EPAs PROPOSED OZONE AND CLEAN POWER PLAN RULE: What should texas do?

EPAs PROPOSED OZONE AND CLEAN POWER PLAN RULE: What should texas do? Cyrus ReedLone Star Chapter of Sierra Club

October 15, 2014

OutlineCurrent rulesWhat are the proposed rulesTimelineWho does it impactState responseOzone Can we get thereClean Power Plan How to ComplyRole of TERP in bothSimple steps legislature can take this session to comply with bothCurrent rulesOzone standardClean Air Act 1990 amendments1997 ozone level set at 0.08 PPM2008 Ozone level lowered to 0.075 PPM, though only recently implementedHouston and Dallas dont meet 2008 standard

Carbon Dioxide RegulationGHG reporting requirementsGHG limits on carsGHG permits required for new facilities emitting 100,000 tons or more per year (tailoring rule)Texas adopts GHG permitting regime in 2013 Proposed rulesOzone StandardEPA has been in a three year process reassessing the 75 PPB standardJust published their Final Policy Assessment and Final Risk and Exposure AssessmentsIn December, expected to publish draft rule with a 60 to 70 PPB standard. possibleMost environmental groups calling for 60 or 65 standardMost industry groups opposedLawsuits expected

Clean Power Plan RuleProposed in June of 2014 to cut carbon dioxide from fossil fuels plants by an average of 30% from 2005 levels to 2030. Each state has different requirements.Public Comment Period extended until December of 2014Final rule expected in June of 2015Implementation plans due in 2016, but actual compliance begins in 2020Lawsuits expectedWho does it impact? Ozone rulePotentially everyoneMultiple Cities from 3 to 7 citiesPower PlantsNew businesses wanting to open in urban areasTransportationOil and gas development, if connection to ozone contributionRefineriesSmaller area sourcesTCEQ and LegislatureTXDOTAir Quality Challenges are Real6

How Are We Doing With Current Ozone Standard? (Some Concerns San Antonio, Austin, Waco, and Corpus Christi)Monday, October 20, 201477State responseTCEQ has consistently opposed a new ozone standardArgues will be impossible to meet a lower standard because of background levels and undermine current voluntary effortsArgues that science does not support lowering standardTCEQ and local COGs will be subject to final rule and need to develop SIPsEPAs Clean Power Plan: who does it impactExisting Fossil Fuel Power Generation From 1250 to 791 Lbs/Mwh by 2030 from our electricity sector

Transmission PlanningRenewable Energy DevelopmentEnergy Efficiency ProgramsBuilding CodesEnergy StorageDSM Demand Response and Onsite SolarCHP Combined Heat and PowerMaybe landfill generators, maybe two biomass facilitiesERCOT, PUC, RRC, SECO and TCEQThere are two paths under EPAs Proposed RuleMass-Based ApproachBased on total carbon dioxide emissions and required reductions for 2020-2029 and for 2030While reductions can begin in 2020, first real mid-point check is in 2025;Will require approximately a 40% reduction in CO2 tons emitted from fossil-fuel plantsEPA -- Technical Document on Mass-Based Approach in DecemberNeed to track any electricity generation to make sure that as carbon is reduced from existing plants, what replaces itTCEQ would be main implementer of mass-based approachClean Air Interstate Rule implemented in 2005 and 2007.10Rate-Based ApproachTexas Rate: 2012 average rate from 1261 lbs per MWh includes renewables853 lbs per MWh Average between 2020-2029 791 lbs per MWh by 2030

GAS EMISSIONS + COAL EMISSIONS/

Lower Carbon Rate by:Making coal plants more efficient (or retiring)Combined Heat and PowerDispatching efficient existing NG plants Renewables growing to 20% by 2030Efficiency growing to 1.0% of sales by 2020 and 1.5% by 2025 or 2030Demand Response, Distributed Generation, Energy Efficient Building Energy Codes, as well as programs like Energy Star and LEEDs Could HELP

11Texas: Were No 1 or With Great Power, Comes Great Responsibility

Texas Emission = Florida + Pennsylvania EmissionsYou may have also heard that EPA is picking on Texas or that Texas is being treated unfairly by the Clean Power Plan.Nothing could be further from the truth.There is a reason that more is expected from Texas power plants. This chart says it all.12Texas: Also No 1 in SO2 + Nox Emissions

Not only is Texas the largest emitter of drought-causing carbon emissions, but Texas power plants are also the largest emitters in any state of sulfur dioxide and nitrogen oxides pollution, the two kinds of pollution that cause particulate matter, haze in our national parks, ozone smog in our cities, and asthma attacks in the Texas communities near the power plants.

