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Vol. 19, No. 23 Week of June 08, 2014
Providing coverage of Alaska and northern Canada's oil and gas industry

30 percent by 2030

EPA sets target for reduction in CO2 emissions from US power generation

Alan Bailey

Petroleum News

Amid a storm of controversy over the merits or otherwise of mandating reduced carbon dioxide emissions from industrial operations, the Environmental Protection Agency, or EPA, has published its much anticipated proposed regulations aimed at curtailing emissions of the gas from existing U.S. power generation. The agency says that it wants to see the rate of carbon dioxide emissions dropping by 30 percent of 2005 levels by 2030.

Publication of the proposal triggers a 120-day public comment period. EPA says that it anticipates publishing a final rule by June 1, 2015.

State targets

The agency says that, following a 2011 Supreme Court decision, it has the authority to regulate carbon dioxide emissions from power generation facilities as a pollutant under the terms of the Clean Air Act. But, rather than spelling out specific emissions rules that would apply to individual power plants, the agency is proposing a broad emissions reduction target for each state, with each state having discretion over how to meet that target. States can use some combination of factors such as changes in the mix of power generation technologies and improved efficiency in energy use to achieve their targets.

States must file plans with EPA, spelling out how they will meet their emissions reduction targets. The EPA also proposes interim state targets that would apply in the period 2020 to 2029, to reflect the ramp-up of the state plans.

Alaska impact

According to EPA data the Alaska carbon dioxide emissions rate for power generation in 2012 was 1,351 pounds per megawatt hour. For Alaska, EPA has set a target of a reduction to 1,003 pounds per megawatt hour by 2030, a rate about 26 percent below the 2012 level. The proposed rule would only require regulation of the carbon dioxide output from large commercial power plants.

Natural gas is the dominant energy source for power generation in Alaska, although hydropower, coal and fuel oil also make significant contributions to the energy mix. The state Legislature has set a target of obtaining 50 percent of the state’s power from renewable energy sources by 2025, with that target appearing dependent on the successful construction of a major hydropower system at Watana on the Susitna River.

Major emissions

EPA says that power plants account for about one-third of U.S. greenhouse gas emissions. And, in announcing the proposed new regulations for reducing those emissions, EPA Administrator Gina McCarthy said that, rather than forcing a choice between a healthy economy and a healthy environment, the new regulations would spur innovation and create jobs.

“Climate change, fueled by carbon pollution, supercharges risks to our health, our economy, and our way of life,” McCarthy said. “EPA is delivering on a vital piece of President Obama’s Climate Action Plan by proposing a Clean Power Plan that will cut harmful carbon pollution from our largest source - power plants. By leveraging cleaner energy sources and cutting energy waste, this plan will clean the air we breathe while helping slow climate change so we can leave a safe and healthy future for our kids.”

According to EPA’s Clean Power Plan, coal and natural gas would remain the leading sources of power generation in the United States, even after achieving the target emissions reductions, with each of these sources meeting 30 percent of the overall power needs. But the reduction in carbon dioxide emissions from factors such as improved efficiencies in power generation and energy usage would bring benefits worth from $48 billion to $82 billion. Rather under half of the benefit would come from the impact of reduced emissions on climate change, with the remainder of the benefit coming from improved human health, the plan says.

The benefit figures take account of the cost of achieving the emissions reductions, a cost that the agency has estimated at about $7.3 billion. But the plan does not spell out how the benefit and cost figures have been calculated.

Flexible approach

The plan says that EPA’s proposed guidelines for emissions reductions reinforce actions that states and utilities are already taking to improve the efficiency of power supplies through upgrades to the aging energy infrastructure, and that the proposed regulations provide states with the flexibility to build on current progress. Thus, the guidelines would enable meaningful carbon dioxide reductions while maintaining reliable and affordable electricity supplies, EPA says.

And rather than placing responsibility for achieving required emissions reductions entirely on power stations, EPA says that its plan allows for the possibility of emissions reduction from initiatives such as energy efficiency programs and renewable energy portfolio standards, programs for which states take responsibility. Thus, a state with an integrated energy resource plan for its future power supplies, for example, could incorporate required carbon dioxide reductions within the framework of that plan, the EPA plan says.

