CHEAPER AND CLEANER:
Using the Clean Air Act to Sharply Reduce
Carbon Pollution from Existing Power
Plants, Delivering Health, Environmental
and Economic Benefits
March 2014 Update
2
CLOSING THE POWER PLANT CARBON POLLUTION LOOPHOLE:
SMART WAYS THE CLEAN AIR ACT CAN CLEAN UP AMERICA’S
BIGGEST CLIMATE POLLUTERS
“We limit the amount of toxic chemicals like mercury and sulfur and arsenic in our air or our water, but
power plants can still dump unlimited amounts of carbon pollution into the air for free. That’s not right,
that’s not safe, and it needs to stop.”
-President Obama, June 25th, 2013
3
THE TIMELINE
2013
2014
2015
2016
2017
January 20th
June 25th
September 20th
Start of President Obama's second term.
President Obama announces Climate Action Plan.
EPA proposes carbon pollution standards for future power plants.
May 9th
June 1st
June-September
End of public comment period for future power plant proposal.
EPA to propose guideline for carbon pollution standards for existing
power plants.
Public comment period on existing power plant proposal.
June 1st
EPA to finalize power plant carbon pollution standards.
June 30th
July-December
States to submit implementation plans for existing
power plants to EPA.
EPA reviews state plans for compliance with its guideline.
January 20th
End of President Obama's second term.
4
THE CLEAN AIR ACT AND EXISTING POWER PLANTS
THE “101” ON 111 (d)
EPA CO2 Emissions Guideline & State Plans
 EPA proposes “emission guideline” June 2014, final June 2015.
 Guideline includes performance standard and compliance provisions.
 States have until June 2016 to adopt and submit state plans. If a state
submits no plan, or one EPA cannot approve, EPA must issue a federal plan.
“Best System of Emission Reduction”
 “Source-based” approach limited to options plants can do “within the fenceline”
(e.g. heat-rate improvements) – yields limited reductions, higher costs
 “System-based” approach includes all options that reduce emissions –yields
deeper reductions, lower costs
Heat-rate improvements
Shifting generation from coal to gas
Increasing zero -emission power (renewables and nuclear)
Increasing energy efficiency
5
NRDC PROPOSAL
SYSTEM-BASED, STATE SPECIFIC STANDARDS
State-specific fossil-fleet average CO2 emission rates (lbs/MWh)
for 2020 and 2025
Calculated by applying benchmark coal and gas rates to each
state’s baseline (2008-2010) fossil generation mix
Averaging allowed among all fossil units in state (including new
units subject to the 111(b) standard)
Credit for incremental renewables and energy efficiency
(equivalent to adding MWhs to denominator in calculating
emission rate for compliance purposes)
States may opt in to interstate averaging or credit trading
States may adopt alternative plans, including mass-based
standards, provided they achieve equivalent emission reductions
6
STATES ALLOWED FLEXIBLE
COMPLIANCE OPTIONS
Heat rate reductions
Cleaner power sources
More renewables
Investments in efficiency
7
NRDC SPECIFICATIONS
LIST OF SCENARIOS
Reference Case
Moderate Case,
Moderate Case,
Full Efficiency
Constrained Efficiency
Ambitious Case,
Ambitious Case,
Ambitious Case,
Full Efficiency
Constrained Efficiency
Constrained Efficiency, PTC
8
NRDC SPECIFICATIONS
LIST OF SCENARIOS
All Cases
 AEO 2013 demand projections
 Onshore wind costs: DOE/LBL 2012 Wind Technologies Report
