Electric Utility Greenhouse Electric Utility Greenhouse Gas Emissions ReductionGas Emissions Reduction

Second Rule Development WorkshopSecond Rule Development WorkshopDecember 5, 2007December 5, 2007

Department of Environmental ProtectionDepartment of Environmental ProtectionDivision of Air Resource ManagementDivision of Air Resource Management

Governor’s Executive Order 07-127Governor’s Executive Order 07-127

““The Secretary of Environmental Protection shall The Secretary of Environmental Protection shall immediately develop rules as authorized under Chapter immediately develop rules as authorized under Chapter 403, Florida Statutes, to achieve the following:403, Florida Statutes, to achieve the following:

Adoption of a maximum allowable emissions level of Adoption of a maximum allowable emissions level of greenhouse gases for electric utilities in the State of greenhouse gases for electric utilities in the State of Florida. The standard will require at minimum three Florida. The standard will require at minimum three reduction milestones as follows: by 2017, emissions not reduction milestones as follows: by 2017, emissions not greater than Year 2000 utility sector emissions; by 2025, greater than Year 2000 utility sector emissions; by 2025, emissions not greater than Year 1990 utility sector emissions not greater than Year 1990 utility sector emissions; by 2050, emissions not greater than 20% of emissions; by 2050, emissions not greater than 20% of Year 1990 utility sector emissions (i.e., 80% reduction of Year 1990 utility sector emissions (i.e., 80% reduction of 1990 emissions by 2050)”1990 emissions by 2050)”

What Are the Electric Utility What Are the Electric Utility Greenhouse Gases of Concern?Greenhouse Gases of Concern?

Summary of Comments:Summary of Comments: Focus on carbon dioxide (COFocus on carbon dioxide (CO22), the primary ), the primary

greenhouse gas (GHG) emitted by electric greenhouse gas (GHG) emitted by electric utilities, for setting baselinesutilities, for setting baselines

Exclude COExclude CO22 emissions from combustion of emissions from combustion of

biogenic materialbiogenic material Allow other GHGs to be used in meeting future Allow other GHGs to be used in meeting future

reduction requirementsreduction requirements

How Should 1990 and 2000 Baseline How Should 1990 and 2000 Baseline COCO22 Emissions be Determined? Emissions be Determined?

Summary of Comments:Summary of Comments: Use DOE revised 1605(b) protocols for 1990 and 2000Use DOE revised 1605(b) protocols for 1990 and 2000

—either continuous emission monitors (CEMs) or mass —either continuous emission monitors (CEMs) or mass balance calculations based on fuel usagebalance calculations based on fuel usage

Use established protocols; e.g., World Resource Use established protocols; e.g., World Resource Institute, California Climate Registry, or multi-state Institute, California Climate Registry, or multi-state Climate RegistryClimate Registry

Use DEP Annual Operating Report (AOR) data and Use DEP Annual Operating Report (AOR) data and mass balance calculations for 1990 and 2000mass balance calculations for 1990 and 2000

Use EPA Clean Air Markets data for 2000 (CEMs)Use EPA Clean Air Markets data for 2000 (CEMs) Provide mechanism for facilities to correct anyProvide mechanism for facilities to correct any

data used for setting baselinesdata used for setting baselines

How Should Future COHow Should Future CO22 Emissions Emissions

be Tracked?be Tracked? Summary of Comments:Summary of Comments:

Use DOE revised 1605(b) protocols Use DOE revised 1605(b) protocols Use established protocols; e.g., World Resource Use established protocols; e.g., World Resource

Institute, California Climate Registry, or multi-Institute, California Climate Registry, or multi-state Climate Registrystate Climate Registry

Allow use of either CEMs or mass balance Allow use of either CEMs or mass balance calculations based on fuel usage, whichever is calculations based on fuel usage, whichever is more accuratemore accurate

What Units Should be Included in What Units Should be Included in the Electric Utility Sector?the Electric Utility Sector?

Summary of Comments:Summary of Comments: Any fossil fuel-fired unit that provides electricity to Any fossil fuel-fired unit that provides electricity to

the power grid (referred to herein as “EIA unit”)the power grid (referred to herein as “EIA unit”) Exclude any municipal waste combustor (MWC) Exclude any municipal waste combustor (MWC)

unit that meets federal Qualifying Facility standardunit that meets federal Qualifying Facility standard Any unit that serves a generator of nameplate Any unit that serves a generator of nameplate

capacity capacity >> 25 MWe 25 MWe Any unit subject to the Clean Air Interstate Rule Any unit subject to the Clean Air Interstate Rule

(referred to herein as “CAIR unit”)(referred to herein as “CAIR unit”) Include interchange power from out of state,Include interchange power from out of state,

using 1605(b) protocol or other methodusing 1605(b) protocol or other method

What Possible Rule Approaches What Possible Rule Approaches Should be Considered?Should be Considered?

