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Clean Power Plan Section 111(d) Panel BackgroundPSERC Summer Workshop
July, 2015
Overview
• Legal Underpinnings
• Overview of Rule
– Timeline
– Targets
How developed
States’ interim and 2030 targets
• Legal Challenges / Responses
• Public Analyses and Impacts
2
Legal Underpinnings
• June 2013 President released Climate Action Plan
• Called for EPA to propose “carbon pollution” standards by June 2014
– To be finalized by June 2015
• Proposal relies on authority given EPA by Congress in Section 111(d) of the Clean Air Act (CAA)
• EPA has proposed “guideline document” with emission rate targets by state
– Interim targets (2020s) and final target (2030)
• Policies to reach the goals determined by the states
3
Overview of the 111(d) Rule
• Proposes state-specific emission rate-based CO2 goals with various options for compliance
• Offers guidelines for the development, submission and implementation of state plans to address greenhouse gas (GHG) emissions from existing fossil-fired power plants
• Reflects emissions reductions that can be achieved by the application of the Best System of Emission Reduction (BSER)….adequately demonstrated.
• Initial proposed rule sets state goals for emission rates – as pounds of CO2 emissions per megawatt-hour of electricity produced – not absolute emissions
• “30% reduction in CO2 emissions by 2030” is estimated impact, not the rule 4
5
Clean Power Plan Milestones
June 2,
2014
Draft rule
issued
Dec 1,
2014
Comments due to EPA
June
2015
Final rule expected
June
2016
State Plans due
June
2017
State plans due (with one-year
extension)
June
2018
Multi-state plans due (with two-year
extension)
January
2020-29
Interim goals in effect
January
2030
Final goals in effect
Over 4 million comments received
Now expected in August
Due one year after final rule
issued
How Targets Were Developed
6
• EPA used four “ building blocks” to develop emissions reduction targets
State Targets
7
Additional Approaches to Meeting CO2 Targets
• Co-firing/switching to natural gas, or other lower carbon fuels
• “Flip the Stack” and/or operate coal during peak load periods
• New natural gas combined cycle generation (NGCC)
• Heat rate improvements for fossil generators
• Transmission efficiency improvements
• Energy storage technology
• Retirements
• Emission trading programs 8
Challenges to CPP
By the fall of 2014, 18 state legislatures had passed either legislation or resolutions that negated the EPA’s CO2
Emission Guidelines. See http://www.wbklaw.com/uploads/file/Articles-%20News/EPA's%20CO2%20Rules%20and%2018%20States'%20Resolutions%20and%20Legislation.pdf.
US Court of Appeals for the DC Circuit ruled June 9th that an appeal regarding the legality of the CPP by a dozen AGs and Murray Energy was premature, since it wasn’t a final rule. Stay tuned…
9
NERC’s Reliability Assessment
• The proposed CPP is expected to accelerate a fundamental changes in electricity generation mix and transform grid-level reliability services, diversity, and flexibility
• Industry needs more time to develop coordinated plans to address shifts in generation and corresponding transmission reinforcements to address proposed CPP CO2 interim and other emission targets
• Implementation plans may change the use of remaining coal-fired generating fleet from baseload to seasonal peaking, potentially eroding plant economics and operating flexibility
10
SPP Analyses
• Reliability (October 2014): system intact and N-1
• Assumptions:
– Retirement of approximately 9,000 MW of coal and gas fired units (6,000 MW more than currently planned)
– Transfers from SPP and MISO to AR and LA
– Part 1: retired capacity replaced by existing unused capacity
– Part 2: retired capacity replaced by new gas and wind
• Results
– Part 1: voltage collapse until addition of 5,200 MVars reactive capability
– Part 2: 38 overloaded elements under N-1; voltage collapse in some areas
11
SPP Analyses
• Economic analysis of Regional implementation (April 2015)
• Approach:
– Use PROMOD production cost model
– Develop 2030 reference case, assumed “copper sheet”
– Evaluate range of carbon-reduction measures for SPP
• Results – to meet compliance goal, needed:
– $45/ton CO2 price; 2,200 MW additional coal retirements; 5,600 MW of wind added; 3,600 MW CCs assumed to be CTs instead
– Incremental production and generation capital costs = $2.9 billion/year
12
PJM Analyses
• Economic analysis (November 2014)
– 17 scenarios evaluated using range of assumptions including:
Gas prices
Fossil and nuclear resources
Renewable resources
Energy efficiency
– Results
Coal generation retired gradually
Increases in Load Energy Payments vary depending on levels of renewables, energy efficiency, new combined-cycle gas, and price of natural gas
Adding more energy efficiency, renewable energy and retaining more nuclear generation would lead to lower CO2 prices
13
MISO Analysis
• Phase 1: Regional approach more cost-effective
• Phase 2: Resource Mix Analysis (no infrastructure)
– 1,296 cases analyzed
– Results: lowest compliance costs meeting the target includes
Carbon price $25
Additional 14 GW of coal retirements
Energy efficiency of 0.75% of sales
Current renewable policies14
MISO Analysis
• Phase 3 (partially complete)
– Analysis of transmission and gas infrastructure needed under several Clean Power Plan Scenarios
Business as Usual
Business as Usual with Clean Power Plan constraints
Coal-to-Gas Conversions
Gas Build-Out
Gas, Wind and Solar Build-Out
Energy Efficiency, Wind and Solar
– Results
Production costs lower with retirements and regional approach
Congestion increases under all compliance approaches
15
Recent Developments
• Final rule to White House as part of interagency review in early June
• Expect Final CPP Rule to be released this summer
• EISPC/NARUC issued “Multistate Coordination Resources for Clean Power Plan Compliance: Sample Documents for Consideration” in June
• At MARC on June 8th, EPA staff indicated final rule to include relaxed interim goals and informal ways for state to collaborate to ease compliance.
• Options create uncertainties, which are good and bad.
• New news everyday. Stay tuned…16
