EPA’s Clean Power Plan: Potentially New and Improved?

On Tuesday, EPA issued a Notice of Data Availability, requesting further comment on some specific issues that have been raised since it published its draft Clean Power Plan in June.  My immediate reaction?  My head hurts.

I don’t mean to trivialize the implementation issues that would likely arise if Congress enacted either a cap-and-trade system or a carbon tax, but they’ve got to pale in comparison to the Rube Goldberg-like 2014-09-08-401kfeedisclosuresystem that’s going to be in place once EPA promulgates a final rule.  This is not meant as a criticism of EPA.  To the contrary.  The agency has to know that it’s not going to get any credit from the right for any improvements that it makes to the Clean Power Plan.  Thus, the only explanation for all the agency’s efforts, including this NODA, is that they really want to get this right and have the ultimate plan be as cost-effective as possible, given the serious constrains under which they are operating.

That being said, I’ll briefly discuss just one issue raised in the NODA.  The state targets proposed in June are based on two arguably inconsistent assumptions.  With respect to Building Block 2, increased use of natural gas combined cycle generation, the proposal assumes that increased NGCC generation will replace older fossil fuel, i.e. coal, generation.  However,  with respect to Building Blocks 3 and 4, increased use of renewable energy (RE) and energy efficiency (RE), EPA assumes instead that RE and EE simply add incrementally to baseline generation, rather than displacing such generation.

In the NODA, EPA is now asking for comment regarding whether it should assume that RE and EE displace existing baseline generation and, if so, should it assume that RE and EE replace all existing generating sources pro rata or that RE and EE preferentially replace coal first.  As EPA has acknowledged, if the rule assumes that RE and EE replace baseline generation, rather than adding to it, the result would be to reduce GHG emissions, thus leading to more stringent state reduction targets.

I’m not sure I know the answer, but I admit I don’t see a reason for treating generation from RE and EE any differently than generation from NGCC.  In any case, keep those comments coming into EPA.  It appears that the agency really wants to know what you think.

3 thoughts on “EPA’s Clean Power Plan: Potentially New and Improved?

  1. Justice need be brought to bear. The system is out-of-control.
    Using a broken system to repair the damage is the problem with our justice.

    Forces of nature (our Republic) need to recognize we are just that. And return to the roots of care and the understanding of right and wrong. And act accordingly.

    Mumbo jumbo works for Injustice……simplify!

  2. I think we do know the answer to this question, and the answer is that the decisions are overwhelmingly site specific in the context of the overall individual corporate capacity profiles . If we look back ten years at the proposals that were pending (and in some cases implemented) here in MA, we found proposals for both coal and oil-fired unit replacements and additions by units capable of firing multiple fuels, all to afford the operators maximum flexibility as fuel prices and availability (and regulatory constraints) changed going forward. I think that underlying principle is so fundamental to capacity planning that it will not change. What this suggests is that EPA should do sensitivity analyses to several “high-low” assumptions rather than any single mix as it develops and implements the rule.

  3. Logically, it makes sense to re-dispatch to zero emission generation instead of treating it as additional, both because the purpose of the rule is ostensibly to reduce the emissions from existing fossil sources and because that creates parity between the treatment of different compliance options.

    However, I recalculated the goals using both method a (a pro-rata displacement of all fossil gen) and method b (preferential displacement of fossil steam turbines followed by combined cycle natural gas) and the result is an average downward revision of each state’s goal by 26% and 30%. Idaho and Maine both end up with goals of 0 lbs/MWh, which in the case of Idaho means the only way to comply would be to retire a combined cycle natural gas plant built in 2012. In some cases the EPA has assumed a greater quantity of renewable generation and “avoided” generation through energy efficiency than the state has existing covered fossil fuel generation. So as a theoretical calculation, it would seem more logical, but application with all other factors being equal yields an utterly absurd result.

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