Summary of Comments:Summary of Comments: Carbon fee provides economic certainty through Carbon fee provides economic certainty through

progressive and measured implementation over time progressive and measured implementation over time and is less expensive to administer than cap-and-tradeand is less expensive to administer than cap-and-trade

Cap-and-trade guarantees emission reductions on Cap-and-trade guarantees emission reductions on established schedule (disparate comments received established schedule (disparate comments received on how such a program should be structured)on how such a program should be structured)

Regulate at the level of the load serving entity (the Regulate at the level of the load serving entity (the organization that directly delivers power to end-use organization that directly delivers power to end-use customers) customers)

Provide recognition and incentives for earlyProvide recognition and incentives for earlyreductions reductions

Other Suggestions ReceivedOther Suggestions Received Summary of Comments:Summary of Comments:

Support creation of an effective national program for Support creation of an effective national program for GHG reductions and provide for seamless GHG reductions and provide for seamless integration of state program into it integration of state program into it

If no national program, join a regional GHG reduction If no national program, join a regional GHG reduction program such as the Regional Greenhouse Gas program such as the Regional Greenhouse Gas Initiative (RGGI)Initiative (RGGI)

Allow unlimited use of verifiable GHG emissions Allow unlimited use of verifiable GHG emissions offsets, regardless of location of the sourceoffsets, regardless of location of the source

Allocate resources to research and development of Allocate resources to research and development of carbon capture and storage technologiescarbon capture and storage technologies

Range of Year 2000 Utility CORange of Year 2000 Utility CO22

Emissions Based on Units IncludedEmissions Based on Units Included All units on grid (EIA units) All units on grid (EIA units) 130,699,788 tons130,699,788 tons Minus MWCs Minus MWCs (non-biogenic CO(non-biogenic CO22)) - 1,119,334 tons - 1,119,334 tons Minus non-CAIR cogeneratorsMinus non-CAIR cogenerators - 689,136 tons - 689,136 tons

(mostly units < 25 MWe)(mostly units < 25 MWe) Minus other non-CAIR unitsMinus other non-CAIR units - 302,575 tons - 302,575 tons

(non-cogen units < 25 MWe)(non-cogen units < 25 MWe) Difference (CAIR units)Difference (CAIR units) 128,588,742 tons128,588,742 tons

All emissions in short tons. Except for MWCs and cogeneration units, all All emissions in short tons. Except for MWCs and cogeneration units, all values are calculated by applying EPA emission factors fromvalues are calculated by applying EPA emission factors fromhttp://epa.gov/climatechange/emissions/downloads/2007GHGFastFacts.pdfhttp://epa.gov/climatechange/emissions/downloads/2007GHGFastFacts.pdf to fuel usage data reported to DEP on AORs. Emissions to fuel usage data reported to DEP on AORs. Emissions from MWCs (COfrom MWCs (CO22 from burning of non-biogenic waste only) and from burning of non-biogenic waste only) and cogeneration units (COcogeneration units (CO22 from electric power generation only) are taken from from electric power generation only) are taken from eGrid (Emissions & Generation Resource Integrated Database) developed eGrid (Emissions & Generation Resource Integrated Database) developed by EPAby EPAOffice of Atmospheric Programs, Climate Protection PartnershipsOffice of Atmospheric Programs, Climate Protection PartnershipsDivision, Division, www.epa.gov/cleanenergy/egrid/index.htmwww.epa.gov/cleanenergy/egrid/index.htm. .

Alternative Estimates of Year 2000 Alternative Estimates of Year 2000 Electric Utility COElectric Utility CO22 Emissions Emissions

Using primarily AOR fuel usage data:Using primarily AOR fuel usage data: EIA units EIA units 130,699,788 tons130,699,788 tons EIA units less MWCsEIA units less MWCs 129,580,454 tons129,580,454 tons CAIR units CAIR units 128,588,742 tons128,588,742 tons

Using primarily eGrid data:Using primarily eGrid data: EIA units EIA units 136,286,083 tons136,286,083 tons EIA units less MWCs EIA units less MWCs 135,166,749 tons135,166,749 tons CAIR units CAIR units 134,108,513 tons134,108,513 tons

Plus:Plus: Emissions from out-of-stateEmissions from out-of-state

interchange powerinterchange power 16,381,935 tons 16,381,935 tons

Emissions from out-of-state power estimated by multiplying yearEmissions from out-of-state power estimated by multiplying year2000 interchange power (15,592,000 MWh) by average2000 interchange power (15,592,000 MWh) by averageAlabama/Georgia utility COAlabama/Georgia utility CO22 emission rate (2,101 lb/MWh). emission rate (2,101 lb/MWh).Interchange data from Florida Reliability Coordinating Council.Interchange data from Florida Reliability Coordinating Council.

