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Challenges & Impact of EPA's Clean Power Plan

Learn about the legal challenges and overall impact of the EPA's Clean Power Plan, including its potential unconstitutional aspects and effects on states, Congress, and the energy industry.

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Challenges & Impact of EPA's Clean Power Plan

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  1. Mike Nasi mnasi@jw.com 512.236.2216 Legal Challenges & Impact of EPA’s “Clean Power Plan” UH Law Center Houston, Texas September 11, 2015

  2. “EPA is attempting an unconstitutional trifecta: usurping the prerogatives of the States, Congress and the Federal Courts – all at once. Burning the Constitution should not become part of our national energy policy.” • Congressional Testimony Regarding EPA’s Clean Power Plan - Laurence Tribe, Harvard Law professor, long-time mentor, counselor and supporter of President Obama, Testimony against EPA’s Clean Power Plan

  3. 1 How the BSER ‘Building Blocks’ Work(Proposed versus Final) (animated) Example: Texas Emission Rate (lb CO2/MWh) 1,566 New Baseline 1,292(too low to begin with due to use of 2012 baseline data) 2012 Texas Baseline -4% from assumed improvements in efficiency at coal plants of 6% Block 1 Heat rate improvements 49 -20% from increasing CCGT utilization to 70% (from 45% in Texas 2012); shifts 72 million MWh from coal to gas1 Block 2 Re-dispatch of fleet 258 -10% from EPA-derived renewable target of 20% + keep “at risk” nuclear capacity Block 3 More renewables, nuc. 124 -5% from reducing end-user consumption by 1.5% annually Block 4 Demand-side reduction 70 TX BSER = 237 (fossil steam) & 697 (NGCC) 2030 Texas Target 791 by 2030 (38.4% Reduction) Default BSER=1,305 (fossil steam) & 771 (NGCC) MWh of Generation of each Final Texas Budgeted Rate=1,042 (1,188 by 2022) (33.5% Reduction off of baseline) Source: IHS CERA: “Digesting EPA’s Proposed Clean Power Plan”; June 10, 2014 Webcast; Final Clean Power Plan, EPA “State at a Glance” Document, Texas.

  4. Texas Budget Computation & Retirements RATE GOAL – Baseline 1,566 lbs/Net MWh MASS TARGET – Baseline 240,730,037 (Short tons) Total retirement of 1786 MW; approximately 893,000 homes. Sources: Clean Power Plan State Goal Visualizer; retirement data from Clean Power Plan and IMP v.5.15; ERCOT “mild spring day” demand condition estimate of 1 MW per 500 homes.

  5. Comparison of Reductions – Proposal to Final RATE Application to Baseline Emissions (Tons) Sources: Proposal – eGRID Methodology TSD, Goal Computation TSD; Final – Emission Performance Rate and Goal Computation, Goal Computation Appendix 1, EPA “State at a Glance” Documents.

  6. Comparison of Reductions – Proposal to Final MASS Application to Baseline Emissions (Tons) Sources: Proposal – eGRID Methodology TSD, Bloomberg, New Energy Finance Analysis of CPP Proposal (for mass conversion); Final – Emission Performance Rate and Goal Computation, Goal Computation Appendix 1, EPA “State at a Glance” Documents.

  7. States’ Proportion of Total CO2 Reductions Rate Application to Baseline Emissions (Tons) FINAL PROPOSAL Remaining states have reductions in CO2 less than 2% of total U.S. emissions. Does not include Alaska, Hawaii, and Vermont since no final standard in rule. Sources: Final - Emission Performance Rate and Goal Computation, Goal Computation Appendix 1, EPA “State at a Glance” Documents; Proposal - EPA Data File - 2012 Unit-Level Data Using the eGRID Methodology.

  8. Comparison of Raw State CO2 Emission Rates (lbs/MWh) Source: EPA Data File - 2012 Unit-Level Data Using the eGRID Methodology; Includes Vermont, which is not subject to Existing-Source GHG Rule.

