Fifteen Governors Highlight Concerns with EPA’s Clean Power Plan Proposal in Letter to the President

(Federal GHG regulations) Permanent link
 
On September 9, 2014, a group of fifteen governors sent a letter to President Obama to express their concerns about EPA’s proposed greenhouse gas (GHG) rule for existing power plants source performance standards (Clean Power Plan Proposal).

The letter was signed by the governors of Alabama, Alaska, Arizona, Idaho, Indiana, Mississippi, New Mexico, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina, Utah, Wisconsin, and Wyoming.

These governors argue that a “coherent, consistent energy policy” requires a “sincere partnership between the states and the federal government, whereby EPA appropriately recognizes the limits of federal authority.” The governors then identify several ways in which the Clean Power Plan Proposal “fails to strike this necessary balance.” The letter then highlights some of the pragmatic concerns, and likely grounds for legal challenges in opposition to EPA’s proposed rule.

The letter begins by challenging EPA’s legal authority to pass the Clean Power Plan Proposal under Section 111(d) of the Clean Air Act (CAA). The governors assert that the “unambiguous language of the CAA expressly prohibits EPA from using Section 111(d) to regulate power plants because EPA already regulates these sources under another section of the Act.” This statement refers to an argument raised by a number of commentators, that Section 111(d) does not allow EPA to issue standards for source categories that already have existing hazardous air pollutant standards under Section 112 of the CAA. Electric generation units (EGUs) are already regulated under Section 112, and thus arguably cannot be regulated under Section 111(d). EPA has taken an alternative position, asserting that only pollutants regulated under Section 112 cannot be simultaneously regulated under Section 111(d).

The governors also contend that while “EPA has the authority to regulate emissions from specific sources, [] that authority does not extend outside the physical boundaries of such sources (i.e., ‘outside the fence’).” By regulating beyond the boundaries of these stationary sources, “the Agency’s proposal not only exceeds the scope of federal law, but also, in some cases, directly conflicts with established state law.” The letter also calls into question EPA’s authority to enforce state renewable portfolio standards if states decide to include such standards in their plans for meeting EPA’s emissions targets.

The letter then raises a number of more pragmatic concerns to argue that the Clean Power Plan Proposal ignores the reality of state energy markets and infrastructure.

First, the governors take issue with the “broad assumptions” that the Clean Power Plan Proposal makes about the access that individual states have to renewable energy. The letter argues that the proposed rule focuses on “arbitrarily-defined
region[s] without any regard for the actual availability of renewable resources or saturation points in the individual states” and that “EPA also fails to consider how increased renewable penetration will impact grid reliability and existing baseload capacity.” As an example of the practical problems with implementing this approach, the letter asks if the Administration has “mapped out a transition pathway for renewables from an artificial to a competitive market? Specifically, what is the federal plan to commercialize storage technology, which is necessary for that transition?”

The letter next highlights concerns with constructing and funding new natural gas infrastructure. The Clean Power Plan Proposal advocates a significant shift from coal to natural gas powered electricity. The governors note that “[b]efore this switch can occur, gas infrastructure, including storage facilities, must be built. The necessary pipelines require permits, and in many cases, federal approval. Before your proposal, studies indicated the need for more than $300 billion in gas infrastructure investment between now and 2035.”

The Clean Power Plan Proposal also encourages the use of more nuclear power. The letter notes the ongoing problems with identifying a “viable, long-term solution” to housing nuclear waste, as well as the fact that nine states have placed bans on building new nuclear power plants.

Finally, the letter explains that because many states meet their electric needs by importing power from other states, shutting down coal plants in exporting states could impact the available power supply in neighboring states. Many utilities already have contracts with out-of-state electric distributors. As a result, EPA’s proposal could force exporting states to choose between serving their own citizens and fulfilling their contractual obligations. The governors argue that the Clean Power Plan Proposal would “unfairly penalize those states that have made adequate power generation investments, which allow them to help other states achieve secure electricity supply.”

