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Implementing EPA’s Clean Power Plan: A Menu of Options May 2015 Implementing EPA’s Clean Power Plan: A Menu of Options May 2015 Implementing EPA’s Clean Power Plan: A Menu of Options Acknowledgements On behalf of the National Association of Clean Air Agencies (NACAA), we are pleased to provide Implementing EPA’s Clean Power Plan: A Menu of Options. Our association developed this document to help state and local air pollution control agencies identify technologies and policies to reduce greenhouse gases from the power sector. We hope that states and localities, as well as other stakeholders, find this document useful as states prepare their compliance strategies to achieve the carbon dioxide emissions targets set by the EPA’s Clean Power Plan. NACAA would like to thank The Regulatory Assistance Project (RAP) for its invaluable assistance in developing this document. We particularly thank Rich Sedano, Ken Colburn, John Shenot, Brenda Hausauer, and Camille Kadoch. In addition, we recognize the contribution of many others, including Riley Allen (RAP), Xavier Baldwin (Burbank Water and Power [retired]), Dave Farnsworth (RAP), Bruce Hedman (Institute for Industrial Productivity), Chris James (RAP), Jim Lazar (RAP), Carl Linvill (RAP), Alice Napoleon (Synapse), Rebecca Schultz (independent contractor), Anna Sommer (Sommer Energy), Jim Staudt (Andover Technology Partners), and Kenji Takahashi (Synapse). We would also like to thank those involved in the production of this document, including Patti Casey, Cathy Donohue, and Tim Newcomb (Newcomb Studios). We are grateful to Stu Clark (Washington) and Larry Greene (Sacramento, California), co-chairs of NACAA’s Global Warming Committee, under whose guidance this document was prepared. Finally, we appreciate the NACAA staff who oversaw this project, including S. William Becker, Executive Director, Karen Mongoven, Senior Staff Associate, and Phil Assmus, Senior Staff Associate. We also recognize the efforts of the NACAA 111(d) Steering Committee for this project, which included directors and staff from state and/or local air pollution control agencies in the following states: Arizona, California, Colorado, Delaware, Massachusetts, Michigan, Minnesota, Nebraska, New Mexico, South Carolina, Tennessee, Washington, and Wisconsin. George (Tad) Aburn Merlyn Hough NACAA Co-President NACAA Co-President Maryland Eugene, Oregon This document is available on the NACAA website at: www.4cleanair.org. ii Implementing EPA’s Clean Power Plan: A Menu of Options Implementing EPA’s Clean Power Plan: A Menu of Options Table of Contents List of Figures .............................................................iii List of Tables ..............................................................vi Acronym List ..............................................................ix Executive Summary .......................................................ES-1 Introduction ...........................................................Intro-1 Chapter 1: Optimize Power Plant Operations ..................................1-1 Chapter 2: Implement Combined Heat and Power in the Electric Sector ............2-1 Chapter 3: Implement Combined Heat and Power in Other Sectors ................3-1 Chapter 4: Improve Coal Quality .............................................4-1 Chapter 5: Optimize Grid Operations .........................................5-1 Chapter 6: Increase Generation from Low-Emission Resources ....................6-1 Chapter 7: Pursue Carbon Capture and Utilization or Sequestration ...............7-1 Chapter 8: Retire Aging Power Plants .........................................8-1 Chapter 9: Switch Fuels at Existing Power Plants ...............................9-1 Chapter 10: Reduce Losses in the Transmission and Distribution System ...........10-1 Chapter 11: Establish Energy Savings Targets for Utilities ........................11-1 Chapter 12: Foster New Markets for Energy Efficiency ...........................12-1 Chapter 13: Pursue Behavioral Efficiency Programs .............................13-1 Chapter 14: Boost Appliance Efficiency Standards ..............................14-1 Chapter 15: Boost Building Energy Codes .....................................15-1 Chapter 16: Increase Clean Energy Procurement Requirements ....................16-1 Chapter 17: Encourage Clean Distributed Generation ...........................17-1 Chapter 18: Revise Transmission Pricing and Access Policies .....................18-1 Chapter 19: Revise Capacity Market Practices and Policies .......................19-1 Chapter 20: Improve Integration of Renewables into the Grid .....................20-1 Chapter 21: Change the Dispatch Order of Power Plants .........................21-1 Chapter 22: Improve Utility Resource Planning Practices ........................22-1 Chapter 23: Improve Demand Response Policies and Programs ...................23-1 Chapter 24: Adopt Market-Based Emissions Reduction Programs. 