mike nasi presentation

8/11/2019 Mike Nasi Presentation

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Assessing the Impact of EPAs CleanPower Plan

Mike Nasi

Jackson Walker [email protected]

September 25, 2014


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PRESENTATION OUTLINE

Overview of Greenhouse Gas Rules

Texas Greenhouse Gas Emissions & Limits

Impacts to Texas Coal Generation (Block 2)

xpectat ons egar ng exas enewa eGeneration (Block 3)

Going Forward

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PRESENTATION OUTLINE

Overview of Greenhouse Gas Rules




Going Forward

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Overview of EPAsCAA 111(d) Rule

EPAs existing power plant rule proposal;published in the Fed. Reg. June 18, 2014.

EPA is referring to the rule as the Clean Power

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Plan. EPAs stated goal is to reduce CO2 emissions

by 30% by 2030, compared to 2005.

All emissions reductions targets (and modelingdata) are based on 2012 data.


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Overview of EPAs

CAA 111(b) Rule

EPAs new power plant rule proposal;re-published in Fed. Reg. on January 8, 2014.

Gas-fired power plant emissions limit of 1,000 lbs

50

2

- ,CO2/MWH (violates EPACT provisions re: subsidies).

Far below EPAs own assessment of newest coal plant limitachievability (1,800 lbs CO2/MWh).

Would require partial carbon capture and sequestration as bestsystem of emissions reduction (BSER) for coal plants.

In effect, prevents new coal-fired power plant

development.


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Overview of EPAsCAA 111(d) Rule

EPAs existing power plant rule proposal;published in the Fed. Reg. June 18, 2014.

EPAs stated goal is to reduce CO2 emissions

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by 30% by 2030, compared to 2005. All emissions reductions targets (and modeling

data) are based on 2012 data.

Original October 16, 2014 Comment Deadlineextended 45 days New Deadline Dec. 1


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Projected 111(d) Rule Schedule

Rulemaking Judicial Review**

June 18, 2014 Rule published in Fed. Reg.

Oct. 16, 2014 End of 120-day comment period

June 1, 2015 EPAs target date to finalizerule

June 2015 Suits filed in Federal Court(likely D.C. Circuit)

June 2015 July 2016

Filing suits for stayIssuance of stay??

June 30, 2016 Complete SIPs are due forsingle-state plans that havenot obtained a 1-year

extension Initial SIPs are due for

states with 1- or 2-yearextensions, as applicable

July 2016 D.C. Circuit decision ?

* Deadlines for states with exemptions.** Timelines are based on the recent legal challenges to the Cross-State Air Pollution Rule (CSAPR). 52


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Rulemaking Judicial Review**

June 30,2017*Complete

SIP due for single-state plans

Nov. 2017 Oral argument in U.S.Supreme Court

March 2018 U.S. Su reme Court

Projected 111(d) Rule ScheduleCont

decision

June 30,2018*

Complete SIP due for stateswith multi-state plans

2020 2029(average)

First-Phase (Interim) StateTargets must be met on

average. Texas 853 lb/MWh

2030 Second-Phase (Final) StateTarget must be met. Texas 791 lb/MWh

* Deadlines for states with exemptions.** Timelines are based on the recent legal challenges to the Cross-State Air Pollution Rule (CSAPR). 53


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PRESENTATION OUTLINE Overview of Greenhouse Gas Rules




Going Forward

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Block 1

Heat rate improvements

Block 2

EPA Used Four Building Blocks to Set

Mandate for Each StateExample: Texas Emission Rate (lb CO2/MWh)

-4% from assumed improvements inefficiency at coal plants of 6%

2012 Texas Baseline1,292 (too low to begin with dueto use of 2012 baseline data)

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-20% from increasing CCGT utilization to70% (from 45% in Texas 2012); shifts258

e- spa c o ee

Block 3More renewables, nuclear

Block 4Demand-side reductions

2030 Texas Target 791 (856 by 2020!)

72 million MWh from coal to gas1

-10% from EPA-derived renewable target of20% + keep at risk nuclear capacity

-5% from reducing end-user consumptionby 1.5% annually

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EPAs 2030 state targets vary from approximately 200 to 1,800 lb CO2/MWh.

