Kentucky Submits Clean Air Act Section 111(d) White Paper to EPA Outlining Proposed Compliance Framework for Greenhouse Gas Emissions from Existing Power Plants
On October 22, 2013, Energy and Environment Cabinet Secretary Len Peters submitted a white paper entitled “Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act” to EPA Administrator Gina McCarthy. The purpose of the document was to identify a proposed framework for Kentucky’s compliance with the upcoming proposed regulation of CO2 emissions from existing power plants under the Clean Air Act.
Kentucky evaluated both an emission rate standard and a mass-emission standard for its proposed framework. An emissions rate standard is one where the emission level is established in relationship to raw material input or production output (i.e., allowable CO2 emissions per unit of electricity generation output). In contrast, a mass-emission standard establishes a quantity or mass of pollutant to be reduced from a baseline level (i.e., percent reduction of the mass (in tons) of pollutant (CO2)).
Kentucky found that an emissions rate standard would negatively impact the Commonwealth’s economy and would not achieve the level of emissions reductions that could occur through the mass-emission reduction strategy. The Secretary stated that an emission rate standard would force Kentucky’s utilities to retire their coal units (which currently provide more than 90 percent of Kentucky’s electricity) and build new natural gas fired generation. Kentucky would simply go from being primarily dependent on coal to being primarily dependent on natural gas, another fossil energy source. The cost for rate payers would be high, renewal and efficiency opportunities would not achieve their full potential and the amount of greenhouse gas emissions reductions achieved in the aggregate would be less than specified by President Obama’s goals.
In contrast, the Secretary determined that a mass-emission standard would provide Kentucky with the flexibility under Section 111(d) guidelines that encourage CO2 reductions from multiple pathways, achieves sustained greenhouse gas reductions, and encourages economic growth until the commercial availability of carbon capture and sequestration (CCS) technology has been demonstrated as feasible and cost-effective on a large scale for the power sector.
Kentucky identified the following objectives for the proposed framework:
- Utilize mass-emission reductions from the fossil fueled electricity generating sector as the primary mechanism for addressing greenhouse gases;
- Ensure that the fossil fuel fueled electricity generating sector has the time and resources necessary to transition to a cleaner fleet when necessary and appropriate;
- Provide that the fossil fueled electricity generating sector has the flexibility to choose the least-cost method of achieving reductions; and
- Encourage diversity for Kentucky’s electricity generation fleet.
To meet these objectives, the Secretary proposed the following framework. First, Kentucky would establish a statewide baseline CO2 level using the CO2 emission from fossil fuel-fired electric generating units from 2005. Next, Kentucky would establish the baseline CO2 reduction targets for 2020 (17% reduction), 2025 (28% reduction), and 2030 (38% reduction). After 2020, state specific data, as well as energy portfolio trends, would be used to set additional reductions. The 2050 target is the 80% reduction goal proposed by President Obama. Kentucky would obtain credit for CO2 reductions that have occurred from the baseline established in 2005, thereby allowing it to comply with baseline reduction targets established after 2020.
Second, Kentucky would allow a suite of compliance options that the Secretary asserts would enable the implementation of the least-cost method of meeting reduction targets. These compliance options include, but are not limited to: demand side energy efficiency, supply side conservation or efficiency programs, transmission upgrades, renewable and other low carbon energy projects at the affected source or at the consumer level, CCS technology, fuel switching to lower emitting fuels, quantifiable and verifiable offsets, and participation in regional or national market based CO2 credit trading programs.
Finally, the Secretary would establish an enforcement and monitoring mechanism whereby Kentucky would be responsible for review, verification of emission estimates and reductions, and approval of the compliance options. The state would be responsible for tracking statewide trends and projects.
To view a complete PDF of the September/October 2013 issue of the Environmental Letter, click HERE.