EPA Issues “Affordable Clean Energy” Proposal to Replace the Clean Power Plan

UPDATED 09.11.2018 The notice of public hearing was published in the Federal Register on September 10, 2018. The online registration form to speak at the public hearing is available here.

UPDATED 09.07.2018 The proposed rule was published in the Federal Register on August 31, 2018. Comments on the rule are due by October 31, 2018 and can be submitted here.

EPA will be holding a public hearing on the rule on October 1, 2018 in Chicago, Illinois. Registration to speak at the hearing ends September 25, 2018. The prepublication notice is available here.

On Tuesday, EPA issued the prepublication version of the Affordable Clean Energy (ACE) rule, its proposed replacement to the CPP.  The proposed rule establishes a new framework under which states will develop plans to address greenhouse gas emissions from existing coal-fired electric generating units (EGUs).  Compared to a no-CPP scenario, EPA projects that the ACE rule will reduce CO2 emissions in 2020 between 13 and 30 million short tons.  And EPA states that under some scenarios, avoided compliance costs total $6.4 billion compared to the CPP.

The proposed rule has four components.  First, EPA proposes to determine the “Best System of Emissions Reduction” (BSER) for existing EGUs based on measures that can be applied at an individual stationary source.  EPA states that this marks a departure from the CPP, which established the BSER “using measures that applied to the power sector as a whole, rather than measures that apply at . . . the level of[] individual facilities.”

Second, EPA proposes to define the BSER as heat-rate efficiency improvements that lower the CO2 emission rate of affected EGUs.  EPA explains that when an EGU improves its heat rate, it consumes less fuel and emits lower amounts of CO2 per kWh of electricity generated. EPA states that these heat-rate efficiency improvements will be achieved through the use of certain “candidate technologies,” equipment upgrades, and best operating and maintenance practices, which states may consider in establishing standards of performance for their EGUs.  These “candidate technologies” include:

  • Neural Network/Intelligent Sootblowers
  • Boiler Feed Pumps
  • Air Heater and Duct Leakage Control
  • Variable Frequency Drives
  • Blade Path Upgrade (Stem Turbine)
  • Redesign/Replace Economizer
  • Improved Operating and Maintenance Practices

The rule also proposes new implementing regulations under Clean Air Action Section 111(d) to give states more time to develop State Implementation Plans (SIPs).  The new rule provides states three years from the date of the final rule to prepare and submit its SIP.  EPA will then have twelve months to evaluate and determine whether the plan can be approved.  In the event that a state does not submit a plan or its plan is not approved, EPA has two years to develop a federal plan for that state. (The existing implementing regulations provided nine months for states to develop SIPs; four months for EPA to evaluate and act on the plans; and six months for EPA to issue a federal plan.)

Finally, EPA proposes a new preliminary applicability test for determining whether a physical or operational change made to an EGU is a “major modification” triggering EPA’s New Source Review (NSR).  Under the new rules, only projects that increase a plant’s hourly rate of pollutant emissions will undergo a full NSR analysis.  EPA states that this proposal will “give the owners/operators of EGUs more latitude to make the efficiency improvements that are consistent with EPA’s proposed BSER without triggering onerous and costly NSR permit requirements.”

The prepublication version of the proposed rule is available on EPA’s website, along with EPA’s press release and fact sheets.  Comments on the rule will be due 60 days after publication in the Federal Register.

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Impacts of Rising Temperatures on Human Health and Safety

While many in the Northern Hemisphere may be compiling anecdata this time of year about the impacts of high temperatures on productivity, health, and well-being, several recent studies have made broader attempts to quantify the potential public health threat of climate change from different angles.

A study in GeoHealth, a journal of the American Geophysical Union, investigated the effect of changes in temperature on hyperthermia and cardiovascular emergency department visits for patients age 64 and younger.  The researchers found a strong positive relationship for hyperthermia (but not cardiovascular issues).  They predict that hyperthermia visits could increase by 21,000 to 28,000 by 2050, depending on greenhouse gas emission levels, with an associated price tag of between $6 million and $52 million.

A study in the Proceedings of the National Academy of Sciences looked at activity levels of police officers and food safety inspectors during times of extreme temperatures, finding that both police stops and food safety inspections decrease in periods of hot and cold temperatures.  The researchers found that these temperature extremes also correlate with increases in fatal crash risks and food safety violations.  They note that studies of potential political impacts of climate change have to date focused on more extreme consequences (for example, this study on democratic turnover), but climate change may have independent effects on governmental function on a day-to-day basis as well (that could also lead to more extreme political consequences).

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Mayors and Attorneys General Oppose Proposed Automobile Emission Standards

Earlier this month, EPA and the National Highway Traffic Safety Administration (NHTSA) issued a proposed rule regarding automobile emission standards for passenger cars and light trucks for model years 2021–2026.  Under the Obama Administration, EPA and NHTSA had enacted rules imposing increasingly stringent standards for each model year.  In contrast, the current proposed rule would flatten the standards and use the same Corporate Average Fuel Economy and carbon dioxide emission standards for model year 2020 through model year 2026.