 Nuclear units re-licensed
Efficiency Assumptions
 Full Efficiency Cases: 482 TWh available in 2020 (Synapse)
 Constrained Efficiency Cases: 241 TWh available in 2020
Ambition Assumptions
9
NRDC SPECIFICATIONS
SIMPLE ENERGY EFFICIENCY SUPPLY CURVE
Energy Efficiency Quantity
Assumptions
Same energy efficiency potential
(maximum MWhs saved) as in 2012
analysis
Divided evenly into three cost blocks
in each region, 482 TWh in total
Energy Efficiency Cost
Assumptions
Costs apply nationwide, do not vary
across regions
Derived based on utility program costs
from Synapse and relative values from
LBNL cost curve to estimate costs of
each block
Middle cost block is equal to the
Synapse utility program cost
Customer contribution at 45% of total
cost is included in cost-benefit
calculations
EE Program Costs
(cents/kWh)
2013-2020
2021-2030
Low
2.3
2.6
Middle
2.6
2.9
High
3.2
3.5
10
NRDC POLICY CASES vs REFERENCE CASE
GENERATION MIX: 2012 vs. 2020 REFERENCE CASE
2012 Actual
2020 Reference
11
NRDC POLICY CASES vs REFERENCE CASE
PROJECTED GENERATION MIX IN 2020
12
NRDC POLICY CASES vs REFERENCE CASE
EMISSIONS 2014-2025
3,000
2,500
Reference Case
CO2 Emissions (short tons)
Historical
2,000
Moderate, Constrained
Efficiency
Moderate, Full
Efficiency
1,500
Ambitious, Constrained
Efficiency
Ambitious, Constrained
Efficiency, PTC
1,000
Ambitious, Full
Efficiency
500
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
13
NRDC POLICY CASES vs REFERENCE CASE
EMISSIONS REDUCTIONS IN 2020: CO2 SO2 NOx
14
NRDC POLICY CASES vs REFERENCE CASE
COSTS AND BENEFITS FROM REDUCED EMISSIONS IN 2020
15
STATE EMISSION RATE TRAJECTORIES UNDER NRDC POLICY
AMBITIOUS CASES 2020 AND 2025
2,500
2,000
Lbs/MWh
1,500
1,000
500
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Oregon
Washington
Idaho
Montana
California
Colorado
16
WESTERN REGIONAL RESULTS
GENERATION MIX IN 2020
17
WESTERN REGIONAL RESULTS
EMISSION REDUCTIONS IN 2020: CO2 SO2 NOx
18
PNW AND CA+OTHERWEST REGIONAL RESULTS
CO2 CREDIT PRICES ($/Ton)
2020
2025
Moderate Full
Efficiency
CA + OTHERWEST
8.42
9.59
PNW
10.48
11.58
Moderate
Constrained
Efficiency
CA + OTHERWEST
12.97
14.32
PNW
16.59
18.43
Ambitious Full
Efficiency
CA + OTHERWEST
11.19
11.56
PNW
10.48
11.58
Ambitious
Constrained
Efficiency
CA + OTHERWEST
27.90
32.15
PNW
16.80
18.46
Ambitious
Constrained
Efficiency, PTC
CA + OTHERWEST
15.05
17.40
PNW
13.42
15.09
19
INTERSTATE ISSUES FOR CONSIDERATION
Exporter states
 Power leaves the state, emissions remain
 States exporting to CA: emissions already counted under AB-32?
Importer states
 Ability to select compliance pathways potentially limited by decisions
in exporting states
 Changes in out of state purchases reflected?
 Out of state renewables and REC purchases?
A multi-state compliance agreement would allow each state to
plan around utility portfolios, whether or not they cross state
lines
20
HIGHER AND LOWER COST OPTIONS TO REACH THE SAME
EMISSIONS LEVELS: NORTHWEST EXAMPLE
The Northwest Power and Conservation Council analyze three
pathways to ~35% emissions reductions by 2029 for the region,
including imported power
 $45/ton carbon tax: 14% revenue requirement increase
 Cap and trade with free allocation: 2% revenue requirement increase
 Phased coal retirement: 15% revenue requirement increase
All scenarios included 5900 MW of additional Energy Efficiency
nlong@nrdc.org
syeh@nrdc.org