EPA sees four broad strategies for emissions reduction that a state may employ, either individually or in combination, to achieve the state’s specified carbon dioxide emissions target. The strategies consist of improving the efficiency of existing power plant systems; substituting low emissions technology for higher emissions technology in existing plants; making more use of lower- or zero-emitting plants within the mix of power supplies; and improving the efficiency with which electrical energy is used. And each state is likely to use some different combination of these building blocks, depending on factors such as the state’s current mix of power generation technologies.

The emission reduction target for each state has been tailored to match that state’s power supply situation, taking into account technically feasible and reasonable-cost approaches to emissions reductions, EPA says. In fact, there is a wide range of emission reduction targets across the various states, with some targets well below that 30 percent average expectation for 2030 and some much higher.

State plans

States must submit plans for achieving their targets. Plan contents will include items such as expected emission performance levels for power plants and specifications of the measures needed to achieve those levels. A plan must also specify a state’s emissions reporting system, including monitoring and record-keeping requirements.

However, there is within the proposed regulations the potential for multiple states to work together, submitting a joint emissions reduction plan to EPA rather than working independently.

And EPA says that it is developing a website for the distribution of resources that will aid states in their planning efforts.

The agency says that, in recognition of the technical, legislative and other work that states will likely need to accomplish in conjunction with the planning process, states have until June 30, 2016, to submit initial plans to EPA. Final plans for individual states will be due by June 30, 2017, with multi-state plans due by June 30, 2018. EPA says that it anticipates its review of all of the final plans taking 12 months to complete. If a state does not end up with an approved plan, EPA will prepare a plan for the state, the proposed regulation says.

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Carbon emissions: a polarized debate

The publication of the Environmental Protection Agency’s proposed new rules for curtailing carbon dioxide emissions from U.S. power stations has yet again brought to the fore a polarized debate over whether such curtailment is necessary or desirable, with strong statements being made on either side of the carbon emissions question.

Having during his first term in office failed to achieve his initial goal of enacting federal legislation to address greenhouse gas emissions in the United States, President Obama has moved to a new strategy of cutting emissions through government regulation. And the proposed power generation regulations form the latest manifestation of that strategy.

EPA Administrator Gina McCarthy, in announcing the proposed regulations, made the case for taking action.

“The science is clear. The risks are clear. And the high cost of climate inaction keep piling up,” McCarthy said. “Rising temperatures bring more smog, more asthma and longer allergy seasons. … Climate inaction is costing us more money, in more places, more often. … If we do nothing, in our grandkids’ lifetimes temperatures could rise 10 degrees and seas could rise four feet.”

Not so, said Kathleen Hartnett White, distinguished fellow at the Armstrong Center for Energy and the Environment, in a June 2 statement.

“Carbon dioxide, unlike genuine pollutants, is an ubiquitous byproduct of basic economic and personal activity,” White said. “EPA’s characterization of this rule as ‘flexible’ is another way of saying its reach is unlimited. Yet EPA’s rule will in no way avert the global warming invoked to justify it.”

“Today, the president made good on his promise to American families that his administration would tackle the climate crisis, and clean up and modernize the way we power our country,” said Michael Brune, executive director of the Sierra Club, in a June 2 statement. “Climate disruption is the greatest challenge facing our generation. Until now, power plants have been allowed to dump unlimited amounts of carbon pollution into our air, driving dangerous climate disruption, and fueling severe drought, wildfires, heat waves and super-storms”

“These proposed regulations are nothing more than an economy killer that will greatly drive up the cost of energy and threaten jobs across the nation,” said Rep. Don Young, R-Alaska.

Sen. Lisa Murkowski, R-Alaska, questioned the cumulative cost of a series of new EPA regulations.

“For years, I have expressed concern that EPA’s unilateral regulations will come at a high cost and harm the affordability and reliability of our energy supply,” Murkowski said. “Nothing I have seen today, including the general dismissal of concerns about the rule’s costs, has lessened my concerns.”

Sen. Mark Begich, D-Alaska, said that he is evaluating the potential impact of the proposed rule on Alaska.

“It is no secret that I have long been skeptical of this administration and their understanding of Alaska’s unique needs when it comes to energy policy and this will be no different,” Begich said. “My office has already asked the EPA for additional information and I will work closely with both the EPA and the State of Alaska to ensure that any final rule is flexible and protects Alaska businesses and families.”

—Alan Bailey