Source: IHS CERA:

Digesting EPA

s Proposed Clean Power Plan

; June 10, 2014 Webcast1. 72 million MWh is 52% of Texas 2012 coal generation (equivalent to over 10,000 MW at 80% capacity factor) 55


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States Proportion of Total CO2 Reductions

from Electric Generation by 2030 (Budgeted Rate)Texas - 17.87%

791 lb/MWh

Florida - 7.06%740 lb/MWh

South Carolina -

Michigan - 2.28%1,161 lb/MWh

North Carolina -2.25%

992 lb/MWh

C2

2% ..

C2E.

Graph does not include Alaska and Hawaii because data was not available. Vermont is excluded because it is not covered by EPA's rule. The following states

were excluded from the graph because they are anticipated to have gains in CO2 emissions: North Dakota (1.0%), Kentucky (3.0%), California (7.0%), Montana(8.0%), Kansas (10.0%), Nebraska (10.0%), Missouri (14.0%), and Rhode Island (37.0%). Sources: EPA Data File - 2012 Unit-Level Data Using the eGRID

Methodology & Bloomberg, New Energy Finance analysis (for the rate-to-mass conversion on which percentages are based).

Louisiana - 6.20%883 lb/MWh

Pennsylvania - 5.21%1,052 lb/MWh

Alabama - 4.44%1,059 lb/MWh

Georgia - 3.65%834 lb/MWhArkansas - 3.62%

910 lb/MWhOklahoma - 3.40%895 lb/MWh

New York - 3.37%549 lb/MWh

Illinois - 3.08%1,271 lb/MWh

Mississippi - 3.01%692 lb/MWh

Arizona - 2.84%702 lb/MWh

Minnesota - 2.81%873 lb/MWh

Indiana - 2.55%1,531 lb/MWh

Wyoming - 2.52%1,714 lb/MWh

Wisconsin - 2.49%1,203 lb/MWh

.772 lb/MWh

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Comparison of Raw State CO2 Emission

Rates (lbs/MWh)

2051.5

1158.9 1138.0

1500.0

2000.0

2500.0

This rate is Lower than 18States Final (2030)

Budgeted Rate underEPAs Clean Power Plan.

Source: EPA Data File - 2012 Unit-Level Data Using the eGRID Methodology; Includes Vermont, which is not subject toExisting-Source GHG Rule.

167.0

0.0

500.0

1000.0

D

C

H

A

F

A

G

A

(#25)

D

C

A

C

A

H

C

D

C

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States Assumed CO2 Reductions from Electric

Generation by 2030 (tons)

80,000,000

100,000,000

120,000,000

140,000,000

Reduction greater

than 27 statescombined.

Graph does not include Alaska and Hawaii because data was not available. Vermont is excluded because it is notcovered by EPA's rule. Sources: EPA Data File - 2012 Unit-Level Data Using the eGRID Methodology& Bloomberg, NewEnergy Finance analysis (for the rate-to-mass conversion on which percentages are based).

20,000,000

0

20,000,000

40,000,000

, ,

F

A

G

A

A

C

C

C

H

C

D

D

D

C

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Going Forward

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Texas Projected Retirements By 2020* (# ) . . C C /G

AE D (1) ** 138 138

B B (2) 2016 1195 1195

C C (1) 20182020 592 592

F (3) 20182020 1639 1639

G C (1) 20182020 466 466

H (3) 2016 (1); 20182020 (2) 1018 1018

D (2) 2016 B 870 870

C (2) ** 4 4

C (2) ** 460 460

2 2016 1130 1130

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(3) ** 457 457 (1) 20202025 669 669

A (4) 20162018 (2); 20182020 (2) 2509 2509

(1) 20182020 723 723

(3) ** 200 200

(5) ** 1814 1814

(1) 2016 391 391 F (1) ** 420 420

1 (1) ** 286 286

(3) 2016 B (1); 2016 (2) 1584 1584

A 13,072 4 3,489 16,565

* Oklaunions projected retirement date begins in 2020 but may extend to 2025.** Retirement date yet to be determined.

Source: EPA IPM, Base Case Unit Retirements, 2020.


