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Advanced Energy Economy Comments on the Clean Power Plan Proposed Rule: Carbon Pollution Emission Guidelines for Existing Stationary Sources: Existing Electric Utility Generating Units Docket ID No. EPA-HQ-OAR-2013-0602 Submitted to the U.S. Environmental Protection Agency by Advanced Energy Economy November 5, 2014 AEE CPP Comments - Submitted 11/5/14 November 5, 2014 Gina McCarthy Administrator, U.S. Environmental Protection Agency 1200 Pennsylvania Avenue, NW Washington, D.C., 20460 RE: Proposed Rule: Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, Docket ID No. OAR–2013-0602 Administrator McCarthy: Advanced Energy Economy is pleased to submit these comments on EPA’s proposed Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, or Clean Power Plan. AEE is a national organization of businesses making the energy we use secure, clean, and affordable. Thanks to technological advances and innovation, we now have more options for meeting energy needs than ever before in history. We call those new options “advanced energy.” AEE and its state and regional partner organizations, which are active in 23 states across the country, represent more than 1,000 companies and organizations that span the advanced energy industry and its value chains. Technology areas represented include energy efficiency, demand response, natural gas, wind, solar, smart grid, nuclear power, and advanced transportation systems. Used together, these technologies and services will create and maintain a higher-performing energy system—one that is reliable and resilient, diverse, cost-effective, and clean—while also improving the availability and quality of customer-facing services. AEE strongly supports the Clean Power Plan as a vital step toward modernizing the U.S. electric power system for greater efficiency, reliability, and economic opportunity, while achieving the Plan’s goal of reducing carbon emissions. Although our comments identify a number of issues that need to be addressed in order to fully realize the potential contribution of advanced energy technologies, we believe that a few commonsense revisions and additional guidance for states will produce a final rule that achieves its goal with maximum benefit. Sincerely, Malcolm Woolf Senior Vice President, Policy and Government Affairs 2 www.aee.net @aeenet Washington DC San Francisco Boston AEE CPP Comments - Submitted 11/5/14 Table of Contents EXECUTIVE SUMMARY .............................................................................................................. 5 I. Introduction & Background .................................................................................................... 13 A. About Advanced Energy Economy ................................................................................. 13 B. Value and Availability of Advanced Energy Technologies .............................................. 13 II. Overview of AEE’s Perspective on the Clean Power Plan .................................................. 14 A. AEE Supports Historic Action To Modernize Our Electricity System .............................. 14 B. The Proposed Rule Aligns with Principles Adopted by AEE and Its Members ............... 15 C. Targets Set Forth Are Technologically Easy To Meet at Low Cost ................................. 15 D. The Proposal Can Be Improved To Allow States to Maximize the Benefits of Advanced Energy Technologies ...................................................................................................... 18 III. Detailed Comments ............................................................................................................. 18 A. EPA’s Flexible System-Based Approach To the Clean Power Plan Allows for Significant Decarbonization of the Electric Power System at Low Cost ........................................... 19 1. A system-based conception of BSER can appropriately drive significant emission reductions ................................................................................................................... 19 2. The Clean Power Plan’s emission reduction targets reflect an achievable, adequately demonstrated, and cost-effective system of emission reduction ................................ 20 B. EPA Should Strengthen Its BSER Methodology To Better Reflect the Potential of Advanced Energy ............................................................................................................ 28 C. Strengthening Block 3: Renewable Energy ..................................................................... 29 1. EPA should establish its BSER calculations based on an assessment of technically achievable cost-effective renewable generation in a state, rather than on historically enacted state policies ................................................................................................. 30 2. EPA should implement the Alternative RE Approach with significant modification .... 32 3. If the final Clean Power Plan uses the Best Practices Approach, it should modify it to better reflect the capabilities of renewable energy technologies ................................ 40 D. Strengthening Block 4: Energy Efficiency ....................................................................... 42 1. Evaluate potential for energy efficiency outside of utility energy efficiency programs 43 2. Use most recent data regarding state savings rates .................................................. 44 3. Account for cumulative energy savings as a percentage of business as usual sales 45 4. Use more common evaluation of measure lives ......................................................... 45 E. Properly Accounting for Emission Reductions of BSER as a System ............................. 47 3 www.aee.net @aeenet Washington DC San Francisco Boston AEE CPP Comments - Submitted 11/5/14 F. EPA Should Shorten Compliance Periods and Incorporate Ongoing Updates To the Emission Rate Standards ................................................................................................ 48 G. EPA Should Drive New Markets by Crediting Emission Reductions from New Actions Taken Prior To 2020 ....................................................................................................... 49 H. Interstate Issues .............................................................................................................. 51 1. The Clean Power Plan should support multi-state compliance plans, as well as limited multi-state agreements on specific issues .................................................................. 51 2. The Clean Power Plan should clarify the crediting approach for interstate renewable energy and avoid disruption of existing commercial agreements ............................... 53 3. The Clean Power Plan should allow a state to take credit for an in-state energy efficiency measure that causes emission reductions in another state ........................ 55 I. EPA Should Provide Additional Guidance To States on Specific Emission Reduction Options and Issues ......................................................................................................... 56 1. EPA should provide assurance that the emission reduction technologies described in AEE’s Advanced Energy Technologies for Greenhouse Gas Reduction report will be approvable as components of state plans .................................................................. 57 2. Additional guidance is needed on EM&V to facilitate energy efficiency in state compliance plans ........................................................................................................ 58 3. The Clean Power Plan should provide more guidance on approvable emission crediting methodologies, and should make clear that the avoided MWh approach is acceptable .................................................................................................................. 61 4 AEE CPP Comments - Submitted 11/5/14 EXECUTIVE SUMMARY Advanced Energy Economy (AEE) is pleased to submit these comments on EPA’s proposed Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units (“Clean Power Plan” or “Proposed Rule”).1 AEE is a national organization of businesses making the energy we use secure, clean, and affordable. Thanks to technological advances and innovation, we now have more options for meeting our energy needs than ever before in history. We call these options “advanced energy.” AEE and its state and regional partner organizations, which are active in 23 states, represent more than 1,000 companies and organizations that span the advanced energy industry and its value chains. Technology areas represented include energy efficiency, demand response, natural gas, wind, solar, smart grid, nuclear power, and advanced transportation systems. Used together, these technologies and services will create and maintain a higher-performing energy system—one that is reliable and resilient, diverse, cost-effective, and clean—while also empowering customers with new and better energy products and services. AEE strongly supports the Clean Power Plan. The basic framework laid out in the proposal is largely consistent with the three principles AEE adopted to guide development of smart, cost- effective plans for reducing emissions from the power sector: (1) recognizing the value of advanced energy technologies; (2) providing business certainty to encourage investment; and (3) encouraging technology-neutral
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