  9. Projected Nationwide Incremental Increase in Renewable Generation Onshore Wind Solar Geothermal Concentrating Solar Power Hydropower Historic Maximum Growth “Franken-Fleet” Average Historic Growth Megawatt-Hours of Dispatch EPA assumes the construction of 104,317 MW of wind capacity from 2022-30. This equals 45,000 2.3-MW turbines and over 5.2 million acres; greater than the combined land area of Rhode Island, Delaware, and Connecticut (beyond the 82,000+MW expected to be installed as of 2021 – another 4.1 million acres). Sources: EPA, Greenhouse Gas Mitigation Measures TSD (Final Rule); EPA, GHG Abatement Measures TSD (Rule Proposal). Assumes: 2012 baseline capacity is apportioned, by technology, at EPA’s modeled historic distribution; average acre/MW (5 MW/KM2) from NREL, U.S. Renewable Energy Technical Potentials: A GIS-Based Analysis, July 2012; state areas from U.S. Census, Geography, State Area Measurements; 2012 Projected Installed Wind Capacity from U.S. EIA, Annual Energy Outlook 2015, Table 58.

  10. PUTTING EPA’S ASSUMED WIND & SOLAR BUILD IN PERSPECTIVE (2013-2030 U.S. Build v. Current World) CPP ASSUMES THAT U.S. WILL BUILD & DISPATCH 6 XMORE WIND & SOLAR MWh BEFORE 2030 THAN ANY NATION’S CURRENT WIND/SOLAR FLEET DISPATCHES Million MWh TEXAS ALONE IS ASSUMED TO ADD AS MUCH WIND & SOLAR AS ANY OTHER NATION HAS NOW Applies EPA’s incremental growth targets under the final CPP and assumes EPA’s modeled historic distribution of generation from 2013 through 2021. Sources: EPA Greenhouse Gas Mitigation Measures TSD; EIA, International Energy Statistics, Renewables, 2012.

  11. ERCOT Capacity Factor for Non-Coastal Wind at Peak: 12% EPA Wind Fleet-Wide Assumed Capacity Factor: 41.8% 11

  12. Peak ERCOT Demand & Wind Over Peak (Case Study – First Week of August 2015) ERCOT 2015 installed wind capacity is 13,060 MW. 69,783* 69,625 68,912* 68,693 68,459* 66,602 66,234 66,352 65,690 61,871 60,903 Wind Over Peak: 1,066 MW MW Wind At Peak Idle Installed Wind Remaining Generation *New Peak Records: Aug. 5 – 68,459 (Wind Over Peak 2,501); August 6 – 68,912 (Wind Over Peak 3,418); August 10 – 69,783 (Wind Over Peak 2,242). Sources: ERCOT, Daily Wind Integration Reports; ERCOT, Item 4.1: CEO Update.

  13. Projected Incremental Increases in ERCOT: Dealing with Wind Performance at Peak Add. Wind if 12% Cap. Factor Add. Wind if 34% Cap. Factor Onshore Wind (41.8% EPA Cap. Factor) Solar Geothermal Concentrating Solar Power Hydropower Megawatts Installed Capacity ~46,000 MW gap needing to be filled to cover discrepancy between capacity factors – 12% cap. factor ~4,200 MW gap needing to be filled to cover discrepancy between capacity factors – 34% cap. factor ERCOT Peak Average Capacity Contribution for Non-Coastal Wind is 12%; Peak Average Capacity Contribution for Coastal Wind is 56%. Demonstrated 34% capacity factor is based on average of coastal and non-coastal capacity factors. Sources: EPA, Greenhouse Gas Mitigation Measures TSD; ERCOT Capacity, Demand, and Reserves Report, May 4, 2015.