For more information about the Clean Power Plan Proposal, please see this previous blog post.

Posted by Corinne Snow at 9/26/2014 4:33 PM

Highlights of the UN Climate Change Summit in NYC

(Adaptation, International, Renewable Fuel Standards and Biofuels) Permanent link
 
Yesterday’s United Nations (UN) climate change summit in New York City produced a diverse array of commitments and agreements from political and business leaders.

Some of the more noteworthy outcomes of the day-long summit are as follows:
  • As discussed in a previous post, the Secretary-General asked UN members to announce their initial contributions to the Green Climate Fund. During the summit, six countries pledged a total of $2.3 billion to the Fund’s initial capitalization, and six additional countries committed to contribute by November 2014.  France contributed $1 billion of the $2.3 billion total. Other contributors included South Korea, Switzerland, Denmark, Norway, and Mexico.
  • A partnership of more than 150 governments, companies, indigenous groups, and civil society groups set targets to halve the global rate of loss of natural forest by 2020 and end forest loss by 2030. The United States was among the national government endorsers. Companies involved included General Mills, Nestle, and Wal-Mart.
  • Over seventy national governments and more than 1,000 businesses and investors expressed their support for the use of carbon pricing as a tool to address global climate change. Some of those supporters also agreed to join the new Carbon Pricing Leadership Coalition announced by the World Bank Group on September 22. The World Bank Group explained that the Coalition will seek to “advance carbon pricing solutions after the Summit ends tomorrow and up to the climate negotiations in Paris in 2015.”
  • Several multinational oil and gas companies partnered with governments of major producing nations and international environmental organizations to form the Oil and Gas Methane Partnership. The Partnership will focus on identifying and reducing methane emissions.  
  • A coalition of governments, businesses, civil society organizations and multilateral development banks announced plans to finance over $200 billion in low-carbon, climate-resilient development.
  • A coalition of institutional investors agreed to disclose the carbon footprint of at least $500 billion in investments and to “decarbonize” $100 billion in investments by December 2015.
In addition to these and other specific commitments, several Heads of State pledged action in their respective countries to address climate change. In particular, President Obama and Chinese Vice Premier Zhang Gaoli both made statements that some observers feel bode well for negotiations in Paris in 2015. President Obama emphasized his administration’s commitment to continued action and highlighted the United States’ and China’s special responsibility as the two largest emitters in the world to take a leading role. Vice Premier Zhang stated that China is ready to work with other countries and that China hopes to peak emissions as early as possible.

Although it remains to be seen how these pledges will ultimately play out, it would seem that the day’s events went a long way towards UN Secretary General Ban Ki-moon’s stated goal of “rais[ing] political momentum for a meaningful universal climate agreement in Paris in 2015,” and galvanizing action “to reduce emissions and build resilience to the adverse impacts of climate change.”

Posted by Lauren Sidner at 9/24/2014 5:16 PM

United Nations to Host Climate Change Summit

(Adaptation, International, Renewable Fuel Standards and Biofuels) Permanent link
 
On September 23, 2014, the United Nations (UN) will host a one-day climate change summit (Climate Summit 2014) in New York City. UN Secretary-General Ban Ki-moon has invited civic, government, finance, and business leaders to the event in hopes of “galvaniz[ing] and catalyz[ing] climate action.”

The Secretary-General has asked for these leaders to announce their plans to reduce emissions, strengthen climate resilience, and mobilize political will in advance of an international legal agreement that he hopes to acheive in 2015.

Climate Summit 2014 will consist of a morning session, where UN member states will have an opportunity to make these climate-related announcements. The UN expects more than 120 Heads of State and Government to attend. U.S. President Barack Obama and British Prime Minister David Cameron have both announced that they plan be at the summit. The leaders of several other major players in any international climate initiative, however, are reportedly going to miss the event. This group includes China’s President Xi Jinping, India’s Prime Minister Narendra Modi, and Germany’s Chancellor Angela Merkel.

