Clean power plan overview and state goals by Bipartisan Policy Center

EPA’s Proposed Clean Power Plan: Overview and State Goals JENNIFER MACEDONIA JUNE 2014

OVERVIEW OF PROPOSED CLEAN POWER PLAN

Main Features v  EPA proposed numerical state goals •  Represent EPA’s interpretation of best system of emission reduction

v  Comment period, EPA will issue final guidelines/goals June 2015 v  States develop and submit a plan regarding implementation •  Individual or multi-state plans •  Submit to EPA June 2016 or request 1-2 year extension

v  State flexibility •  Timing •  Interim goal 2020-2029 (states choose trajectory to meet on average) •  Final 2030 goal

•  Rate-based or mass-based metric •  States choose policy design •  Wide range of strategies may count towards compliance

v  EPA federal plan, if no state plan submitted/approved

BUILDING BLOCKS OF EPA’S PROPOSED STATE GOALS

Best System of Emission Reduction (BSER) is based on 4 Building Blocks

Coal Plant Heat Rate Improvement

Increased Use of Existing Natural Gas

Clean Generation (Renewable & Nuclear)

End-Use Energy Efficiency

EPA’S PROPOSED CLEAN POWER PLAN

Available CO2 Reduction Options for Implementation v  Range of CO2 reduction options may count towards compliance •  •  •  •

Heat rate improvements (process & equipment) at affected EGUs Fuel switching/co-firing (natural gas & biomass) at affected EGUs Coal and oil/gas steam plant retirements Shifting dispatch from higher emitting to lower/zero emitting •  •  •  •  •  •

more efficient coal-fired units existing, under construction, and new natural gas combined cycle existing and increased generation from non-hydro renewable energy new and increased hydro nuclear uprates and new nuclear under construction & 6% of existing nuclear generation [counts, but is in goal]

•  End-use energy efficiency •  Reductions in transmission & distribution losses •  Carbon capture & storage (CCS)

BUILDING BLOCKS OF EPA’S PROPOSED STATE GOALS

STATE BASELINE End-Use Energy Efficiency

Clean Generation (Renewable & Nuclear)

Increased Use of Existing Natural Gas

Coal Plant Heat Rate Improvement

STATE GOAL average emission rate that reﬂects applica2on of BSER

EPA: “goals are intended to represent CO2 emission rates achievable by 2030 aDer 2020-‐2030 phase-‐in period on an output-‐ weighted-‐average basis collec2vely by all of a state’s affected EGUs, with certain computa2onal adjustments …to reflect the poten2al to achieve mass emission reduc2ons by avoiding fossil fuel-‐fired genera2on.”

BUILDING BLOCKS OF EPA’S PROPOSED STATE GOALS

STATE GOAL

STATE BASELINE

Fossil emission rate =

fossil emissions (lbs. CO2) fossil genera4on (MWh)

The state fossil emission rate is calculated for all aﬀected electric genera2ng units (EGUs) using 2012 data for exis2ng units and es2mated data for units under construc2on

BUILDING BLOCKS OF EPA’S PROPOSED STATE GOALS

STATE GOAL

STATE BASELINE

baseline emission rate =

(fossil emissions)baseline (fossil genera4on)baseline + (RE + Nuc)baseline emissions (lbs. CO2)

(coal + oil/gas + NGCC + other)baseline (coal + oil/gas + NGCC + other)baseline + (RE + Nuc)baseline genera2on (MWh)

The baseline emission rate includes coal-‐ﬁred steam, oil/gas steam, natural gas combined cycle (NGCC) and other (IGCC & CTs) exis2ng and under construc2on EGUs, plus historic genera2on from non-‐hydro renewable energy and “at risk” nuclear

BUILDING BLOCKS OF EPA’S PROPOSED STATE GOALS

STATE GOAL

STATE BASELINE

Inserting Block 1 into State Goal

emissions (lbs. CO2)

coal + oil/gas + NGCC + other (coal + oil/gas + NGCC + other)baseline + (RE + Nuc)baseline genera2on (MWh)

Coal Plant Heat Rate Improvement

Building block 1: baseline coal emissions reduced 6% to represent “average ﬂeet-‐wide opportunity for heat rate improvements … technically achievable at reasonable cost”

