Estimates of the Cost of the Clean
Power Plan – One Perspective
Tom Wilson
Senior Program Manager, Energy & Environmental Analysis
RFF/EPRI Clean Power Plan Webinar
2nd December 2014
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© 2014 Electric Power Research Institute, Inc. All rights reserved.
2
Clean Air Act § 111 (d) Proposal Limits CO2 Emissions
from Existing Electric Generating Units (June 2, 2015)
“Building Blocks –
The Best System of Emission Reduction” (BSER)”
Coal Units
Heat Rate
Improvements
Expansion of
Renewable
and Nuclear
Energy
Re-dispatch
to NGCC
Units
Use of Energy
Efficiency
Estimated Reduction of 30% from 2005 Level by 2030
© 2014 Electric Power Research Institute, Inc. All rights reserved.
3
EPA’s Proposal Creates Varying State-Level
Challenges and Incentives
% CO2 Reductions by State in 2030 (from 2005)
WA 77%
MT 9%
ND 5%
MN 60%
VT
OR 42%
MA 65%
ID 55%
SD 10%
WI 45%
WY 26%
PA 34%
OH 29%
NJ 56%
IL 26%
MD
40%
IN 27% WV 22%
DE 51%
VA 55%
KY 4%
MO -2%
KS 8%
AZ 44%
NM 14%
≤ 0%
RI -93%
IA 28%
CO 25%
CA -25%
NY 67%
MI 27%
NE -32%
NV 67%
UT 29%
ME 72%
NH 75%
AR 26%
OK 43%
TN 42%
CT 48%
NC 36%
SC 41%
GA 48%
MS 57%
AL 38%
TX 43%
1% - 25%
LA 47%
FL 36%
26% - 50%
> 50%
State-by-State Required Reductions in 2030 from 2005
Levels Range from -93% to 77%
Source: EPA 2014 Opt 1 All Emissions (2030), EIA Total Electric Power (2005)
© 2014 Electric Power Research Institute, Inc. All rights reserved.
4
“Clean Power Plan” Analyses are on the Way
• Comment period closed Dec. 1;
> 1.246 million comments submitted
– Many related to cost/quantity of building blocks or speed of change
• The few available public analyses disagree on costs
– EPA’s Regulatory Impact Analysis
– NERA
– NRDC
• All analysis teams are playing catch-up
– Electric sector is changing -- modeling of energy efficiency, gas-electric
interface, distributed generation, renewables and demand response all under
development
– No one truly models state-level behavior – “what is good for me depends on
you”
Goal Today: To Make You a Better-informed Consumer of Analyses
© 2014 Electric Power Research Institute, Inc. All rights reserved.
5
Perspective: What a Difference a Few Years Makes!!
The Cost of Lieberman-Warner Is …
450
CRA, banking
MIT, 15% offsets, CCS subs
400
MIT, no offsets, CCS subs
MIT, 15% offsets, no CCS subs
MIT, no offsets, no CCS subs
350
EPA, ADAGE core
EPA, ADAGE low intl
$/ton CO2e
300
EPA, ADAGE constrained N&B
EPA, ADAGE constrained N,B,CCS
EPA, ADAGE constrained N,B,CCS,NG cartel
250
EPA, ADAGE alt ref
EPA, IGEM core
200
EPA, IGEM unlim
EPA, IGEM no offset
EPA, IGEM alt ref
150
CATF
ACCF, low
100
ACCF, high
EIA, core
EIA, high cost
50
EIA, lim alt
EIA, no intl offsets
0
2010
EIA, lim/no intl
2015
2020
2025
© 2014 Electric Power Research Institute, Inc. All rights reserved.
2030
2035
2040
6
2045
2050
2055
Key Lessons from Reviewing Past Analyses
You have to work to learn from them:
Legislative Analyses’
Views on Nuclear,
CCS, and Renewables
• Analyses ask different questions
– The proposal is always changing
Cumulative Capacity Additions by 2030
600
• They can assume fundamentally different
views of technology costs and rates of
deployment
500
GW
400
• There is often a “mystery” technology
– In legislative analyses, it was emission
offsets – “limitless supply for $10/ton”
– Today, energy efficiency?? Despite
years of research and experience,
wide range of opinion
Renew
Nuclear
Coal CCS
300
200
100
0
CRA
EPA
IPM
CATF ACCF, ACCF,
low
high
LIMIT LIMIT
Models are Always Sprinting to Catch Up
© 2014 Electric Power Research Institute, Inc. All rights reserved.
7
EIA,
core
EIA,
high
cost
EIA, EIA, no EIA,
lim alt
intl
lim/no
offsets
intl
Clean Power Plan Cost Estimates Available Today Many More Coming Soon!
Clean Power Plan Cost in 2030 –
Low/High Estimates from Each Group (Billion $)*
100
80
60
40
20
0
NRDC
-20
EPA Regulatory Impact
Analysis
Low High
*NERA estimate is actually for 2029 and in $2013. EPA/NRDC in $2011
© 2014 Electric Power Research Institute, Inc. All rights reserved.
8
NERA
Key Assumptions that Drive the Differences
(Preliminary)
• EPA assumes energy efficiency (BB4) happens and in
effect, that heat rate improvements (BB1) happen 
model primarily fuel switch, renewables, and nuclear
Clean Power Plan Cost in
2030 (Billion $)
• NRDC and NERA modeled BB4 endogenously – at least in
some scenarios
– NRDC assumed lower costs than EPA for renewables
and energy efficiency and a higher, maximum
deployment rate for BB4 (2%/year)
– NERA assumed higher costs than EPA for BB4 in their
lower-cost case
100
80
60
40
20
0
-20
NRDC
EPA
Regulatory
Impact
Analysis
• High cost versus low cost case – “apples vs oranges”
– EPA/NRDC compare regional vs state-level constraints
– NERA compares state-level with a different question,
“what if BB3/4 cannot be used for compliance?”
Two More Drivers -- Form of Policy and State-level Behavior
© 2014 Electric Power Research Institute, Inc. All rights reserved.
9
NERA
The Policy Proposal will Change, but Critical Factors that
Affect CPP Cost Estimates Likely will Include …
Energy Efficiency
• Analytical understanding is much better than for offsets, but LOTS of
uncertainty/difference of opinion remains
Rate vs Mass – State targets are rates, but can be converted to mass.
• Affects policy cost, electricity price, technology choices, emissions
Natural Gas Price and Deliverability are Critical in the CPP
• Mattered less with 80% reduction by 2050; gas was not good enough without
CCS
State-level decisions rather than national – your strategy depends on your
neighbors’
What you assume happens after 2030 can matter
• You have to Work to Learn from Analyses
• Key Factors are VERY Different than 5 years Ago
© 2014 Electric Power Research Institute, Inc. All rights reserved.
10
Together…Shaping the Future of Electricity
Questions or Comments:
Tom Wilson
Senior Program Manager
twilson@epri.com
650-855-7928