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Arkansas Retirements By 2020

C C /G

H C 123 123

1,678 1,678

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C 620 620

E . 670 670

B 1,659 1,659

A 4,007 0 743 4,750

Source: EPA IPM Assessment of Option 1 with Regional Compliance, 2020 Run Year


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Louisiana Retirements By 2020

C C /G

B C 1 220 220

B C 2 1,756 1,756

B E C 486 422 908

C C C 46 46

D G H 130 130

D B 302 302

2 138 138

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126 126 C 54 54

38 38

763 603 1,366

346 346

A 3,051 0 3,192 6,243

Source: EPA IPM Assessment of Option 1 with Regional Compliance, 2020 Run Year


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Mississippi Retirements By 2020

C /G

B 1,176 1,176

D 177 177

G A 712 712H 29 29

706 706

35 8 43

73 73

66

D 360 360

D 1,020 1,020

19 19

33 33

A 2,086 69 2,193 4,348

* Mississippi is modeled to retire combined cycle generation at two units.Source: EPA IPM Assessment of Option 1 with Regional Compliance, 2020 Run Year


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New Mexico Retirements By 2020 C C /G

C 186 186

815 815

A 815 0 186 1,001

67Source: EPA IPM Assessment of Option 1 with Regional Compliance, 2020 Run Year

C C /G

H 440 440

1,022 1,022

920 920 1,043 1,043

A 3,425 0 0 3,425


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Texas Greenhouse Gas Emissions & Limits Impacts to Texas Coal Generation (Block 2)


Going Forward

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EPAs Modeled Increases in Renewable

Electricity 2012 to 2030 BLOCK 3Texas 51,945,805 MWh

Pennsylvania 30,871,737 MWh

10,000,000 .

Modeled increases are in megawatt-hours (MWh) comparing 2012 data to EPAs projected 2030 target. The above

graphic does not include Iowa, Maine, Minnesota, and South Dakota, states in which EPAs model anticipates reductionsin RE. Sources: EPA Data File, Goal Computation, Appendix 1; GHG Abatement Measures TSD.

New York 19,069,478 MWh

Florida -17,585,816 MWh

Ohio 12,036,972 MWh

Alabama 11,516,247 MWh

California 11,183,858 MWh

* Does not reflect 2020-2029

interim

budgets, whichpractically, requires a significantamount of the investments andchanges to be achieved by 2020.

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40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000

EPAs Modeled Increases in Renewable Electricity(Top Ten Producers) 2012 to 2030 (MWh) BLOCK 3

EPA assumes the largestrenewable fleet - Texas - togrow an additional 153% (>

29 states combined)

Modeled increases are in megawatt-hours (MWh) comparing 2012 data to EPAs projected 2030 target. Texas is projected to go from

34,016,697 to 85,962,502 MWh in RE. From 2020 to 2030, EPAs model predicts that Texas will increase renewable electricitygeneration by 114.9%, while California is modeled to increase by 8%. Sources: EPA Data File, Goal Computation, Appendix 1; GHGAbatement Measures TSD.

0

10,000,000

20,000,000

30,000,000

2012 RE Increase in Re Decrease in RE

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80

100

120

140

MWh

EPAs Modeled 2030 Texas Renewable Fleet v.Present Day International Solar/Wind Generation

Texas renewable fleet wouldbe larger than the present-day

wind and solar fleet of anyother country in the world!

2012

0

20

40

60

U.S. Texas China Germ. Spain India Italy Can. U.K. Fran. Denm.

Million

2012 2030

Present-day international generation data are from 2011, the most recent year of complete data. Present day Texas

renewable generation data are from 2012. Sources: EPA Data File, Goal Computation, Appendix 1; GHG AbatementMeasures TSD; EIA, International Energy Statistics, Renewables, 2011.


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Texas Greenhouse Gas Emissions & Limits Impacts to Texas Coal Generation (Block 2)


Going Forward

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EPA Re-Engineering of EachStates Utility Fleet

EPA claims states have flexibility but the reality of mandatedstate budgets strictly limit options available to states.

Majority of the rules reductions come outside the fence by- - .

Many states/regions lack legal authority to accomplish the task.

SIP disapprovals & FIPs could result in unprecedented clashbetween EPA and states.

Assuming EPA has any authority to enforce a FIP under111(d), it clearly lacks authority to force any of the utility systemchanges contemplated in Blocks 2 through 4.

