EPA Regulation of Electricity Sector Carbon Emissions - 111(d)

Over the last few decades, nearly every aspect of America’s technology infrastructure has been modernized, with one glaring exception: the electric power system. Although an engineering marvel of the mid-20th century, the U.S. electric power system needs upgrading to meet the need for secure, clean, affordable energy in the 21st century.

EPA’s regulation of carbon emissions from the electric power sector under Section 111(d) of the Clean Air Act represents an opportunity to modernize the electric power system, making it higher performing and more consumer-focused while reducing emissions. Advanced energy technologies and services make it possible to cut emissions while improving reliability, reducing costs, increasing competition, and creating new services for consumers.

Given the scale of the opportunity for the country, AEE has organized a member-led campaign to ensure that the collective voice of advanced energy businesses is present throughout the federal and state portions of the regulatory process. AEE is engaged with the Administration, federal agencies, and Capitol Hill, while working in states with our coalition of state and regional partners, which represent roughly 1,000 businesses across 23 states. The goal is to bring a coordinated business voice to both levels of government in order to realize the economic potential in modernizing the electric power system.

Featured on E&E TV's On Point

Malcolm Woolf, AEE's senior vice president for policy and government affairs, was featured on E&E TV's On Point discussing the role of advanced energy and how states can incorporate advanced energy technologies in their plans to comply with U.S. EPA's carbon emission regulations for existing power sources.

Modernization is An Opportunity to be Embraced

Nearly every aspect of America's technology infrastructure has been modernized, with one glaring exception: the electric power system, which operates with infrastructure, technology, and a basic business model that dates to the early 1900s. Although an engineering marvel of the 20th century, the U.S. electric power system needs upgrading to meet the need for secure, clean, affordable energy in the 21st century.

EPA’s regulation of carbon emissions from the electric power sector under Section 111(d) of the Clean Air Act represents an opportunity to modernize the electric power system, making it higher performing and more consumer focused. This is an opportunity to be embraced.

The key to this opportunity is advanced energy.

Reports & White Papers

Market Response to the Clean Power Plan

Lessons from Three Decades of Clean Air Act Implementation

When EPA releases the final Clean Power Plan this summer, regulators and industry will move to consider compliance options in earnest. While opponents contend that these options will be limited and costly, the track record of EPA regulations allowing for market-based compliance suggests otherwise. This report looks at outcomes under prior EPA rules, finding that when regulations allow for market-based compliance, efficient and active markets develop rapidly. Given the structure of the proposed CPP and the status of current markets for advanced energy technologies and services available as compliance options, the report predicts that the CPP will elicit a similarly robust market response.

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Impacts of the Clean Power Plan on U.S. Natural Gas Markets and Pipeline Infrastructure

The AEE Institute contracted with ICF International to perform an assessment of the potential impacts of the EPA Clean Power Plan (CPP) on required gas pipeline capacity. This report responds to concerns raised by some stakeholders, including the North American Electric Reliability Corp. (NERC), that states might rely heavily on natural gas generation for compliance with the CPP, creating stress on gas pipeline capacity and ultimately impacting electric system reliability.

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Competitiveness of Renewable Energy and Energy Efficiency in U.S. Markets

Questions have been raised about whether renewable energy (RE) and energy efficiency (EE) resources can provide substantial emission reductions at reasonable cost under EPA’s proposed Clean Power Plan (CPP). These concerns reflect fundamental misperceptions about the performance and cost of today’s renewable energy and energy efficiency technologies, rooted in outdated information and perpetuated by inaccurate official market projections. This report shows that RE and EE are competitive resources in today’s marketplace that will not only be cost-effective mechanisms for CPP compliance but should also be expected to grow strictly on the basis of competitiveness.

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EPA’s Clean Power Plan and Reliability

Assessing NERC’s Initial Reliability Review

In November 2014, the North American Electric Reliability Corporation (NERC) issued an “initial reliability review” in which it identified elements of the CPP that could lead to reliability concerns. Echoed by some grid operators and cited in comments to EPA submitted by states, utilities, and industry groups, the NERC study has made reliability a critical issue in finalizing, and then implementing, the Clean Power Plan.

In order to gain insight on the issue, the Advanced Energy Economy Institute commissioned The Brattle Group, a leading consulting firm to utilities and grid operators, to conduct a critical review of the NERC study. The Brattle Group’s conclusion:

“Following a review of the reliability concerns raised and the options for mitigating them, we find that compliance with the CPP is unlikely to materially affect reliability.”

