Van Ness Feldman Publishes Clean Power Plan Resource Guide

September 24, 2015

Van Ness Feldman has developed a comprehensive Clean Power Plan Resource Guide.  The Resource Guide provides clear explanations of all the major components of not only the EPA’s final Clean Power Plan rule, but also the proposed federal plan and model trading rules, and the final rule establishing GHG performance standards for new, modified, and reconstructed power plants.

If you are interested in purchasing a copy of the Resource Guide, please contact Kyle Danish or Stephen Fotis.

In order to get a sense of the broad coverage of the Resource Guide, please review the excerpt below consisting of the Introduction and the Table of Contents.  

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Excerpt from the Resource Guide

Introduction

In August 2015, the Environmental Protection Agency (EPA) issued a suite of rules regulating emissions of carbon dioxide (CO2) from new, modified and reconstructed, and existing fossil fuel-fired electric generating units (EGUs) under section 111 of the Clean Air Act (CAA or Act). 

This suite of rules includes: (1) the final Clean Power Plan,” a rule under CAA section 111(d) establishing state-by-state CO2 emission reduction “goals” for existing EGUs starting in 2022, and directing each state to submit for EPA approval a plan demonstrating how the state will meet its reduction goals; and (2) a final “Carbon Pollution Standards” rule under CAA section 111(b) setting emission standards for new EGUs, and in the same rule, emission standards for modified and reconstructed EGUs.

In addition, EPA released a Proposed Federal Plan Rule, which would establish unit-by-unit emission reduction obligations for affected EGUs in a state that did not submit an approvable state plan under the Clean Power Plan rule.  The Proposed Federal Plan Rule also includes “presumptively approvable” Model Trading Rules and proposed modifications to EPA’s section 111(d) implementing regulations. 

This Section provides a short overview of these actions and explains how to use this Resource Guide.

A. Overview of EPA’s CO2 Regulations for EGUs

The Clean Power Plan establishes emission guideline “goals” for certain categories of existing EGUs, and requires states to develop plans to implement those guidelines for the EGUs in their states.  EPA’s guidelines are formulated as rate-based limits (lbs. CO2/MWh).  EPA also provides mass-based limits (tons CO2) that the Agency deems equivalent to the rate-based limits.  States may choose to require their EGUs to comply with either the rate-based or mass-based limits.  EPA will issue a Federal Plan for states that fail to submit an approvable implementation plan.

The final rules for new, modified, and reconstructed EGUs (which we refer to as “the 111(b) Rule” or the “Carbon Pollution Standards” rule) establish nationally-applicable emission limits for certain affected new, modified, and reconstructed EGUs.

Finally, in its Proposed Federal Plan Rule, EPA proposes “presumptively approvable” Model Trading Rules—a rate-based Model Trading Rule and a mass-based Model Trading Rule—for complying with both a rate-based limit and a mass-based limit that states could adopt to meet their obligations under the Clean Power Plan.  In addition, EPA proposes to finalize a variant of one of these options (either the rate-based Model Trading Rule or the mass-based Model Trading Rule) as the approach it will take when imposing a federal plan for states that fail to submit an approvable state plan.

B. How to Use This Resource Guide 

The final and proposed rules run to over 3,000 pages, and EPA has issued hundreds of pages of supporting Technical Support Documents.

For a six-page summary of these EPA actions, see our August 5, 2015 Alert: “EPA Issues Regulations to Control Carbon Dioxide Emissions from the Power Sector.”

In contrast to the alert and the overview above, this Resource Guide is a deep dive.  It provides an explanation of each of the major components of the rules.  In the Resource Guide, you will find entries on such issues as the criteria for being an “affected” EGU, the eligibility of various activities to earn Emission Reduction Credits, and the requirements for addressing new source “leakage.”  The Resource Guide also includes a thorough discussion of the various elements of the proposed Federal Plan and Model Trading Rules, highlighting issues on which EPA has requested comment.

The Resource Guide includes a detailed Table of Contents, which is organized to allow you to hone in on issues of most interest.

What follows is an overview of the topics covered in each Section:

II - Affected EGUs: This Section reviews the criteria for determining which EGUs are subject to regulation (i.e., “affected”) under the Clean Power Plan.

III - Determination of State Interim and Final Goals:  This Section summarizes the form of emission performance standard EPA has set for affected EGUs, and the flexibility EPA has provided to states to instead use equivalent statewide rate-based or mass-based emission  goals.  These goals are listed in Appendix A.  A detailed discussion of the emission performance rate and goal determination methodologies is available at Appendix B.  This Section also discusses the possibility of state goal revisions.

