Indiana Energy ConferenceEPA Clean Power Plan—111(d)

November 13, 2014

Thomas W. Easterly, P.E., BCEE, Commissioner

IN Department of Environmental Management

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IDEM’s MissionProtecting Hoosiers and Our Environment

While Becoming the Most Customer-Friendly Environmental Agency

IDEM’s mission is to implement federal and state regulations to protect human health and the environment while allowing the environmentally sound operations of industrial, agricultural, commercial and government activities vital to a prosperous economy.

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Timeline111(b) - New Sources

• February 26, 2014 – 111(b) for new fossil fuel EGUs published in the Federal Register

• March 6, 2014 – Comment period extended

• May 9, 2014 – Comment period closed• January 2015 - Final rule scheduled

for release

111(d) – Existing Sources• June 2, 2014 – 111(d) for EGUs

released• June 18, 2014 – published in the

Federal Register • December 1, 2014 – comments due to

U.S. EPA• June 1, 2015 – U.S. EPA targeted

promulgation date• June 30, 2016 – state/ regional plans

or requests for extensions due• June 30, 2017 – final due date for

individual state plans• June 30, 2018 – final due date for

regional plans• Year 2020 – States/regions must meet

interim emission goals• Year 2030 – State/regions must meet

final emission goals 3

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Existing Source Proposal—111(d) The proposed goal for Indiana is to reduce our net

emissions from the 2012 level of 1,924 lb CO2/MWh to 1,607 lb CO2/MWh for the period 2020 to 2029 and 1,531 lb CO2/MWh after 2029.

Goal is based upon:

1. Increase coal EGU efficiency by 6%.

2. Increase NGCC utilization from 53% to 70%.

3. Increase renewable energy generation to 7%.

4. Reduce energy demand by 3.2% by 2020 and 11.11% by 2030 through energy efficiency.

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Existing Source Proposal—111(d)

U.S. EPA estimates on a national level that:• Coal production will decrease 25 to 27%, and the

price of coal will decrease by 16 to 18% by 2020.• Natural gas production will increase by 12 to 14%

with a price increase of 9 to 12% by 2020.• Renewable generation capacity will increase by 12

GW, NGCC capacity will increase by 20 to 22 GW.• Coal generation capacity will decrease by 46-49

GW, and oil generation capacity by 16 GW.

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Existing Source Proposal—111(d)

• Annual incremental compliance costs of $5.5 to $7.5 billion in 2020 and $7.3 to $8.8 billion in 2030.

• Job increases of 25,900 to 28,000 in the electricity, coal and natural gas sectors by 2020.

• Job increases of 78,000 for demand-side energy efficiency by 2020.

IDEM is currently evaluating both the feasibility and estimated cost of meeting U.S. EPA’s goals.

Indiana Carbon Dioxide Emission Rates(pounds of CO2 per Megawatt Hour)

2012 Baseline U.S. EPA 2030 Goal

Indiana 2030 Estimate

1,924 1,531 1,615 to 1,683Alternative Goal

1,683

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Impacts on Indiana• This regulation will increase the costs of

energy in the United States—both natural gas and electricity prices expected to rise by 10%--the impact on Hoosiers may be greater due to our current reliance on coal.

• The number of Hoosiers who lose utility services for non-payment is likely to increase.

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Impacts on Indiana• This increased cost of energy will likely

reduce the international competitiveness of Hoosier businesses resulting in a shift of emissions from Indiana to other countries.

• The worldwide greenhouse gas emissions may actually increase when manufacturing moves from Indiana (and the rest of the United States) to other countries.

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Climate Impacts—111(d) ProposalThis rule will have virtually no impact on

modeled global climate change. It is projected to reduce:

• Global CO2 concentrations by 1.5 ppm by 2050. This represents 0.3% of the expected projected average global average CO2 concentrations in 2050.

• Sea level increases by 0.01 inch.10

Climate Impacts—111(d) ProposalThe proposed rule is also projected to reduce:• Global average temperatures by 0.016o F

(0.009o C) based upon U.S. EPA’s climate models. – This projected temperature reduction is based

upon the projected 1.5 ppm reduction in global CO2 concentrations.

– Since 1998, global average CO2 concentrations have increased by 33 ppm or 9%, but global average temperatures have not increased. 11

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State Goals as % Reduction from 2012

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Source: Bloomberg New Energy Finance

Percentage Change in CO2 Emissions from Utilities (2005 – 2012)

Decreasing >15%

Decreasing 0 – 15%

Increasing

No Data

Location of the State Capitals

State Boundaries 14

Reliability Concerns

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Road Blocks to Compliance• Time frames

– Insufficient time to develop State rule.

– Insufficient time for meaningful stakeholder process.

– Insufficient time for legislative action to take place (Blocks 2-4).

• Regulatory authority

– IDEM lacks authority to regulate energy distribution.

– IDEM lacks authority to regulate energy efficiency beyond fence line.

– IDEM lacks authority to set renewable energy standards.

– IDEM lacks ability to enforce, document, and measure energy efficiency measures.

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Road Blocks to Compliance• Infrastructure

– Transmission lines not in place for current wind farm capacity.– Insufficient transmission lines for new wind farms scheduled to

be built.– Questions as to sufficient pipeline capacity for increased natural

gas use.

• Generation capacity– Concerns about generation capacity should there be fuel supply

interruptions with increased reliance on natural gas fuels.– Questions concerning sufficient capacity for “peak demand

days.”– Closures may make Indiana a net importer of electricity.

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Indiana’s Response to the 111(d) Proposal

• The proposed regulation is not consistent with our goal of affordable reliable energy.

• Governor Pence, Attorney General Zoeller and IDEM Commissioner Easterly have taken numerous actions to opposing U.S. EPA’s proposal.

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Indiana’s Response to the 111(d) Proposal

• Indiana is pursuing other options in case the legal and policy challenges do not succeed.– IDEM is preparing possible options for a State

plan to meet the proposed regulations.– IDEM and the IURC are working with other

MISO states as the Midcontinent States Energy and Environmental Regulators (MSEER) to evaluate possible regional plans.

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Midcontinent States Environmental and Energy Regulators

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Questions?

Tom EasterlyCommissioner

Indiana Department of Environmental Management(317) 232-8611

teasterly@idem.IN.gov

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