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Integrating Renewable Energy into the Electricity Grid

Case Studies Showing How Technologies and Operations are Maintaining Reliability

The Advanced Energy Economy Institute commissioned The Brattle Group, a leading consulting firm to utilities and grid operators, to provide an overview of how utilities and grid operators were integrating variable renewable resources while maintaining reliable electric service. In this report, The Brattle Group provides two case studies representing the two types of electricity market structures in the United States - the Electric Reliability Council of Texas (ERCOT), a regional transmission organization (RTO), and Xcel Energy Colorado, a vertically integrated utility - each of which is successfully managing a high and increasing share of electric power from variable renewable resources.

The Brattle Group found that “ongoing technological progress and ongoing learning about how to manage the operations of the electric system will likely allow the integration not only of the levels of variable renewable capacity now in places like Texas and Colorado but even significantly larger amounts in the future.”

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White Paper - NERC'S Clean Power Plan 'Phase I' Reliability Assessment - a Critique

On April 21, the North American Electric Reliability Corp. (NERC) released its “Phase I” assessment of the reliability impacts of EPA’s Clean Power Plan (CPP). The Phase I report is a follow-up to NERC’s Initial Reliability Review, and NERC indicates there will be more to come. This is in keeping with NERC’s vital role in informing policymakers and grid operators about issues in maintaining reliable electric service across the country. This white paper provides a critique of the Phase I reliability assessment and suggests ways future assessments can be improved.

The Phase I modeling of the Clean Power Plan projects an electric power system of tomorrow that is inconsistent with the technology and market trends of today, let alone the future. Taking into account a more likely result of ongoing developments in the electric power sector, especially those that will be accelerated by the Clean Power Plan, the reliability concerns the Phase I report derives from its projections largely disappear.

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Design Principles for a Rate-Based Federal Plan Under EPA's Clean Power Plan

This summer, the Environmental Protection Agency will release a draft Federal Plan to implement the Clean Power Plan in states that do not submit a satisfactory state plan. Some groups have argued that inclusion of advanced energy—even renewable energy and energy efficiency, which are both part of EPA’s calculation of state goals—is beyond EPA’s authority in a Federal Plan.

AEE’s whitepaper Design Principles for a Rate-Based Federal Plan Under EPA’s Clean Power Plan describes how the Federal Plan can use EPA’s jurisdiction over emitting power plants in combination with a voluntary rate-based credit trading system to incorporate both zero- and low-emission generation resources and demand-side resources. While EPA has many options for including advanced energy in either a mass-based or rate-based Federal Plan, this white paper outlines a fair and simple way to ensure that states have access to a full range of cost-effective compliance options under a rate-based Federal Plan.

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Report - Assessing Employment Gains from Compliance Scenarios in Virginia

This report, prepared by Meister Consultants Group for the Advanced Energy Economy Institute and the Virginia Advanced Energy Industries Coalition, analyzes two possible scenarios for Virginia’s compliance with the U.S. EPA’s Clean Power Plan to reduce carbon emissions from the electric power sector. It shows that the Commonwealth could create thousands of permanent and temporary jobs by making investments to diversify its power sources with renewable energy, energy efficiency, and natural gas generating plants – and more than double the additional jobs if the state simultaneously pursued a long-sought goal of eliminating electricity imports from out of state.

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Report - Advanced Energy Technologies for Greenhouse Gas Reduction

The U.S. Environmental Protection Agency’s plan to regulate carbon emissions is just the latest challenge to the U.S. electric power system. Technological innovation is disrupting old ways of doing business, infrastructure is showing its age, and customers are demanding new forms of service. Advanced energy offers a wide range of technologies and services that can help meet all these challenges. From zero- and low-emission forms of electricity generation to sophisticated grid management tools, investment in advanced energy solutions can modernize the electric power system, provide economic benefits, and reduce carbon emissions at the same time. As states develop plans to meet EPA’s carbon emission standard, AEE offers this compendium of 40 different advanced energy technologies that can be used to create a modern electric power system that is secure, clean, and affordable.

AEE’s Advanced Energy Technologies for Greenhouse Gas Reduction provides details on the use, application, and benefits of 40 specific advanced energy technologies and services. By incorporating these and other advanced energy technologies into their plans, states can not only meet carbon reduction goals but also improve the efficiency, resiliency, and cost effectiveness of service provided by electric utilities.

State Tool for Electricity Emissions Reduction (STEER)

AEEI's State Tool for Electricity Emissions Reduction (STEER) is an open access integrated resource planning model, developed for analyzing least-cost strategies to implement the Clean Power Plan. It automatically calculates the least-cost plan given policy options, load and technology price forecasts. All data, inputs, and formulae are visible to user and can be modified as necessary.

