Environmental Issues in Electricity Demand Response

Slide 1:Environmental Issues in Electricity Demand Response Nancy L. Seidman Massachusetts Dept of Environmental Protection Bill White U.S. Environmental Protection Agency, Region 1 Ken Colburn Northeast States for Coordinated Air Use Management

Slide 2:Topics to Cover Background Pollutants of concern and their impacts Progress to date Remaining Environmental Challenges Regulatory outlook and timeline Regulatory framework: state and federal permitting Distributed generation Economy–Environment Convergence?

Slide 3:7 federal (US-EPA) public health standards four important for power generation SO2, NOx, CO and PM2.5 Ozone and PM2.5 levels and trends next steps in federal programs next steps in state programs CO2 and Hg - emerging issues Pollutant of Concern and Regulatory Standards

Slide 4:Health Effects of Exposure to Ozone Coughing

Slide 5:Health Effects of Exposure to Fine Particles Premature death

Slide 7:CO2 emissions contribute to global climate change – which is projected to have serious and wide-ranging impacts on human health and the environment The climate is currently changing, and larger changes are expected. Temperatures and sea level are rising, and precipitation patterns are changing. The US National Assessment of the Consequences of Climate Change for the United States determined that climate change will result in significant impacts on health, agriculture, forests, water resources, coastal areas, species and natural habitats. Impacts in each of these sectors have implications for EPA water programs.The climate is currently changing, and larger changes are expected. Temperatures and sea level are rising, and precipitation patterns are changing. The US National Assessment of the Consequences of Climate Change for the United States determined that climate change will result in significant impacts on health, agriculture, forests, water resources, coastal areas, species and natural habitats. Impacts in each of these sectors have implications for EPA water programs.

Slide 8:Mercury poses serious risks to human health and the environment Mercury bioaccumulates – concentrates – in fish and animals that eat them – including humans 41 states now have mercury-based health advisories for fresh-water fish, including all New England states High dose exposures can cause serious neurological and developmental effects: Mental retardation, limb deformities Blindness, cerebral palsey, seizures Low dose exposures can cause: Adverse developmental effects on attention, fine-motor functions, visual-spatial abilities and verbal memory Other possible effects: carcinogen, heart disease, adult immune system, and reproductive system

Slide 9:Air Programs Have Made Great Progress Automobile tailpipe, inspection & maintenance, and cleaner gasoline programs VOC & NOx control requirements for industry Power plant control strategies: Acid rain program: SO2 and NOx NOx RACT in 1995 OTC’s NOx budget program -- 1999 and 2003 caps Section 126 petitions and NOx - - SIP call reductions in 2004 State multi-pollutant power plant programs – MA, CT and NH

Slide 11:SO2 Emissions From New England Power Plants

Slide 12:NOX Emissions From New England Power Plants

Slide 14:Outlook: Environmental Challenges yet to be Addressed Implementation of eight-hour ozone national ambient air quality standard Implementation of fine particulate standard and regional haze program Acid rain Mercury from coal burning Greenhouse gas emissions

Slide 15:This map is based on monitors operated since the first quarter of 2000 and meet 1-year (2000) completeness goals.This map is based on monitors operated since the first quarter of 2000 and meet 1-year (2000) completeness goals.

Slide 17:Timeline for Implementing New Ozone and PM Standards 2003 EPA finalizes implementation guidance 2003-4 States recommend nonattainment designation and boundaries 2004-5 EPA finalizes nonattainment designations and boundaries 2007-8 States submit control strategy SIPs Mercury MACT requirements take effect? 2009-15 Attainment deadlines for ozone and PM 2015?-18? Requirements for CO2, and additional reductions in NOx and SOx? ISO NE projects peak electricity demand to increase by 13-20+% in 2009-2015

Slide 18:– NH = 2nd in High Tech Employment – NH is the only state among the Top 10 fastest growing that is not in the South or West. (NHPR, 12-20-01) – Intel example: Bash Climate => Bash Intel – NH = 2nd in High Tech Employment – NH is the only state among the Top 10 fastest growing that is not in the South or West. (NHPR, 12-20-01) – Intel example: Bash Climate => Bash Intel