IV - State Plan Approaches: This Section reviews the two primary categories of state plan approaches: the Emission Standards approach and the State Measures approach.  It further reviews the two sub-categories of the Emission Standards approach: rate-based plans and mass-based plans.  The Section also summarizes key parts of the proposed model rate-based trading plan and proposed mass-based trading plan included in the Proposed Federal Plan Rule.  Finally, the Section discusses a set of other state plan issues, including (1) the Clean Energy Incentive Program (CEIP); (2) the use of biomass as a compliance measures; and (3) provisions designed to provide reliability assurances.

V - State Plan Submission and Compliance:  This Section reviews different aspects of the process of submission and review of state plans, including (1) the timeline for performance under state plans; (2) state plan components and approval criteria; (3) the state plan submittal and approval process; and (4) the requirements for state plan modification. 

VI - Proposed Federal Plan:  This Section discusses the proposed rate-based Federal Plan and the mass-based Federal Plan.  In each case, the Section highlights where the Federal Plan version is more constrained or more prescriptive than the proposed Model Trading Rules.  The Section also summarizes the other elements of the proposed rule, including (1) proposed amendments to EPA’s section 111(d) regulations; (2) a clarification of whether an existing source subject to section 111(d) that undergoes a modification or reconstruction under section 111(b) would continue to be regulated under section 111(d); and (3) the proposed “necessary and appropriate” finding for affected EGUs in three areas of Indian Country.

VII - Interactions with Other EPA Programs and Rules: This Section summarizes EPA’s interpretation of how the Clean Power Plan interacts with other Clean Air Act programs, including the prevention of significant deterioration (PSD) program and Title V program.

VIII - New, Modified, and Reconstructed Sources Rule:  This Section summarizes the final new, modified, and reconstructed units rule. 

Appendices

The Appendices consist of more detailed information about the state goals under the Clean Power Plan, including tables listing the various goals for each state and an explanation of the methodology by which EPA determined the state goals. 

Appendix A - State Interim and Final Goals:  This appendix includes tables presenting the final CPP state goals in rate-based form and mass-based forms. 

Appendix B - Determination of Subcategory-Specific Emission Rates and State Goals: This appendix provides a detailed explanation of the methodology EPA used to calculate subcategory-specific emission rates and state goals.

 

Table of Contents

I.          Introduction    

A.        Overview of EPA’s CO2 Regulations for EGUs       

B.        How to Use This Resource Guide      

II.        Affected EGUs          

A.        Categories of Affected EGUs            

B.        Regulated Existing Units        

1.         General Criteria           
2.         Additional Fossil Steam Applicability Criteria—Permit Limitations 
3.         Exemption for Simple Cycle and Oil-Fired Combustion Turbines     
4.         Additional CHP Applicability Criteria           

III.       Emission Performance Rates and State Goals            

A.        Subcategory-Specific CO2 Emission Performance Rates      

B.        State Goal Equivalents           

C.        State Goal Revisions   

IV.       State Plan Approaches            

A.        Overview        

B.        “Emission Standards” Plans: Rate-Based Plans         

1.         Setting EGU Emission Rate Limits    
2.         Calculating EGU Compliance Rates  
3.         ERC Issuance 18
4.         Additional Design Considerations Regarding Market Based Emission Rate Trading Plans

C.        Emission Standards Plans: Mass-Based Plans            

1.         General Description    
2.         Measurement and Accounting Systems for CO2 Emissions  
3.         Requirement to Address New Unit Leakage 
4.         Additional Requirements for Mass-Based State Plans Employing the Cap-and-Trade
    Approach 
5.         Requirements for Multi-Sector Plans
6.         Determining Compliance Under Mass-Based Emission Standard Plans
7.         Interstate Allowance Trading 

D.        State Measures Plans  

1.         General Description    
2.         Components of State Measures Plans 
3.         Determining Compliance Under a State Measures Plan         

E.         Other Issues for State Plans    

1.         Clean Energy Incentive Program (CEIP)       
2.         Use of Biomass as a Compliance Measure     
3.         Reliability        

V.        State Plan Submission and Compliance          

A.        Overview        

B.        Timelines for Performance Under State Plans            

C.        State Plan Components and Approvability Criteria   

D.        State Plan Submittal and Approval Process and Timing        

E.        State Plan Modifications        

VI.       Proposed Federal Plan            

A.        Revisions to the Section 111(d) Framework Regulations      

B.        Interpretation Regarding the Continued Applicability of Section 111(d) to Sources that    
   Undergo Reconstruction or Modification Triggering Section 111(b).           

