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The Regulatory Assistance Project 50 State Street, Suite 3Montpelier, VT 05602
Phone: 802-223-8199www.raponline.org
111(d) Compliance Measures Outside EPA’s Four Building Blocks
3N Meeting
December 4-5, 2014 – Washington, DC
Presented by
Ken Colburn, Senior Associate
• The Regulatory Assistance Project (RAP) is a global, non-profit team of energy experts, mostly veteran regulators, advising current regulators on the long-term economic and environmental sustainability of the power and natural gas sectors. (www.raponline.org)
– Non-advocacy; no interventions
• Ken Colburn is a Senior Associate at RAP. His experience as an air quality regulator came as Air Director for the State of New Hampshire and as Executive Director of NESCAUM.
Introduction
2
Goal: Illuminate (and Expand) 111(d) Options for States
4
• Working Title: “Reducing Greenhouse Gas Emissions from the Power Sector: A Menu of Options”
• 25 chapters detailing technology and policyoptions
• 26th chapter on “emerging issues”
• “Expand”: Began months before 111(d) Proposal,so goes beyond EPA’s four “Building Blocks”
EPA’s Building Blocks & “Menu” Chapters
5
1. Heat Rate Improvements
2. Redispatch
3. Renewable and Nuclear Generation
4. Energy Efficiency
1. Optimize Power Plant Operations
2. Electric-Sector CHP
3. Other-Sector CHP
6. Increase Low-GHG Generation
8. Retire Aging Power Plants
11. Establish Energy Efficiency Targets (EE, DSM, EERS)
13. Pursue Behavioral Efficiency Programs
14. Boost Appliance Standards
15. Boost Building Codes
Other Technology Optionsin the “Menu of Options”
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4. Improve Coal Quality
5. Optimize Grid Operations
7. Pursue Carbon Capture & Utilization or Sequestration
9. Switch Fuels at Existing Power Plants
10. Reduce Losses in the T&D System
Other Policy Optionsin the “Menu of Options”
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12. Foster New Markets for Energy Efficiency
16. Increase Clean Energy Procurement Requirements
17. Encourage Clean Distributed Generation
18. Revise Transmission Access & Pricing
19. Revise Capacity Market Practices
Other Policy Optionsin the “Menu of Options” (Continued)
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20. Improve Integration of RE into the Grid
21. Adopt Environmental Dispatch
22. Improve Utility Resource Planning
23. Improve Demand Response Programs
24. Adopt Market-Based Reduction Programs
25. Tax Carbon Dioxide Emissions
Bottom Line
• EPA developed its “Building Blocks” approach to provide a consistent, legally-defensible way to determine state-specific rate targets…
• …NOT to constrain states to those options alone!
• So think outside the “Building Block Box”– Consider other options in the “Menu of Options”– And even beyond (e.g., Water Conservation)– Target least-cost solutions
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…And Try to Capture Co-Benefits
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• Good 111(d) choices can help air quality; good air quality choices can help 111(d) compliance
• Ditto for increasing water concerns
• Integrated multi-pollutant, multi-media approach can lower cost, risk (IMPEAQ)
Energy Efficiency
Energy and Demand Resource Management
Combined Heat & Power
Wind, Solar, Tidal
Low- and Zero-Emission Vehicles
Carbon Capture & Storage
Flue Gas Desulfurization
(Scrubbers)
Three-Way Catalysts (Petro)
Diesel Particulate Filters
Uncontrolled Fossil Fuel
Combustionin Stationary and Mobile Sources
Increase in “Uncontrolled” Diesel
Biofuels
Biomass
Buying Emissions Credits Overseas
Forthcoming DOE/LBNL Guide on Using EE to Reduce Emissions
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• EE as least-cost strategy to reduce power sector CO2
• Shaped with input from NACAA, NARUC, NASEO
• Complementary to other efforts
• Practical information:
– Tried-and-true policy and program options to advance EE
– Examples of existing policy and program documents
– Tools & methods to estimate and measure EE savings & emission reductions
• Publication targeted Spring 2015
• Contact: Johanna Zetterberg
(202) 586-8778
Johanna.Zetterberg@ee.doe.govwww.seeaction.energy.gov
State 111(d) Compliance Plans:The Actual Opportunity
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1 2 3 4
+ + +=State
Compliance
Conventional Wisdom:
Beyond
+Actual Opportunity:
Each BB likely > 0 Some BBs may be 0…
Keys:• “Better to seek ‘approval’ than to ask permission”• EPA can’t promote “Beyond BB” options…• If you don’t focus on least-cost, who will?
