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J A N U A R Y 2 9 , 2 0 1 9 | H O L Y O K E , M A
Patricio SilvaS E N I O R A N A L Y S T
Environmental Advisory Group
Environmental Regulatory Update
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Presentation Overview• National Trends
• Regional Trends
• Changes in Federal Environmental Regulatory Policy– Major Environmental Rules Related to Coal, Natural Gas, and Nuclear
Generation
• MATS Update
• Load-Weighted Real-time Marginal Unit by Month (2017-2018)
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NATIONAL TRENDS
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• U.S. power generation capacity retirements continued from 2017 (11.5 GW) through 2018 (16.9 GW):
– 11.8 GW in coal-fired capacity retirements (70%)
– 3.78 GW in gas-fired capacity retirements (22.4%)
• Retired fossil capacity tended to have lower capacity factors (53.7% for coal, 10.6% for natural gas in 2017)
• Unfavorable economic conditions driving fossil and nuclear retirements nationwide
• Cumulative coal retirements (74,722 MW 2010-2018) expected to have limited impact on national emission trends
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2018 U.S. Capacity Retirements
Sources: EIA; S&P Global Market Intelligence
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• In 2019, changes expected in U.S. generating capacity include:– 49,420 MW in new capacity
expected to enter service• 22,447 MW of wind• 13,993 MW of natural gas• 11,050 MW of solar
– 8,597 MW expected to retire:• 5,834 MW of coal• 1,801 MW of natural gas• 683 MW of nuclear
– 2,216 MW fuel switching
• In New England 1,572 MW in new natural gas, oil, solar, wind capacity expected, while 683 MW in nuclear capacity retires
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2019 Forecast U.S. Capacity Changes
Sources: EIA; S&P Global Market Intelligence
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EIA Forecasts U.S. Energy-Related Carbon Dioxide Emissions Increased 2.8% in 2018
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-42
145
-63
-40
forecast
-200
-150
-100
-50
0
50
100
150
200
2017 2018 2019 2020
Components of annual changemillion metric tons
natural gaspetroleumcoalnet change
forecast
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2016 2017 2018 2019 2020
total energy
petroleum
natural gas
coal
U.S. annual carbon emissions by sourcemillion metric tons
Source: Short-Term Energy Outlook, January 2019
Source: EIA
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1
2
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5
0
2
4
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1990 2000 2010 2020 2030 2040 2050
Billi
on M
etric
Tons
of C
O2
Mill
ion
Met
ric To
ns o
f SO
2/N
Ox
carbon dioxidesulfur dioxidenitrogen oxide
NOx Budget Trading Program
Electric sector emissions (Reference case)
2018history projections
SO2 Phase 1
SO2 Phase 2
MATS
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EIA AEO2019 Reference Case - Electric Sector Emissions
Source: EIA
Projections reflect decreasing coal generation, increasing natural gas generation emissions
EIA forecasts the power sector experiences a notable shift in fuels used to generate electricity, driven in part by historically low natural gas prices. Increased natural gas-fired electricity generation; larger shares of intermittent renewables; and additional retirements of less economic coal and nuclear plants occur during the projection period
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EIA AEO2019 Reference Case – New England Electric Sector Projected Emissions
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0
5
10
15
20
25
30
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
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Mill
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ric To
ns o
f CO
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Petroleum Natural Gas Coal Other
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SYSTEM GENERATION, EMISSIONS & WATER USE TRENDS
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Fossil Fuel Deliveries to New England Power Plants
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
0
100
200
300
400
500
600
Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec
Nat
ural
Gas
Rec
eive
d (M
Mcf
)
Coal
(Tho
usan
d Sh
ort T
ons)
, Oil
(Mill
ion
Barr
els)
Rec
eive
d
2017
Coal (1000 tons) Oil (MBbls) Natural Gas (MMcf)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
0
100
200
300
400
500
600
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Nat
ural
Gas
Rec
eive
d (M
Mcf
)
Coal
(Tho
usan
d Sh
ort T
ons,
Oil
(Mill
ion
Barr
els R
ecei
ved
2018
Data Coal (1000 tons) Data Oil (MBbls)Data Natural Gas (MMcf)
Source: EIA
Coal (1000 tons)
Natural Gas (MMcf)
