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PRESEN PRESENTA TATION TION TO TO TH THE GOVERN E GOVERNOR ORS S EXECUTIVE ORDER EXECUTIVE ORDER 57 57 WORK ORKGROUP GROUP VIRGINIAS CARBO RBON N REDU REDUCTI TION N EFFO EFFORTS RTS Depa Department of of En Environ

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SLIDE 1

PRESEN PRESENTA TATION TION TO TO TH THE GOVERN E GOVERNOR’ OR’S S EXECUTIVE ORDER EXECUTIVE ORDER 57 57 WORK ORKGROUP GROUP

VIRGINIA’S CARBO RBON N REDU REDUCTI TION N EFFO EFFORTS RTS Depa Department of

  • f En

Environ ironmental l Qualit lity August 31, 31, 2016 2016

1

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SLIDE 2

 Where

Where we’ we’ve b ve been een

  • Carbon emission trends in Virginia
  • Regulations and factors affecting carbon emissions
  • Virginia’s fossil fuel power plants

 Where we a

Where we are re

  • GHG permitting for major sources
  • Virginia’s Permit By Rule for small solar and wind projects

 Status

us of f EPA’ EPA’s s Clea Clean Po n Power Pla wer Plan

  • Potential pathways for additional carbon emission reductions

2

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SLIDE 3

3 47.5 47.0 46.0 45.5 45.2 46.1 41.0 46.1 40.2 34.5 37.8 31.4 27.8 34.1 32.7 0.0 .0 5.0 .0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Millio lions o

  • f M

Metric ric T Tons

VIRGINI NIA POWER ER SECTO CTOR R CO2 2 EMISSI SIONS NS

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SLIDE 4

4

2, 2,007 007 1, 1,980 980 1, 1,987 987 1, 1,917 917 1, 1,913 913 1, 1,920 920 1, 1,937 937 1, 1,903 903 1, 1,905 905 1, 1,774 774 1, 1,728 728 1, 1,623 623 1, 1,404 404 1, 1,544 544 1, 1,543 543 0.0 .0 50 500. 0.0 100 000. 0.0 150 500. 0.0 200 000. 0.0 250 500. 0.0 20 2000 00 20 2001 01 20 2002 02 20 2003 03 20 2004 04 20 2005 05 20 2006 06 20 2007 07 20 2008 08 20 2009 09 20 2010 10 20 2011 11 20 2012 12 20 2013 13 20 2014 14 Pounds ds Per M Megawatt H tt Hour

Virgin inia ia Power r Sector r CO2 2 Emis issio ion Rate

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SLIDE 5

5

1, 1,000, 000,000 000 2, 2,000, 000,000 000 3, 3,000, 000,000 000 4, 4,000, 000,000 000 5, 5,000, 000,000 000 6, 6,000, 000,000 000 7, 7,000, 000,000 000 8, 8,000, 000,000 000

2015 CO 2015 CO2 2 EM EMISSIONS NS FRO ROM VI VIRG RGINI NIA POWER WER PLA LANTS NTS

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SLIDE 6

 NOx regulations to achieve ozone National Ambient Air

Quality Standard (NAAQS)

  • NOx SIP Call (1998)
  • Clean Air Interstate Rule (CAIR) (2005)
  • Cross State Air Pollution Rule (CSAPR) (being implemented)

 Mercury Air Toxics Rule (MATS) aimed at reducing toxics

emissions from EGUs (2015-2016)

 Sulfur Dioxide NAAQS (being implemented)  Falling natural gas prices

  • $9.00 per million Btu 2008
  • $2.00 per million Btu 2016

6

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SLIDE 7

7

* Pending transmission line issue resolution

Pla lant Na Name Ch Change I In Oper eration/ n/Fue uel Ye Year ar

Altavi vist sta Pow

  • wer S

Sta tation

  • n (

(Coa

  • al)

