Regulations for Carbon Pollution

Regulations for Carbon PollutionExecutive SummaryIn June 2014, the environmental Protection Agency issued a gulp regularization to regulate carbon pollution from vivacious power devisets, as part of an action plan to spoken language climate change.The rule is limited to existing power plants and does non address other sources of carbon pollution such as cars or industrial facilities. It is a great deal referred to in short hand as the 111d rule, because the agency used the authority found in piece 111d of the Clean Air Act to issue the regulation.The EPA gave separately render a target of carbon diminution to reach at power plants by 2030, based on its assessment of each states unique characteristics. The average carbon diminution nationwide is 30% by 2030. element 109s proposed target is a carbon emission rate reduction of 21%.The draft rule gives the states significant amounts of flexibility in how to meet the briskly proposed standards for clean air. If the final rule by EPA provides the flexibility promised in the draft, Montana will lay down significant latitude to implement measures that are rooted in the states unique economic characteristics.This DEQ paper presents hypothetical scenarios that could emerge depending on how the state decides to respond to the rule the EPA eventually releases. This document only seeks to illustrate some of the measures that the state could undertake as part of its plan to meet the proposed reduction targets in the draft rule. There are, of course, a number of other pathways to meeting the proposed standard, but we hope to start a discussion through this paper that will hint to even more innovations. In addition, this paper does not address the options or challenges that other states may have in meeting their respective proposed reductions, which could have impacts on Montana.As can be seen in the discussion that follows, each scenario has its potential benefits, costs, and uncertainties. Importantly, none of the scenarios call for plant closures. All five scenarios evaluated in this paper not only keep the jobs that we currently have and meet the reduction target in the proposed rule, but strongly suggest that it would be possible to create new jobs and additional tax revenue, and to further strengthen the economy through the development of new renewable electricity generating capacity and increased investment in efficient energy efficiency.Background ContextOn June 2, 2014, the Environmental Protection Agency (EPA) issued draft emission guidelines for the regulation of greenhouse gas emissions specifically carbon dioxide (CO2) from existing electric generating units (referred to as power plants in this paper), relying on its regulatory authority under segment 111(d) of the Clean Air Act.For all pollutants regulated under section 111, EPA is required to identify a best corpse of emission reduction and set targets for carbon reduction based on that system of controls. In the draft rule, EPA used four make blocks to determine the best system of emission reduction. They are based on the most likely sources of carbon pollution reductions.Section 111(d) provides significant flexibility to states to decide how to meet the established standards of performance. Consequently, the EPAs mental synthesis blocks would not require states to follow them in order to comply with the rule.The four building blocks the EPA used are1) Efficiency improvements at all coal-fired power plants2) A shift in total electricity times from coal-fired power plants to existing rude(a) gas combined cycle power plants3) Increased generation from low- and no-carbon renewable and nuclear energy options and4) Increased investment in energy efficiency.EPA applied this system of controls to each state to determine proposed targets for each state.Montanas target is expressed in pounds of carbon emitted per megawatt hour (a rate-based standard) 1,771 lbs CO2/MWh by 2030, a reduction of approxi mately 21% from the 2012 emissions level of 2,246 lbs CO2/MWh. To meet the standards for clean air created by the new rule, the state has the option to convert the rate-based standard into a mass-based standard, which is an boilersuit reduction of tons of carbon emitted annually.EPA uses the following specific data inputs for each building block to arrive at Montanas target.In make Block 1, EPA assumes a 6% efficiency improvement at all nine affected coal- fired units.EPA assumes Montanas potential under mental synthesis Block 2 to be zero because Montana does not currently have any natural gas combined cycle power plants.In Building Block 3, EPA assumes that Montana will be able to increase renewable energy generation from its current 5% of total state generation to approximately 10% by 2030.In Building Block 4, EPA assumes that Montana will be able to increase the electricity energy savings from demand-side oversight programs beginning in 2017, ultimately moreFOR DISCUSSIONS PU RPOSES ONLY 4than doubling current energy efficiency in the state. The net result would be a reduction of the states retail sales of electricity by 11.3% cumulatively by 2030, compared to what Montana would consume without energy efficiency programs.Although EPA used the above-described building blocks to set targets, section 111(d) and the draft emission guidelines afford states the opportunity to use any mix of controls, including methods not considered by EPA, to meet those targets. That is, Montana does not have to use the building blocks EPA used if it can find a different path to meeting the overall proposed carbon reduction target.After the final rule is released in June 2016, Montana must develop a state plan (individual or multi- state) in accordance with section 111(d) to implement and comply with the rule.1 Although the methods in the plan may differ from those described above, Montanas plan must meet or exceed the final carbon reduction target mensurable by EPA.Purpose o f this AnalysisThis paper analyzes five scenarios that, if implemented, would meet the EPAs proposed target reduction in carbon emission intensity. These scenarios are similar in that they all achieve EPAs proposed target, but differ in the extent to which they rely on each of EPAs proposed building blocks to meet or communicate the target.The scenarios are presented here to demonstrate the relative interplay and effectiveness of some of the options available to Montana for complying with the proposed emission guidelines. The following five scenarios are discussed in more tip throughout this paperScenario 1 Existing thrust Generation positive(p) Heavy Energy EfficiencyScenario 2 Existing Energy Generation plus Lewis Clark Plant Co-FireScenario 3 Existing Energy Generation plus Moderate Energy Efficiency and Heat Rate ImprovementScenario 4 Existing Energy Generation plus Heavy Renewable EnergyScenario 5 Existing Energy Generation plus CO2 SequestrationSummary of Scenario In puts and ResultsThe five scenarios were pattern using a tool developed by the Montana Department of Environmental Quality. Each scenario results in compliance with EPAs proposed rate-based emission target as well as Montanas estimated mass-based target. The following table shows the extent to which each building block contributes to each of the five scenarios.This paper only considers opportunities and challenges for trim carbon emissions through actions taken within the states boundaries and does not consider a multi-state or regional approach.