Transcript Mike Nasi [email protected] 512.236.2216 Legal Challenges & Impact of EPA’s “Clean Power Plan” UH Law Center Houston, Texas September 11, 2015

Mike Nasi
[email protected]
512.236.2216
Legal Challenges & Impact of
EPA’s “Clean Power Plan”
UH Law Center
Houston, Texas
September 11, 2015
“EPA is attempting an unconstitutional trifecta:
usurping the prerogatives of the States, Congress
Burning
the Constitution should not
become part of our national
energy policy.”
and the Federal Courts – all at once.
• Congressional Testimony Regarding EPA’s Clean Power Plan - Laurence
Tribe, Harvard Law professor, long-time mentor, counselor and supporter of
President Obama, Testimony against EPA’s Clean Power Plan
2
How the BSER ‘Building Blocks’ Work
(Proposed versus Final) (animated)
Example: Texas Emission Rate (lb CO2/MWh)
1,566 New Baseline
1,292 (too low to begin with due
2012 Texas Baseline
to use of 2012 baseline data)
Block 1
49
Heat rate improvements
Block 2
Re-dispatch of fleet
1
Block 3
More renewables, nuc.
Block 4
Demand-side reduction
124
70
258
-4% from assumed improvements in
efficiency at coal plants of 6%
-20% from increasing CCGT utilization to
70% (from 45% in Texas 2012); shifts
72 million MWh from coal to gas1
-10% from EPA-derived renewable target of
20% + keep “at risk” nuclear capacity
-5% from reducing end-user consumption by
1.5% annually
TX BSER = 237 (fossil steam) & 697 (NGCC)
2030 Texas Target
791 by 2030 (38.4% Reduction)
Default BSER=1,305 (fossil steam) & 771 (NGCC)
MWh of Generation of each
Final Texas Budgeted Rate=1,042 (1,188 by 2022)
Source: IHS CERA: “Digesting EPA’s Proposed Clean Power Plan”; June 10, 2014 Webcast; Final Clean Power Plan, EPA “State at a Glance”
Document, Texas.
(33.5% Reduction off of baseline)3
Texas Budget Computation & Retirements
RATE GOAL – Baseline 1,566 lbs/Net MWh
Plant Name
MASS TARGET – Baseline 240,730,037 (Short tons)
EPA Projected Retirements In 2016 & 2018
Before Compliance Date
Capacity
Rate-Based
State
Base Case*
MW
Compliance
Mass-Based
Compliance
528
0
2016
Welsh
TX
528
0
2016
Welsh
TX
391
2016
2016
San Miguel
TX
339
2030
2016
Harrington
TX
* EPA relies on elevated base-case retirements, based on unrealistic and unproven expectations.
2016
2016
2016
2016
Total retirement of 1786 MW; approximately 893,000 homes.
Sources: Clean Power Plan State Goal Visualizer; retirement data from Clean Power Plan and IMP v.5.15; ERCOT “mild spring day”
4
demand condition estimate of 1 MW per 500 homes.
Comparison of Reductions – Proposal to Final
RATE Application to Baseline Emissions (Tons)
100,000,000
90,000,000
80,000,000
70,000,000
60,000,000
TOTAL TONS THAT MUST BE REDUCED GIVEN BUDGETED RATE
SCALE MATTERS: How much stuff must you build?
How many assets must you strand?
How many customers must pay for it?
How many businesses will leave?
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
Texas
Florida
Pennsylvania
Illinois
Georgia
Ohio
North Carolina
Michigan
Arizona
Indiana
Alabama
Louisiana
South Carolina
Oklahoma
Arkansas
Kentucky
Missouri
Tennessee
New York
Colorado
Wisconsin
West Virginia
California
Minnesota
Virginia
Mississippi
Wyoming
Utah
Kansas
Maryland
Nebraska
Iowa
New Mexico
New Jersey
Nevada
Washington
Massachusetts
Montana
Oregon
North Dakota
New Hampshire
Connecticut
Delaware
South Dakota
Rhode Island
Maine
Idaho
0
Sources: Proposal – eGRID Methodology TSD, Goal Computation TSD; Final – Emission Performance Rate and Goal Computation, Goal
Computation Appendix 1, EPA “State at a Glance” Documents.
5
Comparison of Reductions – Proposal to Final
MASS Application to Baseline Emissions (Tons)
120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
-20,000,000
Texas
Florida
Pennsylvania
Louisiana
Alabama
Oklahoma
Arkansas
Illinois
Georgia
New York
Arizona
Mississippi
Wyoming
Indiana
Minnesota
Wisconsin
South Carolina
Michigan
North Carolina
Iowa
Virginia
Colorado
Tennessee
New Jersey
Massachusetts
Nevada
Utah
Washington
Oregon
New Hampshire
Maryland
Maine
Connecticut
Ohio
Delaware
New Mexico
Idaho
South Dakota
West Virginia
North Dakota
Rhode Island
Montana
Nebraska
Kentucky
Kansas
California
Missouri
0
Sources: Proposal – eGRID Methodology TSD, Bloomberg, New Energy Finance Analysis of CPP Proposal (for mass conversion);
Final – Emission Performance Rate and Goal Computation, Goal Computation Appendix 1, EPA “State at a Glance” Documents.
