Litigation Maps Illustrate State Involvement in Power Sector Environmental Regulation Suits

Posted on September 14, 2016 by SpiegelBlog

States are on both sides of the various lawsuits over EPA’s regulation of air emissions from the power sector.  To assist readers with tracking state and local government participation in active litigation, Considering the Grid has compiled maps showing the roles of states in the lawsuits.  An overview of the litigation maps is available here.

Individual maps are available for the:

CPP
Clean Power Plan		 MATS
Mercury and Air
Toxics Standards
NSPS carbon
CO2 New Source Performance
Standards for
New Power Plants		 Methane
New Source Performance
Standards for
Oil and Natural Gas Sector
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PJM Issues Report on CPP Compliance

Posted on September 13, 2016 by Jeff Bayne

Earlier this month, PJM released a report analyzing the Clean Power Plan’s impact on electricity economics and reliability.  The report analyzed seven different compliance pathways and found that PJM would be able to both achieve the CPP’s CO2 emissions reduction goals and maintain resource adequacy.

The CPP gives states the option to take either mass-based or rate-based approaches to CO2 emissions reduction.  The PJM report evaluates four mass-based compliance pathways and three rate-based ones, as well as a reference scenario that models a future without the CPP.  The mass-based approaches vary in terms of whether states enforce mass-based limits on just existing sources or both existing sources and new ones, and whether states allow sources to trade CO2 allowances across state lines.  The rate-based approaches vary in terms of whether states act individually or as a region, and whether they use separate emissions rates for different sources or a weighted average rate.

According to the report, each of the compliance pathways satisfies CPP’s CO2 emissions goals, preserves resource adequacy, and reduces total congestion.  In addition, in every compliance scenario the primary resources replacing fossil steam resources and actively setting PJM energy prices are natural gas combined cycles.

But, despite these similarities, the various approaches do have different long-term impacts. Under both mass-based and rate-based pathways, regional approaches lead to lower costs than does individual state compliance.  Rate-based approaches to compliance result in lower wholesale energy prices but higher capacity market prices compared to both the reference scenario and mass-based approaches.  Rate-based approaches also result in larger amounts of new renewable resources, absent regulation of emissions from new sources.  Mass-based approaches lead to greater retirement of coal resources, although the geographic distribution depends on whether states take a regional or intrastate approach.  New nuclear generation was not economically viable under any of the scenarios examined in the report.

Whether any of the pathways analyzed by the PJM report will ultimately be implemented depends on that fate of the CPP itself.  Two weeks from today, the D.C. Circuit will hear 218 minutes of oral arguments on challenges to the CPP.

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EPA Issues Update to Cross-State Air Pollution Rule

Posted on September 9, 2016 by Anjali Patel

On September 7, 2016, EPA finalized its Cross-State Air Pollution Rule (CSAPR) Update for the 2008 Ozone NAAQS (Update) setting new summertime (May–September) ozone season nitrogen oxide (NOx) emission budgets for power plants in 22 eastern states.

Under the Clean Air Act’s “good neighbor” provision (42 U.S.C. § 7410(a)(2)(D)(I)), states that emit air pollutants that could “contribute significantly” to a downwind state’s ability to meet its national ambient air quality standards (NAAQS) are required to develop programs to address the interstate transport of their air emissions.  If a state fails to submit a compliant State Implementation Plan (SIP), then the Clean Air Act authorizes EPA to develop a Federal Implementation Plan (FIP) for that state.  42 U.S.C. § 7410(c)(1).

EPA’s first attempt to identify the upwind states and the emissions that would be subject to the good neighbor provision (Clean Air Interstate Rule) was overturned by the D.C. Circuit in 2008, and returned to EPA for further consideration. North Carolina v. EPA, 531 F.3d 896, on reh’g, 550 F.3d 1176 (2008).  In 2011 EPA issued CSAPR and a supplemental rulemaking which collectively finalized FIPs and set annual NOx and sulfur dioxide (SO2) emissions budgets for 28 upwind states to address interstate transport of ozone pollution under the 1997 Ozone NAAQS and of fine particulate matter (PM2.5) pollution under the 1997 and 2006 PM2.5 NAAQS.  EPA’s actions were upheld generally by the Supreme Court in EPA v. EME Homer City Generation, L.P., 134 S. Ct. 1584 (2014).

