Regulation and Compliance in the US Power Generation Market · Session 201601 Regulation and...
Transcript of Regulation and Compliance in the US Power Generation Market · Session 201601 Regulation and...
Session 201601
Regulation and
Compliance in the US
Power Generation
Market
Daniel L. Chartier
Vice President, Government Affairs
Corn Refiners Association
ABB Automation & Power World
March 3, 2015
Houston, Texas
The Corn Refiners Association
CRA has represented the corn refining
industry of the United States since 1913
Corn refiners manufacture sweeteners,
ethanol, starch, bioproducts, corn oil and
feed products from corn components such as
starch, oil, protein and fiber
See more at: www.corn.org
Producers and users of electricity and steam
Impacted by each of the rules discussed
today
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Air
Water
Climate
Waste
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Air•Cross-State Air
Pollution Rule (CSAPR)
•National Ambient Air Quality Standard (NAAQS) for Ozone
•Mercury & Air Toxics Rule (MATS)
Cross-state Air Pollution Rule (CSAPR)
August 2011 – CASPR published
Affects power companies in 27 eastern states
through budgets for NOX and/or SO2 (both for
most states) to meet 1997 ozone standard
August 2012, D.C. Circuit vacates rule; Clean
Air Interstate Rule (CAIR) remains in place
April 2014, Supreme Court reverses D.C.
circuit and remands case
October 2014, D.C. Circuit lifts stay, moves
compliance deadlines
Phase I: 2015/2016; Phase 2: 2017
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CSAPR - Geography
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CSAPR - Litigation continues
Industry
Allegations of over control; Challenges to modeling
Requested remedy: Vacate ozone season requirements in
14 states; Remand emission budgets to correct errors
States
Deficiencies with EPA’s disapproval of SIPs ; Over-control in
Texas; Notice and comment deficiencies
Requested remedy: Complete vacatur; Vacatur of rule as it
relates to Texas
Briefing complete; Oral arguments held
February 25, 2015
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Ozone NAAQS
NAAQS are supposed to be reviewed every
5 years; In Jan. 2010, EPA proposed revising
the std. in the range of 60 to 70 ppb.
In September 2011, President Obama
instructed EPA to withdraw the revised
proposal, keeping the primary standard at 75
ppb.
New standards proposed November 2014
Current primary standard, 75 ppb
Proposed primary standard range, 65-70 ppb
Comment requested on standard as low as 60 ppb
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Ozone Nonattainment Areas Under
the Current (2008) Standard of 75 ppb
9Source: EPA; http://www.epa.gov/groundlevelozone/designations/2008standards/final/finalmap.htm
EPA’s Projection of Nonattainment
Areas Under the Proposed Standard
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API’s Nonattainment Projection
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Mercury & Air Toxics Rule (MATS)
Rule published April 16, 2012
Metals, including mercury, arsenic, chromium &
nickel
Acid gases including hydrogen chloride &
hydrogen fluoride
Particulate matter
EPA granted reconsideration of certain new
source issues
Petitions for review consolidated under
White Stallion Energy Center LLC v. EPA
Rule upheld by DC Circuit April 15, 2014
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MATS Timeline
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There’s moreimpacting air…
Regional visibility requirements for Class I
areas
Updates to additional National Ambient Air
Quality Standards
More “transport” rules
Standards to be used during Start-up,
Shutdown and Malfunction (SSM)
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Water•Cooling Water Intake
Structures – 316(b)
•Thermal Discharge –316(a)
•Effluent Limitations Guidelines (ELGs)
•Waters of the United States
Cooling Water Intake Structures – 316(b)
August 2014 final rule published establishing
rules for cooling water intake structures to
“reduce injury and death of fish and other
aquatic life”
Three main components at existing facilities
Flow > 2 MGD to install Best Technology Available
(BTA) for “impingement”
Flow >125 MGD to conduct studies to determine
if controls are needed for “entrainment”
New units at existing facilities must meet
entrainment levels commensurate with closed-
cycle cooling or meet technology standard16
Cooling Water Intake Structures-cont’d
17Graphic courtesy of the Edison Electric Institute
Cooling Water Intake Structures-cont’d
Rule is being challenged in court
Riverkeeper and other ENGOs
Assert that facilities are given too much flexibility and
should be required to utilize closed-cycle cooling where
achievable
Industry
Whether the 2 MGD applicability limit set is too low
Whether EPA unreasonably included/failed to revise a
provision that allows BPJ section 316(b) requirements
to be imposed on intake structures where less than 25%
of the water is used for cooling purposes
Whether the Final Rule is unambiguous and is consistent
with statements in the preamble and the economic
impact analysis18
Thermal Discharges – 316(a)
Thermal effluents are regulated because
heat is identified as a pollutant under CWA
Section 502(6)
46 states issue NPDES permits (EPA has not
granted this authority in 4 states and the
District of Columbia)
In general, permit restrictions for thermal
effluents are based upon the receiving water
body’s ability to assimilate heat
Closed-cycle cooling may be the answer
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Effluent Limitations Guidelines (ELGs)
EPA published a proposed rule in June 2013
to amend the Steam Electric effluent
guidelines and standards
Coal, oil, gas and nuclear facilities affected
(~1,200 facilities)
Sets new Best Available Technology (BAT) limits
on 7 important waste streams (including fly ash
and bottom ash)
8 options; 4 preferred
Zero liquid discharge a part of all but 2 options
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Waters of the United States (WOTUS)
33 U.S.C. § 1362 states: "The term 'navigable
waters' means the waters of the United
States, including territorial seas.”