6
States’ Proportion of Total CO2 Reductions
Rate Application to Baseline Emissions (Tons)
Remaining states have
reductions in CO2 less than
2% of total U.S. emissions.
West Virginia - 1,620 lbs/MWh
2.05%
Wisconsin - 1,203 lbs/MWh
Kansas - 1,293 lbs/MWh
2.10%
2.01%
Colorado
1,108
lbs/MWh
Iowa - 1,283
lbs/MWh
2.19%
2.10%
Texas
lbs/MWh
Texas--1,042
791 lbs/MWh
10.67%
13.58%
PROPOSAL
FINAL
Illinois - 1,245 lbs/MWh
5.55%
Florida - 704 lbs/MWh
6.64%
Indiana - 1,242 lbs/MWh
5.48%
Pennsylvania - 1,052 lbs/MWh
Pennsylvania5.23%
- 1,095 lbs/MWh
5.39%
New York--1,211
549 lbs/MWh
Tennessee
lbs/MWh
Illinois - 1,271 lbs/MWh
2.26%
2.18%
4.59%
Tennessee - 1,163 lbs/MWh
Ohio - 1,190 lbs/MWh
Oklahoma - 1,068 lbs/MWh
2.35%
5.06%
2.22%
Missouri - 1,544 lbs/MWh
Colorado - 1,174 lbs/MWh
Georgia - 834 lbs/MWh
2.39%
2.24%
4.13%
Kentucky - 1,763 lbs/MWh
Wisconsin - 1,176 lbs/MWh
Kentucky
1,286
lbs/MWh
2.43%
2.30%
4.92%
Arkansas - 910 lbs/MWh
Ohio - 1,338 lbs/MWh
N. Carolina
- 1,136 lbs/MWh
2.54%
4.09%
2.81%
Oklahoma - 895 lbs/MWh
Florida
919
lbs/MWh
Georgia - 1,049 lbs/MWh
North Carolina - 992 lbs/MWh
2.69%
4.13%
2.87%
3.51%
SouthWyoming
Carolina -- 1,299
772 lbs/MWh
lbs/MWh
Missouri - 1,272 lbs/MWh
2.77%
2.93%
Michigan
- 1,161 lbs/MWh
3.79%
Louisiana - 883 lbs/MWh
Alabama - 1,018 lbs/MWh W. Virginia
- 1,305
lbs/MWh
Indiana
1,531
lbs/MWh
3.18%
Michigan
- 1,169
lbs/MWh
2.78% Alabama - 1,059 lbs/MWh
Arizona
- 702
lbs/MWh
3.30%
3.52%
2.97%
3.64%
3.02%
2.89%
Does not include Alaska, Hawaii, and Vermont since no final standard in rule. Sources: Final - Emission Performance Rate and Goal
Computation, Goal Computation Appendix 1, EPA “State at a Glance” Documents; Proposal - EPA Data File - 2012 Unit-Level Data
Using the eGRID Methodology.
7
Kentucky
Wyoming
West Virginia
North Dakota
Indiana
Utah
Missouri
Nebraska
Colorado
Kansas
Ohio
New Mexico
Hawaii
Iowa
Michigan
Wisconsin
Oklahoma
Montana
Minnesota
Arkansas
Florida
Maryland
National Average
Georgia
Alaska
Texas (#25)
Delaware
Tennessee
North Carolina
Louisiana
Alabama
Pennsylvania
Mississippi
Illinois
Massachusetts
South Carolina
Rhode Island
Nevada
Maine
Virginia
Arizona
New Hampshire
California
New York
South Dakota
New Jersey
Connecticut
Idaho
Oregon
Washington
Vermont
Comparison of Raw State CO2 Emission Rates
(lbs/MWh)
2500.0
2000.0
2051.5
1500.0
1158.9 1138.0
1000.0
500.0
167.0
0.0
Source: EPA Data File - 2012 Unit-Level Data Using the eGRID Methodology; Includes Vermont, which is not subject to Existing-Source
GHG Rule.
