Technical Support Document

for the Final

Ozone NAAQS Regional Impact Analysis

Potential for Reducing NOx Emissions from EGU Sources on High Energy
Demand Days with Energy Efficiency Measures

EPA Docket number:  EPA-HQ-OAR-2007-0225

March 2008

U.S. Environmental Protection Agency

Office of Air and Radiation

Background

Existing state and regional strategies have resulted in substantial
reductions of ozone and attainment of the NAAQS in most of the U.S. 
However, ozone episodes continue to be a problem in some highly
populated areas of the Eastern United States and are expected to
continue to be a problem despite aggressive regulatory measures to
reduce precursor NOx emissions.  Some of these areas projected to remain
as nonattainment areas with “known future controls” as presented in
Chapter 3 of the Final Ozone NAAQS RIA.

A number of efforts have been undertaken to consider strategies to
address ozone originating from EGUs or peak ozone days.  These include
efforts by OTC as part of their HEDD Initiation efforts in 2006, by MIT
(partially funded by EPA), and work EPA has done both in support of the
OTC HEDD effort and for Ozone NAAQS RIA.

MIT Study

The Center for Energy and Environmental Policy Research at MIT has been
working on approaches to demonstrate potential reductions available in
NOx emissions from power sector. Their recent report titled “Time and
Location Differentiated NOx Control in Competitive Electricity Markets
Using Cap-and-Trade Mechanisms” presents the details of proposed
approaches and the next steps (see Attachment).

The MIT study investigated the possibility of the mismatch between the
relatively uniform incentives to reduce NOx provided by existing
regulatory systems and the highly variant temporal and locational impact
of NOx precursor emissions on ozone formation in any given area.  They
previously have found evidence that NOx emissions are reduced at times
during the summer season when the formation of ozone is unlikely and
when the damages caused by ozone are relatively low.

To demonstrate the potential for reductions in NOx emissions in the
short run, they simulated the magnitude of NOx reductions that can be
achieved at various locations and times as a consequence of redispatch
of generating units taking supply-demand balance constraints and network
congestion into account.  The estimated maximum potential reductions,
which occur at NOx pricess of about 125,000/ton, are about 8 tons (20%)
hourly in peak electricity demand hours and about 10 tons (50%) in
average demand hours. They found that network constraints have little
effect on the magnitude of the reductions in NOx emissions.

They also used two methods to perform the simulations and found that
hourly reductions of between 6 and 10 tons (14%-44%) were possible on
the highest demand days of 2005 in Classic PJM.

Their plans for future work include estimation of potential reductions
from power plants to weather forecasting and atmospheric chemistry
models in order to determine if the simulated NOx reductions are of the
necessary magnitude to reduce the likelihood of ozone episodes.

HEDD Strategy Demonstration -- Ozone NAAQS Proposal RIA

In the Proposed Ozone NAAQS RIA, EPA has demonstrated additional
reductions available in power sector NOx emissions as co-benefits of
energy efficiency measures during the HEDDs.  The Technical Support
Document titled “Energy Efficiency Approach for Reducing NOx Emissions
from EGU Sources (Description and Analysis)” presents description and
analysis of this study (EPA Docket number:  EPA-HQ-OAR-2007-0225, July
2007). 

Increasing energy efficiency reduces energy demand, which would lessen
the demand for high emitting peaking units to operate on high demand
days (particularly if the energy efficiency measures are designed to
target peak end uses such as residential or commercial air conditioning
or commercial lighting).  As part of the OTC HEDD Initiative, the OTC
and EPA conducted analyses to project the effect of increased energy
efficiency on power sector emissions that could, in turn, help improve
air quality on high electricity demand days. 

Given the high number of ozone nonattainment areas in the OTC region,
EPA looked in greater detail at changes in this region.  Within the OTC,
we analyzed a potential energy efficiency strategy that resulted in a
decrease in annual NOx emissions of roughly 4,400 tons (3%), and a
decrease in ozone season NOx emissions of 450 tons (1%).  As expected,
the reduced growth in demand does not lead to overall changes in
nationwide annual emissions in the presence of an emissions cap, but it
does change the temporal distribution of those emissions.  Because the
electricity demand was scaled downwards in this scenario, demand on
HEDDs does not reach the same peak it would under the base case.  The
reduced demand results in fewer tons of NOx emissions on these days.  

At the annual level, the analysis showed little or no change in NOx
emissions, as sources continue to emit at the CAIR cap levels, however,
daily emissions in the OTC are reduced overall, on average 3 tons.  Many
of the peaking days for NOx emissions are the HEDD days during the ozone
season, show a reduction in emissions under the energy efficiency
scenario.  When examining hourly generation in the OTC, the 120 highest
emitting hours of the year (almost all of which are during the ozone
season) show an average of 3 tons (10%) hourly reduction in emissions
under the energy efficiency scenario. On the whole, the significant
reductions in emissions occurring on HEDD days, and during the ozone
season in general, would potentially help some of these counties achieve
attainment status under the proposed new ozone standard.

Ongoing EPA Work

Building on the analysis presented in the Proposed Ozone NAAQS RIA, EPA
is developing an improved modeling platform to demonstrate potential air
quality benefits available through energy efficiency measures.  Other
studies summarized above demonstrated the potential emissions reductions
in NOx from power sector, however, no representative air quality
modeling analysis has been conducted so far to demonstrate the potential
reductions available in ambient 8-hour ozone concentrations.  EPA’s
improved modeling platform is not limited to analyze energy efficiency
scenarios only, it can be used to analyze command-and-control or
time-and-location differentiated cap-and-trade HEDD scenarios as well.  

The new modeling platform incorporates the following improvements:

IPM (Integrated Planning Model) which simulates the power sector
behavior under cap and trade programs now generates hourly emissions (in
contrast to total summer and winter season emissions) at the unit level.

IPM and air quality modeling platform (CMAQ) are being synchronized in
their use of meteorological data and energy demand data.

The emissions processing tool which converts IPM outputs into air
quality modeling inputs is being improved to handle emissions at a much
greater temporal and spatial resolution.  This will allow the new
platform to generate outputs at an appropriate level to detect emission
variations under different HEDD scenarios.

EPA’s demonstration study will utilize the new platform to show
potential air quality benefits available through energy efficiency
measures (as outlined in the Proposed RIA) in the Eastern United States.
 The energy efficiency scenario will be demonstrated building upon the
Policy Scenario presented in the Final ozone NAAQS RIA for 2020.  Our
current plan is to share descriptions and results of this study with the
States and public in general later in 2008.

