WV’s Great Carbon Opportunity: Our Failed Political Class Has Snatched It Away from Us

Behind all the squawking and whining by WV politicians there is Section 111d of the federal Clean Air Act.  Section 111d is the part of the Clean Air act that requires the federal Environmental Protection Agency (EPA) to provide states with performance standards for emissions from existing power plants.  In the last few years, EPA has determined that Section 111d allows the agency to establish guidelines to regulate the emission of dangerous carbon compounds from existing power plants, primarily plants burning fossil fuels.  The US Supreme Court has determined that regulation of carbon emissions “fit well within the Act’s capacious definition of ‘air pollutant'” and can be regulated by EPA under the Clean Air Act.

In a paper published this month “The Case for End-Use Energy Efficiency Programs in the Section 111(d) Rule for Existing Power Plants” by Kate Konschnik and Ari Peskoe, the authors explain how Section 111d will be implemented:

Section 111(b) of the Clean Air Act directs EPA to publish a list of categories of stationary sources that in the Agency’s judgment, “cause[ ], or contribute[ ] significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare.”11 EPA sets standards of performance for new sources in each category.12 Under Section 111(d), EPA issues emission guidelines for existing sources in the same category;13 States then implement performance standards that are “no less stringent than the corresponding emission guideline(s).”

Some have argued that Section 111 requires all emission reduction measures to occur due to action taken at a source.  However, the language of the statute does not support this contention. The heart of the Section 111 program is the standard of performance, defined in Section 111 as:

a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair [sic] quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.

This definition does not limit EPA’s consideration of emission reduction systems to those that are implemented at a source or facility. To the contrary, the breadth of the “best system of emission reduction” and the fact that the Clean Air Act provides no definition for this term implies a broad delegation of authority, providing EPA with flexibility in setting and approving performance standards. The definition’s multi-factor balancing test provides some guidance, while enabling the Agency and the States to craft cost-effective standards that make sense for each source category.

The rest of Section 111 likewise supports EPA’s broad inquiry into “adequately demonstrated” systems. There is no language requiring the performance standard to be achieved at each source. Section 111(b) directs EPA to set standards of performance “for new sources”; Section 111(d) requires states to “establish[ ] standards of performance for any existing source”. These provisions do not constrain the setting of performance standards to systems of emission reduction occurring within the source’s fence line. [I have removed footnotes for this post, but they can be found in the report.  I have also added emphasis.]

Note the passages that I have bolded above.  Section 111 allows states to meet pollution reduction targets by any “best system of emission reduction” using “adequately demonstrated” methods.  Konschnik and Peskoe provide a lot more explanation of the broad scope and flexibility that states have to implement reductions in carbon emissions, but this is the heart of their point about the law’s language and clear purpose: states have the flexibility to meet new emissions targets with a wide range of system wide solutions.

WV politicians, of course, have responded to all regulation of the coal industry, including the coal-fired power plants owned by WV’s two Ohio-based holding companies, AEP and FirstEnergy, with a constant bleating about a “war on coal.”

Last month, the WV DEP, the state agency that will be in charge of developing WV’s Section 111d implementation, published “West Virginia’s Principles to Consider in Establishing Carbon Dioxide Emission Guidelines for Existing Power Plants” laying out the plans of WV’s coal establishment to resist regulation of carbon emissions by EPA.

Here are the five principles laid out in this document:

A. EPA should regulate CO2 emissions from existing electric generating units (EGUs) under provisions for the protection of public welfare because CO2 has not been demonstrated to have any direct adverse impact on public health. The agency should make a formal finding that adverse effects on public health have not been demonstrated as specified in 40 CFR §60.22(d)(1), and acknowledge that the provisions of 40 CFR §60.24(d) apply. This would provide maximum state flexibility in developing state CAA §111 plans.

B. EPA should establish mass-based emission guidelines in terms of reductions from a 2005 base year. The agency is required to consider the different sizes, types and classes of existing units, reflective of the level of emission control achievable through the application of the site-specific Best System of Emission Reduction (BSER) at all designated facilities. The guidelines should reflect the use of practical and cost-effective CO2 control measures achievable within the fence-line.

C. EPA should establish CO2 emission guidelines that allow maximum flexibility by states to meet emission reduction targets. Moreover, the agency must fully consider the wide range of variation among the existing power plant fleet and recognize that states have broad discretion to balance the emission guidelines and compliance times against other factors of public concern in establishing emission standards, compliance schedules and variances. For example, some states may want to credit GHG reductions realized through other policies and any other state mandated programs such as demand-side energy efficiency improvements.

