_Union.svg

By S. Solberg J. ([1]) [CC-BY-3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons

At the end of October European Union Leaders agreed to a 2030 Framework for Climate and Energy PoliciesThe EU committed to reducing greenhouse gas (GHG) emissions by at least 40% below the 1990 level by 2030.  This new goal doubles the previous commitment of a 20% reduction by 2020; and keeps the EU on pace to meet their 2050 goal of at least an 80% reduction in GHG emissions.  In comparison, President Obama’s 2013 Climate Change Action Plan has set a goal of reducing greenhouse gas emissions 17% below the 2005 level by 2020.

The new EU GHG reduction goal will be met, in part, by lowering the cap in the EU Emissions Trading System (ETS).  EU ETS is a cap and trade system that operates across the 28 member states and covers about 45% of EU emissions from power generation and manufacturing.  The remainder of the reduction will come from sectors that fall outside of the EU ETS; targets will be set for individual member states, which have flexibility in how reductions are achieved.

The UK Energy Savings Opportunity Scheme (ESOS) is one example of an EU member country strategy to reduce GHG emissions outside of the EU ETS.  ESOS is a mandatory energy assessment scheme implemented by the UK Environment Agency that requires organizations meeting the definition of a large undertaking to complete an ESOS assessment at least once every 4 years.  The ESOS assessment must cover building, process, and transportation energy use; and should identify practical and cost effective energy saving opportunities.  The difficulty for many organizations will be collecting the required 12 months of continuous data that accounts for at least 90% of energy use.  The deadline for UK companies to conduct the first ESOS assessment is December 5, 2015; so, companies still have time to begin collecting data.

In related news the IPCC’s 5th Assessment Synthesis Report was released just four days ago on November 1 and provides support for the EU’s GHG emission reduction activities.  The report restates that human influence on a warming climate system is unequivocal, and

Continued emission of greenhouse gases will cause further warming
and long-lasting changes in all components of the climate system,
increasing the likelihood of severe, pervasive and irreversible impacts
for people and ecosystems. Limiting climate change would require
substantial and sustained reductions in greenhouse gas emissions which,
together with adaptation, can limit climate change risks.

The report will inform the next round of UN climate talks in Paris in 2015 where 200 governments will again try to reach consensus on an international agreement to combat climate change.

EPA Clean Power Plan Key to U.S. Climate Change Action Plan

On Monday, June 2 the U.S. Environmental Protection Agency (EPA) released a proposed rule entitled the Clean Power Plan (CPP); whose purpose is to reduce carbon emissions from existing power plants.  The goal of the CPP is to reduce carbon emissions from existing power plants by 30% from 2005 levels by 2030.  The CPP is one step taken in response to the President’s Climate Change Action Plan, released a year ago, which set a goal of reducing U.S. carbon emissions 17% by 2020.  The CPP also follows proposed rules to limit carbon emissions from new power plants released by the EPA in September of 2013.

The CPP covers larger electric generating units (EGUs) that sell power to a utility distribution system.  Covered EGUs include any boiler, integrated gasification combined cycle, or combustion turbines (simple or combined cycle) that:

  1. is capable of combusting 250 million BTUs per hour or more
  2. combusts fossil fuel for 10% or more of its total annual heat input
  3. sells the greater of 219,000 MWh per year and one third of its potential electrical output
  4. was in operation or had commenced construction as of January 8, 2014

Given the fuel input and electrical production numbers above a rough approximation of the size of the smallest generating unit that would be covered is 25 MW.  It should also be noted that the state of Vermont and the District of Columbia have no covered EGUs.  EGUs on tribal lands are not covered by the CPP, but tribal governments are encouraged to participate.

The CPP defines a national framework and goals, but gives states flexibility on how to reach those goals.  The CPP sets intensity goals, defined as average pounds of CO2 per net MWh.  Goals are state specific, and vary based on the states level of performance in the 2012 baseline year.  Goals are set at the state level and are not specific to individual EGUs.  The map below shows the percentage reduction each state must make to their CO2 emission intensity (lbs/MWh) by 2030 based on the EPA’s proposed Clean Power Plan.

Presentation1

To assist states with meeting CO2 reduction goals EPA has identified four building blocks that can be used to develop the Best System of Emission Reductions (BSER) for each state.