The polluters will try to hide this kind of data, show you charts that have incredible amounts of spin and manipulation.But at the end of the day, the data is undisputed = Texas power plants put more carbon, sulfur, and NOx pollution into the air than any other state.Period.13

The majority of Texas power plant carbon emissions come from coal plants.

CO2 Emissions from the Electric Power Sector in Texas (2013). 62% Coal versus 38% Gas

15Ten (10) old and most polluting plants emit 39.8 % of the states power plant carbon emissions.

CO2 Emissions steady in ERCOT slight decline on lbs/MWh Basis because of wind we must do better16

17TEXAS WILL REACH 20% RENEWABLES BY 2020 FORGET 203062 TWhs by 2018Complying with Clean Power PlanWhichever path chosen, Sierra Club believes Texas can reach proposed rate without resource adequacy or major cost issuesefficiency, demand response, renewables, and energy storage can play key roles to get there cost-effectively, grow our economy and lower pollutionThe rule does not require that any particular coal plant retire, only that carbon emissions overall decrease. We do believe that retirements will happen, which will make it easier to meet the goals for whichever path is chosen

State responseTCEQ, PUC and RRC have jointly expressed concern about impact on TexasTCEQ has said it is uncertain it could comply with EPA building block approachERCOT has said it believes it can make system workLegislature has held one hearing but not officially opinedSome individuals legislators are publicly saying refused to implementMany utilities concerned about scale and timingWhat we could do on ozone Begin cleaning up emissions from oil and gas patchFund TERP -- $1 billion sitting in a coffer Fund sufficient monitoringConsider further requirements on larger coal unitsAre oil and gas emissions contributing to high ozone days in Dallas or San Antonio? UNT Study showed greater rate of increase of ozone formation in fracking area than non-fracking area in ozone formation post-2008David Allen study found preliminarily that TCEQ was underreporting VOCs from methane emissions, largely due to leakage from pneumotic devices in DFW areasTCEQs own emissions data suggest compressor engines and drilling rigs are top sources of Nox, while condensate tanks and pnuematic pumps and devices are cause of VOCsStudies by ACOG in San Antonio suggest that amount of emissions will likely rise through 2018, and suggest that these emissions are now contributing to higher ozone levels21Venting and Flaring up 35 billion Cubic Feet of gas in 2013

22Solutions On Clean Air In the Oil patchGreen Completions, Leak DetectionCompressor Station MaintenanceNo-bleed pneumatic controllersTERP fundingVenting and Flaring standardsSpecific TCEQ authority over drilling completion requirementsBetter inspectionRegulatory vs. Incentives

23Status of LIRAP and TERP: Lots Spent but Lots More AvailableCategoryFy 2011Exp 2012Exp 2013FY 2014FY 2015Balance$385$413$556$615$716Revenues$162$167$167$187$187Spending$134$25$109$77.7$77.6TERP Ending Fund$413$556$772$882$992LIRAP Revenue$41$40$39$40Spending$7.3$7.3$7.7$7.7Balance$33$66$98$130Monday, October 20, 201424Complying with clean carbon ruleDont fight begin developing plan that takes advantage of the work we are already doing on building codes, energy efficiency and renewablesAuthorize SECO to begin tracking carbon dioxide reductions TERP can fund studies and reportsAuthorize PUC to adjust rules to increase energy efficiencyContinue REC program but consider converting to carbon dioxide reduction trading program through ERCOTAuthorize TCEQ to consider mass-based trading approach for fossil fuel plant carbon dioxide emissionsContinue to implement advanced energy codes in our building stock and get credit for itFighting the rule will only lead to a similar situation like the GHG permits feds step in, Texas losesEE/RE Programs in Texas Prevented Some 10 Million Tons of Carbon Dioxide in 2012 We Could Get 3X This Amount

26

ConclusionsTexas will need to develop a state response to comply with EPA ozone and carbon dioxide standardsFighting through lawsuits not likely to win given our historyMaking sure we track and get credit for what we are doing very important on efficiency, TERP, renewable energy, energy storage and other solutions being developed in TexasLegislature can take steps in 2015 to help get us there:Authorize TCEQ to take actionFund TERP for a variety of programsMake sure we are tracking our efficiency and renewable programsDont do anything to undermine the progress we have madeTake some regulatory and incentive action on the oil and gas patch