C.        Necessary and Appropriate Finding for EGUs in Indian Country     

D.        Proposed Federal Plan            

1.         Timing of the Federal Plan Process    
2.         Ability of States to Replace or Implement the Federal Plan  
3.         Administrative Appeals Process         
4.         Co-Proposal of Mass-Based and Rate-Based Federal Plans  

E.         Proposed Rate-Based Federal Plan    

1.         State Rate-Based Goals for Each Compliance Period Under the Federal Plan         
2.         Eligibility for ERCs under the Federal Plan   
3.         Requirement to Implement CEIP       

F.         Proposed Mass-Based Federal Plan    

1.         State Mass-Based Goals for Each Compliance Period Under the Federal Plan         
2.         Allowance Allocation Method Under the Federal Plan         
3.         Proposed Treatment of Retired EGUs           
4.         Proposed Treatment of Modified or Reconstructed EGUs    
5.         Set-Asides of Allowances Under the Federal Plan    

G.        Interstate Trading Under the Federal Plan     

VII.     Interactions with Other EPA Programs and Rules     

A.        Preconstruction Permitting: PSD Program     

B.        Title V Operating Permit Fees            

VIII.    New, Modified, and Reconstructed Units Rule         

A.        Applicability Criteria and Affected EGUs     

1.         General Criteria           
2.         Additional Fossil Fuel-Fired Steam Generating Unit Applicability Criteria  
3.         Additional Modified Unit Applicability Criteria       
4.         Additional CHP Applicability Criteria           

B.        The Final Standards Established in the Carbon Pollution Standards Rule    

1.         New Fossil Steam EGU standards     
2.         Reconstructed Fossil Steam EGU Standards 
3.         Modified Fossil Steam EGU Standards         
4.         New and Reconstructed Base Load Natural Gas-Fired Stationary Combustion Turbines 
5.         New and Reconstructed Non-Base Load Natural Gas-Fired Stationary
    Combustion Turbines 
6.         New and Reconstructed Multi-Fuel Fired Stationary Combustion Turbines
    (Base Load and Non-Base Load)         
7.         Modified Stationary Combustion Turbines (All Subcategories)        

C.        Key Changes from the New and Modified Source Proposals            

1.         Relaxation of the Fossil Steam EGU Standard          
2.         Withdrawal of Standards for “Small” Modifications to Fossil Steam EGUs            
3.         Withdrawal of Proposal to Subject Section 111(d)-Regulated Fossil Steam Sources That
            are Modified to Additional Section 111(d)-Related Performance Standard     

D.        Demonstrating Compliance    

Appendices

Appendix A: State Interim and Final Goals   

Appendix B: Determination of Subcategory-Specific Emission Rates and State Goals        

A.        EPA’s Approach to BSER in the Proposed Rule       

B.        EPA’s Approach to BSER in the Final Rule  

C.        Derivation of Subcategory-Specific CO2 Emission Performance Rates        

D.        Determination of Interim and Final Subcategory-Specific Performance Rates         

E.        Calculation of State Rate-Based Goals          

F.        Calculation of State Mass-Based Goals         

G.        Calculation of Mass-Based New Source Complement           

Tables

Table A-1: Statewide Rate-Based CO2 Emission Performance Goals (Pounds of CO2 per Net MWh)  

Table A-2: Statewide CO2 Mass-based Goals           

Table A-3: New Source Complement (NSC) to Statewide CO2 Mass-based Goals 

Table A-4: Cumulative Statewide CO2 Mass-based Goals with and without  New Source Complement (Short tons of CO2 per Compliance Period)     

Table B-1: U.S. Historical Deployment of Renewable Energy Capacity, 2009-2014            

Table B-2: Step 2 - Baseline Generation and Emission Data by Regional Interconnection   

Table B-3: Step 3 - Subcategory-specific Baseline Emission Rates by Regional Interconnection (lbs.CO2 per MWh (Net))       

Table B-4: Step 4 - Subcategory-specific Emission Rates by Regional Interconnection after Application of Building Block 1 (Heat Rate Improvements) (lbs.CO2 per MWh (Net))            

Table B-5: Step 5 - Adjustment of 2030 Generation to Account for Building Block 3 Generation Shift to Renewable Energy  

Table B-6: Step 6 - Adjustment of 2030 Generation to Account for Building Block 2 Generation Shift to NGCC        

Table B-7: Step 8 - 2030 Fossil Fuel-Fired Performance Rates After Application of All Three Building Blocks          

Table B-8: Annual Fossil Steam and NGCC Performance Rates for 2022-2030 Derived Through Application of All Three of EPA’s Building Blocks 

Table B-9: Alabama Rate-Based Goal Calculation    

Table B-10: Incremental Generation to Support Demand Growth (GWh)    

Table B-11: Under Construction Generation Already Meeting Incremental Demand for Generation (GWh)      

Table B-12: Affected EGU Generation Growth Already Incorporated in Statewide Mass-Based Goals (GWh)   

Table B-13: New Source Complement Generation by Interconnection (GWh)