About RAP
The Regulatory Assistance Project (RAP) is a global, non-profit team of experts focused on the long-term economic and environmental sustainability of the power and natural gas sectors. RAP has deep expertise in regulatory and market policies to:
Promote economic efficiency Protect the environment Ensure system reliability Allocate system benefits fairly among all consumers
Learn more about RAP at www.raponline.org
Thank You for Your Time and Attention
Ken Colburn: kcolburn@raponline.org
617-784-6975
• Profile (description, pros, cons, etc.)
• Regulatory Backdrop
• State & Local Implementation Experience
• GHG Emissions Reductions
• Co-Benefits
• Costs and Cost-Effectiveness
• Other Considerations
• For More Information
• Summary
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NACAA Menu of Options:Chapter Contents
The Biggest Challenge?
• The federal Clean Air Act:– 40-years old and highly prescriptive
– 2 generations of federal delegation to state air agencies
• Section 111(d) is:– The “40-year-old virgin” and highly flexible
• EPA’s never done this before either…
• Morphing the traditional practice of air regulation into the new permissiveness reflected in EPA’s proposed rule may be more difficult (for both EPA offices and the states) than it is for the regulated community to actually comply with the rule…
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Unfortunately, EM&V Hurdles Remain
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Calculating Avoided Emissions Should be a Standard Part of EM&V and Potential Studies
The Pr oblem EE i s a Pr oven Solu t i on EE i s a Sm ar t Solu t i onWe Need Bet ter Data
• Improve accuracy of cost-effectiveness tests and economic potential studies
• Include EE in State Implementation Plans (SIPs) for air quality (e.g., ozone SIPs)
• Earn credits for “111d” compliance (power plant carbon regulations)
We Need You r H elp• Air quality profession has very
limited resources and lacks expertise on EE
• EE program money already allocates resources for EM& V
• Missing ingredients are timing and location of energy savings
• EE professionals have the knowledge and skills to estimate timing and location
• Little incremental effort is needed to calculate avoided emissions using standard U.S. EPA tools
147 Million Americans in 43 StatesBreathe Unhealthy Air
Electricity is a Big Source of Air Pollut ion
Avoided Emissions are Part of What Makes EE Cost-Ef ect ive
Examples of Avoided Emissions Attributed to Energy Ef ciency
Wisconsin
Texas
Northeast States
EE is the Cheapest Way to Control Air Pollut ion
I Wan t You !