Conve nverted t d to bi biomas mass (wood) d) 2012 2012 Brem emo Blu luff ( (Co Coal) Conve nverted t d to nat natur ural al ga gas 2014 2014 Chesapea eake ( e (Coal) Coal al uni units pe perma manent ntly shut hut do down wn 2015 2015 Clin Clinch Riv River ( r (Co Coal) 1 coal al uni unit shut hut do down/ wn/2 c conv nverting ng to g to gas 2015 2015 Gle len Ly Lyn (Coal) l) Facility ty pe perman manent ntly c y closed 2015 2015 Hop

  • pewell P

Pow

  • wer S

Sta tati tion

  • n (

(Coa

  • al)

Con

  • nverted to

to biom

  • mass (wood
  • od)

2013 2013 Por

  • rts

tsmou

  • uth

th Genco co (Coal) l) Cu Curre rrently close sed/possi ssible b e biomass ss conver versi sion 2015 2015 Potom

  • tomac Riv

River ( r (Co Coal) Facility ty pe perman manent ntly c y closed 2012 2012 Sout uthampt hampton Pow

  • wer S

Sta tati tion ( (Coa

  • al)

Conve nverting ng t to bi biomas mass ( (wood) 2013 2013 Wa Warre rren Co County (NG NGCC) CC) Cons nstruc ucted and d and be began an operatio tion 2014 2014 Bruns unswick Co County ( (NG NGCC) CC) Cu Curre rrently unde under cons nstruc uction 2016 2016 Yor Yorktow ktown ( (Coa

  • al)

Pendi nding ng c coal al s shut hutdow

  • wn

2017* 2017* Greensvil ille Co County ( (NG NGCC) CC) Per Permit is issued in in June 2016 2016 2019 2019

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SLIDE 8

27% 27% 39% 1% 1% 5%

VI VIRG RGINIA EL ELEC ECTR TRICITY GEN ENERATION 2014 2014

Coal Natural Gas Nuclear Petroleum Hydroelectric Other To Total G l Genera ration 77 77 Mill illion M Mega gawatt Ho Hours rs

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SLIDE 9

Where we

Where we are are

  • GHG permitting for major sources
  • Virginia’s Permit By Rule for small solar and wind

projects

9

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SLIDE 10

 EPA Tailoring Rule – Effective January 2, 2011  GHGs - 6 different compounds including Carbon Dioxide

(CO2) and Methane (CH3)

 Limited to Major Sources of Pollution

  • Sources must be major for a pollutant other than GHG
  • Must be major for GHG >100,000 tons per year (tpy)
  • GHG expressed as Carbon Dioxide Equivalents (CO2(e))

 Requires a Best Available Control Technology (BACT) analysis  Few add-on controls exist for GHGs  Emissions related to combustion efficiencies

10

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SLIDE 11

 Dominion Brunswick – 1400 MW Natural Gas Combined-Cycle

  • Permit Issued 03/12/2013
  • 920 lbs/MWh CO2(e) Limit

 Panda Stonewall LLC – 750 MW Natural Gas Combined-Cycle

  • Permit Issued 04/30/2013
  • 903 lbs/MWh CO2(e) Limit

 Dominion Greensville – 1600 MW Natural Gas Combined- Cycle

  • Permit Issued 06/17/2016
  • Tiered Limit
  • 812 lbs/MWh CO2(e) first 6 years
  • Increases in 6 year increments
  • Final Limit (years 31 & later) – 890 lbs/MWh
  • MO

MOST T STR TRINGENT GHG HG LIMITS IN THE THE NATION

11

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SLIDE 12

 40 CFR Part 60 Subpart TTTT - New Source Performance

Standard (NSPS) for Greenhouse Gas Emissions for New or Modified Electric Generating Units

  • Applies to Fossil-Fuel Power Plants
  • Commenced construction after January 8, 2014

 40 CFR Part 60 Subpart OOOOa – NSPS for Crude Oil and

Natural Gas Facilities Constructed or Modified after September 18, 2015

  • Applies to gas wells and compressor stations
  • Implementation of rule is pending

12

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SLIDE 13

 DEQ shall develop, by regulations to be effective as soon as

practicable, but not later than July 1, 2012, a permit by rule or permits by rule if it is determined by the Department that one

  • r more such permits by rule are necessary for the

construction and operation of small renewable energy projects, including such conditions and standards necessary to protect the Commonwealth's natural resources. If the Department determines that more than a single permit by rule is necessary, the Department initially shall develop the permit by rule for wind energy, which shall be effective as soon as practicable, but not later than January 1, 2011.

