UCS Approach for Strengthening the

Renewable Targets in EPA’s Clean Power Plan

October 2014 1

Key Takeaways • EPA’s renewable targets are modest

• UCS approach improves on EPA’s methodology by building off demonstrated success of leading states

• UCS approach leads to more renewables and CO2 reductions in every region and nearly every state – ~40% national CO2

reduction below 2005 levels

• Defensible and affordable approach for achieving BSER – Minimal effect on electricity prices & lower natural gas prices

2

Power plants are the largest source of U.S. heat-trapping emissions

• 40% of CO2 emissions

• 32% of total GHG emissions

• A major source of mercury, SO2, NOx, particulates, lead...

Impacts of climate change are here… and likely to worsen

- Improve coal unit heat rate by 6%

NGCC Boiler - Re-dispatch coal to natural gas - Increase average NGCC utilization to 70%

- Achieve average regional renewable growth targets

- Avoid retirement of 6% nuclear fleet - Complete new nuclear in construction

- Annual incremental electricity savings rate of 1.5 percent

Best System of Emission Reduction (BSER) Based on 4 Building Blocks

BASELINE EMISSION RATE = (fossil emissions)baseline

(fossil generation)baseline + (RE + Nuc)baseline

(coal + oil/gas + NGCC + other)baseline

(coal + oil/gas + NGCC + other)baseline + (RE + Nuc)baseline

=

emissions (lbs. CO2)

generation (MWh)

2030 STATE GOAL = re-dispatched fossil CO2 emissions

baseline fossil generation + clean energy goal + EE goal

emissions (lbs. CO2)

generation (MWh)

Adjusted Output-Weighted Average CO2 Emission Rates in Lbs CO2/MWh

EPA Proposed Approach Regional Renewables RPS Target

21%

15%

20% 10%

25%

16%

7 7

EPA’s National Renewables Targets Are Modest

9% 10%

7%

12%

8%

12%

0%

2%

4%

6%

8%

10%

12%

14%

2020 2030

% o

f E

lect

rici

ty S

ale

s

EIA Business as Usual

EPA Proposed Approach

EPA Alternative Approach*

8 *excluding existing hydro

2030 targets in 7 states below 2013 generation levels

2030 targets in 17 states below requirements under existing RES laws

Renewable electricity standard

EPA target below RES requirement

Demonstrated Renewables Growth Approach

• Calculated national benchmark renewables growth rate of 1% of electricity sales/year from 2009-2013

• States below benchmark ramp-up to 1% by 2020

• States at or above benchmark grow at their 5-year average growth rate up to a maximum rate 1.5%

• In each year, states achieve greater of growth rate approach or required RPS target

• Renewables capped at 40% of electricity sales per state

• Added 2013 renewable generation from EIA, distributed PV, and wind & utility solar under construction from 2014-2016

11

UCS vs. EPA National Renewables Targets

9% 10%

7%

12%

14%

23%

0%

5%

10%

15%

20%

25%

2020 2030

% o

f E

lect

rici

ty S

ale

s

EIA Business as Usual

EPA Proposed Approach

UCS Demonstrated Growth Approach

12 *excluding existing hydro

UCS Approach Leads to More Renewables in Every Region (renewable % of electricity sales in 2030)

16% 14%

31%

EPA Proposed Approach

UCS Demonstrated Growth Approach

17% 27%

7% 14%

14% 20%

9%

24% 16%

24%

13

UCS Approach Requires Only Small Fraction of Renewable Resources Available in Each Region

0.2%

0.2%

0.2% 0.5%

2.2%

1.6%

Regional Targets from UCS Demonstrated Growth Approach in 2030 as % of RE Technical Potential

0

2

4

6

8

10

12

Average Consumer Electricity Price (2013c/kWh)

ReEDS Business as Usual UCS Demonstrated Growth Approach

maximum 0.3% increase in 2026

UCS Renewable Energy Targets are Affordable

0

1

2

3

4

5

6

7

Average Power Sector Natural Gas Price (2013$/million BTU)

9% reduction by 2030

0

500

1,000

1,500

2,000

2,500

2016 2018 2020 2022 2024 2026 2028 2030

Po

we

r Se

cto

r C

O2 E

mis

sio

ns

(m

illio

n m

etr

ic t

on

s)

2005 Emissions

EPA Modeling of CPP (30% below 2005 levels)

Additional Reductions, UCS Demonstrated Growth Approach

More Renewables Deliver Greater Carbon Reductions

0

500

1,000

1,500

2,000

2,500

2016 2018 2020 2022 2024 2026 2028 2030

Po

we

r Se

cto

r C

O2 E

mis

sio

ns

(mill

ion

me

tric

to

ns)

2005 Emissions

EPA Modeling of CPP (30% below 2005 levels)

Additonal Reductions, UCS Demonstrated Growth Approach

NRC Carbon Budget

Deeper Cuts are Needed to Address Climate Change

0

100

200

300

400

500

600

700

800

900

1,000

EPA Proposed Approach Renewables Generation (GWh)

Solar Thermal Solar PV Landfill Gas Biomass Geothermal Wind

UCS Approach Results in More Wind and Solar PV

0

100

200

300

400

500

600

700

800

900

1,000

UCS Approach Renewables Generation (GWh)

19

UCS 2030 Demonstrated Growth Approach Sensitivity Analysis

22.9%

20.3%

22.3% 21.9% 23.1% 23.3%

25.3%

0%

5%

10%

15%

20%

25%

% o

f E

lect

rici

ty S

ales

UCS Proposed Demonstrated REGrowth Approach

No RES Constraint

1% Growth Rate for All States

RE Generation Capped at 33% ofElectricity Sales

No Maximum Cap on State GrowthRate

No Cap on RE Genereration

No Cap on State Grow Rate or REGeneration

20

Recommendations

• EPA should expand the role of renewables in establishing state emissions rate reduction targets

• EPA should review and strengthen state emissions reduction and renewables targets by 2025

• States and the EPA should implement measures to prevent double counting of renewables

• States should prepare to develop and implement strong compliance plans

21

For More Information

Contact: Megan Rising mrising@ucsusa.org

More Details and Link to Report:

www.ucsusa.org/renewablesandcleanpowerplan

Blogs: http://blog.ucsusa.org/epa-clean-power-plan-we-must-do-better-we-can-do-

better-683 http://blog.ucsusa.org/epa-clean-power-plan-underestimates-power-of-

renewable-energy-to-reduce-carbon-emissions-682

22