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Clean Air Act Section 111(d)Indiana State Bar Association
Utility Law SectionSeptember 4, 2014
Thomas W. Easterly, P.E., BCEE CommissionerIN Department of Environmental Management
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President’s Climate Directives• U.S. EPA directed to issue proposed carbon
pollution restrictions for:– New power plants by September 20, 2013, 111(b).– Existing power plants by June 1, 2014, and finalize those
restrictions by June 1, 2015, 111(d).
• States will be required to submit state plans under Section 111(d) of the Clean Air Act by June 30, 2016.
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New Source Proposal—111(b)
• In September, 2013, U.S. EPA proposed New Source Performance Standards (NSPS) for Greenhouse Gas (GHG) Emissions for certain Electric Utility Generating Units (EGUs)—111(b).
- Combined cycle gas turbines will meet the rule.
- Coal fired units will not meet the rule without using carbon capture and storage.
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New Source Proposal—111(b)• Carbon Capture and Storage (CCS):
− is not yet commercially available,−has not yet been demonstrated at
commercial scale, and−is likely to be prohibitively expensive.
• Due to the increased energy used for CCS, the net greenhouse gas emissions per unit of useful energy produced from a coal fired plant using this technology and meeting the lower emission limits will likely be no lower than emissions from a modern plant without CCS.
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Existing Source Proposal—111(d)
• In accordance with the President’s Climate Directive, on June 2, 2014, (June 1 was a Sunday) U.S. EPA Administrator McCarthy signed a proposed rule to reduce emissions from existing fossil fueled Electrical Generating Units (EGUs) starting in 2020.
• The proposed rule was actually published on June 18, 2014, at 79 FR 34829-34958. Comments are due by October 16, 2014.
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Existing Source Proposal—111(d)
Each State has an individual carbon intensity goal developed from four “Building Blocks”
1. Increase the thermal efficiency at coal fueled EGUs by 6%.
2. Increase utilization of natural gas combined cycle plants to 70%.
3. Increase zero carbon renewable generation.
4. Increase energy efficiency (load reduction).
Choice of rate based or mass based regulations.
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Existing Source Proposal—111(d) The proposed goal for Indiana is to reduce our net
emissions from the 2012 level of 1,924 lb CO2/MWh to 1,607 lb CO2/MWh for the period 2020 to 2029 and 1,531 lb CO2/MWh after 2029.
Goal is based upon:
1. Increase coal EGU efficiency by 6%.
2. Increase NGCC utilization from 53% to 70%.
3. Increase renewable energy generation to 7%.
4. Reduce energy demand by 3.2% by 2020 and 11.11% by 2030 through energy efficiency.
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Existing Source Proposal—111(d)
U.S. EPA estimates on a national level that:• Coal production will decrease 25 to 27%, and the
price of coal will decrease by 16 to 18% by 2020.• Natural gas production will increase by 12 to 14%
with a price increase of 9 to 12% by 2020.• Renewable generation capacity will increase by 12
GW, NGCC capacity will increase by 20 to 22 GW.• Coal generation capacity will decrease by 46-49
GW, and oil generation capacity by 16 GW.
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Existing Source Proposal—111(d)
• Annual incremental compliance costs of $5.5 to $7.5 billion in 2020 and $7.3 to $8.8 billion in 2030.
• Job increases of 25,900 to 28,000 in the electricity, coal and natural gas sectors by 2020.
• Job increases of 78,000 for demand-side energy efficiency by 2020.
IDEM is currently evaluating both the feasibility and estimated cost of meeting U.S. EPA’s goals.
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Indiana Carbon Dioxide Emission Rates(pounds of CO2 per Megawatt Hour)
2012 Baseline U.S. EPA 2030 Goal
Indiana 2030 Estimate
1,924 1,531 1,615 to 1,683
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Impacts on Indiana• This regulation will increase the costs of
energy in the United States—both natural gas and electricity prices expected to rise by 10%--the impact on Hoosiers may be greater due to our current reliance on coal.
• The number of Hoosiers who lose utility services for non-payment is likely to increase.
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Impacts on Indiana• This increased cost of energy will likely
reduce the international competitiveness of Hoosier businesses resulting in a shift of emissions from Indiana to other countries.
• The worldwide greenhouse gas emissions may actually increase when manufacturing moves from Indiana (and the rest of the United States) to other countries.
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Climate Impacts—111(d) Proposal
This rule will have virtually no impact on modeled global climate change. It is projected to reduce:
• Global CO2 concentrations by less than 1%.
• Global average temperatures by less than 0.02o F
• Sea level increases by 0.01 inch.
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State Goals as % Reduction from 2012
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Source: Bloomberg New Energy Finance
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Percentage Change in CO2 Emissions from Utilities (2005 – 2012)
Decreasing >15%
Decreasing 0 – 15%
Increasing
No Data
Location of the State Capitals
State Boundaries 16
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Questions?
Tom EasterlyCommissioner
Indiana Department of Environmental Management(317) 232-8611
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