Federal Greenhouse Gas Regulations

1. Federal Greenhouse Gas Regulations Paul F. Simon Regional Climate Change Program Advisor U.S. Environmental Protection Agency Region 2

2. Regulatory Initiatives • Endangerment Finding • Motor Vehicle Standards • Permitting Requirements for Stationary Sources • GHG Reporting Rule • New Source Performance Standards for Power Plants and Petroleum Refineries • Renewable Fuel Standard • Geologic Sequestration Rule

3. EPA Regulatory Actions on Greenhouse Gas Emissions • Taking action on climate change is one of the top seven priorities Administrator Jackson has set for the EPA • The Administrator’s principles to guide EPA regulatory actions on GHG’s: • Common Sense • Cost-Effectiveness • Clarity, Achievability and Flexibility • Transparency • Focus on the largest emitters

4. EPA Regulatory Actions on Greenhouse Gas Emissions U.S. Supreme Court Decision Clean Air Act Process for Stationary Sources GHG Endangerment Finding First GHG Standards for Passenger Vehicles

5. Supreme Court Decision • InMassachusetts v. EPA (2007), the Supreme Court held that GHGs are air pollutants covered by the Clean Air Act and that EPA must determine whether or not emissions of GHGs from new motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare.

6. Endangerment Finding • Issued by EPA on Dec. 15, 2009 in response to the Supreme Court decision and a petition that EPA issue standards to control emissions of GHGs from new motor vehicles. • Findings: • Six greenhouse gases* in combination endanger public health & welfare. • The combined emissions of these GHGs from new motor vehicles and motor vehicle engines contribute to the GHG air pollution that endangers public health and welfare. ______________ • (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride )

7. Endangerment Finding • “Warming of the climate system is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice, and rising global average sea level.” • “The scientific evidence is compelling that elevated concentrations of heat trapping GHGs are the root cause of recently observed climate change.” • “There continues to be no reason to expect that, without substantial and near-term efforts to significantly reduce emissions, atmospheric levels of greenhouse gases will not continue to climb, and thus lead to ever greater rates of climate change.”

8. Endangerment Finding • Adverse public health impacts from climate change include: • Health impacts from increased levels of ambient ozone in broad areas of the country • Increased number of heat-related deaths • Health impacts from increased extreme-weather events • Motor vehicles in U.S. account for 4% of total global GHG emissions and thus they contribute to the climate change problem.

9. GHG Standards for Passenger Vehicles • Endangerment Finding made it necessary for EPA to issue standards to control GHG emissions from motor vehicles. • Standards issued in April 2010 by EPA and NHTSA -- the first-ever GHG emission standards under the CAA. • Standards arrived at through cooperative process with automakers and states. • Apply to model year 2012-2016 cars and light trucks. • Fuel economy will be increased by ~5%/year. • The standards set an average emissions level of 250 grams of CO2 per mile in model year 2016—equivalent to 35.5 mpg if met solely through fuel economy.

10. GHG Standards for Passenger Vehicles • The standards will save consumers more than $3,000 over the lifetime of a model year 2016 vehicle • Will reduce greenhouse gas emissions by nearly 950 million metric tons and conserve 1.8 billion barrels of oil over the lifetime of these model year 2012-2016 vehicles. • July 2011: EPA and NHTSA announce plan to propose fuel efficiency and GHG emission reductions for model year 2017-2025 light-duty vehicles. • Plan calls for steady improvement in efficiency and emissions such that by MY 2025, on an average industry fleet-wide basis, vehicles would need to meet the equivalent of 54.5 miles per gallon, reducing oil consumption by 2.2 million barrels/day. • EPA and NHTSA are expected to detail this plan in a proposed rule very shortly.

11. GHG Standards for Heavy- and Medium-Duty Trucks • EPA and NHTSA have also established the • first-ever program to reduce GHG • emissions from and improve fuel efficiency • of medium and heavy-duty vehicles • (semi trucks, buses, etc.). • Rules finalized on Aug. 2011 and apply to • model years 2014-2018. • Require up to 20% reduction in fuel consumption and GHG emissions by MY 2018. • Projected to reduce GHG emissions by ~270 million metric tons and save 530 million barrels of oil. • A semi truck owner could realize net savings of $73,000 through reduced fuel costs over the truck’s useful life.