  • Make fossil fuel power plants more efficient
    (EPA assumes a 6% improvement is possible for coal units)
  • Use low-emitting power sources more
    (Increase the capacity factor to 70% for natural gas combined cycle EGUs)
  • Use more zero and low emitting power sources
    (increase use of renewable resources)
  • Use electricity more efficiently
    (increase demand-side energy efficiency)

States have the option of submitting individual plans to meet emission reduction goals, or working with other states to submit a multi-state plan.  For individual plans states have at least two years, until June 30, 2016, to submit initial or complete plans to reduce CO2 emissions.  Individual states that need more time can ask for a one year extension to June 30, 2017; but an initial plan must still be submitted by June 30, 2016.  Multi-state plans can get a two –year extension to June 30, 2018.  For both individual and multi-state plans EPA has up to 12 months to review and approve plans.  The map below shows existing programs that would likely meet the CPP requirements: California’s Cap & Trade Program and the multi-state Regional Greenhouse Gas Initiative (RGGI).

RGGI

EPA’s Clean Power Plan State Maps website is an interactive map that gives background information on each states’ CO2 emissions, electric generation mix, existing programs such as Renewable Portfolio Standards (RPS) that help reduce CO2 emissions, among other things.  EPA has also drafted a series of fact sheets on different aspects of the CPP that are shown below.

EPA Clean Power Plan Fact Sheets:

DOE Report: Energy Sector Vulnerable to Climate Change

US Dep Ag - wea00173Image Source: U.S. Department of Agriculture

The U.S. energy sector is increasingly vulnerable to the impacts of climate change according to a report released today by the U.S. Department of Energy (DOE).  U.S. Energy Sector Vulnerabilities to Climate Change and Extreme Weather outlines how three main factors: 1) increasing temperatures, 2) decreasing water availability, and 3) increasing storms, flooding, and sea level rise will impact the ability to generate and transmit electricity.  This report also outlines impacts across the fossil fuel supply chain from extraction through transportation.

Rising temperatures and drought have already impacted electric generation by shutting down power plants for lack of cooling water.  Last August the Millstone Nuclear Power Plant in Connecticut shut down for two weeks because the temperature of the intake cooling water was too high.  Wildfires have directly impacted the transmission and distribution system, but higher temperatures also decrease transmission efficiency and cause lines to sag, which increases the possibility of failure.   Rising temperatures also strain the electric transmission and distribution system by driving up demand for electric services such as air conditioning.

2012 was the hottest year on record in the U.S., and it was accompanied by widespread drought in the U.S.  Oil and gas production was impacted when drought led to the curtailment of water to oil and gas operations in Kansas, Texas, North Dakota and Pennsylvania.  Drought in 2012 also disrupted barge shipments of coal and petroleum on the Mississippi.

The report concludes with steps that can be taken and additional research that needs to be done to make the U.S. energy sector more resilient to the impacts of climate change.  Examples include development of more water efficient oil and gas exploration technology, and thermoelectric power generation.  The report supports the President’s Climate Change Action Plan, which calls for taking steps now to prepare for climate change.

Climate change induced impacts on power quality and availability may lead to more commercial and industrial facilities seeking out their own generation and fuel sources.  This could make onsite generation options such as solar or micro-turbines more attractive, particularly in mission critical operations.

U.S. Climate Change Action Plan

On Tuesday President Obama outlined his plan to address the U.S. contribution to climate change.  The overarching goal of the Plan is to reduce U.S. greenhouse gas emissions 17% from a 2005 baseline by 2020.  The graphic below shows the major sources of carbon pollution in the U.S.

Carbon Pollution
Source: http://www.whitehouse.gov/share/climate-action-plan

The electricity and transportation sectors account for over 60% of U.S. carbon emissions and will be the focus of much of the plan to reduce U.S. emissions.  In 2007 the U.S. Supreme Court ruled that the U.S. Environmental Protection Agency (EPA) had the authority to regulate carbon emissions under the Clean Air Act (CAA).  Just a few months ago President Obama stopped the EPA from issuing regulations for new power plants.  The release of the Climate Change Action plan signals that the President will have the EPA push forward with regulation for new and existing power plants, but on a longer timeline.  It is expected that the new rules will be proposed in a year, finalized a year after that.  When they take affect will depend on the level of litigation that takes place around the new rules.  So, new regulations and implementation are 3-5 years away.   The likely short-term outcome of the plan will be support for the trend of planned retirements of coal-fired power plants that was being driven by low natural gas prices and environmental regulation on mercury emissions.

The President’s Action Plan seeks to continue the momentum around the growth in renewable energy sources.  The 2014 budget includes a 30% increase for clean energy technology, with the goal of doubling solar and wind generation by 2020.  The Interior Department has also been directed to permit enough renewable electricity by 2020 to power 6 million homes.

In the transportation sector, the Plan calls for improving heavy duty vehicle emission standards after the current standards expire in 2018.   The Plan also supports the existing Renewable Fuel Standard, and renewed research efforts to bring about the next generation of biofuels.

The full Action Plan can be found on the White House website here.

A summary of the Action Plan from the New York Times is here; and The Guardian here.