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Electric Utility Greenhouse Gas Emissions Reduction

Electric Utility Greenhouse Gas Emissions Reduction. Second Rule Development Workshop December 5, 2007 Department of Environmental Protection Division of Air Resource Management. Governor’s Executive Order 07-127.

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Electric Utility Greenhouse Gas Emissions Reduction

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  1. Electric Utility Greenhouse Gas Emissions Reduction Second Rule Development Workshop December 5, 2007Department of Environmental ProtectionDivision of Air Resource Management

  2. Governor’s Executive Order 07-127 “The Secretary of Environmental Protection shall immediately develop rules as authorized under Chapter 403, Florida Statutes, to achieve the following: Adoption of a maximum allowable emissions level of greenhouse gases for electric utilities in the State of Florida. The standard will require at minimum three reduction milestones as follows: by 2017, emissions not greater than Year 2000 utility sector emissions; by 2025, emissions not greater than Year 1990 utility sector emissions; by 2050, emissions not greater than 20% of Year 1990 utility sector emissions (i.e., 80% reduction of 1990 emissions by 2050)”

  3. What Are the Electric Utility Greenhouse Gases of Concern? • Summary of Comments: • Focus on carbon dioxide (CO2), the primary greenhouse gas (GHG) emitted by electric utilities, for setting baselines • Exclude CO2 emissions from combustion of biogenic material • Allow other GHGs to be used in meeting future reduction requirements

  4. How Should 1990 and 2000 Baseline CO2 Emissions be Determined? • Summary of Comments: • Use DOE revised 1605(b) protocols for 1990 and 2000—either continuous emission monitors (CEMs) or mass balance calculations based on fuel usage • Use established protocols; e.g., World Resource Institute, California Climate Registry, or multi-state Climate Registry • Use DEP Annual Operating Report (AOR) data and mass balance calculations for 1990 and 2000 • Use EPA Clean Air Markets data for 2000 (CEMs) • Provide mechanism for facilities to correct anydata used for setting baselines

  5. How Should Future CO2 Emissions be Tracked? • Summary of Comments: • Use DOE revised 1605(b) protocols • Use established protocols; e.g., World Resource Institute, California Climate Registry, or multi-state Climate Registry • Allow use of either CEMs or mass balance calculations based on fuel usage, whichever is more accurate

  6. What Units Should be Included in the Electric Utility Sector? • Summary of Comments: • Any fossil fuel-fired unit that provides electricity to the power grid (referred to herein as “EIA unit”) • Exclude any municipal waste combustor (MWC) unit that meets federal Qualifying Facility standard • Any unit that serves a generator of nameplate capacity > 25 MWe • Any unit subject to the Clean Air Interstate Rule (referred to herein as “CAIR unit”) • Include interchange power from out of state,using 1605(b) protocol or other method

  7. What Possible Rule Approaches Should be Considered? • Summary of Comments: • Carbon fee provides economic certainty through progressive and measured implementation over time and is less expensive to administer than cap-and-trade • Cap-and-trade guarantees emission reductions on established schedule (disparate comments received on how such a program should be structured) • Regulate at the level of the load serving entity (the organization that directly delivers power to end-use customers) • Provide recognition and incentives for earlyreductions

  8. Other Suggestions Received • Summary of Comments: • Support creation of an effective national program for GHG reductions and provide for seamless integration of state program into it • If no national program, join a regional GHG reduction program such as the Regional Greenhouse Gas Initiative (RGGI) • Allow unlimited use of verifiable GHG emissions offsets, regardless of location of the source • Allocate resources to research and development of carbon capture and storage technologies

  9. Range of Year 2000 Utility CO2 Emissions Based on Units Included • All units on grid (EIA units) 130,699,788 tons • Minus MWCs (non-biogenic CO2) - 1,119,334 tons • Minus non-CAIR cogenerators - 689,136 tons(mostly units < 25 MWe) • Minus other non-CAIR units - 302,575 tons(non-cogen units < 25 MWe) • Difference (CAIR units) 128,588,742 tons All emissions in short tons. Except for MWCs and cogeneration units, all values are calculated by applying EPA emission factors fromhttp://epa.gov/climatechange/emissions/downloads/2007GHGFastFacts.pdf to fuel usage data reported to DEP on AORs. Emissions from MWCs (CO2 from burning of non-biogenic waste only) and cogeneration units (CO2 from electric power generation only) are taken from eGrid (Emissions & Generation Resource Integrated Database) developed by EPAOffice of Atmospheric Programs, Climate Protection PartnershipsDivision, www.epa.gov/cleanenergy/egrid/index.htm.

  10. Alternative Estimates of Year 2000 Electric Utility CO2 Emissions • Using primarily AOR fuel usage data: • EIA units 130,699,788 tons • EIA units less MWCs 129,580,454 tons • CAIR units 128,588,742 tons • Using primarily eGrid data: • EIA units 136,286,083 tons • EIA units less MWCs 135,166,749 tons • CAIR units 134,108,513 tons • Plus: • Emissions from out-of-stateinterchange power 16,381,935 tons Emissions from out-of-state power estimated by multiplying year2000 interchange power (15,592,000 MWh) by averageAlabama/Georgia utility CO2 emission rate (2,101 lb/MWh).Interchange data from Florida Reliability Coordinating Council.