12. GHGs from Stationary Sources • Because EPA’s light-duty vehicle standards for GHGs took effect on January 2, 2011, on that date CAA permitting requirements (PSD and Title V req’mts) began to apply to stationary sources of GHGs as well. • EPA issued a rule in 2010 which tailored the CAA permitting program for GHGs, so that the permitting req’mts are focused on the largest GHG emitters. • The following GHGs are covered: - Carbon dioxide - Methane - Nitrous oxide - Hydrofluorocarbons - Perfluorocarbons - Sulfur hexafluoride

13. Prevention of Significant Deterioration (PSD): Permitting Steps under the Tailoring Rule EPA’s 2010 “Tailoring Rule” phases in the Clean Air Act permitting requirements for stationary sources of greenhouse gases in several steps: Step 1 - January 2, 2011 to June 30, 2011: Only sources already subject to PSD “anyway” New sources: 75,000 tons per year (tpy) of carbon dioxide equivalent (CO2e) Modifications: 75,000 tpy CO2e Step 2 - July 1, 2011 to June 30, 2013: Continue Step 1 sources plus otherlarge GHGemission sources New sources: 100,000 tpy CO2e Modifications: 75,000 tpy CO2e Step 3 - Rulemaking to conclude no later than July 1, 2012: Evaluate whether additional sources of GHG emissions should also be subject to permitting req’mts., but the permitting threshold would be no lower than 50,000 tpy.

14. Best Available Control Technology (BACT) Basics Since EPA is the PSD permitting authority in P.R. and U.S.V.I., EPA plays the key role in determining BACT for each project in P.R. and U.S.V.I where PSD is triggered. EPA Guidance on PSD and Title V Permitting for GHGs (March 2011): BACT determinations will continue to be a state- and project-specific decision. Permitting authorities can continue to use the five-step case-by-case BACT selection process that has been used under the Clean Air Act for many years. The guidance emphasizes the importance of BACT options that improve energy efficiency. Carbon Capture and Sequestration is currently an expensive technology and unlikely to be selected as BACT in most cases. Specific types of fuels or facility design are neither required nor precluded by the guidance.

15. Regulation of Biomass Sources • July 2011: EPA issues a rule deferring for 3 years the application of the Clean Air Act PSD and Title V permitting requirements to carbon dioxide emissions from bioenergy and other “biogenic” stationary sources. • Biogenic CO2 emissions are emissions of CO2 directly resulting from the combustion or decomposition of biologically-based materials other than fossil fuels and mineral sources of carbon. • Purpose of the 3-year deferral is to give EPA time to conduct a detailed examination of the science associated with biogenic CO2 emissions and other technical issues. • EPA intends to develop a final rule by the conclusion of the 3-year deferral period regarding how biogenic CO2 emissions should be treated and accounted for in PSD and Title V permitting.

16. Greenhouse Gas Reporting Rule Goal: To provide a better understanding of where U.S. GHG emissions are coming from and help guide development of policies and programs to reduce emissions. • Directed by Congress in 2008 Appropriations Act. • Applies to facilities emitting large quantities of GHGs (≥25,000 metric tons of CO2e. There are also 22 “all-in” categories). • Requires annual reporting by 41 source categories, accounting for 85-90% of U.S. GHG emissions, including 33 types of direct emitters and 6 types of suppliers of fuel and industrial GHGs. • First annual reports were due September 30, 2011. Approx. 6700 reports submitted. • Public release of data expected in December 2011. • Some categories of sources don’t need to submit their first reports until 2012 (some by March 31, 2012, others by Sept. 28, 2012).

18. Emission Standards for Power Plants & Refineries • EPA will soon be proposing GHG emission standards (“New Source Performance Standards” under the Clean Air Act) for fossil fuel-fired power plants and petroleum refineries. • The standards will set a limit on the amount of GHGs that new or modified power plants and refineries may emit. • Also, EPA will issue guidelines that states and territories will have to address in preparing their own plans to control GHG emissions from existing power plants and refineries. • EPA’s draft rule on power plant GHG emissions now undergoing OMB review.

19. Renewable Fuel Standard (RFS) • Program required by Congress in order to ensure that transportation fuel sold in the U.S. contains a minimum volume of renewable fuel. • The increased use of renewable fuels required by the RFS is expected to reduce dependence on foreign sources of crude oil and increase domestic sources of energy, while at the same time providing reductions in GHG emissions. • Goal is to increase the use of renewable, low-carbon fuels in motor vehicles to 36 billion gallons by 2022 and decrease GHG emissions. • The renewable fuels must achieve GHG emission reductions compared to the gasoline and diesel fuels they replace. • EPA is required to set renewable fuel standards each November for the following year based on gasoline and diesel projections from the Energy Information Administration, and also set an annual cellulosic biofuel standard.

20. Other Power Plant Regulations • EPA has proposed new emission standards to cut hazardous air pollutants (e.g., mercury) from coal- and oil-fired power plants. The rule is expected to be finalized shortly. • Could have co-benefit of reducing GHG emissions.

21. Litigation • EPA’s various GHG regulatory actions are currently being challenged in court. Litigation pending in DC Circuit. • American Electric Power Co. v. Connecticut (Supreme Court, June 20, 2011): • State and local governments sued five major power companies under the federal common law of nuisance to seek abatement of the power co.’s’ contributions to global climate change. • Plaintiffs sought a court order setting CO2 emission limits. • HELD: Clean Air Act and the EPA rulemaking actions that the Act authorizes displace any federal common-law right to seek abatement of CO2 emissions from fossil fuel-fired power plants.