BUILDING BLOCKS OF EPA’S PROPOSED STATE GOALS

STATE GOAL

STATE BASELINE

Inserting Block 2 into State Goal

emissions (lbs. CO2)

coal + oil/gas + NGCC + other Increased Use of Existing Natural Gas

Coal Plant Heat Rate Improvement

(coal + oil/gas + NGCC + other)baseline + (RE + Nuc)baseline genera2on (MWh)

Building Block 2: Emissions are reduced by amount to reﬂect shiS in dispatch from coal & oil/gas steam to exis4ng natural gas combined cycle up to 70% capacity factor

BUILDING BLOCKS OF EPA’S PROPOSED STATE GOALS

STATE GOAL

STATE BASELINE

Inserting Block 3 into State Goal

Clean Generation (Renewable & Nuclear)

Increased Use of Existing Natural Gas

Coal Plant Heat Rate Improvement

emissions (lbs. CO2)

coal + oil/gas + NGCC + other (coal + oil/gas + NGCC + other)baseline + (RE + Nuc)goal genera2on (MWh)

Building Block 3: Future zero-‐carbon energy is reﬂected by replacing baseline renewable and nuclear genera4on with the state 2030 renewable genera4on target and under construc4on/preserved nuclear in the denominator

BUILDING BLOCKS OF EPA’S PROPOSED STATE GOALS

STATE GOAL

STATE BASELINE End-Use Energy Efficiency

Inserting Block 4 into State Goal 2030 STATE GOAL =

Clean Generation (Renewable & Nuclear)

Increased Use of Existing Natural Gas

Coal Plant Heat Rate Improvement

emissions (lbs. CO2)

coal + oil/gas + NGCC + other (coal + oil/gas + NGCC + other)baseline + (RE + Nuc)goal + (EE)goal genera2on (MWh)

Building Block 4: future end-‐use energy efficiency is reflected by adding the avoided genera4on from the state’s 2030 energy efficiency target to the denominator

BUILDING BLOCKS OF EPA’S PROPOSED STATE GOALS

STATE GOAL

STATE BASELINE DemandSide Energy Efficiency

Clean Generation (Renewable & Nuclear)

Increased Use of Existing Natural Gas

Coal Plant Heat Rate Improvement

2030 STATE GOAL = emissions (lbs. CO2)

re-‐dispatched fossil CO2 emissions baseline fossil genera@on + clean energy goal + EE goal genera2on (MWh)

BUILDING BLOCKS OF EPA’S PROPOSED STATE GOALS

Example:

MICHIGAN

STATE BASELINE

End-Use Energy Efficiency

Clean Generation (Renewable & Nuclear)

= 1690 lbs/MWh

- 178 lbs/MWh -11%

- 69 lbs/MWh

-4% -12%

Increased Use of Existing Natural Gas

- 195 lbs/MWh

-5%

- 87 lbs/MWh Coal Plant Heat Rate Improvement

31% below state baseline

STATE GOAL

= 1161 lbs/MWh

Source: Numbers calculated from pg. 25 of the TSD: Goal Computa4on. Percent reduc4ons represent the building block emission rate/baseline emission rate.

Proposed State Goals Building Block 1: Heat Rate Improvements Coal Plant Heat Rate Improvement

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BUILDING BLOCKS OF EPA’S PROPOSED STATE GOALS

Building Block 1: Heat Rate (HR) Improvements v  State goals reduce average HR of coal-fired EGUs by 6%

Examples:

Missouri

Mississippi

Baseline Coal ER

2,085 lbs/MWh

2,494 lbs/MWh

-‐6% Coal ER

-‐126 lbs/MWh

-‐150 lbs/MWh

Adjusted Coal ER

1,959 lbs/MWh

2,344 lbs/MWh

Baseline ER

1,963 lbs/MWh

1,093 lbs/MWh

-‐6% Coal ER

-‐114 lbs/MWh

-‐22 lbs/MWh

Block 1 % Change

-‐6%

-‐2%

Genera4on (MWh)

Coal Oil Gas-‐ Combined Cycle Gas-‐ Combus4on Turbine Hydro Nuclear Wind Other

80% coal

55% Gas

Sources: EPA Technical Support Documents: Goal Computation Appendix 1 & 2; Goal Computation pg. 25

Proposed State Goals Building Block 2: Re-dispatch to existing natural gas combined cycle