Oil (MBbls)
93.9 243846.6 718.8
Coal (1000 tons)
Natural Gas (MMcf)
Oil (MBbls)
197.687 352097.855 502.148
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Monthly Energy Data (GWh) 2017 2018 ∆Generation 102,564 103,702 1,138Pumping Load 1,717 1,804 87Net Interchange (+ = Import) 20,373 21,409 1,036
Imports 23,260 23,488 228Exports -2,887 -2,080 807
Net Energy for Load (GWh) * 121,220 123,307 2,087
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Annual, Monthly Energy Generation (GWh) for New England
Source: ISO-NE
-20,000 20,000 60,000 100,000
Generation
Pumping Load
Net Interchange
Imports
Exports
2018 2017
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Annual Generation by State (GWh)
CT MA ME NH RI VT
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New England Emitting Generation & Estimated CO2 Emissions (MWh, Metric Tons)
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
2017 2018
Emitting Generation (MWh)
COAL GAS OIL LANDFILL GAS METHANE REFUSE WOOD
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2017 2018
Estimated CO2 Emissions (Metric Tons)
COAL GAS OIL LANDFILL GAS METHANE REFUSE WOOD
Source: ISO-NE
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New England 2017 vs. 2018 SO2 & NOXEmissions (Short Tons)
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2017 2018
SO2 Emissions
Coal Diesel Oil Natural Gas Other Oil Residual Oil Wood
0
1000
2000
3000
4000
5000
6000
7000
2017 2018
NOx Emissions
Coal Diesel Oil Natural Gas Other Oil Residual Oil Wood
2018 emission increases attributable in part to changes in weather, economic growth, energy prices, and fuel mix
Sources: ISO-NE; EPA
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Water Withdrawals for Power Generation by Fuel Type in New England (Million Gallons)
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2016 Water Withdrawals (Million Gallons)
Coal Black Liquor Distillate Oil Natural Gas
Nuclear Residual Oil Wood
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2017 Water Withdrawals (Million Gallons)
Coal Black Liquor Distillate Oil Natural Gas
Nuclear Residual Oil Wood
Source: EIA
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Water Consumption for Power Generation by Fuel Type in New England (Million Gallons)
0
100
200
300
400
500
600
700
800
2016 Water Consumption (Million Gallons)
Coal Black Liquor Distillate Oil Natural Gas
Nuclear Residual Oil Wood
0
100
200
300
400
500
600
700
800
2017 Water Consumption (Million Gallons)
Coal Black Liquor Distillate Oil Natural Gas
Nuclear Residual Oil Wood
Source: EIA
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CHANGES IN FEDERAL ENVIRONMENTAL REGULATORY POLICY
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Overview of Federal Environmental Rulemakings Impacting Energy Infrastructure
• Clean Air Act– New Source Review Applicability changes– Clean Power Plan Repeal, Affordable Clean Energy Rule Replacement
• Clean Water Act– Proposed jurisdictional limit to affected water bodies– Wastewater discharge compliance deadlines deferred
• Endangered Species Act/Migratory Bird Treaty Act– Protections limited for threatened and endangered species and habitats– Protections limited for migratory birds
• Most actions intended to either rollback or streamline permitting, licensing, or compliance rules for a range of energy infrastructure– Uncertain regional impact, developers see potential adverse impact on
levelized costs for various types of energy infrastructure
Sources: EPA; MJ Bradley & Associates LLC
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Overview of Federal Environmental Rulemakings Impacting Energy Infrastructure
• Extended federal government shutdown creating uncertainty for the power sector as closure of various departments and agencies stalls rulemakings, permitting and information gathering and reporting functions– Increasing risk of regulatory ‘snapback’ as delays in permitting,
rulemaking, guidance or adverse litigation outcomes leave developers with uncertain or conflicting regulatory obligations
– Bureau of Ocean Management, Environmental Protection Agency unable to mover forward during federal shutdown on siting or permitting matters directly impacting development of energy infrastructure in the region
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Major Environmental Rules Related to Coal, Natural Gas, and Nuclear Generation
Title YearFinalized
YearsImplemented
AuthorizingStatute Major Provisions
GenerationSources Affected
Cooling Water Intake Rule
2001 (Phase 1)2003 (revised Phase 1)2014 (Phase 2)
Phase 2: 2014-2018;2018 litigation upholds 316(b) rule
CleanWater
Act
• Promulgated under 316(b) of the Clean Water Act. New sources regulated under Phase I and existing sources regulated under Phase II.
