How the EPA may change the Clean Power Plan
On Tuesday, the Environmental Protection Agency (EPA) released its Notice of Data Availability (NODA) on the Clean Power Plan, its draft rule to regulate carbon emissions from existing power plants. The document, meant to address concerns raised during the agency's public comment period, opens the door to more flexibility for utilities trying to cope with the new regulations.
In particular, the EPA document reveals that the EPA will seek further comment from stakeholders in three areas: The 2020-2029 trajectory—or glide path—for emission reductions, the Clean Power Plan's building blocks, and calculating state-specific CO2 goals.
The 2020-2029 glide path
In the document, the EPA describes the concerns of many stakeholders—including utilities—who say that the emissions reductions would weaken reliability and be prohibitively costly.
Although the EPA said it wrote significant flexibility into the regulations, "some stakeholders have expressed concerns with the approach that the EPA used to determine states’ interim goals and have stated that ... significant shifts of generation away from coal-fired generators to [Natural Gas Combined Cycle (NGCC)] units ... will be necessary by 2020 and will be difficult for at least some states to reasonably achieve in that timeframe."
In response, the agency announced it would seek further comment on two specific adjustments to the proposed regulations. First, a phase-in schedule could be developed for increasing generation from existing natural gas facilities under building block 2 of the Clean Power Plan. The schedule would be based on the extent to which infrastructure improvements would be needed to use more existing gas generation and how long they would take to build.
Second, the EPA announced it was open to comment on modifying building block 2, which mandates how quickly states must switch from high-emission generation, like coal, to lower-emission options, like natural gas.
"In particular," the agency wrote, "stakeholders have expressed a concern that shifting generation away from existing generating assets, particularly coal-fired [electricity generating units], could, in some situations, result in limiting cost-effective options."
The EPA maintained its proposed plan already gives enough flexibility to states, but that it would accept comments on alternative proposals for meeting the goals with building block 2, such as taking into account not just the book life of the original generation asset, but any pollution-controlling upgrades as well.
"The EPA requests comment on whether, and how, book life might be either used as part of the basis for the development of an alternative emission glide path for building block 2 or used to evaluate whether other ways of developing an alternative glide path ... would address stakeholders’ stranded investment concerns," the report read.
Building block concerns
The Clean Power Plan is built on four "building blocks," each corresponding to a different goal in the effort to reduce carbon emissions. The NODA focuses on two complaints raised by stakeholders corresponding to the building block methodology—namely, the consideration of natural gas in building block 2 and renewable energy in building block 3.
Numerous stakeholders raised concerns highlighted in the NODA that "the proposed approach to building block 2 creates significant disparities in state goals between those states with little or no [Natural Gas Combined Cycle (NGCC)] generating capacity, and those with significant amounts of NGCC capacity not currently being used fully."
Some stakeholders suggested that instead of only mandating an increase in natural gas generation from existing sources in building block 2, EPA could include new natural gas generation in the block, thereby easing the transition for states where little gas generation currently exists.
EPA responded with a suggestion that it could set a minimum value for expected re-dispatch of coal-fired generation to NGCC and requested comment for what that standard should be. But the agency also floated the idea of including new gas generation, as well as cofiring natural gas at coal plants, in building block 2 and solicited comments on how best to do so.
In terms of building block 3, which deals with renewable generation, stakeholders suggested that the EPA could forgo a state-by-state regulatory regime, and instead take a regional approach to regulating the implementation of renewables.
"Stakeholders have expressed interest in a target-setting methodology that takes into account interstate exchanges of [renewable energy (RE)] in the calculation of state goals, on the premise that such an approach would better align with existing state RE policies and potential claims on a given state’s RE generation by parties from other states (such as renewable energy certificates and power purchase agreements)," the NODA said.
EPA responded by suggesting it could regionalize its approach to renewable generation by using the state groupings proposed in its June 2014 proposal, and requested comment from stakeholders on how best to structure regional renewable energy markets under the Clean Power Plan.
Calculating CO2 goals
In its last section, the NODA addresses concerns from stakeholders that the numeric equations used to calculate carbon emission goals are not consistent across different resources. In particular, they said that calculations for natural gas emission goals under building block 2 hold the base level of generation constant with only the mix of more- and less-carbon intensive resources changing. In contrast, they said, generation levels are not held constant in building blocks 3 and 4 to express the drawdown in fossil fuel resources when renewables and energy efficiency increase.
The result, stakeholders said, is that "the state goals do not reflect the potential for added generation from building block 3 and avoided generation from building block 4 to shift generation away from existing fossil steam generation below the 2012 level and, therefore, do not reduce generation, and thus emissions, from affected fossil fuel-fired generation."
In response, the EPA requested comment on two different approaches for calculating emissions goals. The first would assume that renewables and energy efficiency would replace old fossil fuel power plants, adjusting the level of assumed fossil generation downward as the other resources increase in capacity. The second proposal is similar to the first, but instead of assuming that renewables and energy efficiency would replace all fossil generation, it would prioritize replacing dirtier fossil steam generation first.
"In particular," the agency wrote, "the EPA is seeking comment on how the amount of incremental RE and EE in the June 2014 proposal relate to potential future generation increases from existing fossil sources."
The baseline year
Finally, the EPA said it would review additional comments on changing the baseline year for carbon emission goals from 2012.
"The EPA is seeking comment," it wrote, "on whether we should use a different single data year or the average of a combination of years (such as 2010, 2011, and 2012) to calculate the state fossil fuel emission rates used in state goal calculations."
The agency announced it would make 2010, 2011 and 2012 emissions data available on its website to facilitate the commenting process.
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