Increased Use of Existing Natural Gas

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BUILDING BLOCKS OF EPA’S PROPOSED STATE GOALS

Building Block 2: Re-dispatch to Existing Natural Gas v  Displaced coal-fired & oil/gas steam generation from increased generation at existing NGCC up to 70% capacity factor (CF)

Examples:

Arkansas

Indiana

NGCC Capacity

5,588 MW

2,768 MW

2012 Genera4on %

44% coal/24% NGCC

80% coal/12% NGCC

2012 Capacity %

31% coal/31% NGCC

65% coal/9% NGCC

NGCC Capacity Factor

32% → 70%

53% → 70%

Re-‐dispatched NGCC

34,361,954 MWh

17,018,034 MWh

Baseline ER

1,634 lbs/MWh

1,924 lbs/MWh

Re-‐dispatched NGCC

-‐496 lbs/MWh

-‐45 lbs/MWh

% change

-‐30%

-‐2%

Genera4on (MWh)

Coal Oil Gas-‐ Combined Cycle Gas-‐ Combus4on Turbine Hydro Nuclear Wind Other IGCC

44% coal

80% coal

Sources: EPA Technical Support Documents: Goal Computation Appendix 1 & 2; Goal Computation pg. 25

Proposed State Goals Building Block 3: Clean Generation Renewable generation Nuclear generation Clean Generation (Renewable & Nuclear)

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BUILDING BLOCK 3 OF STATE GOALS: CLEAN GENERATION

Renewable Energy (RE) Generation v  EPA evaluated state potential to generate from RE in 2030 •  •

State RE potential based on ability to ramp up towards regional average States <regional average make annual progress (growth rate) •  By 2030 RE goal, ½ of states still below regional average RE generation

•

States ≥ regional average not expected to do more, but get credit if they do •  5 states already reached or surpassed RE target (IA, ME, MN, ND, SD) North Central & South Central: wind

West: geothermal & concentra4ng solar

Northeast: oﬀ-‐shore wind, biopower, solar 25%

15%

21%

16% East Central & Southeast: biopower & rooSop solar PV 20%

10%

Hydro-‐power is not included in the RE regional averages or targets

x% = EPA’s regional average RE (Adjusted 2020 RES/RPS)

BUILDING BLOCK 3 OF STATE GOALS: CLEAN GENERATION

State 2030 RE Generation Target •  By 2030 Final RE target, ½ of states still below regional average RE •  5 states already reached or surpassed RE target (IA, ME, MN, ND, SD) 25%

15% 10%

15%

21% 18% 21%

21% 7%

19%

15%

21%

11%

15%

11% 20% 20%

3% 7%

11%

6% 16%

14%

2% 6% 10%

10%

16% 10%

12% 16%

10% x% = EPA’s regional average RE (Adjusted 2020 RES/RPS)

10%

24%

18%

16%

15%

20% 20%

25%

21%

% = 2030 RE target (as % of total 2012 genera4on)

BUILDING BLOCK 3 OF PROPOSED STATE GOALS: CLEAN GENERATION

Nuclear generation v  Building Block 3 nuclear generation includes: •  Projected generation (90% CF) from completing under construction •  Watts Barr 2 in Tennessee •  Vogtle 3-4 in Georgia •  Summer 2-3 in South Carolina

•  Avoiding retirement of ≈6% percent of existing “at risk” capacity Examples: State

2012 Nuclear Fleet* (MW)

At-‐Risk Nuclear Capacity (MW)

At-‐Risk Nuclear Genera@on (GWh)

Illinois

11,486

671

5,305

Michigan

3,957

231

1,828

Minnesota

1,819

106

840

Mississippi

1,368

632

Wisconsin

1,184

547

BUILDING BLOCK 3 OF STATE GOALS: CLEAN GENERATION

Building Block 3: Renewable and Nuclear Generation Examples:

Minnesota

North Dakota

Illinois

Renewable Energy Baseline (2012) % RE Baseline RE gen 2030 RE gen target 2030 % RE genera4on target

18% 9,454 GWh 7,889 GWh 15%

15% 5,280 GWh 5,460 GWh 15%

4% 8,373 GWh 17,818 GWh 9%

Nuclear Energy At risk Nuc gen Under construc4on nuclear

840 GWh 0

0 0

5,305 GWh 0

925 3%

978 -‐1%

1540 -‐7%

Contribu@on to State Goal Baseline ER Block 3 (RE & Nuc): % Change

Source: EPA Technical Support Document: GHG Abatement Measures; Table 4.8 p4-‐27, Table 4.9 p4-‐29, and Table 4.10 p4-‐34. EPA TSD: State Goal Data Computa4on Appendix 1

