Frontline Perspective on the Clean Power Plan (CPP): Energy Efficiency and Implementation

Transcription

1 Frontline Perspective on the Clean Power Plan (CPP): Energy Efficiency and Implementation SEE Action Executive Group Meeting Carnegie Library, Washington, DC Presented by Ken Colburn, Principal October 1, 2015 The Regulatory Assistance Project (RAP)

2 Introduction The Regulatory Assistance Project (RAP) is a global, non-profit team of energy experts, mostly veteran regulators, advising current regulators on the long-term economic and environmental sustainability of the power and natural gas sectors. ( Foundation-funded; some contracts Non-advocacy; no interventions Ken Colburn is a Principal at RAP. His experience as an air quality regulator came as Air Director for the State of New Hampshire and as Executive Director of NESCAUM. 2

3 ! Reliability Standards, Safety Valves, and the State Clean Power Plan Compliance Obligation Carl Linvill, John Shenot, Mike Hogan, Dave Farnsworth, Ken Colburn May 2015 Introduction In!its!April!2015!assessment!of!the!proposed!Clean!Power!Plan!(CPP)!111(d)!rule,1!the!North!American! Electric!Reliability!Corporation!(NERC)!recommended!that:! [t]he!u.s.!environmental!protection!agency! (EPA)!should!include!a!formal!reliability!assurance!mechanism!in!the!final!rule!that!provides!the! regulatory!certainty!and!explicit!recognition!of!the!need!to!ensure!reliability!during!both!the!plan! development!and!the!implementation!period!through!2030 and!potentially!beyond.!nerc s! recommendation,!alluding!to!the!"safety!valve"!concept!put!forward!in!other!similar!proposals,!suggests! that!such!a!mechanism!could! include!timing!adjustments!and!the!granting!of!extensions!to!an!entity s! implementation!of!and!compliance!with!its!cpp!implementation!plan!where!there!is!a!demonstrated! reliability!need.! NERC!is!right!to!assert!that!proposed!state!plans!for!complying!with!the!111(d)!regulations!must!not! jeopardize!bulk!power!system!reliability.!however,!nerc!errs!in!placing!the!burden!for!specifying!a! mechanism!to!ensure!reliability!on!epa!within!the!111(d)!regulation.!epa!is!giving!states!flexibility!in! defining!their!compliance!plans!and!it!is!reasonable!for!epa!simply!to!require!that!states!present!plans! that!safeguard!reliability.!epa!only!needs!to!consider!a! reliability!assurance!mechanism!after!a!state! proves!to!epa!that!it!has!fully!explored!all!combinations!of!carbon!reduction!measures!available!to!it!and! defined!standards!for!reliability.!! that!it!is!unable!to!comply!in!a!manner!that!meets!wellw Given!the!number!of!carbon!reduction!tools!available!and!the!compliance!flexibility!the!proposed!rule! offers,!it!seems!unlikely!that!states!will!be!unable!to!comply!in!a!manner!that!protects!reliability.!it!is! nevertheless!worth!considering!what!epa!should!do!if!a!state!is!legitimately!unable!to!present!a!cpp! compliance!plan!that!maintains!compliance!with!existing!reliability!standards.!a!reliability!assurance! mechanism!that!includes!a! safety!valve!could!be!established!in!concert!with!nerc!to!address!this! exceptional!situation!and!it!is!worth!considering!how!such!a!safety!value!might!be!designed.! EPA Should Require States to Present a Compliance Plan that Meets Reliability Standards 3 NERC s!recommendation!that!epa!should!provide!a!safety!valve!is!sound!in!its!intended!purpose.!some!

4 Overall, Final CPP Reflects Masterful Solutions 4

5 Bad: From the States: Good News and Bad News for EE Disproportionate clarity for EE in rate-based (ERCs & use) EE won t happen automatically in mass-based Not clear how some EE efforts can play (e.g., ESCOs) Clarity, certainty highly valued Tilt toward rate for that reason? 5

6 Greater Clarity for Rate-Based, ERCs? It s quite possible that air regulators will lean toward paths that are better delineated 6

7 From the States: Good News and Bad News for EE Bad: Disproportionate clarity for EE in rate-based (ERCs & use) EE won t happen automatically in mass-based Not clear how some EE efforts can play (e.g., ESCOs) Clarity, certainly highly valued Tilt toward rate for that reason? Good: Mass-based cheaper, more future flexibility; more states leaning? NASEO Hub, EE Registry efforts Premium on multi-pollutant strategies Good examples and opportunities for state leadership RGGI: proven, nearly self-implementing, self-enforcing, jobs/economic benefits, revenue stream, etc. But bad marketing GIS, GATS, WREGIS, M-RETS analogue? 7

8 EE = Least-Cost Approach (Levelized Cost of Energy ($/MWh), Lazard, Version 8, 2014) If EE isn t prominent in your state s CPP plan, your state doesn t have a least-cost plan. 8

9 More Stringent Ozone Standards (EPA, Ozone Concentrations, 2010) EPA announcing new NAAQS for ozone in the ppb range (vs. 75) today? 9

10 Multi-Pollutant Reductions + Water Savings Flue Gas Desulfurization (Scrubbers) Three-Way Catalysts (Petro) Diesel Particulate Filters Uncontrolled Fossil Fuel Combustion in Stationary and Mobile Sources Energy Efficiency Energy and Demand Resource Management Combined Heat & Power Wind, Solar, Tidal Low- and Zero-Emission Vehicles Carbon Capture & Storage Increase in Uncontrolled Diesel Biofuels Biomass Buying Emissions Credits Overseas Good CPP choices can help air quality; good air quality choices can help CPP compliance Ditto for increasing water concerns Integrated multipollutant, multi-media approach can lower cost, risk (see RAP s IMPEAQ paper) 10

11 What s Needed Now: Detailed How-to Ways for States to Include EE in Mass-Based Auction Allowances? EE Set-Aside in Allocation? Allocation in Vertical Mkts? Private EE (ESCOs) [How-to] [How-to] [How-to] Industrial EE Actions [How-to] [How-to] [How-to] Building Codes [How-to] [How-to] [How-to] Appliance Standards [How-to] [How-to] [How-to] Rate Design [How-to] [How-to] [How-to] IRP Plans [How-to] [How-to] [How-to] RTO Actions [How-to] [How-to] [How-to] 11

12 Thank You for Your Time and Attention About RAP The Regulatory Assistance Project (RAP) is a global, non-profit team of experts that focuses on the long-term economic and environmental sustainability of the power sector. RAP has deep expertise in regulatory and market policies that: Promote economic efficiency Protect the environment Ensure system reliability Allocate system benefits fairly among all consumers Learn more about RAP at Ken Colburn: kcolburn@raponline.org