The morning announcements will be followed by an afternoon session, which will consist of a series of topic-specific climate discussions. The afternoon session will focus on eight “actions areas” for dealing with climate change: agriculture, cities, energy, financing, forests, petroleum and industry, resilience, and transportation. With regard to energy, the UN and World Bank have already begun a joint initiative called Sustainable Energy for All. This initiative has “set 2030 as a goal for doubling the global rate of energy efficiency improvement, doubling renewable energy’s share in the global energy mix, and ensuring universal access to modern energy services.”

As part of the climate financing meeting, participants will discuss how to pay for any plans for climate mitigation and adaptation. The Secretary-General also wants UN members to announce their initial contributions to the Green Climate Fund. The Green Climate Fund will be used to promote low carbon and climate-resilient sustainable development and aims to deliver $100 billion a year by 2020, mainly from developed to less developed nations.

Posted by Corinne Snow at 9/18/2014 2:55 PM

EPA Extends Comment Period for Clean Power Plan Proposal

(Federal GHG regulations) Permanent link
 

On September 16, 2014 EPA granted a 45-day extension to the period for public comment on the proposed greenhouse gas (GHG) rule for existing power plants source performance standards (Clean Power Plan Proposal). The new deadline for comments is December 1, 2014.

This announcement comes in the wake of a letter sent on September 11, 2014 by a group of fifty-three senators (the “September 11 Letter”) to EPA Administrator Gina McCarthy asking her to give the public additional time to comment.

The ordinary comment period for a proposed rule is thirty to sixty days. EPA provided a longer 120-day comment period for the Clean Power Plan Proposal based on a previous request from a group of forty-seven senators. The original group of senators requested that extended period for comment because of the “significant impact this rule could have on our nation’s electricity providers and consumers, on jobs in communities that have existing coal-based power plants, and on the economy as a whole.”

Now a slightly larger group of senators has requested an additional sixty-day extension to the comment period. The group includes ten Democrats and nearly all senate Republicans. Senators Deb Fischer (R-Nebraska) and Heidi Heitkamp (D-North Dakota) took the lead in making both the initial 120-day request, as well as this second request for a time extension.

In the September 11 Letter, the senators argue that an additional 60-day extension is “critical to ensure that state regulatory agencies and other stakeholders have adequate time to fully analyze and comment on the proposal” and to allow these stakeholders time to “digest more than 600 supporting documents released by EPA in support of this proposal.” The letter notes that the proposed rule imposes a heavy burden on states during the rulemaking process because the states must provide supporting documentation in order to contest the emission rate targets included in the Clean Power Plan Proposal. As the letter explains, the proposed rule does not provide a mechanism for states to later challenge the interim and final emissions targets set by EPA for each individual state.

The September 11 Letter also explains that EPA’s proposed rule requires an unprecedented level of coordination to fully evaluate “intra- and inter-state, regional, and in some cases international energy generation and transmission.” The letter concludes that, as a result of these complexities, comments on the Clean Power Plan Proposal “cannot be adequately accomplished in only 120 days.”

President Obama has asked EPA to issue a final rule by June 2015. For more information about the Clean Power Plan Proposal, please see this previous blog post.

Posted by Corinne Snow at 9/16/2014 4:59 PM

State Perspectives on the EPA’s Clean Power Plan Proposal

(Federal GHG regulations) Permanent link
 
This week states have continued to actively discuss EPA’s greenhouse gas (GHG) rule for proposed existing power plants source performance standards (Clean Power Proposal). On September 9, several states testified before House Energy & Commerce Committee’s energy and power subcommittee, and California Air Resources Board (CARB) officials held a workshop to discuss EPA’s proposal.