In the Update, EPA finalizes new or revised FIPs and sets new Phase 2 ozone season NOx budgets for 22 states.  The Phase 2 budgets are based on the 2008 Ozone NAAQS which is a more stringent standard than the 1997 Ozone NAAQS.  EPA does not set a Phase 2 standard for Georgia, finding that Georgia does not contribute to interstate transport with respect to the 2008 Ozone NAAQS; however, Georgia will continue to be subject to its original Phase 1 FIP.  EPA also removes ozone season NOx budgets for North Carolina, South Carolina, and Florida because its updated modeling found that these states do not contribute significantly to ozone air quality in downwind states.  The affected states may replace their FIPs with approvable transport SIPs starting in 2018.

Although emission budgets are set at a state level, the rule is implemented through the CSAPR ozone season NOx trading program and requires owners/operators of affected coal-, gas-, and oil-fired facilities to hold and surrender allowances equivalent to the total tons of NOx that their units emit during the ozone season.  The Phase 2 compliance period starts in 2017.  Allowances may be bought, sold, or banked, but Phase 1 allowances may not be used to comply with Phase 2 emission budgets.  The Update authorizes a one-time allowance conversion to transition a limited amount of 2015 and 2016 banked allowances into allowances that will be compliant with Phase 2.

Fact sheets and technical support documents related to the Update can be found here.

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New NREL Study Examines Renewable Generation Integration in the Eastern Interconnection

Posted on September 6, 2016 by Amber Martin

The U.S. Department of Energy (DOE) commissioned the National Renewable Energy Laboratory (NREL) to examine the potential impacts that high penetrations of wind and solar photovoltaics (PV) may have on the Eastern Interconnection by evaluating the conditions system operators would face if wind and solar photovoltaics were used to meet 30% of annual electricity demand.  According to the NREL, its Eastern Renewable Generation Integration Study (ERGIS) is intended to assist power system planners, operators, and regulators in planning for operational changes that may be needed to support the anticipated influx of new renewables.  NREL reports in the ERGIS that integrating up to 30% variable wind and PV generation into the Eastern Interconnection is technically feasible, but will likely change the way traditional generation sources operate and may require operational modifications, including increased coordination across the system.  Among other things, NREL found that as wind and PV output increased, coal and combined cycle generation were displaced, and thermal plants would run fewer hours on an annual basis and cycle more frequently on a daily basis.  Additionally, hydro and pumped storage resources shifted from a single peak per day to a morning and evening peak.

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State and Tribal Associations Weigh In on CEIP Proposal

Posted on September 1, 2016 by Jessica Bell

Comments have started coming in on the proposed Clean Energy Incentive Program (CEIP) design details.  Here are some highlights:

  • The National Association of State Energy Officials (NASEO) submitted comments taking no position on the merits or legality of the CPP and generally seeking clarity and increased flexibility for states that participate in the CEIP.  For example, NASEO urges EPA to stay away from overly restrictive definitions of low-income communities that would be burdensome to document.  NASEO also asks EPA to include energy efficiency as an allowable resource for the 1:1 match available to renewable energy.  NASEO states that combined heat and power (CHP) and waste-heat-to-power should be recognized as eligible for the low-income match.  NASEO notes that some projects may commence operations in accordance with the rule’s date thresholds but be implemented pursuant to a pre-existing program, and asks that EPA clarify that these projects are eligible for CEIP participation.  NASEO also asks for an explicit signal that state energy offices, public utility commissions, and other agencies may certify or vet evaluation, measurement, and verification procedures (not just state air quality agencies and EPA).
  • The National Tribal Air Association (NTAA) submitted comments addressing elements of the proposed design details most relevant to NTAA’s member tribes.  NTAA notes that EPA has proposed language that prohibits states from excluding projects on tribal lands from receiving early action credits or allowances and suggests some clarifications, citing an estimate that tribal lands have almost 6% of the technically feasible renewable energy resources in the U.S.  NTAA asks that EPA include a tribal set-aside for renewable energy and energy efficiency programs that would be commensurate with the pro rata shares of tribal renewable energy resources and low-income households.  NTAA asks EPA to expand eligible renewable energy technologies to include biomass and to allow projects receiving other incentives to be eligible to participate in the CEIP.  NTAA repeats its recommendation that EPA adopt a national federal implementation plan for tribes, which would allow tribes to participate in the CEIP independent from a state (among other things).

In case you missed it, EPA extended the comment deadline to November 1, 2016.  EPA states that this extension is to allow for requested tribal consultation on the proposal.  (The request of the states challenging the CPP for an extension appears to still be pending.)

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