Agenda Item V-1_PowerPoint

Department of Environmental Quality
Emission Guidelines for Control of Greenhouse Gas Emissions from Power Plants (565)
Air Quality Committee Meeting –January 8, 2025
Acronyms
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Department of Environmental Quality
Abbr.Term Abbr.Term
40 CFR Title 40 of the Code of Federal Regulations EG Emission Guidelines
ACE Affordable Clean Energy Rule EGU Electricity generating unit
AQC Air Quality Committee EMC Environmental Management Commission
BSER Best System of Emission Reduction EPA United States Environmental Protection Agency
CAA Clean Air Act FR Federal Register
CCS Carbon capture and sequestration/storage GHG Greenhouse Gases
CO2 Carbon dioxide HRI Heat Rate Improvement
COBRA Co-benefits Risk Assessment NCUC North Carolina Utilities Commission
CPIRP Carbon Plan Integrated Resource Plan RIA Regulatory Impact Analysis
CPP Clean Power Plan RULOF remaining useful life and other factors
DAQ Division of Air Quality SC-CO2 Social cost of carbon dioxide
DEC Duke Energy Carolinas NSPS New Source Performance Standards
DEP Duke Energy Progress
BackgroundHistory of Electric Utility Generating Unit Part 60 Standards
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Department of Environmental Quality
•In 2015, the EPA promulgated New Source Performance Standards (NSPS) for Electric Utility Generating
Units (EGUs) in 40 CFR Part 60, Subpart TTTT for the control of greenhouse gases (GHG) from affected
facilities.
•Established CO2 emission standards for new, modified, and reconstructed steam generating units and
stationary combustion turbines.
•EPA identified the Best System of Emission Reduction (BSER) as partial carbon capture and storage
(new steam EGUs), efficient natural gas combined cycle (NGCC) technology (base load combustion
turbines (CTs)), and clean fuels (non-base load CTs and multi-fuel-fired units).
•In the same action, the EPA promulgated Emission Guidelines (EGs) for existing EGUs in 40 CFR Part 60,
Subpart UUUU for the control of GHGs from designated facilities, which was known as the Clean Power
Plan (CPP).
•Established guidelines for States to develop standards of performance for existing steam generating
units and stationary combustion turbines.
•EPA identified BSER as state-specific goals for reducing CO2 emissions, and required States to
develop a plan, including necessary rules, to meet those goals.
The CPP was stayed by the Court in 2016.
BackgroundHistory of Electric Utility Generating Unit Part 60 Standards
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Department of Environmental Quality
In 2019, the EPA finalized the following:
•Repeal of the CPP;
•Revisions to the Emission Guidelines Implementing Regulations under 40 CFR Part 60,
Subpart Ba.
•New EG for GHGs from existing EGUs under 40 CFR Part 60, Subpart UUUUa, known as
the Affordable Clean Energy (ACE) Rule.
•In the ACE Rule, the EPA identified BSER as heat rate improvement (HRI) through
application of seven specific HRI candidate technologies.
•The ACE Rule was stayed by the Court in January 2021.
BackgroundHistory of Electric Utility Generating Unit Part 60 Standards
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Department of Environmental Quality
•On May 23, 2023, the EPA proposed five separate actions for GHG emissions from
fossil-fired EGUs.
•Repeal of the ACE Rule
•NSPS for new stationary combustion turbines and NSPS for fossil fuel-fired steam
generating units undertaking large modification.
•New EG for existing coal-fired and oil/gas-fired steam generating units and EG for existing
large combustion turbines.
•On May 9, 2024, the EPA finalized four of the proposed five actions.
•Repeal of the ACE Rule.
•Finalized the NSPS for new stationary combustion turbines.
•Finalized the NSPS for coal-fired steam generating units undertaking large modification.
•Finalized the EG for existing coal-fired and oil/gas-fired steam generating units.
The EPA intends to take final action on existing combustion turbines at a later time.
What are North Carolina’s CAA obligations?
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Department of Environmental Quality
•NSPS promulgated under CAA Section 111(b) are directly applicable to facilities and automatically
incorporated via Rule 02D .0524; but
•EGs promulgated under CAA Section 111(d) are not directly applicable to facilities; instead, EGs
specify requirements for States, Locals, and Tribal Air Agencies to develop standards that apply to
designated facilities within their jurisdiction.
•The final EG gives states two years after the effective date of the rule to develop and submit
their plans to EPA for reducing GHG from existing sources (i.e., “State Plans”).
•May take into account remaining useful life and other factors (RULOF) when applying standards
of performance to individual existing sources.
•States must follow requirements of the State Plan Implementing Regulations codified at 40 CFR
Part 60, Subpart Ba, which were revised on November 17, 2023.
Emission Guidelines Procedures
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Department of Environmental Quality
Three steps:
1)EPA identifies the BSER for existing sources within source category;
2)States establish standards of performance for designated facilities within their jurisdiction based on application of BSER;
•NC codifies the standards in State Rule(s); and
•DAQ will incorporate the State Rule(s) into a State Plan for submittal to EPA.