Proposed State Goals Building Block 4: End-use Energy Efficiency End-use Energy Efficiency

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BUILDING BLOCK 4 OF STATE TARGETS

Building Block 4: End-use Energy Efficiency v  Increase state EE to reach 1.5% annual incremental savings •

States <best practice level are given time to ramp up (0.2%/yr)

•

States ≥ best practice level not required to (but get credit if they) do more

Examples:

Annual EE Savings as % of Retail Sales State Indiana Iowa Kentucky Louisiana

Incremental Savings 2017 2020 2030 0.57% 1.02% 0.22% 0.00%

1.17% 1.50% 0.82% 0.60%

1.50% 1.50% 1.50% 1.50%

Net Cumula@ve Savings 2020 2030 3.20% 4.65% 1.91% 1.14%

11.11% 11.66% 10.02% 9.33%

Source: EPA Technical Support Document: GHG Abatement Measures Appendix 5-‐5 (worksheet 1 and 2)

BUILDING BLOCK 4 OF STATE TARGETS

Building Block 4: End-use Energy Efficiency v  Calculate net cumulative EE from annual incremental savings •  •  •  •

Annual incremental savings = first year savings from EE investment EE investments continue to deliver savings for several years Cumulative savings includes savings from past EE investments EPA assumes an average measure life of 10 years and a linear decline in first year savings over 20 years

Net cumulative EE for a year (GWh) = (incremental savings ─ total expiring savings)year + (cumulative savings)last year

STATE BASELINE RATES, BUILDING BLOCKS, AND STATE GOALS (CONTINUED ON NEXT SLIDE) State

Alabama Alaska Arizona Arkansas California Colorado Connec4cut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachuseqs Michigan Minnesota Mississippi

2012 Fossil Emission Rate (lb/ MWh) 1,518 1,368 1,551 1,722 900 1,959 844 1,255 1,238 1,598 1,783 858 2,189 1,991 2,197 2,320 2,166 1,533 873 2,029 1,001 1,814 2,013 1,140

Adjusted Baseline Rate (lb/MWh) 1,444 1,351 1,453 1,634 698 1,714 765 1,234 1,199 1,500 1,540 339 1,894 1,924 1,552 1,940 2,158 1,455 437 1,870 925 1,690 1,470 1,093

Percent Reduc@on from Baseline Rate by Building Block 1

-‐4% -‐1% -‐4% -‐5% 0% -‐5% 0% -‐2% -‐3% -‐4% -‐2% 0% -‐6% -‐6% -‐6% -‐6% -‐6% -‐4% 0% -‐5% -‐1% -‐5% -‐6% -‐2%

-‐8% -‐8% -‐38% -‐30% -‐5% -‐17% -‐4% -‐17% -‐24% -‐14% 0% 0% -‐9% -‐2% -‐10% 0% -‐2% -‐25% -‐3% -‐3% -‐10% -‐12% -‐27% -‐24%

-‐9% -‐3% -‐2% -‐4% -‐7% -‐7% -‐12% -‐8% -‐6% -‐19% -‐2% -‐14% -‐7% -‐3% 11% -‐9% -‐1% -‐4% 6% -‐18% -‐17% -‐4% 3% -‐5%

-‐6% -‐14% -‐8% -‐5% -‐11% -‐7% -‐13% -‐4% -‐6% -‐6% -‐12% -‐19% -‐11% -‐9% -‐11% -‐8% -‐9% -‐7% -‐17% -‐11% -‐9% -‐11% -‐11% -‐5%

Total Reduc@on from Baseline

2030 Goal (lb/MWh)

-‐27% -‐26% -‐52% -‐44% -‐23% -‐35% -‐29% -‐32% -‐38% -‐44% -‐15% -‐33% -‐33% -‐20% -‐16% -‐23% -‐18% -‐39% -‐14% -‐37% -‐38% -‐31% -‐41% -‐37%

1,059 1,003 702 910 537 1,108 540 841 740 834 1,306 228 1,271 1,531 1,301 1,499 1,763 883 378 1,187 576 1,161 873 692

