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Monday, August 31, 2015

Clean Power Plan

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1. Background

2. Acronyms/Definitions
3. Business Case
4. Benefits
5. Risks/Issues
6. Success Criteria
7. Next Steps
8. Companies
9. Links


  • After more than 4 million public comments submitted to the EPA and hundreds of meetings with stakeholders, on August 3, 2015, President Obama and EPA announced the Clean Power Plan – a historic and important step in reducing carbon pollution from power plants that takes real action on climate change.
  • With strong but achievable standards for power plants, and customized goals for states to cut the carbon pollution that is driving climate change, the Clean Power Plan provides national consistency, accountability and a level playing field while reflecting each state’s energy mix. It also shows the world that the United States is committed to leading global efforts to address climate change.
  • In this action, the Environmental Protection Agency (EPA) is establishing final emission guidelines for states to follow in developing plans to reduce greenhouse gas emissions from existing fossil fuel-fired EGUs. Specifically, the EPA is establishing:
    1. CO2 emission performance rates representing the best system of emission reduction (BSER) for two subcategories of existing fossil fuel-fired EGUs – fossil fuel-fired electric utility steam generating units and stationary combustion turbines,
    2. State-specific CO2 goals reflecting the CO2 emission performance rates, and 
    3. Guidelines for the development, submittal and implementation of state plans that establish emission standards or other measures to implement the CO2 emission performance rates, which may be accomplished by meeting the state goals. 
  • xxx
  • The EPA is establishing CO2 emission performance rates for two subcategories of existing fossil fuel-fired EGUs, 
    • fossil fuel-fired electric steam generating units and
    •  stationary combustion turbines.
      State targets will between the final rate range depending on their mix of coal vs. natural gas  771 - 1,305 lbs / MHh

      The rates are intended to represent CO2 emission rates achievable by 2030,\. The interim and final emission performance rates are presented in the following table:
  • xxx

2. Acronyms/Definitions
  1. BACT - Best Available Control Technology
  2. BSER - Best System of Emission Reductions -  To set state-specific goals, EPA analyzed the practical and affordable strategies that states and utilities are already using to lower carbon pollution from the power sector. These include improving energy efficiency, improving power plant operations, and encouraging reliance on low-carbon energy. Together, these make up the best system for reducing carbon pollution because they achieve meaningful reductions, and create jobs by driving clean energy investment and reducing energy waste to save families money.
  3. BPT - Benefit per Ton
  4. BSER Building Blocks
    Source: EPA

    1. Block 1 -  Improving heat rate at affected coal-fired steam EGUs. 
    2. Block 2 - Substituting increased generation from lower-emitting existing natural gas combined cycle units for reduced generation from higher-emitting affected steam generating units. 
    3. Block 3 - Substituting increased generation from new zero-emitting generating capacity for reduced generation from affected fossil fuel-fired generating units.
    4. Block 4 - Energy Efficiency
  5. CEIP - Clean Energy Incentive Program - An optional, “matching fund” program states may choose to use to incentivize early investments in wind or solar power, as well as demand-side energy efficiency measures that are implemented in low-income communities.