  14. Climate Benefits of Clean Power Plan • U.S. PAIN – 2012 to 2020: • EPA projected retirements of 121,000 MW of capacity by 2020. • Total spending on electricity increases from $364 to $541 billion per year, a $177 billion (49%) increase. • Total spending on gas increases from $107 to $214 billion per year, a $107 billion (100%) increase. • Residential electric bills increase by 27%. • Residential gas bills increase by 50%. • TEXAS PAIN – 2012 to 2020: • EPA projected retirements of 16,283 MW of capacity by 2020. • Total spending on electricity increases from $31.4 to $60.8 billion per year, a $29.4 billion (93%) increase. • Total spending on gas increases from $7.9 to $20.9 billion per year, a $13.1 billion (166%) increase. • Residential electric bills increase by 48%. • Residential gas bills increase by 75%. Reduction from Rule Based on EPA Methodology – 0.01° F IPCC Projected Increase in Global Avg. Temp. – Up to 3.6° F 60° Current Global Avg. Temp. – 58.24° F Modeled CO2 Reduction 0.98 ppm 50° 40° 30° 20° 10° 0° • WORLD GAIN: • 0.2% reduction in CO2 concentration (see pie chart). • Global temperature increase reduced by 0.01F. • Sea level rise reduced by less than 1/100thof an inch (less than the thickness of 2 sheets of paper or 1 or 2 human hairs. • In 2025, total annual US reductions will be offset by approximately 3 weeks of Chinese emissions. Remaining CO2 Concentration 499.02 ppm GLOBAL CO2 CONCENTRATION * “Pain” statistics are based on the proposal’s 30% nationwide reduction. The final rule requires a 32% nationwide reduction. Additional studies forthcoming.

  15. Climate Benefits of Clean Power Plan -SOURCES- • “PAIN” SOURCES: • EPA, IPM, Proposed Clean Power Plan, Base Case. • EPA, IPM, Proposed Clean Power Plan, Option 1. • Energy Ventures Analysis, Energy Market Impacts of Recent Federal Regulations on the Electric Power Sector, November 2014. The study incorporates environmental policies that were enacted as of August 2013; the same assumption made by EPA. Projected cost increases do not include other non-power market forces on the price of gas, such as increases in exports, transportation use, or industrial use. • “GAIN” SOURCES: • U.S. EPA, Regulatory Impact Analysis: Final Rulemaking for 2017-2025 Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards, August 2012. Provides basis of EPA’s assessments of climate impacts of CO2 reductions. • EPA Analysis of the Clean Power Plan, IPM Run Files, EPA Base Case for the Clean Power Plan, Base Case State Emissions spreadsheet; Rate-Based, Rate-Based State Emissions spreadsheet; and Mass-Based, Mass-Based State Emissions spreadsheet. • National Oceanic and Atmospheric Administration, Earth System Research Laboratory, “Recent Monthly Average Mauna Loa CO2.” • IPCC, Climate Change 2013: The Physical Science Basis: Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Chapters 1 & 12. Intergovernmental Panel on Climate Change (IPCC) projected concentrations of CO2 in 2050 from 450 to 600 ppm. • Statement of Karen Harbert, U.S. Chamber of Commerce, U.S. House of Representatives Comm. on Science, Space, & Technology, April 15, 2015. • National Centers for Environmental Information, NOAA, Global Analysis – Annual 2014.

  16. Path Forward(and projected timing) • October/November 2015 - Federal Register (FR) Publication • FR + 1-30 days – Motions to Stay filed • FR + 30 days – Petitions for review of rule due • FR + 90 days – Comments due on Proposed Federal Plan • Fall/Winter 2015/16 - Potential ruling on Motions to Stay • Summer 2016 - Finalization of model trading rules • September 6, 2016 –State “Plans” Due (FIP risk after this) • Summer/Fall 2016 – Earliest DC Circuit Crt. Of App. decision • Summer/Fall 2017 – Earliest SCOTUS ruling on appeal • September 6, 2018 – Final State Plans Due • 2022-2029 – Interim compliance stair-steps (interim rates) • 2030 – Final budgeted rates must be met

  17. EPA Statement About New Gas Power “Emission reductions achieved through the use of new NGCC capacity require the construction of additional CO2-emitting generating capacity, a consequence that is inconsistent with the long-term need to continue reducing CO2 emissions beyond the reductions that will be achieved through this rule.”

  18. Mike Nasi mnasi@jw.com 512.236.2216 Questions?

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