Background 

As discussed in a previous post, EPA published a proposal earlier this summer in the Federal Register to create GHG emission standards for existing power plants earlier this summer. EPA invoked a rarely-used provision in the Clean Air Act, section 111(d), as the statutory authority under which it proposes to require states to meet mandatory carbon dioxide (CO2) targets. EPA is proposing to set individual state GHG reduction targets. The proposed rule includes an individual “interim goal” for each state to meet in 2020 and a “final goal” that states must meet beginning in 2030. These mandatory goals vary among the states, and were calculated by EPA based on four building blocks:
  1. Making coal-fired power plants more efficient;
  2. Using low-emitting natural gas combined cycle plants more where excess capacity is available;
  3. Using more zero- and low-emitting power sources such as renewables and nuclear; and
  4. Reducing electricity demand by using electricity more efficiently.
The proposal allows states latitude to determine how they will meet the regulatory goals. States have the option to use either the rate-based goal or to convert the rate-based goal to a mass-based goal. EPA has proposed that states adopt plans that incorporate a combination of “strategies,” and noted that states “may work alone or in cooperation with other states to comply with the proposed rule.” The proposed rule requires each state to submit a plan for meeting these goals to EPA by June 30, 2016. Under the proposed rule, states could either submit individual plans, or work together and submit a multi-state plan. The Clean Power Plan proposal is unique in that it involves actions “beyond the fenceline” of the regulated stationary sources. This aspect of the proposal has led many commentators to question whether the Clean Power Plan is actually federally enforceable under section 111(d) of the Clean Air Act. 

Congressional Hearings

On Tuesday, September 9, regulatory representatives from Texas, Montana, Arizona, Indiana, Rhode Island, Maryland, and Washington testified before the House Energy & Commerce Committee’s energy and power subcommittee at a hearing titled, “State Perspectives: Questions Concerning EPA's Proposed Clean Power Plan.” This was the third in a series of hearings that the subcommittee has held on EPA’s proposed rule. The subcommittee first heard testimony in June from EPA’s Acting Assistant Administrator for Air and Radiation, Janet McCabe. In July, the subcommittee also heard from the Federal Energy Regulatory Commission (FERC) Commissioners.

As subcommittee Chairman Whitfield explained, “Our oversight of EPA’s Clean Power Plan thus far has left us with more questions than answers. Neither EPA nor FERC was able to adequately explain how this sweeping takeover of our electricity sector will work or what the consequences will be for consumers and our economy. . . . The burden of implementing this plan will fall to the states, which are being asked to completely redesign their electricity systems. States will no longer be able to choose what the best electricity mix is to meet their own needs, and all energy-planning decisions will be subject to a federal veto. And it is American families and their jobs that will suffer. We look forward to hearing the states’ perspectives on EPA’s plan and how it will affect their ability to provide affordable and reliable electricity to consumers and businesses.”

California Workshop

CARB officials hosted a workshop in Sacramento to discuss EPA’s proposed Clean Power Plan rule. In advance of the meeting, CARB released a discussion paper designed to highlight some of the issues surrounding the proposal, and to generate feedback from stakeholders.

The discussion paper indicates that California is considering EPA’s suggestion that it work with other states to reach the Clean Power Plan goals. According to the paper, CARB and other California energy agency staff “are currently exploring these opportunities for coordination with other western states that participate in the Western Electricity Coordinating Council (WECC) and/or Pacific Coast Collaborative. [C]ARB and state energy staff are also having discussions with a broader coalition of states to promote support for U.S. EPA’s effort and find common ground on issues that will support a rigorous federal target for emissions reductions while giving states flexibility to innovate as they improve existing programs and develop new ones.”

The CARB paper also highlights a few of California’s key concerns with the Clean Power Plan, including:
  • Reducing duplicative regulatory procedures for state programs that meet federal requirements;
  • Fair treatment of imported and exported renewable energy in multi-state partnerships;
  • Clear guidance to allow states to assess “programmatic level compliance using existing monitoring, verification, and reporting system requirements when possible;”
  • Allowing sufficient time for states to meet EPA’s proposed goals.
CARB will collaborate with other California regulatory entities to submit comments on EPA’s proposal by the October 16 deadline.

