NOTE

DATE:  March 5, 2012

TO:  Docket EPA-HQ-OAR-2011-0660

FROM:  Mary Johnson

SUBJECT:  Summary of June 17, 2011 Meeting with Small Entities

Standards of Performance for GHG Emissions for New Stationary Sources:
EGUs:  Proposed Rule

The EPA’s outreach to small entities regarded planned actions for new
and existing sources, but only new sources would be affected by the
currently proposed action.  At that time, the EPA believed it likely
that proposed regulations for greenhouse gas (GHG) emissions from
electric utility generating units (EGUs) (new sources as well as
existing sources) would not result in a significant economic impact on a
substantial number of small entities (SISNOSE).  However, because the
EPA believes that outreach to small entities is an important element in
the development of these regulations, the EPA requested that a Small
Business Advocacy Review (SBAR) Panel be convened to allow that outreach
to occur.

It has since been determined that new source performance standards
(NSPS) for emissions of carbon dioxide (CO2) for new affected
fossil-fuel-fired EGUs will be proposed at this time.  At a future date,
the EPA intends to promulgate emission guidelines for states to develop
plans reducing CO2 emissions from existing fossil-fuel-fired EGUs.

Summary of June 17, 2011 Meeting with Small Entities

The EPA conducted outreach with representatives from 20 various small
entities that potentially would be affected by GHG regulations rule. 
The representatives included small entity municipalities, cooperatives,
and private investors.  The EPA distributed outreach materials to the
small entity representatives; these materials included background, an
overview of affected sources and GHG emissions from the power sector, an
overview of CAA section 111, an assessment of CO2 emissions control
technologies, potential impacts on small entities, a summary of the
listening sessions held with various stakeholders, applicable small
entity definitions, and small entities potentially subject to
regulation.

The SBAR Panel (EPA, OMB, SBA) met with eight of the small entity
representatives, as well as three participants from organizations
representing power producers (participating as viewers/technical
backup), on June 17, 2011.  The goal of the meeting was to familiarize
the small entity representatives with the background on the rulemaking
itself, as well as the Panel process, and their role as a small entity
representative (SER) in the Panel process.  When conducted, this meeting
with small entity representatives was referred to as the first SBAR
Panel Outreach Meeting.  A list of meeting participants is attached to
this note.  Copies of four documents used during the meeting are
included as attachments to the docket entry Agenda and Materials for
first Outreach Meeting_06-17-2011_email and include:

Agenda for the 6-17-11 Meeting)  

Presentation by the Small Business Advocacy Chair

Presentation on the Rulemaking

Document outlining the regulatory options that EPA heard at the GHG NSPS
listening sessions	

The meeting began with the EPA’s Small Business Advocacy Review Chair
presenting an overview of the SBAR Panel process; this included a
presentation that explained what a SBAR Panel is, how the Panel fits
into the rulemaking process, how SERs participate in the Panel process,
and what the Panel does with SER recommendations.  The EPA’s Office of
Air Quality Planning and Standards (OAQPS) went through its presentation
on the rulemaking and then directed the SERs’ focus to the list of
questions the EPA prepared for SERs (actual questions shown below).  The
purpose of these questions was for the EPA to collect the SERs’ advice
and recommendations regarding the rulemaking to be proposed and its
potential impact on small entities.  Main topics for which the EPA
solicited input included appropriate CO2 control levels, mechanisms for
achieving CO2 emissions reductions, and State equivalency with the
emission guidelines.  The SERs were encouraged to provide comment on the
specific questions as well as on regulatory alternatives that could
minimize the impact on small entities while still meeting the statutory
objectives of the CAA.

In addition, OMB and SBA solicited the SERs’ views on the use of
alternative applicability thresholds, alternative ways to address
modified sources, how the EPA should choose between the various
regulatory alternatives, whether the EPA should establish a
cost-effectiveness benchmark for energy efficiency or other
technological improvements at each unit, whether the EPA should
establish a system of CO2-equivalent credits and trading among EGUs or
among a broader set of industries and/or sources, and whether the EPA
should adopt BACT guidance as BDT for new and existing sources and rely
on case-by-case evaluation of facilities for cost-effective improvements
(actual questions shown below).

EPA’s questions for SERs:

Applicability 

Is EPA’s description of applicability of these standards on slides
29-31 appropriate?

Should applicability include stationary combustion turbines (combined
cycle gas turbines and simple cycle gas turbines)?

Current Practices 

Do you employ measures to ensure that your EGU operates in an energy
efficient manner?

What are the energy efficient measures you employ?

Are these measures a result of regulatory requirements, initiated
voluntarily, or employed for other reasons?

What are the estimated emissions reductions associated with the energy
efficient measures?

What are the costs of implementing the energy efficient measures?

 Appropriate Control Levels for New Sources 

Should new source standards be based on fuel and technology specific
efficiency standards based on the best performing coal units being
permitted/ built (e.g., IGCC and/or ultra-supercritical coal)?

Alternatively, should tighter standards that require new coal units to
go beyond technologies such as IGCC and ultra-supercritical coal and be
designed/built to perform at lower CO2/MWh levels be considered?

Given the existence of generation alternatives such as natural gas
combined cycle and renewables, tighter standards could be based on the
use of technologies such as co-firing of lower carbon fuels, integration
of renewables or the use of some level of CCS. 