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Projected Nationwide Incremental Increase
in Renewable Generation
900,000,000
Onshore Wind
Actual Onshore Wind Growth
1,000,000,000
2012 Boom/2013 Cliff (MW Installed)
Solar
Geothermal
14,000
12,000
800,000,000
Megawatt-Hours of Dispatch
8,000
700,000,000
Concentrating Solar Power
92%
Drop
10,000
Hydropower
6,000
Historic Maximum
Growth “Franken-Fleet”
4,000
600,000,000
2,000
0
2010
500,000,000
2011
2012
2013
2014
Average Historic
Growth
EPA assumes the construction of 104,317 MW of wind capacity
from 2022-30. This equals 45,000 2.3-MW turbines and over
5.2 million acres; greater than the combined land area of Rhode
Island, Delaware, and Connecticut (beyond the 82,000+MW
expected to be installed as of 2021 – another 4.1 million acres).
400,000,000
300,000,000
200,000,000
100,000,000
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Sources: EPA, Greenhouse Gas Mitigation Measures TSD (Final Rule); EPA, GHG Abatement Measures TSD (Rule Proposal). Assumes: 2012 baseline
capacity is apportioned, by technology, at EPA’s modeled historic distribution; average acre/MW (5 MW/KM2) from NREL, U.S. Renewable Energy Technical
Potentials: A GIS-Based Analysis, July 2012; state areas from U.S. Census, Geography, State Area Measurements; 2012 Projected Installed Wind Capacity
from U.S. EIA, Annual Energy Outlook 2015, Table 58.
9
PUTTING EPA’S ASSUMED WIND & SOLAR BUILD
IN PERSPECTIVE (2013-2030 U.S. Build v. Current World)
700
CPP ASSUMES THAT U.S. WILL BUILD
& DISPATCH 6 X MORE WIND &
SOLAR MWh BEFORE 2030 THAN
ANY NATION’S CURRENT
WIND/SOLAR FLEET DISPATCHES
600
Million MWh
500
400
TEXAS ALONE IS ASSUMED TO ADD
AS MUCH WIND & SOLAR AS ANY
OTHER NATION HAS NOW
300
200
100
0
CPP
United
States
World
United
States
China
CPP Germany Spain
ERCOT
Italy
India
United France
Kingdom
Japan
Canada
Applies EPA’s incremental growth targets under the final CPP and assumes EPA’s modeled historic distribution of
generation from 2013 through 2021. Sources: EPA Greenhouse Gas Mitigation Measures TSD; EIA, International Energy
10
Statistics, Renewables, 2012.
ERCOT Capacity Factor for Non-Coastal Wind at Peak: 12%
EPA Wind Fleet-Wide Assumed Capacity Factor: 41.8%
11
Peak ERCOT Demand & Wind Over Peak
(Case Study – First Week of August 2015)
ERCOT 2015 installed wind capacity is 13,060 MW.
80,000
70,000
66,234
65,690
61,871
68,693
66,602
69,783*
69,625
66,352
Wind Over Peak: 1,066 MW
60,903
68,459* 68,912*
60,000
MW
50,000
40,000
30,000
20,000
10,000
0
1-Aug
2-Aug
3-Aug
4-Aug
Wind At Peak
5-Aug
6-Aug
7-Aug
Idle Installed Wind
8-Aug
9-Aug
10-Aug
11-Aug
Remaining Generation
*New Peak Records: Aug. 5 – 68,459 (Wind Over Peak 2,501); August 6 – 68,912 (Wind Over Peak 3,418);
August 10 – 69,783 (Wind Over Peak 2,242).
Sources: ERCOT, Daily Wind Integration Reports; ERCOT, Item 4.1: CEO Update.
12
Projected Incremental Increases in ERCOT:
Dealing with Wind Performance at Peak
Add. Wind if 12% Cap. Factor
Add. Wind if 34% Cap. Factor
Onshore Wind (41.8% EPA Cap. Factor)
Solar
Geothermal
Concentrating Solar Power
Hydropower
TOTAL U.S. Onshore Wind Growth
80,000
2012 Boom/2013 Cliff (MW Install.)
14,000
70,000
12,000
92%
Drop
Megawatts Installed Capacity
10,000
60,000
8,000
6,000
50,000
4,000
2,000
40,000
~46,000 MW gap needing to be
filled to cover discrepancy between
capacity factors – 12% cap. factor
0
2010
2011
2012
2013
2014
30,000
20,000
~4,200 MW gap needing to be
filled to cover discrepancy between
capacity factors – 34% cap. factor
10,000
0
2022
2023
2024
2025
2026
2027
2028
2029
2030
ERCOT Peak Average Capacity Contribution for Non-Coastal Wind is 12%; Peak Average Capacity Contribution for Coastal Wind is
56%. Demonstrated 34% capacity factor is based on average of coastal and non-coastal capacity factors. Sources: EPA,
Greenhouse Gas Mitigation Measures TSD; ERCOT Capacity, Demand, and Reserves Report, May 4, 2015.