• States consider requirements for power plants on a case-by-case basis
• Requires controls to reduce mortality to fish and other aquatic organisms
CoalNatural GasNuclear
Cross-State Air Pollution Rule
2011 Phase 1: 2015 Phase 2: 2017
Clean Air Act
• The Cross-State Air Pollution Rule replaced the Clean Air Interstate Rule starting on January 1, 2015, and requires states to reduce power plant emissions of SO2 and NOx that contribute to ozone emissions and fine particle pollution in other states
CoalNatural Gas
Steam Electric Effluent Limitation Guidelines
1974; policy updates in 1977, 1978, 1980, 1982, and 2015
1982; 2015-;2017EPA suspends 2015 rule for reviewLitigation suspended
CleanWater
Act (40 CFR 423)
• Established limitations on the discharge of toxic and other chemical pollutants and thermal discharges from existing and new steam electric power plants, as well as pretreatment standards.
• The 2015 update sets the first Federal limits on levels of toxic metals that can be discharged
CoalNatural Gas
Source: DOE
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Major Environmental Rules Related to Coal, Natural Gas, and Nuclear Generation
Title YearFinalized
YearsImplemented
AuthorizingStatute Major Provisions
GenerationSources Affected
New Source Review
1980; policy updates in 1996 and 2002
1980; 2002 updates2018 EPA revises applicability
Clean Air Act
• Affects stationary sources of air pollutants. Requires that a new or modified power plant obtain a pre-construction permit to ensure, among other things, that modern pollution control equipment is installed.
• Requirements differ depending on whether or not the plant is located in an area that meets the requirements under the National Ambient Air Quality Standards
CoalNatural Gas
Mercury and Air Toxics Standards
2012 2015-2016Implemented2017Litigationsuspended2018 EPA proposes rollback
Clean Air Act
• Set mercury, arsenic, acid gases, and other toxic pollutants emissions limits for coal-and oil-fired power plants
• Operators had until April 2015 to comply with many plants receiving additional multi-year extensions
CoalOil
Coal Combustion Residuals Rule
2015 2015-2018;2018 rule revised, court overrules changes
Resource Conservation and Recovery
Act
• Addresses groundwater contamination risks from coal combustion residuals (i.e., “coal ash”) disposal in unlined landfills and surface impoundments by establishing national standards for disposal
Coal
Source: DOE
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Major Environmental Rules Related to Coal, Natural Gas, and Nuclear Generation
Title YearFinalized
YearsImplemented
AuthorizingStatute Major Provisions
GenerationSources Affected
Regional Haze Rule
1999; policy
revisions in 2017
ImplementedRevised state plans due in 2021, some plans underreview
Clean Air Act
• Requires states to develop long-term strategies, including enforceable measures to improve visibility in 156 national parks and wilderness areas
• Aims at returning visibility to natural conditions by 2064
CoalOilNatural Gas
Carbon New Source PerformanceStandards
2015 2016Litigationsuspended pending EPA review2018 EPA proposes changes
Clean Air Act
• Carbon New Source Pollution Standards established CO2 emission standards for new fossil fuel-fired generators under Clean Air Act section 111(b)
CoalOilNatural Gas
Clean Power Plan
2015 2018 EPA proposes repeal
Clean Air Act
• The Clean Power Plan, establishes CO2emission standards for existing power plants under section 111(d) of the Clean Air Act
CoalOilNatural Gas
Source: DOE
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MERCURY AND AIR TOXICS STANDARDS (MATS)
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EPA proposes changes to Mercury and Air Toxics Standards (MATS)• December 2018: EPA proposes changes to Mercury and Air Toxics
Standards (MATS) which limited mercury and other toxic pollutant emissions from existing coal- and oil-fired steam thermal generators– MATS imposed hazardous air pollutants (HAPs) emissions from coal- and
oil-fired generators, requiring reductions of 90% in mercury emissions and reductions in acid gases and particulate matter emissions
– Any modification or reversal of the 2016 Supplemental Notice could undermine the MATS requirements and jeopardize some affected generators’ ability to recover capital costs incurred with the required pollution control retrofits
– Any modifications to the cost benefit analyses for this rulemaking will likely establish a precedent for other rulemakings
• No regional impact expected, affected generators remain subject to independent state air toxics limits
• EPA scheduled to propose the MATS Residual Risk and Technology Review and Cost Review for public comment late in 2019
Sources: EPA; MJ Bradley & Associates LLC
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LOAD-WEIGHTED REAL TIME MARGINAL UNIT FUEL DATA BY MONTH (2017-2018)
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Load-Weighted Real time Marginal Unit Fuel Data by Month (2017-2018)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2017 2018
Gas Externals Pumped Storage Coal Oil Wind Hydro Other
In this time period, on average, the marginal unit was: natural gas (75%); pumped storage (17%); oil (2%); coal (1.9%); hydro (1.9%); wind (1.1%); and, other (1%)
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