  11. Revised First Estimate: Year 1990 Electric Utility CO2 Emissions • Applying ratio of 1990/2000 electric utility emissions from EPA State Inventory Tool (.74111) to eGrid-based year-2000 baseline of EIA units less MWC units: • 100,173,429 tons • Plus emissions from out-of state interchange power: • 24,598,119 tons Emissions from out-of-state power estimated by multiplying year 1990 interchange power (23,412,000 MWh) by year 2000 average Alabama/Georgia utility CO2 emission rate (2,101 lb/MWh). Interchange data from Florida Reliability Coordinating Council; AL/GA emissions rate from eGrid. Use of AOR data forestimating 1990 baseline emissions being examined, butmay contain gaps.

  12. Year 2004 Utility CO2 Emissions by Fuel Type (EIA units less MWCs) Coal 65,484,849 tons Oil & petcoke 33,404,545 tons Natural gas 44,846,881 tons • Total fossil fuel 143,736,276 tons All emissions data from eGrid. Does not include 1,265,244 tons CO2 emissions in 2004 from burning of non-biogenic solid waste such as plastics and tires in MWCs, nor does it include CO2 emissions from producing thermal energy in cogeneration units. Also, does not include emissions from out-of-state interchange power.Fossil-fuel electricity generation accounts for about 45% ofFlorida’s greenhouse gas emissions.

  13. Required Utility CO2 Reductions from Year 2004 Level (EIA units less MWCs) • By 2017 6% • By 2025 30% • By 2050 86% • But, electric power usage in the state is growing… 2017-required reduction based on year 2000 baseline consisting of EIA units less MWC units (same as previous slide). 2025 and 2050 reductions calculated using 1990 first estimate. Calculationsdo not include emissions from out-of-state interchange power.

  14. Year 2004 Net Generation by Source • Fossil-fuel generation • Coal 61,982,540 MWh • Oil & petcoke 37,232,873 MWh • Natural gas 76,624,773 MWh • Interchange power 18,649,000 MWh • Subtotal 194,489,186 MWh (83% of grand total) • Other generation • Biomass 4,950,744 MWh • Nuclear 31,215,576 MWh • Hydroelectric 265,258 MWh • Other waste & phosphate* 2,862,650 MWh • Grand Total233,783,414 MWh Interchange data from Florida Reliability Coordinating Council;all other data from eGrid. eGrid assigns 70% of generation fromMWCs to biomass; 30% to other waste (plastics, tires, etc.).*Includes waste heat power generation in phosphate industry.

  15. Projected Electricity Usage • Year 2016: 325,566,000 MWh • Equates to 33% increase from actual 2006 net generation—same rate of increase as from 1996 to 2006 • No Year 2017, 2025 or 2050 projections available. Year 2016 projection from “2007 Regional Load and Resource Plan” by Florida Reliability Coordinating Council, available on Public Service Commission website at: www.psc.state.fl.us/utilities/electricgas/10yearsiteplans.aspx.

  16. Year 2004 Average CO2 Emission Rates for Florida Fossil-Fuel Units Coal 2,113 lb/MWh Oil & petcoke 1,794 lb/MWh Natural gas 1,171 lb/MWh • Weighted avg. 1,635 lb/MWh

  17. CO2 Emission Rates for Fossil-Fuel Generating Units Compared • Year 2004 statewide average emission rate: 1,635 lb/MWh • Statewide average emission rate to meet 135 million ton cap with total generation of 325 million MWh, 83% of which supplied by fossil fuel (values selected for illustrative purposes; not a DEP-presumed scenario) 1,000 lb/MWh • Emission rates achievable by today’s new units: • Natural gas combined cycle 800 lb/MWh • Pulverized coal or IGCC 1,750 lb/MWh(w/o carbon capture & storage)

  18. Challenges in Meeting the Caps • Slowing the state’s growth in electricity demand • Increasing generation from proven non-fossil sources • Reducing statewide average fossil fuel emission rate • Developing and deploying advanced technologies

  19. Suggested Issues for Comment • How to define the “utility sector” for purposes of establishing the target caps and for purposes of future regulation. • How to calculate the 1990 and 2000 emission levels, and how much precision needed. • How to treat out-of-state interchange power; in particular, how to account for it in both estimating baseline emissions and tracking future emissions. • What are possible rule approaches to consider for achieving the reductiontargets set forth by the Governor.

  20. Comments • Mail to: Mr. Larry George, Program Administrator Division of Air Resource Management, MS-5500 Department of Environmental Protection 2600 Blair Stone Rd. Tallahassee, FL 32399-2400cc: Ms. Lynn Scearce, Rules Coordinator (same address) • Or e-mail to: larry.george@dep.state.fl.usandlynn.scearce@dep.state.fl.us • All comments are public records and will be posted on the department’s website at www.dep.state.fl.us/air • To receive updates on this rule development project bye-mail, provide name, affiliation, and e-mail address toMs. Lynn Scearce atlynn.scearce@dep.state.fl.us

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