In addition, the proposed rule would withdraw a waiver previously granted to California allowing the state set its own rules through its Low Emission Vehicle program and Zero Emission Vehicle program.  EPA and NHTSA’s proposed rule states that California has disproportionally focused on greenhouse gas emissions over the past decades, but the purpose of the relevant section of the Clean Air Act allowing EPA to grant the state a waiver was intended to address smog-related air quality problems.

More than 400 mayors, representing 70 million Americans from 47 states, issued a statement condemning this proposed rule.  They argue that because transportation is the largest and fastest-growing source of U.S. greenhouse gas emissions, automobile fuel economy standards are critical to addressing climate change.

Twenty state attorneys general and the attorney general for the District of Columbia announced their intention to challenge the proposed rule.  This group includes the attorneys general from every jurisdiction that has adopted California’s more stringent standards.  Similar to the coalition of mayors, they argue that “[f]ederal rules to limit tailpipe pollution and improve fuel economy are our best strategy to reduce carbon pollution, improve air quality, and save drivers money on gas.”  According to these attorneys general, the proposed rule would not only have negative environmental impacts, but it would also cost American drivers hundreds of billions of dollars.

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New York Solicits Public Comments on Energy Storage Roadmap, Including $350 Million in Incentives

Last month, New York released its Energy Storage Roadmap, identifying a range of policy, regulatory, and programmatic actions that the state and market actors can undertake to achieve New York’s goal of installing 1,500 MW of storage by 2025.  The Roadmap is one piece of Governor Cuomo’s Reforming the Energy Vision strategy, which proposes that 50% of the state’s electricity needs come from renewable energy sources by 2030.

The Roadmap makes seven broad recommendations:

  1. Retail Rate Actions and Utility Programs.  The Roadmap proposes to “[i]mprove . . . retail [rate design] to send more accurate price signals that correspond to the system‐wide and locational value of peak load reductions and to reduce financing barriers.”
  2. InvestorOwned Utility Roles.  This proposal is aimed at enabling development of a market‐based storage sector.  The Roadmap proposes to align utility incentives to that end by clarifying the role and business model for investor‐owned utilities to manage the full customer bill and leveraging assets, such as storage and non‐wires alternatives (NWAs).
  3. Direct Procurement Approaches through NWAs, Renewable Energy Certificates (RECs) and New York State Leading by Example.  The Roadmap proposes to “[e]xpand the market by employing direct procurement approaches through utility NWAs,” as well as the New York State Energy Research and Development Authority’s (NYSERDA) RECs that can pair large‐scale renewables with energy storage.  It also proposes to leverage the state’s purchasing power to act as a catalyst for early adoption of storage to power public buildings.
  4. Market Acceleration Incentive.  Department of Public Service Staff recommends “establishing an approximately $350 million bridge incentive statewide . . . to accelerate adoption of customer-sited storage and storage sited on the distribution or bulk systems, including pairing with [solar photovoltaic systems].”
  5. Addressing Soft Costs Including Barriers in Data and Finance.  Here, the Roadmap proposes to “[p]ursue cross‐cutting actions to reduce barriers including expanding access to more granular system load data to target highest‐need locations on the electric system, lowering costs (e.g., permitting, interconnection, and capital costs), and insuring access to a skilled workforce.”
  6. “Clean Peak” Actions.  This proposal is aimed at aligning “storage approaches with Department of Environmental Conservation . . . draft combustion turbine peaking unit regulations to reduce NOx and develop approaches to differentially value peak carbon reductions.”
  7. Wholesale Market Actions and Distribution / Wholesale Market Coordination.  The Roadmap recommends developing “approaches to directly or indirectly access wholesale market values (including capacity and ancillary service values) by modifying wholesale market rules to better enable storage participation, including dual market participation (i.e., where storage provides both distribution system and wholesale system services).”

The Department of Public Service and NYSERDA will convene technical conferences on August 7 and 21 to facilitate broad stakeholder engagement in the Roadmap.  All interested parties are invited to submit comments by September 10 and reply comments by September 18 in Case No. 18-E-0130, In the Matter of Energy Storage Deployment Program.

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EIA Releases Annual International Energy Outlook

Earlier this week, the Energy Information Administration (EIA) released its International Energy Outlook 2018.  The report focuses on the impacts of macroeconomic conditions and growth patterns on energy markets in China, India, and Africa.  EIA notes that economic development in these regions is “likely to have important implications for global energy markets because of increased demand from the production and provision of goods and services.”  The U.S. may be impacted in its role as an energy exporter.

The report finds that China will remain the world’s largest producer of energy-intensive goods in 2040.  Despite the projection that India will have the world’s largest population and the fastest-growing economy, total energy use and energy use per capita in India is lower than in China or the U.S.  The report anticipates an expansion of the manufacturing sector and increase in industrial energy use in African countries.

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