Regulatory/Technology Issues Facing Montana's Industries

Carb

Joint Engineers ConferenceHelena, MT

November 7, 2014

Treasure State Resource Industry Association• Established 1976 – formerly Western Environmental Trade

Association (WETA)• 91 Members• Agriculture, Construction, Electricity Generation and

Transmission, Hard Rock and Coal Mining, Oil and Gas Exploration and Production, Manufacturing, Transportation, Wood Products, labor unions – and supporting organizations

• Mission: Establish and maintain coalitions to promote and advocate for responsible natural resource development and reasonable environmental regulation in Montana.

www.tsria.org

Regulatory Issues• Clean Power Rule• Regional Haze Rule• SO2 Nonattainment• Nutrient Rule• Waters of the US• Sage Grouse

Clean Power Rule

•Proposed emission guidelines for EGU’s•Authority: Section 111(d) of CAA•Goal: 30% nationwide reduction in

GHG emissions by 2030• State specific goals: Montana (21%)•2438 lb/MWh to 1960 lb/MWh•How? BSER (EPA building blocks)

CPP Timeline

* Allowance for one- to two-year extension.

• PPL, Colstrip• PPL, Corette• Bicent Power, Hardin• MDU, Lewis & Clark Station• YELP (petroleum coke)• CELP (waste coal)

“Affected” Entities—Montana

Emission Reduction “Building Blocks” for States

STEP 1 IMPROVIN

G HEAT RATE

STEP 2 FUEL

SWITCHING

STEP 3 LOW

EMITTING SOURCES

STEP 4 ENERGY

EFFICIENCY

12%

30%

40% (7%

nuclear)

18%

% of CO2 reductions

in US Improve average heat rate of coal-fired generation units by 6%

Increase generation from existing NGCC toward a 70% target utilization rate

Increase renewable generation capacity

Increase demand-side EE efforts to reach 1.5% annual electricity savings by 2029

• EPA assumes 6% efficiency gain at EGUs• How to achieve this at older plants?• Combustion Control Optimization .15% – .84%• Cooling System Heat Loss Recovery .2% - 1%• Flue Gas Heat Recovery .3% - 1.5%• Low Rank Coal Drying .1% - 1.7%• Sootblower Optimization .1% - .65%• Steam Turbine Design .84% - 2.6%• Total: 1.59% to 6.59%Is this possible and at what cost?

Heat Rate

Montana does not have any natural gas plants that could replace coal-fired electric generation.

Fuel Switching

•Increase in renewable generation in Montana from 1,261,752 MWh today to 2,859,417 MWh by 2030•342 MWh increase

Low Emitting Sources

• Save 2,532 GWh by 2030• Saving 100 GWh annually right

now• Requires 17% reduction in

overall consumption• Current efficiency programs from

electrical suppliers would need to triple to meet goal.

Energy Efficiency

Energy Efficiency• Demand Side Management• Technology – smart meters, others

CO2 Control/Sequestration

•MDEQ assumes most likely technology is mineralization• Industry experts point to chilled ammonia capture•Either way, as much as 30% energy penalty

Chilled Ammonia Capture

CO2 Control/Sequestration

•CO2 control technology reduces efficiency at coal plants. Will EPA take that into account in its requirement for heat rate improvements?•Why doesn’t EPA count efficiency improvements already completed at coal plants?

All of this at what cost?• From NERA report - http://www.americaspower.org• 19% - Average electricity price increase in Montana

from 2020-2029 • Compliance costs total $366 billion to $479 billion

over 2017-2031, and annual compliance costs average $41 billion to $73 billion.

• Consumers must spend $560 billion to cut electricity use.

• Coal retirements are projected to increase by at least 45,000 MW. The U.S. could lose more than one-third of its coal-fired electric generating fleet by 2020.

• Natural gas prices could increase by as much as 29 percent.

At what cost? (continued)• Grid Reliability – Public Service Commissioner Travis Kavulla

testimony to US House of Reps (9/9/14)• EPA assumes every MWh of natural gas generation could

replace an equivalent MWh of coal generation. Gas plants not designed to operate 70% of time – have firm transmission rights to certain markets.

• Wind Generation – existing transmission system does not support increase called for in plan

• WECC warned about balancing issues of renewables on transmission line from MT to Pacific NW.

• High voltage Colstrip line designed for constant—not intermittent supply

EPA Regional Haze Rule• Visibility protection for National Parks• Long term goal to have zero visibility impact by

2064• Compliance by 2017• Impacts:• NOx (Colstrip 1&2)

• Allowable reduced 63%• Low Nox burners and SNCR

• SO2 (Colstrip 1&2)• Allowable reduced 88%• Scrubber Enhancement (Lime addition and sieve tray)

• Nox (Corette) – Allowable reduced 13%• SO2 (Corette) – Allowable reduced 19%

SO2 Nonattainment• The EPA last year ruled that a portion of Yellowstone County is

in nonattainment for federal ambient air quality standards for emissions of sulfur dioxide (SO2).

• Based on emissions data from monitoring station in 2010 that exceeded 3 year average of new standard (75 ppb)

• Since then, emission average has been in low 60’s• Why? More than a dozen technologies and control strategies• 2010 reading in question• Implications? State Implementation Plan for county• Great administrative burden, expense for MDEQ and industry• No expansion of industry or new industry in area

Nutrient Rule

First Part• Numeric nutrient criteria (control of nitrogen and

phosphorous effluent from industry/municipalities)• Standard depends on ecoregion• Remaining Issues

No technology available to meet standard (Reverse Osmosis)

Relationship to nondegradation rulesSecond Part• Variance Process• Remaining Issues

applicability, non-severability

Waters of the US• Proposed EPA and US Army Corps of Engineers Rule• Redefine “navigable waters” – increase EPA and Army Corps

jurisdiction under the Clean Water Act• Comments due November 14• EPA draft report on Connectivity of Stream and Wetlands to

Downstream Waters• Demonstrate interconnectedness of tributaries, wetlands, and

other waters to downstream waters and the impact these connections have on the biological, chemical and physical relationship to downstream waters.

• modify existing regulations, which have been in place for over 25 years, regarding which waters fall under federal jurisdiction through the Clean Water Act (CWA)

Waters of the US (continued)• Court cases in 2001 and 2006• 2001: Army Corps claimed federal jurisdiction over an isolated

wetland “wherever a migratory bird could land.”• 2006: Army Corps intent to regulate isolated wetlands• Supreme Court ruled in both cases Corps exceeded its

authority to regulate.• Proposed rule attempts to resolve broaden geographic scope

of CWA jurisdiction. • Defines “waters of the U.S” -- navigable waters, interstate

waters, territorial waters, tributaries (ditches), wetlands, and “other waters ” and redefines adjacency, riparian area, and flood plain.

Sage Grouse• Governor Bullock Executive Order• Goal: Mitigate habitat loss to conserve species and prevent

ESA listing• Establishes MT Sage Grouse Oversight Team and Habitat

Conservation Program• Core Area and General Habitat Restrictions• No Surface Occupancy within 0.6 mile of leks• Seasonal Restrictions• Noise Restrictions (10 dBA)• Vegetation Removal• Specific regulations for oil and gas, hard rock mining, coal

mining, wind energy,

Sage Grouse Conservation Areas

Thank You!

Mark Lambrecht3117 Cooney Drive, Ste. 101

Helena, MT 59602(406) 594-2955

tsria@mt.netwww.tsria.org