3)Regulated sources comply with the standards using either BSER or non-BSER methods.
The State Plan must demonstrate that the state’s standards of performance meet the equivalency criteria specified in the EG (40 CFR § 60.5775b(c)(1) – (8)) when compared to the presumptive standards of performance in EG UUUUb.
Final Standards for New Stationary Combustion Turbines
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Department of Environmental Quality
New Stationary Combustion Turbines
Base LoadIntermediate LoadLow Load
Annual
Capacity Factor (CF):CF ≤ 20%20% < CF ≤ 40%CF > 40%
BSER:
use of lower-
emitting fuels
Standard:
<160 lb CO2/MMBtu
Phase 2:
(by 2032)
BSER:
highly efficient combined cycle
generation
Size < 2,000 MMBtu/hr
Standard:
800-900 lb CO2/MWh
Size > 2,000 MMBtu/hr
Standard:
800 lb CO2/MWh
BSER:
highly efficient simple
cycle generation
Standard:
<1,170 lb CO2/MWh
BSER:
CCS with 90% capture
Standard:
100 lb CO2/MWh
Emission for Existing Coal Steam Generating EGUs
EPA finalized three subcategories (based on the operating horizon of unit)
1.Near-term – EGUs that plan to permanently cease operations prior to
January 1, 2032
•No emission control obligations under the rule
2.Medium-term - EGUs that plan to operate beyond January 1, 2032, and
permanently cease operations prior to January 1, 2039
•BSER: meet CO2 emission limit equivalent to 40% co-firing with natural
gas by Jan. 1, 2030
3.Long-term – EGUs that plan to operate on or after January 1, 2039
•BSER: meet CO2 emission limit equivalent to 90% carbon capture and
sequestration/storage (CCS) by Jan. 1, 2032
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Department of Environmental Quality
Final Emission Guidelines for Existing Steam EGUs
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Department of Environmental Quality
Fossil Fuel-Fired Steam EGUs
Coal-Fired
no
emission
obligations
Presumptive Standard:
16% reduction in
emission rate
Near-term Medium-Term Long-Term
Planned Operating Horizon:
retiring
before
1/1/2032
retiring
before
1/1/2039
operating
on or after
1/1/2039
BSER:
co-firing 40% natural
gas
Presumptive Standard:
88.4% reduction in
emission rate
BSER:
CCS with 90%
capture
Compliance Date:
January 1, 2030
Compliance Date:
January 1, 2032
Natural Gas and Oil-Fired
Annual Capacity Factor (CF):
CF ≤ 8%8% < CF ≤ 45%CF > 45%
Low-Load Intermediate-Load Base-Load
BSER:
Routine methods of operation and maintenance and no increase
in emission rate
Presumptive Standards:
Natural gas-fired:
130 lb CO2/MMBtu
Oil-fired:
170 lb CO2/MMBtu
1,600
lb CO2 /MWh-gross
1,400
lb CO2 /MWh-gross
Compliance Date:
January 1, 2030
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CAA Section
111(b) - NSPS
CAA Section
111(d) - EGs
HB951
Carolina Carbon Plan
Adopted by reference
into DAQ rules
Requires DAQ rule-making &
development of State Plan
NCUC implements
Regulating GHG emissions
from the Power Sector
North Carolina HB 951/Carbon Plan
•HB 951 requires the North Carolina Utilities Commission (NCUC) to take “all
reasonable steps” to achieve 70% carbon emission reductions from 2005 levels by
2030 and achieve carbon neutrality by 2050.
•The Carbon Plan Statute directs the NCUC to review the plan every two years after
the adoption of the Initial Carbon Plan and evaluate the portfolios against four
objectives: 1) CO2 Reduction, 2) Affordability, 3) Reliability, and 4) Executability.
•The initial Carbon Plan order consolidated the Integrated Resource Plan (IRP)
process with the Carbon Planning process to create the Carbon Plan and Integrated
Resource Plan (CPIRP), which is required to be filed by Duke every two years,
beginning in 2023.
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Department of Environmental Quality
North Carolina CPIRP
•On August 17, 2023, Duke Energy filed its proposed 2023 CPIRP, which included
three core portfolios, thirteen portfolio variants, and ten sensitivity analysis portfolios.
•On January 31, 2024, Duke Energy revised the CPIRP based on their updated 2023
fall load forecast (“Supplemental Planning Analysis” or “SPA”).
•On July 1, 2024, Duke Energy filed its CAA Section 111 Sensitivity Analysis, which
presents the impacts of the EPA’s recently finalized NSPS and EG for GHGs from the
Power Sector.
•On November 1, 2024, the NCUC issued a decision on Duke Energy’s 2023-2024
CPIRP. Excerpt:
“The Commission further concludes, consistent with the Stipulation, that the modeling
presented in the CPIRP, as well as the Supplemental Portfolio Analysis and the CAA
Section 111 Sensitivity Analysis, are reasonable for planning purposes.”