Posted by Corinne Snow at 9/12/2014 2:06 PM

EPA Approves First CCS Injection Permits, but Challenges Remain

(Federal GHG regulations) Permanent link
 

On September 2, 2014, the U.S. Environmental Protection Agency (EPA) for the first time issued permits to allow a coal-fired power plant to capture its carbon dioxide (CO2) emissions and inject them into four underground wells, a process known as carbon capture and storage, or CCS. FutureGen Industrial Alliance Inc. (FutureGen) (a group of coal companies leading the project) received four identical permits to use CCS at its FutureGen 2.0 coal plant in Meredosia, Illinois. With these permits, FutureGen may begin retrofitting the existing coal fired power plant in Meredosia, and drilling the four, 4,000-foot deep wells, possibly as early as October. Once operational, FutureGen estimates that its CSS project will capture and inject 1.1 million metric tons of CO2 every year for the next twenty years – the equivalent of CO2 emissions from 232,000 cars, according to EPA. The 168-megawatt power plant is scheduled to begin operations in 2017.

EPA issued the permits under its 2010 rule under the Safe Drinking Water Act, which created a new class of Underground Injection Control (UIC) wells for CCS projects (Class VI wells). Operators of Class VI wells must meet requirements that are more stringent than those for other UIC wells, including siting and testing obligations intended to protect underground sources of drinking water from CO2 and other greenhouse gases.

The new permits require FutureGen to test and monitor the wells and submit reports to the Agency, and to secure financial assurance for $51.7 million (total for all four wells) to address the costs of future corrective action, injection well plugging, post-injection site care and site closure, and emergency and remedial response. Specifically, FutureGen must test and monitor the following: (1) CO2 stream; (2) pressure, flow, rate, volume, annulus pressure, annulus flue level and temperature; (3) corrosion; (4) external mechanical integrity testing (MIT); (5) pressure fall off; (6) groundwater quality; (7) plume and pressure front; (8) surface air and/or soil gas; (9) monitoring well MITs; and (10) financial responsibility updates. For most of these categories, FutureGen must report to the Agency on a semi-annual basis, although some categories require more frequent reporting.

These permits and the FutureGen project are important because they may influence future requirements to use CCS to mitigate greenhouse gas emissions from new and existing power plants, which some argue is not yet a commercially viable technology. A successful CCS project at the FutureGen power plant would demonstrate that CCS technology is feasible and support EPA’s proposed regulations imposing strict limits on how much CO2 new power plants can emit into the atmosphere. FutureGen faces many obstacles ahead, however, including securing private financing, a legal challenge by the Sierra Club, and a September 2015 deadline to use $1 billion in Recovery Act funding, which, if left unused, will expire. We will continue to follow this and other CCS projects and provide important updates as we learn them.

Posted by Jennifer Cornejo at 9/11/2014 2:15 PM

V&E Climate Change Report Special Issue: EPA’s Proposed Greenhouse Gas ESPS

(Federal GHG regulations, International) Permanent link
 
On June 18, 2014, the EPA published a proposal in the Federal Register to create greenhouse gas (GHG) emission standards for existing power plants under section 111(d) of the Clean Air Act (the existing source performance standards or ESPS). In setting the performance standards under the proposed rule, the EPA has for the first time required “beyond-the-fenceline” reductions, meaning that the GHG emission rate targets set in the rule cannot be met through installation of additional controls at affected power plants alone. This first-of-its-kind proposal will no doubt generate a significant volume of comments and subsequent litigation to determine whether the broad view of utility regulation EPA seems to adopt in its proposal reaches beyond the scope of the Agency’s legal authority under the Clean Air Act (CAA). This special issue of the Climate Change Report is devoted to EPA’s proposed ESPS and its potential consequences for the energy industry. To access a copy of the special issue, follow this link.

Posted by Margaret E. Peloso at 9/8/2014 12:23 PM






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