The principal purpose of STEER is to facilitate access to data and integrated resource planning analysis for all stakeholders as states plan Clean Power Plan implementation.

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STEER MODELS

Arkansas

The Arkansas version of the State Tool for Electricity Emissions Reduction (STEER) is an open-access integrated resource planning tool, developed for analyzing least-cost strategies to implement the Clean Power Plan. It automatically calculates the least-cost plan given policy options, load and price forecasts. All data, inputs, and formulae are visible to and changeable by the user. The principal purpose of STEER is to facilitate all-stakeholder access to data and integrated resource planning analysis as states plan Clean Power Plan implementation.

Learn more >

Michigan

The Michigan version of the State Tool for Electricity Emissions Reduction (STEER) is an open-access integrated resource planning tool, developed for analyzing least-cost strategies to implement the Clean Power Plan. It automatically calculates the least-cost plan given policy options, load and price forecasts. All data, inputs, and formulae are visible to and changeable by the user. The principal purpose of STEER is to facilitate all-stakeholder access to data and integrated resource planning analysis as states plan Clean Power Plan implementation.

Learn more >

Pennsylvania

The Pennsylvania version of the State Tool for Electricity Emissions Reduction (STEER) is an open-access integrated resource planning tool, developed for analyzing least-cost strategies to implement the Clean Power Plan. It automatically calculates the least-cost plan given policy options, load and price forecasts. All data, inputs, and formulae are visible to and changeable by the user. The principal purpose of STEER is to facilitate all-stakeholder access to data and integrated resource planning analysis as states plan Clean Power Plan implementation.

Learn more >

Virginia

The Virginia version of the State Tool for Electricity Emissions Reduction (STEER) is an open-access integrated resource planning tool, developed for analyzing least-cost strategies to implement the Clean Power Plan. It automatically calculates the least-cost plan given policy options, load and price forecasts. All data, inputs, and formulae are visible to and changeable by the user.

Learn more >

AEE Poll Finds Support for Modernization

In a survey commissioned by AEE, 66% of Americans said they thought it was “a good idea” to modernize the electric power system. Seventy-four percent of Americans believe that modernizing U.S. electric power systems to use electric power more efficiently and reduce the need for old power plants is a good idea, according to the survey. And 58% of respondents said that modernizing the electric power system by scaling back the use of old power plants and adding more low-emission natural gas and zero-emission wind, solar, and hydropower is a good idea even if it costs more money.

Testimony and Comment Letters

EPA is working on greenhouse gas regulations for the existing power sector, often called 111(d) performance standards. AEE has built a 111(d) Campaign with its members to ensure that the advanced energy business voice is at the table throughout the federal and state process for implementing these standards.

AEE submitted comments on the Proposed Federal Plan and Model Trading Rules, which are intended to ensure that the Clean Power Plan sends a uniform market signal across the country and facilitates state planning. AEE supports EPA’s use of market-based trading in both mass- and rate-based compliance plans. However, AEE believes that certain elements of each plan type as proposed will impede the deployment of cost-effective advanced energy measures. Our comments identify revisions that will ensure these measures can compete fairly in the market for emission reductions, allowing states to capture the economic benefits of these technologies while reducing implementation costs.

Download AEE Comments

AEE welcomes the concept of the Clean Energy Incentive Program as a tool to accelerate the deployment of advanced energy. If implemented to its full potential, the program would be a step toward modernizing the U.S. electric power system while expediting emission reductions and lowering the cost of compliance. However, AEE believes certain aspects of the proposed structure could prevent the program from achieving its goals. Our comments identify a number of commonsense revisions and clarifications that would help ensure that the CEIP realizes its full potential.

Download AEE Comments

In November 2014, AEE submitted comments to EPA in support of the Clean Power Plan. In its comments, AEE called on the agency to strength emission targets based on the use of energy efficiency and renewable energy, the potential for which was underestimated by the Agency, and to clarify the eligible advanced energy technologies and how they should be treated in order to facilitate their use in state compliance plans.

On December 1, the final day of the public comment period, AEE submitted supplemental comments addressing the attribution of crediting of renewable energy among states; additional information released by EPA; EPA's justification of BSER; maintaining reliability by using advanced energy technologies; energy efficiency as an embedded and crucial components of a 21st century electricity system; and demand response as a compliance strategy.

AEE testified at the July 30, 2014, public hearing in Washington, DC, on EPA's draft rule for reducing carbon emissions from electric power plants under Section 111(d) of the Clean Air Act – the “Clean Power Plan.”

In March 2014, AEE submitted design recommendations to EPA for consideration as the Agency works towards the June 2014 release of its proposed regulation.