2012 Fossil Adjusted Baseline Emission Rate (lb/ Rate State HEADER GOES HERE MWh) (lb/MWh)

Percent Reduc@on from Baseline Rate by Building Block

Total Reduc@on from Baseline

2030 Goal 27 (lb/MWh)

Missouri Montana Nebraska Nevada

2,010 2,439 2,162 1,091

1,963 2,246 2,009 988

1 -‐6% -‐6% -‐6% -‐2%

2 -‐5% 0% -‐4% -‐17%

3 -‐2% -‐8% -‐8% -‐8%

4* -‐9% -‐7% -‐9% -‐7%

-‐21% -‐21% -‐26% -‐35%

1,544 1,771 1,479 647

New Hampshire

1,119

905

-‐2%

-‐20%

-‐5%

-‐46%

486

New Jersey

1,035

928

-‐1%

-‐11%

-‐21%

-‐9%

-‐43%

531

New Mexico

1,798

1,586

-‐5%

-‐15%

-‐7%

-‐34%

1,048

New York

1,096

978

-‐1%

-‐15%

-‐18%

-‐11%

-‐44%

549

North Carolina

1,772

1,647

-‐5%

-‐19%

-‐7%

-‐8%

-‐40%

992

North Dakota Ohio Oklahoma

2,368 1,897 1,562

1,994 1,850 1,387

-‐6% -‐5% -‐4%

0% -‐4% -‐20%

-‐1% -‐9% -‐6%

-‐4% -‐9% -‐5%

-‐11% -‐28% -‐35%

1,783 1,338 895

Oregon

1,081

717

-‐2%

-‐19%

-‐16%

-‐11%

-‐48%

372

Pennsylvania

1,627

1,531

-‐5%

-‐4%

-‐15%

-‐7%

-‐31%

1,052

Rhode Island

918

907

-‐4%

-‐9%

-‐14%

782

South Carolina

1,791

1,587

-‐5%

-‐10%

-‐30%

-‐6%

-‐51%

772

South Dakota Tennessee Texas

2,256 2,015 1,420

1,135 1,903 1,284

-‐6% -‐6% -‐4%

-‐30% -‐5% -‐20%

15% -‐20% -‐9%

-‐14% -‐8% -‐5%

-‐35% -‐39% -‐38%

741 1,163 791

Utah

1,874

1,813

-‐6%

-‐11%

-‐3%

-‐7%

-‐27%

1,322

Virginia

1,438

1,302

-‐3%

-‐16%

-‐12%

-‐6%

-‐38%

810

Washington

1,379

756

-‐4%

-‐38%

-‐19%

-‐11%

-‐72%

215

West Virginia

2,056

2,019

-‐6%

-‐10%

-‐3%

-‐20%

1,620

Wisconsin Wyoming

1,988 2,331

1,827 2,115

-‐5% -‐6%

-‐13% -‐1%

-‐6% -‐9%

-‐10% -‐3%

-‐34% -‐19%

1,203 1,714

PROPOSED STATE GOALS: RATE-BASED TO MASS-BASED CONVERSION

Translating from rate-based to mass-based standards

State Goal rate-‐based (lbs CO2/MWh)

Apply State Goal as an average CO2 emission rate for state

non-‐plan projected scenario

Scenario includes impact of “on the books” requirements but excludes all ac2ons /programs intended to be enforceable under a state plan

State Goal mass-‐based (lbs CO2)

Projected CO2 emissions from aﬀected EGUs for 2020-‐2029 and 2030, represent the interim and ﬁnal mass-‐based State Goal

Background

REFERENCE

North American Regional Transmission Organizations

Source: FERC

GHG PERFORMANCE STANDARDS

NSPS Rulemaking January 2014 Proposal*

January 2015 Final

NSPS Rulemaking June 2014 Proposal*

June 2015 Final

EPA Guidelines June 2014 Proposal

June 2015 Final

States Submit Plans June 2016- June 2018

Start of Compliance 2020

*Proposal signed by EPA Administrator 9/2014 and published in Federal Register 1/2014. Effective upon promulgation 1/2014. NSPS: New Source Performance Standard Source: Dates from Federal Register publication of 111(b) proposal, June 25, 2013 Presidential Memorandum; and June 2014 EPA Proposed Clean Power Plan

www.BipartisanPolicy.org Jennifer Macedonia jmacedonia@bipartisanpolicy.org