13

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SLIDE 14

 As used in this article, "small renewable energy project"

means (i) an electrical generation facility with a rated capacity not exceeding 100 megawatts that generates electricity only from sunlight, wind, falling water, wave motion, tides, or geothermal power, or (ii) an electrical generation facility with a rated capacity not exceeding 20 megawatts that generates electricity only from biomass, energy from waste, or municipal solid waste.

14

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SLIDE 15

 Thr

hree s ee sol

  • lar

ar pr proj

  • jec

ects per permitt tted ed

  • Amazon, Eastern Shore, 80 MW
  • Buckingham Firestone, Buckingham Co., 20 MW
  • Hecate Energy Cherrydale. Northampton Co., 20MW

 Over 20

r 20 Notice ces o

  • f Intent su

submitted

  • 710 projected total MW

 At

t leas east f t four

  • ur s

sol

  • lar

ar appl applicat ations ex expec pected ted by by mid d Septem eptember ber totaling a an additional 160 160 MW

 Wind r

d regul egulat ation l liti tigati ation r res esol

  • lved s

ved suc ucces essfully i in n favor avor of

  • f DE

DEQ

  • Karr, et al., v VDEQ, (Record No. 1715-15-2, Court of Appeals of Virginia,

Judge Humphreys, August 9, 2016)

15

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SLIDE 16

 htt

ttp: p://ww www.de deq. q.virgi irginia ia.go .gov/P v/Progra grams/R /Renewa wable leEn Energy.a y.asp x

 https://www.google.com/maps/d/viewer?mid=1XZyl-

JGFb2B9uAbuXCXfxUrb31k

 http://www.deq.virginia.gov/Programs/RenewableEnergy/Pub

licNotices.aspx

16

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SLIDE 17

The Sta

Statu tus s of E

  • f EPA

PA’s ’s Cle lean Pow Power Pla Plan

  • Potential pathways for additional carbon emission

reductions

17

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SLIDE 18

 Whil

hile e fut uture ure of f CPP CPP unc uncer ertain, it it pro rovid ides wid wide ra e rang nge o e of f co comp mpli liance ce o

  • ptio

ions a and nd a alt lter ernativ ive reg regula ulatory ry st stru ructures, inclu including:

  • Opti

Option to to use es e esta tabli lished ov

  • verall

ll r rate or ate or mas ass g goals

  • als or
  • r spe

pecif ific rate rate/m /mass g goals

  • als for
  • r spe

pecif ific s sou

  • urces
  • Opti

Option to to in incl clude on

  • nly

ly ex existi isting or

  • r ex

exis isti ting & & new ew sou

  • urces
  • Opti

Option to to part particip ipate in in in intra tra or

  • r in

inter terstate tradi trading

  • Cou

Could ld in inclu lude m mix ixtu ture re of m measu sures es im implem plemented by by th the s e stat tate in incl cludin ing ren renewable en energ ergy an and en d ener ergy ef effic icie iency s stan tandard rds or

  • r
  • ther

er m measu sures es

 CPP

CPP and nd it its o s optio ions ha have ve a alrea lready b been een sub subjec ect t to muc much deb ebate a e and nd a ana naly lysis

18

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SLIDE 19

19

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SLIDE 20

20

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SLIDE 21

 Sep

eptemb ember 6, er 6, 2018 2018 – Fina Final l st state e pla lans ns

 Ja

Janua nuary ry 1, 1, 2022 t 2022 to Decemb ecember 31, er 31, 2024 2024 – First First int interim erim co comp mplia ianc nce e perio eriod