    EPA will provide matching allowances or Emission Rate Credits (ERCs) to states that participate in the CEIP, up to an amount equal to the equivalent of 300 million short tons of CO2 emissions. The match is larger for low-income EE projects, targeted at removing historic barriers to deployment of these measures. Also, states with more challenging emissions reduction targets will have access to a proportionately larger share of the match 
  6. CCS - Carbon Capture and Sequestration or Carbon Capture and Storage
  7. DICE - Dynamic Integrated Climate and Economy Model  
  8. ERC - Emission Reduction Credit
  9. Leakage - xxxx
  10. Negative Externalities - Whereby the market does not internalize the full opportunity cost of production borne by society as public goods such as air quality are unpriced. If a fossil fuel-fired electricity producer pollutes the atmosphere when it generates electricity, this cost will be borne not by the polluting firm but by society as a whole, thus imposing a negative externality. The equilibrium market price of electricity may fail to incorporate the full opportunity cost to society of generating electricity. All else equal, given this externality, the composition of EGUs used to generate electricity in a free market will not be socially optimal, and the quantity of electricity generated may not be at the socially optimal level.
  11. REC - Renewable Energy Credit - geography is important.
  12. Mass Based Standards - goal measured in short tons of CO2
  13. Mass-based goal with a new source complement (for states that choose to include new sources) measured in short tons of CO2Easier to administer.  Don't have to worry about separate standards coal,gas, blended.
  14. Rate Based Standards -  goal measured in pounds per megawatt hour (lb/MWh); How to credit energy efficiency. Can bring wholesale prices down
  15. State Plan Types
    1. Emission Standards Plan – state places federally enforceable emission standards on affected electric generating units (EGUs) that fully meet the emission guidelines - can be designed to meet the CO2 emission performance rates or state goal (ratebased or mass-based goal)
    2. State Measures Plan - state includes, at least in part, measures implemented by the state that are not included as federally enforceable emission standards - designed to achieve the state CO2 mass-based goal - includes federally enforceable measures as a backstop
  16. xxx
EPA received more than 4 million comments   Table Source: EPA

3. Business Case
  • The approach taken in the final rule is very different from the approach in the proposed rule.
  • Trade off between coal and energy efficiency.  Energy efficiency anything at the customer side.  Zero emitting  
  • 1305 - 1771 Tons of CO2 per mWh
  •  The interim period runs from 2022-2029 and includes three interim performance periods creating a reasonable trajectory (smooth glide path)
    • :Step 1 – 2022-2024
    • Step 2 – 2025-2027 
    • Step 3 – 2028-2029
  • xxx
Source: EPA

4. Benefits
  • Goals give states flexibilityEach state has the flexibility to choose how to meet the goal using a combination of measures that reflect its particular circumstances and policy objectives. While EPA identified a mix of four “building blocks” that make up the best system of emission reductions under the Clean Air Act, a state does not have to put in place the same mix of strategies that EPA used to set the goal. States are in charge of these programs and can draw on a wide range of tools, many of which they are already using, to reduce carbon pollution from power plants and meet the goal, including renewable energy portfolios and demand-side energy efficiency measures.
  • Many CO2 Reduction Opportunities
    • Heat rate improvements
    • Fuel switching to a lower carbon content fuel
    • Integration of renewable energy into EGU operations 
    • Combined heat and power • Qualified biomass co-firing and repowering 
    • Renewable energy (new & capacity uprates) 
    • Wind, solar, hydro • Nuclear generation (new & capacity uprates) 
    • Demand-side energy efficiency programs and policies
    • Demand-side management measures 
    • Electricity transmission and distribution improvements 
    • Carbon capture and utilization for existing sources
    • Carbon capture and sequestration for existing sources
  • New structure is more multi state 
  • Design Preserves Reliability 
    • Long compliance period starting in 2022 with sufficient time to maintain system reliability 
    • Design that allows states and affected EGUs flexibility to include a large variety of approaches and measures to achieve the environmental goals in a way that is tailored to each state’s and utility’s energy resources and policies, including trading within and between states, and other multi-state approaches 
    • Requirement that each state demonstrate in its final plan that it has considered reliability issues in developing its plan, including consultation with an appropriate reliability or planning agency 
    • Mechanism for a state to seek a revision to its plan in case unanticipated and significant reliability challenges arise 
    • Reliability safety valve to address situations where, due to an unanticipated event or other extraordinary circumstances, there is a conflict between the requirements imposed on an affected power plant and maintaining reliability

5. Risks/Issues
  • xxx

6. Success Criteria
  1. xxx
7. Next Steps
  • What programs will states pick?

8. Companies
  1. xxx

9. Links
  1. EPA - Clean Power Plan for Existing Power Plants
  2. EPA - Clean Power Plan Final Rule
  3. EPA - Clean Power Plan Toolbox for States

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