Business 1,978,570 106,048,600 4,810,382,690 6,237,757 7,588,884 29.62
Residential 746,807 20,200,130 1,582,495,514 2,160,038 2,863,243 10.68
Total 2,725,377 126,248,730 6,392,878,204 8,397,795 10,452,127 40
Connecticut 245,592,110 132,240 299,120
Maine 118,488,550 63,800 144,310
Maryland 699,625,780 634,910 2,155,040
Massachusetts 741,682,600 399,370 903,330
New Hampshire 43,977,220 23,680 53,560
New York 1,479,008,990 1,450,360 3,187,210
Rhode Island 85,000,140 45,770 103,530
Vermont 84,777,170 45,650 103,250
Total 3,498,152,560 2,795,780 6,949,350
Incentive Costs $15,775,767 $28,090,892 $43,866,659
Admin Costs $3,792,038 $3,374,847 $7,166,885
Delivery Costs $8,647,538 $13,780,905 $22,428,443
Incremental Measure Costs $38,764,692 $98,249,403 $137,014,095
Total Non-Incentive Costs $51,204,268 $115,405,154 $166,609,422
Electric Benefits $61,608,536 $203,458,650 $265,067,186
Gas Benefits $45,627,166 $138,716,232 $184,343,398
Emissions Benefits $30,541,571.90 $100,147,119 $130,688,691
Total TRC Benefi ts $137,777,274 $442,322,000 $580,099,274
TRC Benefi ts Minus Costs $86,573,006 $326,916,846 $413,489,852
TRC Ratio 2.69 3.83 3.48
Program Area
State
State
Lifecycle Verified Gross MWh
Lifecycle Verified Gross Therms
CO2 (lbs)
Avoided CO2
(lbs)
Carbon Dioxide (CO2)
NOx (lbs)
Avoided NOx (lbs)
Nitrogen Oxides (NOx)
Sulfur Dioxide (SO2)
Particulate Matter
SO2 (lbs)
Avoided SO2
(lbs)
Mercury (lbs)
Carbon Dioxide2012
Count ies Designated “ Nonattainment ”for Clean Air Act’s National Ambient Air Quality Standards (NAAQS)
Lifecycle Verif ed Gross Emissions DisplacedJuly 1, 2001 – December 31, 2010
Avoided Emissions from Electric Sector EE Programs
Wisconsin 2012 Costs, Benef ts, and TRC Rat io
Cost of Selected Emissions Control Measures
Nitrogen Oxides2011
Sulfur Dioxide2011
Mercury2005
Electric PowerAll Other Sectors
62%
86%
29% 50% 50%71%
14%
38%
Selective Catalytic Reduction No reduction $1550+/ton No reduction No reduction
Fabric Filter (“Baghouse”) No reduction No reduction No reduction $42+/ton
Electrostatic Precipitator No reduction No reduction No reduction $40+/ton
Wet Flue Gas Desulfurization (“Wet Scrubber” ) No reduction No reduction $80+/ton $80+/ton
Energy Efficiency ≤ $0/ton ≤ $0/ton ≤ $0/ton ≤ $0/ton
Source: Tetra Tech, Focus on Energy Evaluation Annual Report (2010)
Source: U.S. EPA, Green Book (2014)
Source: U.S. EPA, Various Documents
Source: U.S. EPA, Menu of Air Pollution Control Measures (2013)
Source: Northeast Energy Efficiency Partnerships, Regional Energy Efficiency Database: Program Year 2011 Annual Report (2013)
Source: Cadmus, Focus on Energy Calendar Year 2012 Evaluation Report (2013)
SEER13-Multi-Family
SEER13-Single Family
Furnace Pilot Light Program
ESL-Commercial
Wind-ERCOT
SECO
PUC (SB7)
ESL-Multi-Family
ESL-Single Family
Ton
s/O
zon
e S
easo
n D
ay
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Energy Systems Laboratory at Texas A&M University, Energy Efficiency/Renewable Energy Impact in the Texas Emissions Reduction Plan (2012) 2005 2006 2007 2008 2009 2010 2011
Residential Nonresidential Total
OSD NOx Reduct ion Levels for ERCOT (Preliminary Est imates)
Over 20%!
Consider Multi-State Compliance Approaches
• Better for power sector- Allows broader reliability regions- More compliance options => lower cost
• Better for states- Fewer “seams” issues- Lighter lift; shared/lower costs- Strength in numbers
• Better for EPA- Less reliability & cost risk- Fewer, faster approvals
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Additional Advice (continued)
• Think outside the box (e.g., water conservation)
• Don’t worry (much) about FIPs, federal incursion on PUC authority, building block conflicts, etc.
• Immediate goal for state plans: Goldilocks (Not
too specific, but enough detail to gain initial EPA approval)
• Comment, comment, comment!
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