 Ja

Janua nuary ry 1, 1, 2025 t 2025 to Decemb ecember 31, er 31, 2027 2027 – Seco econd nd int interim erim co comp mplia ianc nce e perio eriod

 Ja

Janua nuary ry 1, 1, 2028 t 2028 to Decemb ecember 31, er 31, 2029 2029 – Third Third int interim erim co comp mplia ianc nce e perio eriod

 Ja

Janua nuary ry 1, 1, 2030 2030 –Final al c com

  • mpl

plian ance

21

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SLIDE 22

 2000

2000 – 47. 47.5 milli 5 million t tons/ ns/act ctual emissio l emissions

 2010

2010 – 37. 37.8

 2012

2012 – 27. 27.8

 2014

2014 – 32. 32.7

 2022

2022 – 29. 29.6 milli 6 million t tons/ ns/CPP PP goals ls

 2024

2024 – 31. 31.3

 2027

2027 – 29 29

 2029

2029 – 27. 27.9

 2030

2030 – 27. 27.4

22

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SLIDE 23

 2000

2000 – 2007 pou pounds pe per m megaw gawatt h att hou

  • ur/ac

/actu tual al

 2010

2010 - 1728 1728

 2012

2012 – 1404 1404

 2014

2014 - 1543 1543

 2022

2022 – 1047 pou pounds pe per megaw gawatt att hou

  • ur/C

/CPP goal goal

 2024

2024 - 1120 1120

 2027

2027 – 1026 1026

 2029

2029 – 966 966

 2030

2030 - 934 934

23

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SLIDE 24
  • Stakehol

Stakeholder er gr group es up estab tablished and hed and met met 5 5 times times from

  • m No

Nov 2015 2015 thr through ugh Mar ar 2016 2016

  • Goal to

to s seek eek co commo mmon gr ground und on elements n elements that that co could uld be includ e included d in s in state tate pla lan

  • Included mo

ncluded most t maj major inter r interes ested ted p parti arties es

 Utilities tilities, env envir ironmen ental gro l groups, indu industry, and o

  • ther

er advoc vocates es

24

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SLIDE 25
  • ption

support

  • ppose

neutral/unsure

Rate-based 4 members 7 members 1 members mass - existing 3 members 3 members 5 members mass with new source component 5 members 5 members 1 members

25

  • No consensus reached; Informal polling showed:
  • General consensus in support of a “trading ready” plan
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SLIDE 26

26

 Muc

uch h CPP PP model eling ng compl plet eted s ed sin ince c conc nclu lusion o n of Virg irginia stakeho eholder lder p proces ess

  • Nic

Nicholas as I Ins nstitute, te, Bip Bipar arti tisan P Polic licy y Cen enter ter, EPRI, PJM, MJ Brad Bradle ley

 Mult

ultip iple e objectives es a and nd dif iffer erenc ences es i in n key assumpt ptions make make comp comparison

  • ns d

difficult

 Con

Consistent b big take takeaw away ays

  • Natura

Natural gas gas pric rices may ay matter atter more re than than an anythi ything

  • RE

RE and EE EE cost costs s also so impor

  • rtant
  • Trad

rading g lo lowers costs ts; th the e wid ider er the the trad trading g th the e lo lower er the the costs ts

  • Wh

What at yo your r neigh neighbors do is is very im very importan ant

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SLIDE 27

27

 Three ma

Three majo jor co r comp mplia ianc nce e paths hs

 Rate Rate-based com complia liance plan plan ( (du dual rate al rate)  Pros – appears to be least cost option for some states  Cons - administrative burden of ERC process; may lead to CO2 emission increase  Mass ss-based com complia liance plan plan ( (ex existin isting s sou

  • urces)

 Pros – well known program (CAIR, CSAPR)  Cons – contentious allocation process  Mass ss-based com complia liance plan plan ( (ex existin isting & & new ew)  Pros – most environmental benefit  Cons – appears to be highest cost option