Slide 19:How Does Permitting Work Today? State and Federal permitting roles Federal rules (large new sources – New Source Review/Prevention of Significant Deterioration) State delegation – other sources Federal Air Quality Standards link to permit limits For large power plants dispersion modeling used to determine ground level impact Differences among states in how small sources are handled

Slide 20:SIP – State Implementation Plan: Links federal and state efforts SIP – state implementation plan EPA designates areas that don’t meet health standards SIP = state regulations and programs to bring areas into compliance with federal standards Some measures are required, others are optional, i.e. up to each state Approved by EPA

Slide 22:What’s in a SIP Plans Commitments Regulations Letters and Attestations Administrative Documentation Technical Support and Background Documentation

Slide 23:Considering Control Strategies Review Emission Inventory Review available Control Technologies Provide costs (for regulated community, for state) Determine Effectiveness of Controls and Programs

Slide 24:What is distributed generation and why is it growing? Distributed Generation (DG) is electric generation on site < 1 MW and up to 10 MW DG is growing because: Need for greater reliability and power quality- tiny outages can cost millions of dollars Load/demand response programs pay customers to shed load - often switching to on-site generators High electricity prices mean on-site options more attractive

Slide 25:DG has the potential to create environmental benefits by . . . Achieving efficiencies of 80% and higher through Combined Heat and Power (CHP) Increasing the contribution of low to zero emissions technologies to power generation Reducing the need to run older, dirtier reserve generating plants Reducing line losses

Slide 26:But, current DG trends present an environmental challenge Diesel internal combustion (IC) engines make up more than 90% of existing DG and a similarly large share of new sales Diesel IC engines pollute at much higher rates than new electric generating plants Even a few hours of operation can have big impacts on air quality Regulations need to catch up with market changes and new technologies

Slide 27:Diesel IC engines are far worse polluters than new gas plants

Slide 28:Even low levels of DG use can have big impacts on air quality

Slide 29:Some evidence that use of and emissions from DG are rising New Hampshire 1996 - 1999 Share of electric generation ozone season NOx emissions grew from 3.8% to 14% - nearly a four fold increase Total NOx emissions from small diesel IC engines doubled - from 278 tons to 576 tons - even as total NOx emissions from all electric generators were nearly halved, from 7314 tons to 3986 tons Source: Andy Bodnarik, NH DEP

Slide 30:Regulations did not anticipate today’s DG trends Most on-site generators are “emergency” generators exempted from emissions requirements Emergency exemption assumed narrowly defined circumstances for use - emergencies - not load response or peak shaving Modification in CA, EPA has no plans to broadly expand guidance for these units Many new units fall outside existing state and federal permitting requirements

Slide 31:Permitting Requirements - MA No permit required < 3 MMBtu/hr fuel input - 300 kw > 3 MMBtu/hr fuel input - best available control technology (BACT) Emergency engine limits See 310 CMR 7.02, 7.03

Slide 32:Permitting Requirements - CT General permit language for emergency engines - valid until 12/03 units > 500 hp Annual tons per year limits - 5 tpy NOx, SOx, 3 tpy PM Ultra low sulfur fuel required SW CT - 52 towns can participate in load response

Slide 33:States and EPA are taking steps to meet the DG challenge Ozone Transport Commission (OTC) Model Rule lowers applicability thresholds for DG EPA and NESCAUM developing inventory of installed on-site capacity in the Northeast Connecticut General Permit for Distributed Generation issued earlier this year RAP model regulation

Slide 34:Bottom line: DG can be good for the air, as long as it’s clean Update regulations to capture diesel IC engines generating electricity Don’t increase use of emergency backup generators Level the playing field for clean, efficient DG by removing regulatory and market barriers and creating incentives Clean DG can help add capacity while reducing emissions

Slide 35:How Will EPA and States Meet New Air Quality Challenges? Upcoming emission reduction programs: 2004 automobile tailpipe and clean fuel stds 2007 heavy duty diesel standards Local emission reduction measures E.g., diesel retrofit and low sulfur diesel fuel programs Reduction of regional transport from power plant emissions: Clear Skies Initiative

Slide 36:Simultaneous Economic Growth and Environmental Improvement