Should new source standards include emission rate averaging?

Should the new source standards be fuel neutral (i.e., standards would
not be fuel or technology specific but instead would be based on use of
lower GHG fuels such as natural gas)?

 Should EPA consider a phased approach where a fuel and technology
specific standard based on existing technologies would apply initially
and, after several years, a tighter standard would apply?

Are there other options that should be considered?

Appropriate Control Levels for Modified Sources 

Will compliance with other regulations impacting the power sector cause
EGUs to become modified sources subject to the GHG standards?

How should modified sources be addressed in the GHG standards?

Should modified source standards be based on efficiency improvements?

Alternatively, given that the modifications are likely to involve more
significant changes to the boiler and/or turbine, is it appropriate to
consider other options such as fuel switching or co-firing with lower
carbon fuels?

Are there other options that should be considered (e.g. different
applicability thresholds)?

 Appropriate Control Levels for Existing Sources 

Should existing source guidelines be based on efficiency improvements?

What is an appropriate heat rate reduction to require for existing EGUs?

Should replacement of older generation be part of the guidelines?

Should there be a linkage between remaining useful life and tightened
standards?

Should  guidelines be based on a system wide generation performance
standard that would decrease as there was fleet turnover?

Should EPA consider a phased approach where a fuel and technology
specific efficiency standard based on existing technologies would apply
initially and, after several years, a tighter standard would apply?

Should other options such as fuel switching or co-firing with lower
carbon fuels be considered?

Should States incorporate considerations of fleet turnover when
considering potential GHG reductions?

Are there other options that should be considered?

Mechanisms to Get Emissions Reductions 

Do output based standards (e.g. lbs/MWh) make sense? ? 

Does a net output based standard make sense for new facilities? 

Should emission averaging be allowed?

Traditionally new source standards have been set at the individual unit
level.

If EPA considers alternatives, should different approaches for new,
modified and existing sources be considered?

Should all generating sources (e.g., renewables, nuclear) be included?

Over what universe of sources should emissions averaging be considered?

Within a facility

Within a State

Within a company within a State

Within a company across State lines

Across state lines

Should other alternatives be considered?

Should EPA develop a model rule that States can follow or just develop
general guidelines?

 How should useful thermal output from CHP be credited?

State Equivalency With the Emission Guidelines 

Should EPA set a more prescriptive set of requirements or a more general
set of principals?

Are there certain types of programs that should (or should not) be
allowed?

Programs that allow crediting of reductions from, or averaging with,
non-affected sources (e.g., generation performance standards or
California’s AB-32 program)

Programs that allow crediting of reductions from, or averaging with,
sources in other States (e.g., the RGGI program)

Are there other important factors for EPA to address as it sets forth
criteria for demonstrating equivalency?

 Compliance, Monitoring, Recordkeeping & Reporting 

Should fewer requirements be placed on low mass emission units?

If so, what should those requirements be?

Are there compliance and monitoring alternatives that would simplify the
requirements?

Are there recordkeeping and reporting alternatives that would simplify
the requirements?

How should useful thermal output from CHP facilities be monitored?

Issues that may Impact Control Options

What types of subcategories based on class, type, or size do you think
EPA should consider and why?

What type of size cut-off, if any, do you think EPA should consider and
why?

Are there other regulatory options or small entity flexibilities that
EPA should consider?

Additional topics that OMB and SBA were interested in SERs’ views on:

The use of alternative applicability thresholds (e.g. 50 MWs instead of
25 MWs)

Alternative ways to address modified sources

How should EPA choose between the regulatory alternatives offered?

What factors should EPA consider?

What emissions benefits should be included in EPA’s consideration -
just GHGs or all pollutants that would be reduced by either reducing
fuel utilization or the decommissioning of facilities?

Should EPA establish an economy-wide emissions goal, an energy-intensity
goal, or a cost-effectiveness goal for GHG emissions reductions?

Should EPA establish a cost-effectiveness benchmark for energy
efficiency or other technological improvements at each unit?

For example, if the social cost of carbon is currently approximately
$20/ton (understanding that under current guidance this would grow over
time), should EPA only require improvements at any particular unit that
cost less than $20/ton CO2 equivalent (CO2e)?

Should the cost of improvements be based on case-by-case engineering
evaluations or economy-wide projections?

Should EPA establish a cost-effectiveness benchmark for energy
efficiency or other technological improvements for the economy as a
whole?

If not $20/ton or the social cost of carbon, what other monetary
benchmark could be used?

Should EPA establish a system of CO2e credits and trading among EGUs?
Among a broader set of industries and/or sources? 

What should credits represent - allowances or emission reductions?

If allowances, how should the supply of allowances be set? Be allocated?

If emissions reductions, how should EPA establish emissions benchmarks?

Are there any reasons - legal, practical or competitive - that a trading
scheme should be restricted?

Should EPA adopt the Best Available Control Technology (BACT) guidance
as Best Demonstrated Technology (BDT) for new and existing sources and
rely on case-by-case evaluation of facilities for cost-effective
improvements?

Information for the docket was provided during the meeting (4 documents)
and is attached to this note.  The information included support for
SERs’ concerns that geologic sequestration is not proven and that
there are limitations caused by other regulations (statutory issues that
are non-air) and that fuel switching to natural gas is not available in
all instances due to the inadequate infrastructure.

Attachments