Confusion caused by Supreme Court
decisions in ‘85, ’01 and ’06
Rule proposed April 21, 2014 replaces the
definitions of “navigable waters” and
“waters of the United States” for all CWA
programs
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Why the WOTUS Definition Matters
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What’s potentially being added to
WOTUS
Concerns over expansion of traditional
WOTUS definition/jurisdiction by adding:
All tributaries
All adjacent waters, including wetlands;
And on a case-specific basis, other waters,
including wetlands, that alone or in combination
with other similarly situated waters in the region
have a significant nexus
EPA asserts its changes only clarify and do
not expand jurisdiction
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Included
or not?
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Climate
•Power Sector Rules for New and Existing Power Plants
• International Negotiations
Proposed GHG Regulations for New and
Existing Power Plants Plants
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Performance Standards for GHG Emissions from New Power Plants – Section
111(b)
• New Coal-Fired Power Plants:
• Limit set at 1,100 pounds of CO2 / Megawatt Hour
• New Natural Gas-Fired Power Plants:
• Limit set at 1,000 pounds of CO2 / MWh (1,100 lb limit for smaller plants determined by heat rating)
Performance Standards for GHG Emissions from
Existing Power Plants –Section 111(d)
• The EPA’s proposal for existing power plants was announced in June 2014 with a goal of a 30% reduction of 2005 GHG levels by 2030.
• The rule establishes individual reduction requirements per state based on EPA’s “best system of emissions reduction” (BSER).
EPA’s Best System of Emissions Reduction
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Block #1
Heat rate improvements at coal-fired electric generating units (EGUs) to reduce carbon
intensity
Replacing coal-based electricity with increased
generation at existing natural gas combined cycle
EGUs
Maintaining and increasing nuclear generation capacity,
and increasing renewable EGU capacity
Reducing generation through demand-side energy efficiency
improvements
The EPA developed state-specific goals using four building
blocksBlock #4
Block #2
Block #3
Who controls the reductions?
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Inside the fence line
Outside the fence line
Single State Compliance Example
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Current (2012) Emissions
1,453 lb/MWh
EPA takes action
on state plans EPA assumes all in-state coal-based generation will be
replaced by other generation resources by 2020
EPA Interim Goal(2020-2029 Average)
735 lb/MWhEPA 2030 Goal
702 lb/MWh
Arizona
State plans due
Annual progress reportsCorrective measures
Litigation Outlook
Litigation on final 111(d) guidelines is
certain
Court decisions not likely until end of
decade
Even if parts of guidelines overturned, state
plans will already have been submitted, and
progress and investments being made
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The Road to a New International
Agreement on Climate Change
Lima Climate Summit, COP-20, Dec. 2014
Lima Call for Climate Action (4 pages, 22 paras.)
Annex – “Elements of a Negotiating Text” (38
pages, 103 paras., with numerous options)
ADP Meeting, Feb. 8-13, Geneva
Annex grows to 86 pages
Becomes the official negotiating text
Next negotiating meeting in June 2015
Goal: Final agreement at COP-21 Paris, Nov.