24-1 Chapter 25: Tax Carbon Dioxide Emissions ....................................25-1 Chapter 26: Consider Emerging Technologies and Other Important Policies .........26-1 iii Implementing EPA’s Clean Power Plan: A Menu of Options List of Figures Figure 1-1 Areas of a Coal-Fired Power Plant That Give Rise to Efficiency Loss . 1-1 Figure 1-2 Age and Capacity of Existing US Power Plants . 1-2 Figure 1-3 Cameo Generating Station, Grand Junction, Colorado, with Parabolic Solar Trough Installation . 1-7 Figure 2-1 Comparison of Separate and Combined Heat and Power Efficiencies and CO2 Emissions . 2-2 Figure 2-2 Existing US CHP Technology by Capacity and Site Number . 2-3 Figure 2-3 Heat Recovery From a Gas Combustion Turbine Using a Heat Recovery Steam Generator . 2-5 Figure 2-4 Annual CHP Capacity Additions . 2-6 Figure 2-5 Existing CHP Capacity by State (2012) . 2-10 Figure 2-6 CHP Can Be a Cost-Effective Source of New Generation Capacity . 2-17 Figure 3-1 Comparison of Separate and Combined Heat and Power Efficiencies and CO2 Emissions . 3-1 Figure 3-2 CHP Technical Potential and Existing Capacity by Sector . 3-4 Figure 3-3 Map of Existing US CHP Facilities Indicating Capacity and Sector . 3-5 Figure 3-4 Treatment of CHP in State Electricity Portfolio Standards . 3-10 Figure 3-5 Comparative Costs of CO2 Reduction Technologies . 3-17 Figure 4-1 Coal Characteristics by Coal Type . 4-7 Figure 5-1 Cost per Unit of Performance for Various Storage and System Flexibility Options . 5-5 Figure 5-2 Three-Phase and Single-Phase Electricity Distribution . 5-7 Figure 5-3 Major North American Electricity Interconnections . 5-8 Figure 6-1 Nuclear Power Plant Licensing and Construction Process . 6-7 Figure 6-2 Leading States for Investments in Renewable Energy . 6-11 Figure 6-3 Lifecycle GHG Emissions of Generating Technologies . 6-14 Figure 6-4 Avoided CO2 Emissions From Wind Energy in 2013 . 6-16 Figure 6-5 Water Use by Fuel and Cooling Technology . 6-17 Figure 6-6 Flexibility of Selected Generating Technologies . 6-18 Figure 6-7 Levelized Costs of Energy for Different Generating Technologies . 6-21 Figure 6-8 Comparison of Wind Power Prices to Wholesale Power Prices . 6-23 Figure 7-1 Pre-Combustion Capture at an IGCC Plant . 7-2 Figure 7-2 Oxy-Combustion Capture at a Pulverized Coal Plant . 7-2 Figure 7-3 Post-Combustion Capture at a Pulverized Coal Plant . 7-3 Figure 7-4 CO2 Phase Diagram . 7-4 Figure 7-5 Trapping Mechanisms Occur on Different Timeframes . 7-5 Figure 7-6 Eight Regions Used in USGS’s Geologic Storage Resource Assessment . 7-6 Figure 7-7 Geologic Storage Resource by Trapping Mechanism and Permeability Class . 7-6 Figure 7-8 Cross-Section of a Sample Storage Formation Showing the Distribution of Pore Volume Between Buoyant and Residual Trapping . 7-7 Figure 7-9 Phases of a Geologic Storage Project . 7-8 Figure 7-10 Many Coal-Fired Power Plants Overlie Potential Storage Formations . 7-12 Figure 7-11 Estimated Water Consumption at New Power Plants With and Without Carbon Capture . 7-15 Figure 7-12 Net Plant Efficiency (High Heating Value) With and Without Capture . 7-15 iv Implementing EPA’s Clean Power Plan: A Menu of Options Figure 8-1 Henry Hub Natural Gas Spot Price, May 2008 to June 2014 ($ per MMBtu) . 8-11 Figure 8-2 US Coal Exports by State . 8-12 Figure 8-3 US Coal Exports . 8-12 Figure 8-4 Average Rail Transport Cost of Coal to the Power Sector by Major Coal Basin . 8-13 Figure 8-5 Annual Retail Electric Sales by Sector (2000–12) . 8-13 Figure 8-6 Lazard’s Estimates of Unsubsidized Levelized Cost of Energy (Dollars per Megawatt-Hour) . 8-14 Figure 8-7 Utility Incentives: Old Coal Plants Have Significant Investment in Rate Base . 8-16 Figure 9-1 Cofiring Configurations Among US Electric Generating Units (2012) . 9-5 Figure 9-2 CO2 Emissions Reductions at RGGI Sources From 2005 to 2009 . 9-5 Figure 9-3 US Fossil Fuel Prices (Real $/MMBTU) . 9-11 Figure 10-1 Simple Diagram of an Electric Transmission and Distribution System . 10-1 Figure 10-2 Average and Marginal Line Losses Increase With Load . 10-6 Figure 10-3 “Layer Cake” of Benefits Associated With Line Loss Reduction . 10-9 Figure 11-1 McKinsey GHG Abatement Curve . 11-2 Figure 11-2 Illustrative Example of Energy Savings Concept . 11-3 Figure 11-3 Common Energy Efficiency Program Types . 11-3 Figure 11-4 States That Have an EERS . 11-9 Figure 11-5 2011 and 2012 Electric Efficiency Savings and Targets by State . 11-9 Figure 11-6 Annual Spending on US Ratepayer-Funded Energy Efficiency Programs . 11-10 Figure 11-7 Projected Spending on Energy Efficiency Programs ($Billion,
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