NSPS Rulemakings for Greenhouse Gas Emissions DRAFT -- DELIBERATIVE DOCUMENT NSPS Rulemakings for Greenhouse Gas Emissions NACAA Fall 2011 Membership Meeting Cleveland, Ohio October 3, 2011 DO NOT CITE OR QUOTE

DRAFT -- DELIBERATIVE DOCUMENT Background On December 15, 2009, EPA published the Endangerment Finding In December 2010, EPA announced that it would begin to address emissions from the two largest stationary source GHG-emitting sectors, power plants and petroleum refineries, under the new source performance standard (NSPS) provisions of the Clean Air Act Both power plant and refinery rulemakings will focus on: Standards for new and modified sources GHG emission guidelines for states to follow for existing sources 2 DO NOT CITE OR QUOTE

GHG Emissions from the Industrial Sector Electric Power Other Sectors Other Sectors Source: Regulatory Impact Analysis for the Mandatory Reporting of Greenhouse Gas Emissions Final Rule (September 2009) 3

EPA GHG NSPS Listening Sessions EPA held five listening sessions on the GHG NSPS for EGUs and Refineries Session 1: Electric Power Industry Representatives February 4, Washington, DC Session 2: Environmental and Environmental Justice Organization Representatives February 15, Atlanta, GA Session 3: State and Tribal Representatives February 17, Chicago, IL Session 4: Coalition Group Representatives February 23, Washington, DC Session 5: Petroleum Refinery Industry Representatives March 4, Washington, DC 4

Key Questions for the EGU GHG NSPS What should emission limits for new sources be based on? What should emission limits for modified sources be based on? What should emission limits for existing sources be based on? What regulatory mechanisms should be used to get reductions? How should State equivalency with guidelines be addressed? 5

EGU New Source Limits Listening session comments included a range of alternatives: Coal with carbon capture and storage (CCS) type limits/natural gas standards Best non-CCS coal technology limits (e.g., ultra-supercritical/integrated gasification combined cycle (IGCC)) Key considerations Availability and cost of technologies Some full scale CCS projects are moving forward Coal with CCS being built (e.g., Southern Co. Kemper Project) Financing the Kemper project and other permitted CCS coal power plants includes a level of government funding Cost of non-CCS technologies vs. natural gas EIA projects no new central station coal-fired power plants beyond those already under construction or supported by clean coal initiatives – AEO 2011 6

EGU Modified Source Limits In the listening sessions and in other forums, we have heard: Modified requirements triggered by hourly (not annual) emission increases Historically, rarely triggered for NSPS, if triggered, usually triggered under PSD For GHGs, could be triggered by emission control installations, where chemical reactions from controls create GHG (e.g., limestone scrubbing) Need to consider potential impact with respect to: Conventional pollutant regulations Comprehensive State GHG programs for existing sources Some have suggested considering options to treat more as existing source than new source 7

Emission Reduction Opportunities from Existing Fossil Fuel-fired EGUs Efficiency improvements at existing units Co-firing/Fuel switching with lower GHG fuels at existing units Reduction in generation from high emitting units Switching to lower emitting units Demand side reductions CCS at existing units 8

A Broad Range of Regulatory Options Have Been Suggested Source-specific standards based on efficiency improvements Efficiency based standards with emissions averaging Emissions averaging with required levels assuming control strategies beyond efficiency improvements Less utilization of higher GHG-emitting units More utilization of lower GHG-emitting units (e.g., for under-utilized gas combined cycle units) Percentage reduction requirements 9

Other Key Points Raised Related to Existing Source Guidelines Applicability Definitely includes boilers and IGCC units What about combined cycle units and simple cycle turbines? Form of the standard? Input vs. output-based standard? Mass vs. rate? 10

State Equivalency General agreement across a wide range of stakeholders that states should have flexibility in developing programs equivalent to emission guidelines Related viewpoints Let states build off existing programs Credit for early action Multi-state utilities also suggested that cross-state consistency would provide cost savings 11

State Equivalency: Key Questions How is equivalency demonstrated? For multi-state programs For programs with cross-border components For multi-sector programs Crediting of: Early reductions Demand side management Other non-EGU reductions EPA is looking forward to continued dialogue with state and local officials on the rulemaking efforts 12

Additional Information More information can be found at: Information on the GHG settlement agreement and other regulations affecting EGUs and Refineries is posted at: http://epa.gov/airquality/ghgsettlement.html More information on the GHG listening sessions, including video recordings of the sessions, is posted at: http://epa.gov/airquality/listen.html 13