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EPA Rule Impacts on

U.S. & Texas Electricity and Gas Costs

17.8

16.0

17.0

18.0

19.0

20.0

/

Residential Electricity Rate Increase - 2012 to 2020

I , : $29.4

(93% )

$13.1 (166% ).

48%

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.

10.0

11.0

12.0

13.0

14.0

15.0

2012 2020

I .., : $189.3

(52% )

$106.5 (100% ).

29% 50%.

..

11.9

11.0

C

.

: EA C . . E A 2013; EA. , , , .


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ALL PAIN, NO GAIN

EPA Rule ImpactsU.S. PAIN 2012 to 2020:EPA projected retirements of 121,000 MW of capacityby 2020.Total spending on electricity increases from $364 to$553 billion per year, a $189.3 billion (52%) increase.Total spending on gas increases from $107 to $213

billion per year, a $106.5 billion (100%) increase.Residential electric bills increase by 29%.Residential gas bills increase by 50%.

TEXAS PAIN 2012 to 2020:EPA projected retirements of 16,565 MW of capacityby 2020.

Modeled CO2 Reduction1.52 ppm

WORLD GAIN: 0.25% reduction in CO2 concentration (see pie

chart). Global temperature increase reduced by 0.016

F. Sea level rise reduced by 1/100th of an inch; less

than the thickness of 3 sheets of paper. Total US reductions by 2030 will be offset by

projected emissions during just 13 and 1/2 days inChina in 2030.

o a spen ng on e ec r c y ncreases rom . o$60.8 billion per year, a $29.4 billion (93%) increase.Total spending on gas increases from $7.9 to $20.9billion per year, a $13.1 billion (166%) increase.Residential electric bills increase by 48%.Residential gas bills increase by 75%.

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Remaining CO2 Concentration598.48 ppm

GLOBAL CO2CONCENTRATION


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ALL PAIN, NO GAIN

SOURCES

AI CE:

EA, C C , , 79 . 34,830, 2014.EA, , C , B C.

EA, , C , 1. EA C . E A 2013; EA. , , , ..

GAI CE:

.. EA, A: F 20172025 D G G E C A F E , A 2012. EA

C2.

CC, C C 2014: C C: C G FA C C.

EA, E , F 2014.

.. EA, A E 2014, ... EA, A, C C , , 2014.CC, C C 2013: B: C G F A C C, C 1 & 12. C

C (CC) C2 2050 450 600 .

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Next on EPAs GHG Target List?(this chart is on EPAs Website)

Source:http://www.epa.gov/ghgreporting/ghgdata/reported/index.html

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BSER Block 1 6 % efficiency gain for everything inside

the fence at a refinery that emits GHGs? BSER Block 2 Forced heavy-to-light crude or crude-to-

i m f k f l wi hin n m n r

THE MADNESS DOES NOT END HERE:

What Might EPAs 111(d) Rule Look Like

for Refiners (under consent decree)?

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green completions for all domestic E&P crude sources? BSER Block 3 Forced funding of alternative fuel

(biofuels, EVs, etc) production to displace need for oil

refining (would likely go well beyond even worst-caseRenewable Fuels Standard projections).

BSER Block 4 - Demand-side reduction - A mass transit

funding or tightening of MPG standards on and off-road?


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Will EPA Get Away With it?

Scalias Supreme Court Majority Opinion in UARGis a shot

across EPAs Bow:

EPAs interpretation is also unreasonable because it wouldr ng a ou anenormou an rans orma v expans on

in EPAs regulatory authority without clearcongressional authorization. When an agency claims todiscover in a long extant statute an unheralded power to

regulate a significant portion of the Americaneconomywe typically greet its announcement with ameasure of skepticism. We expect Congress to speakclearly if it wishes to assign to an agency decisions of

vast economic and political significance. 79


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EPA Sleight of Hand Use of Debated

PM2.5 Science to Sell GHG RuleThis week, we re unveiling theseproposed guidelines, which will cut down

on thecarbon pollution,[]In just the firstyear that these standards go into effect,up to 100,000 asthma attacks and 2,100

heart attack will b avoided andthose numbers will go up from there.

-President Obama May 31, 2014

NAAQS supposed to be safe (with margin)

No-threshold linear regression to 0 model

Contrast between PR statements & rule. 80


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Questions?

Mike Nasi

Jackson Walker [email protected]

mike nasi presentation

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