D. EPA should extend the deadline for submission of state plans under CAA §111(d) to three years, so as to parallel the requirements for State Implementation Plans (SIPs) under CAA §110 and provide states adequate time for plan development. CAA §111(d) does not specify any specific time frame for plan submittal, and 40 CFR § 60.27(a) provides that the Administrator may, whenever he deems necessary, extend the period for submission. CAA §111(d) also does not specify any time frames or milestones to achieve any related state emission reductions. EPA must recognize that climate change is a long-term, multi-national problem that requires long-term solutions (measured in multiple decades) and there is no quick fix available. Compliance milestones should be extended accordingly.

E. EPA must allow states to take into consideration, among other factors, the remaining useful life of the existing sources when establishing performance standards, as required by CAA §111(d)(B). [emphasis added]

Later in its document, the DEP describes its approach to using energy efficiency improvements to meet Section 111d requirements:

There are two basic ways to reduce the generation of electricity from existing power plants – supply-side efficiency improvements or demand-side efficiency improvements. Supply-side efficiency improvements include site specific energy efficiency measures that improve heat rate (MMBtu/MW-hr) and therefore, lower CO2 emissions at the plant. Conversely, demand-side electricity reductions are the result of efficiency improvements that result in the use of less electricity by the consumer – industrial, commercial or residential. These demand-side energy efficiency measures can include, among other things, the use of more efficient lighting, air conditioning systems, heating systems, or the installation of insulation, energy efficient windows or doors. Demand-side efficiency improvements may often be outside the control of the source and, therefore, may present limited applicability as control options. [emphasis added]

So DEP, not surprisingly, starts off their “principles” with a toned down version of climate change denial when they assert that climate change has not produced any public health impacts.  The agency maintains a focus on power plants and “inside the fence” measures to comply with Section 111d and whines for delays and special treatment for the plants owned by Ohio’s holding companies.  This is not a plan.

The DEP’s discussion of energy efficiency dismisses demand side efficiency programs by saying they “may represent limited applicability as control options.” Really?  Tell that to PJM Interconnection which manages power plant capacity throughout the region and directly controls power plant capacity in WV.  PJM has a huge and well established system for documenting and controlling demand side resources.  DEP’s claim is so unfounded as to be ludicrous.

As explained above by Konschnik and Peskoe, the DEP’s position is in directly contradiction to the letter of the Clean Air Act which includes all system wide means of reducing emissions.

Why would this be so?  Why would the WV DEP chose to be so wildly off base with its “principles”?

For the simple reason that WV has no existing energy efficiency or renewable power programs that have an “adequately demonstrated” impact on reducing emissions as required by the Clean Air Act.  Neither AEP nor FirstEnergy has energy efficiency programs that come anywhere near the demonstrated effectiveness of programs in states like California and Massachusetts.  WV has no standards for energy efficiency improvements in state statutes.  The WV Legislature only this year passed a flaccid integrated resource planning requirement that specifically exempts FirstEnergy for a number of years.

Instead of bellowing about the “war on coal” WV politicians should have been protecting West Virginians by establishing strong energy efficiency programs in our state.  Instead, the Legislature has welcomed the WV Coal Association to block any new laws that would require a change from WV’s total commitment to coal burning power plants.

The WV PSC has done legislators one better by allowing both AEP and FirstEnergy to shift ownership of three coal-fired power plants (the AEP transfer is still not complete) to their WV regulated subsidiaries, insuring that WV rate payers will bear the full cost of Gov. Tomblin’s and DEP’s failed plan for resisting new Section 111d requirements.

Of course, none of this discussion includes the fact that many states will include offsets and credits to Section 111d implementation based on the demonstrated effectiveness of their solar carve out programs and real renewable energy credit programs.  WV has none of this.  WV’s ARPS coal promotion scheme has, in fact, dug WV’s Section 111d hole deeper by actively suppressing renewable power generating capacity in our state.

So WV lies at the mercy of new federal regulation of carbon emissions because WV politicians of almost all stripes have failed in their job to insure the well being and prosperity of our state.  These politicians have chosen the corporate interests of holding companies and faceless corporate shareholders in Ohio and other states over innovation and businesses in our own state.

If WV politicians had put in place strong energy efficiency programs and incentives for the development of renewable power generation in WV years ago, as in other state, we would now have programs with demonstrated effectiveness that could be used to reduce the cost of complying with the new Section 111d requirements.  But they failed.  And West Virginians will pay the price in rising electric rates and lost jobs.

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