Revised First Estimate: Year 1990 Revised First Estimate: Year 1990 Electric Utility COElectric Utility CO22 Emissions Emissions

Applying ratio of 1990/2000 electric utility emissions Applying ratio of 1990/2000 electric utility emissions from EPA State Inventory Tool (.74111) to eGrid-from EPA State Inventory Tool (.74111) to eGrid-based year-2000 baseline of EIA units less MWC based year-2000 baseline of EIA units less MWC units:units: 100,173,429 tons100,173,429 tons

Plus emissions from out-of state interchange power:Plus emissions from out-of state interchange power: 24,598,119 tons24,598,119 tons

Emissions from out-of-state power estimated by multiplying year Emissions from out-of-state power estimated by multiplying year 1990 interchange power (23,412,000 MWh) by year 2000 average 1990 interchange power (23,412,000 MWh) by year 2000 average Alabama/Georgia utility COAlabama/Georgia utility CO22 emission rate (2,101 lb/MWh). emission rate (2,101 lb/MWh). Interchange data from Florida Reliability Coordinating Council; Interchange data from Florida Reliability Coordinating Council; AL/GA emissions rate from eGrid. Use of AOR data forAL/GA emissions rate from eGrid. Use of AOR data forestimating 1990 baseline emissions being examined, butestimating 1990 baseline emissions being examined, butmay contain gaps.may contain gaps.

Year 2004 Utility COYear 2004 Utility CO22 Emissions by Emissions by

Fuel Type (EIA units less MWCs)Fuel Type (EIA units less MWCs)

CoalCoal 65,484,849 tons 65,484,849 tons Oil & petcokeOil & petcoke 33,404,545 tons 33,404,545 tons Natural gasNatural gas 44,846,881 tons 44,846,881 tons

Total fossil fuelTotal fossil fuel 143,736,276 tons143,736,276 tons

All emissions data from eGrid. Does not include 1,265,244 tons All emissions data from eGrid. Does not include 1,265,244 tons COCO22 emissions in 2004 from burning of non-biogenic solid waste emissions in 2004 from burning of non-biogenic solid waste such as plastics and tires in MWCs, nor does it include COsuch as plastics and tires in MWCs, nor does it include CO22 emissions from producing thermal energy in cogeneration units. emissions from producing thermal energy in cogeneration units. Also, does not include emissions from out-of-state interchange Also, does not include emissions from out-of-state interchange power.power.

Fossil-fuel electricity generation accounts for about 45% ofFossil-fuel electricity generation accounts for about 45% ofFlorida’s greenhouse gas emissions.Florida’s greenhouse gas emissions.

Required Utility CORequired Utility CO22 Reductions from Reductions from

Year 2004 Level (EIA units less MWCs)Year 2004 Level (EIA units less MWCs) By 2017By 2017 6% 6% By 2025By 2025 30%30% By 2050 By 2050 86%86%

But, electric power usage in the state is But, electric power usage in the state is growing…growing…

2017-required reduction based on year 2000 baseline consisting of 2017-required reduction based on year 2000 baseline consisting of EIA units less MWC units (same as previous slide). 2025 and 2050 EIA units less MWC units (same as previous slide). 2025 and 2050 reductions calculated using 1990 first estimate. Calculationsreductions calculated using 1990 first estimate. Calculationsdo not include emissions from out-of-state interchange power.do not include emissions from out-of-state interchange power.

Year 2004 Net Generation by SourceYear 2004 Net Generation by Source Fossil-fuel generationFossil-fuel generation

CoalCoal 61,982,540 MWh 61,982,540 MWh Oil & petcokeOil & petcoke 37,232,873 MWh 37,232,873 MWh Natural gas Natural gas 76,624,773 MWh 76,624,773 MWh Interchange powerInterchange power 18,649,000 MWh 18,649,000 MWh Subtotal Subtotal 194,489,186 MWh ( 194,489,186 MWh (83% of grand total83% of grand total))

Other generationOther generation BiomassBiomass 4,950,744 MWh 4,950,744 MWh Nuclear Nuclear 31,215,576 MWh 31,215,576 MWh HydroelectricHydroelectric 265,258 MWh 265,258 MWh Other waste & phosphate* 2,862,650 MWhOther waste & phosphate* 2,862,650 MWh

Grand TotalGrand Total 233,783,414 MWh233,783,414 MWh

Interchange data from Florida Reliability Coordinating Council;Interchange data from Florida Reliability Coordinating Council;all other data from eGrid. eGrid assigns 70% of generation fromall other data from eGrid. eGrid assigns 70% of generation fromMWCs to biomass; 30% to other waste (plastics, tires, etc.).MWCs to biomass; 30% to other waste (plastics, tires, etc.).

*Includes waste heat power generation in phosphate industry.*Includes waste heat power generation in phosphate industry.

