The Center for Climate and Energy Solutions seeks to inform the design and implementation of federal policies that will significantly reduce greenhouse gas emissions. Drawing from its extensive peer-reviewed published works, in-house policy analyses, and tracking of current legislative proposals, the Center provides research, analysis, and recommendations to policymakers in Congress and the Executive Branch. Read More
In its final rule (Clean Power Plan) to reduce carbon dioxide emissions in the power sector, EPA has set a unique target emissions rate for each state to achieve by 2030. Targets are based on the “best system of emission reduction” (BSER), which use three “building blocks” or potential pathways to cost-effectively and efficiently reduce CO2 emissions:
- Make coal-fired power plants more efficient;
- Shift generation from existing fossil steam plants to existing natural gas combined cycle plants (NGCC) up to a maximum utilization of 75 percent; and
- Use more zero-emission renewable power, including onshore wind, utility-scale solar photovoltaic (PV) and concentrating solar power (CSP), geothermal and hydropower.
State Target Calculation Steps
To calculate a state’s target, EPA first determined a CO2 emissions baseline (using 2012 data) based on each state’s level of CO2 emissions from fossil-fired power plants divided by its total fossil-fired electricity generation (including coal steam plants, oil and natural gas steam plants and natural gas combined cycle plants). Next, the state level data was aggregated to the regional level (Eastern, Western and Texas Interconnections). Then, “emission performance rates” were established for years 2022-2030 for two subcategories of existing fossil-fired power plants (1) fossil steam (generally, coal-fired plants), and (2) natural gas combined cycle units, based on the capacity of each region to achieve reductions using the identified building blocks.
Finally, state target emission rates (pounds of CO2 per megawatt-hour of electricity generated) were calculated based on a weighted average of the states’ baseline fossil fuel mix (percentage of fossil steam and natural gas combined cycle plant generation) and the two emission performance rates (see sample calculation below).
In 2030, the emission performance rate for all fossil steam plants was determined to be 1,305 lb CO2/MWh, and the emission performance rate for all natural gas combined cycle plants was calculated to be 771 lb CO2/MWh. All state target emission rates in 2030 fall between these two values.
Sample calculation for Alabama
State target (weighted average) = (% fossil steam generation in 2012 x fossil steam plant rate in 2030) + (% natural gas combined cycle generation in 2012 x natural gas combined cycle plant rate in 2030)
In Alabama in 2012, total fossil generation was 46 percent from fossil steam generation and 54 percent from natural gas generation, therefore
Alabama state target CO2 emissions rate in 2030 (lbs CO2/MWh) = (0.46 * 1,305) + (0.54 * 771) = 1,018 lb CO2/MWh
Each state can meet its established target however it sees fit, and does not need to leverage each building block to the extent that EPA projects. The EPA has also converted state target emissions rates to a mass-based standard (tons of CO2 emitted per year) to better enable trading of carbon pollution credits.
The Obama Administration today took a major step toward reducing the carbon dioxide emissions that are impacting our climate. The Environmental Protection Agency (EPA) released its “Clean Power Plan,” which leverages existing authority in the Clean Air Act to propose carbon pollution standards for existing power plants, the largest single source of U.S. carbon emissions. The proposal would cut emissions in the power sector by 30 percent by 2030, based on 2005 levels. We reviewed the basics of the Clean Power Plan with four critical questions in mind:
1. Is the standard based on emission reductions outside the power plant fence line?
The short answer is “yes.” EPA cannot require states or power plant operators to take any specific measures, but it can set the emissions target stringent enough so that it would be challenging to achieve unless certain measures are taken. EPA is proposing state-specific targets based on the capacity of each state to leverage four “building blocks.” They are:
- Make fossil fuel power plants more efficient.
- Use low-emitting natural gas combined cycle plants more where excess capacity is available.
- Use more zero- and low-emitting power sources such as renewables and nuclear.
- Reduce electricity demand by using electricity more efficiently.
Although “outside-the-fence-line” measures are not specifically required under the proposal, states would be hard-pressed to meet their targets without using programs to reduce the demand for fossil electricity, by, for example, increasing energy efficiency and encouraging renewable energy.
Looking to Figure 1, EPA has chosen the System-level Option.
Figure 1: Scope of reduction requirements
U.S. Capitol Visitor Center
Room SVC 202-203
First St SE
Washington, DC 20515
Thursday, May 22, 2014
9:30 AM to 11:30 AM
Carbon pricing is widely viewed as a cost-effective way to reduce greenhouse gas emissions and encourage energy innovation. Different forms of carbon pricing are employed in a growing number of jurisdictions around the world. Experts join C2ES to explore options for expanding the use of carbon pricing in the United States -- in particular, as a way for states to implement upcoming federal standards to reduce carbon emissions from power plants.
Session I: Carbon Pricing - What are the Options?
ADELE MORRIS (presentation)
Policy Director, Climate and Energy Economics Project, Brookings Institution
APARNA MATHUR (presentation)
Resident Scholar, American Enterprise Institute
Vice President, Markets and Business Strategy, Center for Climate and Energy Solutions
Session II: Carbon Pricing Under the Clean Air Act
DALLAS BURTRAW (presentation)
Senior Fellow, Resources for the Future
DAVID BOOKBINDER (presentation)
Co-Founder, Element VI Consulting
BRIAN TURNER (presentation)
Deputy Executive Director for Policy and External Relations, California Public Utilities Commission
JON BREKKE (presentation)
Vice President, Membership and Energy Markets, Great River Energy
Senior Fellow, Center for Climate and Energy Solutions
Judging from the climate policy debate in Washington, one might conclude that carbon pricing is only a concept, or something being tried in Europe.