30-Dec 11, 2015
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US - China Announcement on Climate
US to cut net greenhouse gas emissions by
26-28% below 2005 levels by 2025
Keeps the US on the trajectory to achieve
reductions of 80% by 2050
China to “peak” CO2 emissions “around
2030” and increase the non-fossil fuel share
of all energy to “around 20%” by 2030
Additional agreements regarding research
and development, carbon capture,
hydrofluorocarbons cooperation, and trade
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Obama’s $3 Billion Climate Fund
Commitment
Fund intended to help poor nations boost
renewable energy and counter effects of
global warming by luring private sector
investment
$10 billion goal achieved prior to Lima
conference
US Congressional approval is needed,
depends on source of funding
Seeks $500 million in latest Presidential budget
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Waste
•Ash Disposal Rule
Ash Disposal Rules
EPA Administrator McCarthy signed the
Disposal of Coal Combustion Residuals (CCR)
from Electric Utilities final rule on December
19, 2014 – not yet published
Driven by the coal ash spill at TVA’s Kingston
facility in 2008
Final rule covers disposal under Subtitle D of
RCRA
The proposed rule had contemplated treatment
as hazardous wastes under Subtitle C of RCRA
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Ash Disposal Rules-continued
Structural Integrity requirements starting 6 months
to 2 years after publication
Groundwater Monitoring and Corrective Action
starting 30 months after publication
Location Restrictions starting 18 months after
publication
Liner Design Criteria documentation required 18
months after publication
Operating Criteria requirements starting 6 months
after publication
Record Keeping, Notification, and Internet Posting
requirements 6 months after publication
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Bringing it all together•What will this all
cost?
• Is there a risk to grid reliability?
•Can we expect relief from Congress?
Bringing it all together:
What will this cost?
CSAPR - $800 million in annual costs, plus $1.6
billion in annual capital due to CAIR
$120 to $280 billion in annual health and environmental
benefits
Ozone - $3.9 billion for a standard of 70 ppb, or
$15 billion for a standard of 65 ppb
Health benefits of $6.4 to $13 billion for a standard of 70
ppb, or $19 to $38 billion for a standard of 65 ppb
MATS – Annual costs of $9.6 billion (2007$)
Health benefits of $37 to $90 billion annually
38Source: All cost and benefit values are from EPA documentation for the respective rule
Bringing it all together:
What will this cost?
316(b)- Annual costs of $275-$297 million
Annual benefits of $29-33 million
WOTUS – Mitigation costs of $162-$278 million
per year
Public benefits estimated at $388 million to $514 million
annually
ELGs– Compliance cost of $185-$954 million
annually
Pollutant discharges reduced by 470 million to 2.62 billion
pounds and water use reduced by 50 billion to 103 billion
gallons per year at affected steam electric power plants
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Bringing it all together:
What will this cost?
Clean Power Plan GHG Rule -Estimated annual
compliance cost of $3.0 to $4.6 billion in 2025
for Block 1 and Block 2 if compliance is
managed on a regional basis
Estimated global benefit of CO2 reductions from
Block 1 and Block 2 ranges from $3.9 to $39 billion in
2025 depending on the discount rate applied to the
Social Cost of Carbon if compliance is managed on a
regional basis
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Source: http://www2.epa.gov/sites/production/files/2014-05/documents/20140602tsd-
memo-buildingblocks-costs-benefits.pdf
Bringing it all together:
Is there a risk to grid reliability?
NERC: Potential Reliability Impacts of EPA’s
Proposed Compliance Plan. Nov. 2014, 27 pages
Brattle Group: EPA’s Clean Power Plan and
Reliability: Assessing NERC’s Initial Reliability
Review. Feb. 2015, 68 pages
Analysis Group: Electric System Reliability and
EPA’s Clean Power Plan: Tools and Practices.
Feb. 2015, 51 pages
FERC: Series of three technical conferences to
discuss implications of compliance with EPA’s Clean
Power Plan
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Bringing it all together:
Can we expect relief from Congress?
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1. The Clean Power Plan (GHG rules)
2. Endangered Species Act
3. Ground-level Ozone Standards
4. Methane Regulations on Oil and Gas Ops
5. Renewable-Fuel Standard
6. Fracking on Public
Lands
7. Waters of the
United States
8. Coal Ash Disposal
Rule
9. Stream Buffer Zone
Rule
10.Social Cost of
Carbonhttp://www.nationaljournal.com/energy/10-
environmental-regulations-the-republican-congress-
wants-to-kill-20150205 Feb. 5, 2015.
10 Regulations the R’s Want to Kill*
*
Thank you!
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Daniel L. ChartierVice President, Government Affairs
1701 Pennsylvania Avenue, N.W.
Suite 950
Washington, DC 20006
Direct: (202) 534-3498
Cell: (202) 731-5888
e-mail: [email protected]