Clean Power Plan

1. Clean Power Plan Kyra Moore Director, Air Pollution Control Program Prepared for: Midwest Energy Policy Conference October 6, 2015

2. EPA Actions on August 3, 2015 Carbon dioxide (CO2) emissions from power plants • Final rules • CO2 emission standards for new power plants - 111(b) • CO2 emission standards for existing power plants - 111(d) • Proposed rule • Proposed Model rules for existing plants - 111(d) • Proposed Federal Plan for existing plants - 111(d) Clean Power Plan

3. EPA Proposed Rules cont. • Model Rule • EPA guide for acceptable Clean Power Plan • States can choose to use entire model rule, parts of model rule or create own rules • Federal plan • Draft EPA Plan • Required if state does not submit a plan or submits a plan EPA cannot approve

4. Clean Power Plan - Overview • The Clean Power Plan sets CO2emissions performance rates for existing power plants that reflect the “best system of emission reduction” (BSER) • EPA identified 3 “Building Blocks” as BSER and calculated nationally consistent performance rates for fossil fuel-fired electric steam generating unitsand another for natural gas combined cycle units • EPA translated the performance rates into mass-based and rate-based state goals using each state’s unique mix of power plants in 2012 • The rule establishes guidelines for states to develop plans that require existing power plants to achieve either the performance rates directly or one of the state goals

5. ND 1,305 (1,783) MN 1,213 (873) WI 1,176 (1,203) SD 1,167 (741) Mid-U.S. 2030 CPP Rate-Goals Final vs. (Proposal) IA 1,283 (1,301) NE 1,296 (1,479) IL 1,245 (1,271) MO 1,272 (1,544) KS 1,293 (1,499) Mid-U.S. Range (ND and TX) Proposed Rule Range: (791 – 1,783) Final Rule Range: (1,042 – 1,305) OK 1,068 (895) AR 1,130 (910) LA 1,121 (883) TX 1,042 (791) Note: All goals are listed in units of lbs CO2/MWh

6. Missouri’s StatewideClean Power Plan Goals 26% 19% 28% 37%

7. General Process for 111(d) Plans • EPA issues guidelines for existing sources • Often guidance contains “Model Rules” • States develop plans and rules for affected sources in their state • State submits plan to EPA for approval • EPA approves plan => complete • EPA disapproves plan – Federal Plan

8. Process for Clean Power Plan 111(d) • Identify Sources – 21 Affected Sources • Understand Goal – Missouri, 1272 lbs CO2/MWh • Draft plan • Public Outreach • Stakeholder Input • Dialog with affected sources • Public comment • Missouri Air Conservation Commission approval • Submittal to EPA

9. Plan – Work Ongoing • Reviewing Final Rule/Technical guidance • Webinars/Conference Calls • EPA and other experts • NGA Policy Academy • Coordination with DED’s Division of Energy and Public Service Commission • Regular meetings and communication • Outreach and Coordination - continuous

10. Path to Compliance - 1272 CO2/MWh • Current coal plants: • Newer plants ~1800 – 1900 lbs CO2/MWh • Rest of fleet ~2000 - ~2400 lbs CO2/MWh • Current Natural Gas Plants • Average of fleet 894 lbs CO2/MWh • Increasing utilization of Natural Gas not enough to meet goal • Need Renewables and Energy Efficiency

11. Compliance Options • Three Building Blocks: • Improve efficiency at existing plants • Redispatch coal to existing Natural Gas • Increase renewable energy • Other options include: • Demand-side Energy Efficiency • New nuclear/upgrades to existing nuclear • Combined Heat & Power • Biomass • Natural gas co-firing/convert to natural gas • Transmission & distribution improvements • Energy storage improvements • Retire older/inefficient power plants

12. State Plan Approaches • Choose form of the compliance goal • Rate-based: (lbs CO2/MWh) • Performance rates, statewide rate-goal, or state-defined rates • Mass-based: (tons CO2) • Include or Exclude new units • State measures option • Different plan elements required depending on plan approach • Interstate trading ability is affected by plan approach

13. Option for ComplianceClean Energy Incentive Program (CEIP) • States award CEIP allowances for eligible Energy Efficiency (EE)/Renewable Energy (RE) projects and EPA matches the award • Eligibility Requirements: • Construction (RE) or implementation (EE) must begin after the State submits final plan • Generation (RE) or savings (EE) must occur in 2020 and/or 2021 (EM&V plan required) • EE measures must serve low-income communities • State participation is optional

14. Items for Consideration • Coal retirements • Helps in Mass Based Approach • Nuclear • Final Rule allows efficiency improvements to count towards compliance • Trading Ready • Rate Vs. Mass • State Energy Plan

15. Draft – For Illustration Purposes What 2030 Could Look Like 2030 Rate-based Fuel Mix * 2030 Mass-based Fuel Mix * 2012 Fuel Mix • 2030 fuel mixes projections. Actual 2030 fuel will vary based on compliance options selected. • NGCC = Natural Gas Combined Cycle; RE = Renewable Energy

16. Clean Power Plan - Missouri Timeline * * This timeline is tentative and gives the maximum time allowed to meet a Final Plan submittal deadline of September 6th, 2018.

17. Clean Power Plan Website and List Serve To receive email updates on this topic: Go to web page: http://dnr.mo.gov/env/apcp/cpp/index.html Click on envelope and add your information

18. Questions? Kyra Moore MDNR Air Pollution Control Program kyra.moore@dnr.mo.gov (573) 751-0303

19. Division of Environmental Quality Director: Leanne Tippett Mosby Date: 10/6/15 Nothing in this document may be used to implement any enforcement action or levy any penalty unless promulgated by rule under chapter 536 or authorized by statute.