Projected Electricity UsageProjected Electricity Usage Year 2016: 325,566,000 MWhYear 2016: 325,566,000 MWh

Equates to 33% increase from actual 2006 net Equates to 33% increase from actual 2006 net generation—same rate of increase as from 1996 to generation—same rate of increase as from 1996 to 20062006

No Year 2017, 2025 or 2050 projections available.No Year 2017, 2025 or 2050 projections available.

Year 2016 projection from “2007 Regional Load and Resource Plan” by Year 2016 projection from “2007 Regional Load and Resource Plan” by Florida Reliability Coordinating Council, available on Public Service Florida Reliability Coordinating Council, available on Public Service Commission website at: Commission website at: www.psc.state.fl.us/utilities/electricgas/10yearsiteplans.aspxwww.psc.state.fl.us/utilities/electricgas/10yearsiteplans.aspx..

Year 2004 Average COYear 2004 Average CO22 Emission Emission

Rates for Florida Fossil-Fuel UnitsRates for Florida Fossil-Fuel Units

Coal Coal 2,113 lb/MWh2,113 lb/MWh

Oil & petcokeOil & petcoke 1,794 lb/MWh1,794 lb/MWh

Natural gasNatural gas 1,171 lb/MWh1,171 lb/MWh

Weighted avg.Weighted avg. 1,635 lb/MWh1,635 lb/MWh

COCO22 Emission Rates for Fossil-Fuel Emission Rates for Fossil-Fuel

Generating Units ComparedGenerating Units Compared Year 2004 statewide average emission rate:Year 2004 statewide average emission rate:

1,635 lb/MWh1,635 lb/MWh

Statewide average emission rate to meet 135 million ton Statewide average emission rate to meet 135 million ton cap with total generation of 325 million MWh, 83% of cap with total generation of 325 million MWh, 83% of which supplied by fossil fuel (values selected for which supplied by fossil fuel (values selected for illustrative purposes; not a DEP-presumed scenario)illustrative purposes; not a DEP-presumed scenario)

1,000 lb/MWh1,000 lb/MWh

Emission rates achievable by today’s new units:Emission rates achievable by today’s new units: Natural gas combined cycleNatural gas combined cycle 800 lb/MWh 800 lb/MWh Pulverized coal or IGCCPulverized coal or IGCC 1,750 lb/MWh1,750 lb/MWh

(w/o carbon capture & storage)(w/o carbon capture & storage)

Challenges in Meeting the CapsChallenges in Meeting the Caps

Slowing the state’s growth in electricity Slowing the state’s growth in electricity demanddemand

Increasing generation from proven non-Increasing generation from proven non-fossil sourcesfossil sources

Reducing statewide average fossil fuel Reducing statewide average fossil fuel emission rateemission rate

Developing and deploying advanced Developing and deploying advanced technologiestechnologies

Suggested Issues for CommentSuggested Issues for Comment How to define the “utility sector” for purposes of How to define the “utility sector” for purposes of

establishing the target caps and for purposes of establishing the target caps and for purposes of future regulation.future regulation.

How to calculate the 1990 and 2000 emission How to calculate the 1990 and 2000 emission levels, and how much precision needed.levels, and how much precision needed.

How to treat out-of-state interchange power; in How to treat out-of-state interchange power; in particular, how to account for it in both estimating particular, how to account for it in both estimating baseline emissions and tracking future baseline emissions and tracking future emissions.emissions.

What are possible rule approaches to consider What are possible rule approaches to consider for achieving the reductionfor achieving the reductiontargets set forth by the Governor. targets set forth by the Governor.

CommentsComments Mail to:Mail to:

Mr. Larry George, Program AdministratorMr. Larry George, Program AdministratorDivision of Air Resource Management, MS-5500Division of Air Resource Management, MS-5500Department of Environmental ProtectionDepartment of Environmental Protection2600 Blair Stone Rd.2600 Blair Stone Rd.Tallahassee, FL 32399-2400Tallahassee, FL 32399-2400

cc: Ms. Lynn Scearce, Rules Coordinator (same address)cc: Ms. Lynn Scearce, Rules Coordinator (same address)

Or e-mail to:Or e-mail to: larry.george@dep.state.fl.uslarry.george@dep.state.fl.us andandlynn.scearce@dep.state.fl.uslynn.scearce@dep.state.fl.us

All comments are public records and will be posted on the All comments are public records and will be posted on the department’s website at department’s website at www.dep.state.fl.us/airwww.dep.state.fl.us/air

To receive updates on this rule development project byTo receive updates on this rule development project bye-mail, provide name, affiliation, and e-mail address toe-mail, provide name, affiliation, and e-mail address toMs. Lynn Scearce atMs. Lynn Scearce at lynn.scearce@dep.state.fl.uslynn.scearce@dep.state.fl.us