1. The Massachusetts Approach to Power Plant Clean-up Policy Making and Standards Setting to Reach Clean Air Sonia Hamel Massachusetts Executive Office of Environmental Affairs Presentation to the National Governor’s Association Center for Best Practices Conference; Taking the Lead: State Innovations to Reduce Greenhouse Gases

2. Air quality issues to be addressed Climate Change Acid Deposition Mercury Emissions and other metals Nitrification and eutrophication Ozone PM 2.5 Regional Haze Visibility

3. Massachusetts Approach: Integrate policies across programs 4 Pollutant Bill (addressed here) Green Restructuring policies (Renewables Portfolio Standards, Renewable Trust and Efficiency Funds, New Siting Rules for Clean Plants, Emissions Disclosure for consumers) Section 126 petition SIP Call and OTC NO x MOU for the northeast Generation Information System

4. Massachusetts Integrated 4 Pollutants into one Regulation Commonsense but ground-breaking 4 Pollutant regulation sets comparable air emission standards, based on electric output Annual NO x limits address deposition, Make significant additional sulfur reductions beyond Clean Air Act, First Mercury controls for power plants and First CO2 regulations nationally

5. These facilities need additional regulation because their emissions are responsible for: 48% of the sulfur dioxide (SO 2 ) emissions in the state and 99% of the SO 2 emissions from power plants in our state; 20% of the NO x emissions in the state and 80% of the NO x emissions from power plants in state; 87% of the carbon dioxide (CO 2 )emissions from power plants in state; 30% of the mercury emissions in the state.

9. Mercury Clean-up Requirements Beginning immediately, the plant owners must begin stack testing for mercury and reporting these results to the DEP. By December 1, 2002, the DEP will complete an evaluation of technology options for mercury control, in accordance with the regional Mercury Action Plan. Within six months of completing this feasibility evaluation, the DEP will propose emissions standards for mercury, to be met by October 1, 2006.

10. CO 2 Emissions and Clean-up Requirements The six facilities covered under the regulation are responsible for 87% of the CO 2 emissions from in- state power plants. The average annual CO 2 emission rate for a new power plant is 760 lbs per mega-watt hour; the average annual CO 2 emission rate from the six facilities is nearly 2,000 lbs per mega-watt hour.

11. CO 2 Emissions and Clean-up Requirements (cont.) The rule will both cap total CO 2 emissions and create an emission standard of 1,800 pounds of carbon dioxide per megawatt-hour for these old plants. The standard represents a reduction of 10% below the current average CO 2 emissions rate (as measured by the average of 1997-99 output). (We do not advocate this as an ideal standard, merely as 10% below existing rate.)

12. CO 2 Emissions and Clean-up Requirements (cont.) The new standards can be met either by increased efficiency at the plant or by the purchase of credits from other CO2 reduction programs, provided that the DEP determines that such reductions are real, surplus, verifiable, permanent, and enforceable. DEP is creating an emissions trading program for the exchange of these credits during 2002. (First stakeholder meeting at the end of January).

14. What do the Regulations require? Facilities must meet overall limits of 1.5 lbs./MWh for NOx and 3.0 lbs./MWh for SO 2 This represents approximately a 50% reduction in NOx emissions over all other current requirements and a 53% to 74% reduction in SO 2.

15. What do the Regulations require? (cont.) Reductions of NOx beginning as early as 2003 and being completed by 2008. Reductions in mercury by the maximum amount feasible with state of the art equipment A cap on CO 2 emissions today and a 10% reduction in CO 2 emissions through efficiency changes or the purchase of offsets by 2006/8.

16. Summary of Compliance Paths and Dates Emission StandardStandard Pathway Compliance Dates Repowering Pathway Compliance Dates NOx 1.5 lbs.Oct. 1, 2004Oct. 1, 2006 SO 2 6.0 lbs.Oct. 1, 2004Oct. 1, 2006 SO 2 3.0 lbs.Oct. 1, 2006Oct. 1, 2008 CO 2 1800 lbs./MWhr annual avg. Oct. 1, 2006Oct. 1, 2008

17. Related Policy Objectives Obtain the benefits while increasing the total electrical generating capacity of these 6 facilities by almost 50% through the addition of several new units at these facilities (to approximately 2200 MW). Prevent pollution by encouraging companies to reach emissions targets by investing in cleaner, more efficient energy generation. Allow us to continue pushing for reduction strategies to reduce ozone transport (clean hands principle).

18. 1999 Summer NOx Emissions from Electric Utilities Source: Preliminary Emissions Data from US EPA

19. NO x : A Regional Problem Midwestern coal- and oil-fired electric generators are a major source of NO x Midwest NO x emissions dwarf eastern emissions and contribute to the ozone problem in the Northeast Reducing NO x levels regionally reduces ozone levels regionally Massachusetts emissions affect coastal Maine and cause exceedances there

20. Previous CO 2 Offset Requirements There is an offset requirement (1-3% of the 20-Year CO 2 emissions at $1.50 per ton) - contributions to cost-effective programs for CO 2 mitigation. Programs are selected in consultation with the Energy Facilities Siting Board. A pump-priming mechanism for future offsets. Plants nearing completion will generate $3 million to fund cost-effective CO 2 mitigation projects, as an offset for their emissions.

21. Summary and Implementation Plans for each of the plants were filed by December 31, 2001. Public review of all plans now underway Mercury testing is underway. CO2 trading group will meet to begin to develop rule on January 30 th