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Climate Benefits of Clean Power Plan
U.S. PAIN – 2012 to 2020:
• EPA projected retirements of 121,000 MW of capacity
by 2020.
• Total spending on electricity increases from $364 to
$541 billion per year, a $177 billion (49%) increase.
• Total spending on gas increases from $107 to $214
billion per year, a $107 billion (100%) increase.
• Residential electric bills increase by 27%.
• Residential gas bills increase by 50%.
TEXAS PAIN – 2012 to 2020:
• EPA projected retirements of 16,283 MW of capacity by
2020.
• Total spending on electricity increases from $31.4 to
$60.8 billion per year, a $29.4 billion (93%) increase.
• Total spending on gas increases from $7.9 to $20.9
billion per year, a $13.1 billion (166%) increase.
• Residential electric bills increase by 48%.
• Residential gas bills increase by 75%.
Reduction from Rule Based on EPA
Methodology – 0.01° F
IPCC Projected Increase in Global Avg. Temp. –
Up to 3.6° F
60°
Current Global Avg. Temp. – 58.24° F
Modeled CO2 Reduction
0.98 ppm
50°
40°
30°
20°
10°
0°
WORLD GAIN:
• 0.2% reduction in CO2 concentration (see pie chart).

• Global temperature increase reduced by 0.01 F.
• Sea level rise reduced by less than 1/100th of an inch
(less than the thickness of 2 sheets of paper or 1 or 2
human hairs.
• In 2025, total annual US reductions will be offset by
approximately 3 weeks of Chinese emissions.
Remaining CO2 Concentration
499.02 ppm
* “Pain” statistics are based on the proposal’s 30%
nationwide reduction. The final rule requires a 32%
nationwide reduction. Additional studies forthcoming.
GLOBAL CO2
CONCENTRATION
14
Climate Benefits of Clean Power Plan
-SOURCES“PAIN” SOURCES:
• EPA, IPM, Proposed Clean Power Plan, Base Case.
• EPA, IPM, Proposed Clean Power Plan, Option 1.
• Energy Ventures Analysis, Energy Market Impacts of Recent Federal Regulations on the Electric Power Sector,
November 2014. The study incorporates environmental policies that were enacted as of August 2013; the same
assumption made by EPA. Projected cost increases do not include other non-power market forces on the price
of gas, such as increases in exports, transportation use, or industrial use.
“GAIN” SOURCES:
• U.S. EPA, Regulatory Impact Analysis: Final Rulemaking for 2017-2025 Light-Duty Vehicle Greenhouse Gas
Emission Standards and Corporate Average Fuel Economy Standards, August 2012. Provides basis of EPA’s
assessments of climate impacts of CO2 reductions.
• EPA Analysis of the Clean Power Plan, IPM Run Files, EPA Base Case for the Clean Power Plan, Base Case State
Emissions spreadsheet; Rate-Based, Rate-Based State Emissions spreadsheet; and Mass-Based, Mass-Based
State Emissions spreadsheet.
• National Oceanic and Atmospheric Administration, Earth System Research Laboratory, “Recent Monthly
Average Mauna Loa CO2.”
• IPCC, Climate Change 2013: The Physical Science Basis: Contribution of Working Group I to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change, Chapters 1 & 12. Intergovernmental Panel on
Climate Change (IPCC) projected concentrations of CO2 in 2050 from 450 to 600 ppm.
• Statement of Karen Harbert, U.S. Chamber of Commerce, U.S. House of Representatives Comm. on Science,
Space, & Technology, April 15, 2015.
• National Centers for Environmental Information, NOAA, Global Analysis – Annual 2014.
15
Path Forward
(and projected timing)
•
•
•
•
•
•
•
•
•
•
•
•
October/November 2015 - Federal Register (FR) Publication
FR + 1-30 days – Motions to Stay filed
FR + 30 days – Petitions for review of rule due
FR + 90 days – Comments due on Proposed Federal Plan
Fall/Winter 2015/16 - Potential ruling on Motions to Stay
Summer 2016 - Finalization of model trading rules
September 6, 2016 –State “Plans” Due (FIP risk after this)
Summer/Fall 2016 – Earliest DC Circuit Crt. Of App. decision
Summer/Fall 2017 – Earliest SCOTUS ruling on appeal
September 6, 2018 – Final State Plans Due
2022-2029 – Interim compliance stair-steps (interim rates)
2030 – Final budgeted rates must be met
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EPA Statement About
New Gas Power
“Emission
reductions achieved through
the use of new NGCC capacity require
the construction of additional CO2emitting generating capacity, a
consequence that is inconsistent
with the long-term need to continue
reducing CO2 emissions beyond the
reductions that will be achieved
through this rule.”
17
Mike Nasi
[email protected]
512.236.2216
Questions?