But in fact, 10 U.S. states (California and the Northeast states in the Regional Greenhouse Gas Initiative) have carbon trading programs. That means more than a quarter of the U.S. population lives in a state with a price on carbon. And a growing number of nations and provinces around the globe are turning to carbon pricing to cost-effectively reduce greenhouse gas emissions and encourage energy innovation.
On June 2, the Environmental Protection Agency (EPA) is expected to release its proposal to cut carbon dioxide (CO2) emissions from existing power plants. This proposal is a key element of President Obama’s Climate Action Plan, and will be critical to reducing U.S emissions of CO2, the most common greenhouse gas contributing to climate change.
The proposed rule, being developed under EPA’s authority under Section 111(d) of the Clean Air Act, could be groundbreaking for at least two reasons. First, it has the potential to drive major reductions in the highest emitting sector in the United States – the power sector – which is responsible for nearly 40 percent of U.S. carbon emissions. Second, EPA has indicated that the proposal will include a number of novel policy provisions to advance low-emitting generation and energy efficiency.
At C2ES, we’ll be looking for answers to four key questions as we read through EPA’s proposal. These questions are expanded upon in our new brief, Carbon Pollution Standards for Existing Power Plants: Key Challenges.
Summary of C2ES May 2014 comments on EPA’s proposed “Standards of Performance for Greenhouse Gas Emissions from New Stationary Sources: Electric Generating Units.”
On September 20, 2013, EPA proposed carbon dioxide emission standards for new power plants in implementing its authority under section of 111(b) of the Clean Air Act. More information on the proposed rule can be found here. On May 7, 2014 C2ES submitted formal comments to EPA in response to the proposed rule. You can read those comments here, which are summarized below.
Market-based measures preferred: A comprehensive market-based approach would be a more efficient and effective way of reducing greenhouse gas emissions. This would require congressional action, which is unlikely in the near term. In the absence of legislation, C2ES believes EPA must proceed using its existing authorities under the Clean Air Act.
Comprehensive energy strategy needed: The United States needs a comprehensive energy strategy that advances low-emitting uses of coal and natural gas, nuclear power, renewable energy, and efficiency. Carbon capture and storage (CCS) must be an element in this strategy.
Importance of a CCS requirement: EPA’s proposed rule would essentially require any new coal plant to employ CCS technology to capture approximately 40 percent (at minimum) of its carbon dioxide (CO2) emissions and store this captured CO2 underground. Due to the availability of inexpensive natural gas and other market factors, no new coal plants are projected in the near term. However, significant increases in natural gas prices may renew interest in new coal plants. If this occurs, a CCS requirement as proposed by EPA will ensure that these new coal plants do not exacerbate the challenge of reducing greenhouse gas emissions.
CCS experience: There are about 50 commercial-scale CCS projects in the power and industrial sectors in various stages of development across the globe, including 12 already in operation in a variety of industrial plants in the United States. All of these plants transfer the captured CO2 to enhanced oil recovery projects (CO2-EOR). CO2-EOR has been used in the United States for 40 years to coax additional production from existing oil wells while reliably storing CO2. Since this process attaches a value to captured CO2, it has been and will continue to be critical in the deployment of CCS in the power sector.
A CCS requirement is only part of the solution: There are several barriers to the deployment of CCS on new coal plants. For one, even if there were an economic reason for a power company to build a new coal plant, there would be no economic or regulatory reason to include CCS. Additionally, CCS technology is currently very expensive, especially compared to a new natural gas power plant. The proposed rule addresses the former problem, but not the latter. Federal financial support through tax credits, such as the Expanding Carbon Capture through Enhanced Oil Recovery Act of 2014, and/or grants is also critical to help technology companies and power providers gain experience and reduce the costs of CCS.
Flexibility mechanisms: In addition to a regulatory requirement and financial support, power companies need time to bring CCS to the point of being cost competitive with other low- and no-carbon power generating technologies. We therefore encourage EPA to consider provisions to allow for flexibility in compliance with the CCS requirement, such as a 20-year emissions averaging period or a few years of lead time before capture is required on plants built after the rule goes in place.
Natural gas standard: Since there are circumstances whereby it is necessary to run gas plants at less than peak efficiency to minimize the systematic emissions of the power system – for example, to back up intermittent renewable sources of electricity – we encourage EPA to ensure that the proposed standards for natural gas plants are achievable for new combined cycle plants under all likely operating conditions.
Relationship with standard for existing plants: The relationship between EPA’s greenhouse gas standard for new power plants and the standard for existing plants is currently unclear. We request that EPA provide guidance on this point to reduce uncertainty for power companies and state regulators.
Statement of Eileen Claussen
President, Center for Climate and Energy Solutions
May 6, 2014
The Third National Climate Assessment makes clearer than ever that climate change is taking a toll here and now, and that it poses growing risks to communities across the country.
Based on an exhaustive review of the latest scientific evidence, the report brings it home to Americans that we are not immune to threats posed by climate change to our infrastructure, water supplies, agriculture, ecosystems, and health.
The impacts vary from region to region – more competition for water in the arid West, more heavy downpours in the Northeast and Midwest, and rising sea levels fueling powerful storm surges along the Gulf Coast. What is clear is that every region faces impacts that could be costly and severe.
Motivated in part by the billions in damages caused by recent extreme weather events, many companies are starting to take action to build their climate resilience, as documented in our “Weathering the Storm” report.
Companies, communities, and individuals all need to better manage climate risks, both by reducing carbon emissions and by becoming more climate-resilient. Investments in mitigation will give our adaptation efforts a greater chance of success.
We agree with the NCA: More must be done across the public and private sectors to reduce -- and to safeguard ourselves against -- the rising risks of a warming planet.
Contact Laura Rehrmann, email@example.com or 703-516-0621