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Department of Environmental Quality (pg. 44)
CPIRP 111 Sensitivity Analysis
•Evaluated the CAA 111(b) and 111(d) Standards on the Duke Energy EGUs with respect to
their trajectories under the CPIRP (without the CAA 111 Standards).
•Assumed all new gas units (CCs and CTs) must operate as intermediate load units (CF ≤
40%) beginning in 2032 since a 100 lb CO2/MWh emission rate is not achievable (CCS is not
feasible in NC and no other technologies capable of meeting this standard are viable or cost-
effective by 2032).
“This modeling also determines that the impacts of the Final Rule on the P3 Fall Base portfolio is
an increase in CO2 emissions of over 4 million tons in the year 2035, a likely delay in the Interim
Target date to 2036 or later, and an increase in the total system cost of more than $600 million.”
(page 195 of Duke CPIRP Rebuttal Testimony, Exhibit 2, July 1, 2024)
The CAA 111(b) rule causes generation to shift away from the highly-efficient new CCs (which are
already planned and in the baseline/P3 Fall Load Base Case) since those units must be operated
with CF < 40% annually. The displaced generation shifts towards more gas units and/or higher
utilization of coal-fired units, causing an increase in CO2 emissions with respect to the baseline.
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Department of Environmental Quality
Coal Unit Retirement Schedule
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Department of Environmental Quality
Business-as-Usual Under CAA 111 Standards
Power Plant Unit ID
Nameplate
Capacity
(MW)
CPIRP Pathway 3 (P3)
Fall Load Forecast Most Likely Subcategory Other possible
Subcategories
DEC Belews Creek 1 1,245.6 Medium-Term (Coal) -
2 1,245.6 Medium-Term (Coal) -
DEC James E. Rogers 5 621.0 Near-Term (Coal) Medium-Term (Coal) Near-Term (Coal)
6 909.5 Long-Term (Coal) Base Load (Natural Gas) Medium-Term (Coal)
DEC Marshall
1 348.5 Near-Term (Coal)Medium-Term (Coal)
2 348.5 Near-Term (Coal)Medium-Term (Coal)
3 711.0 Medium-Term (Coal)Near-Term (Coal)
4 711.0 Medium-Term (Coal)Near-Term (Coal)
DEP Mayo 1A/1B 763.2 Near-Term (Coal)Medium-Term (Coal)
DEP Roxboro
1 410.8 Near-Term (Coal)Medium-Term (Coal)
2 657.0 Medium-Term (Coal)-
3A/3B 745.2 Medium-Term (Coal)-
4A/4B 745.2 Near-Term (Coal)Medium-Term (Coal)
DEC = Duke Energy Carolinas
DEP = Duke Energy Progress
•The 111 Sensitivity modeling shows that the CAA 111(d) Guidelines have little effect on Duke’s retirement plans for
existing coal units.
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Department of Environmental Quality
-
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050
2
CPIRP 111 Sensitivity Analysis - CO2 Emissions
P3 Fall Baseline P3 Fall Baseline w/ 111
CPIRP 111 Sensitivity Analysis - Effect of CAA 111 Regulations on CPIRP Pathway 3 Fall Load Forecast(difference between 111(b)/(d) Rules and Baseline, by generation type)
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Department of Environmental Quality
(10,000)
(8,000)
(6,000)
(4,000)
(2,000)
0
2,000
4,000
6,000
8,000
10,000
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050
Year
Steam EGUs - Coal
Steam EGUs - Natural Gas
CTs/CCs - Fuel Oil
CTs/CCs - Hydrogen
CTs/CCs - Natural Gas
Nuclear
Renewable:Solar PV
Renewable:Wind
Draft Rules under DevelopmentPreliminary Format/Outline
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Department of Environmental Quality
15A NCAC 02D .2700
Standards of Performance for Greenhouse Gas Emissions from
Existing Electric Utility Generating Units Under Clean Air Act
Section 111(d)
02D .2701 Purpose and Applicability
02D .2702 Definitions
02D .2703 Standards of Performance for Carbon Dioxide
02D .2704 Compliance Flexibilities
02D .2705 Monitoring, Recordkeeping and Reporting Requirements
02D .2706 State Plan Materials
Draft Rules under DevelopmentPreliminary Format/Outline
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Department of Environmental Quality
02D .2701 Purpose and Applicability
•Defines the EGUs that are subject to this set of Rules;
•Specifies excluded units; and
•Provides for invalidation/voiding of the rules (or a portion of the rules) in the event
that all or any portion of Subpart UUUUb is stayed, withdrawn, repealed, revoked, or
otherwise rendered of no force at the federal level.
Draft Rules under DevelopmentPreliminary Format/Outline
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Department of Environmental Quality
02D .2702 Definitions
•Includes the appropriate definitions from Subpart UUUUb; and
•Defines the affected EGU subcategories, including:
•“Near-term coal-fired EGU”;
•“Medium-term coal-fired EGU”;
•“Long-term coal-fired EGU”;
•“Base-load natural gas-fired steam generating unit”;
•“Intermediate-load natural gas-fired steam generating unit”;
•“Low-load natural gas-fired steam generating unit”;
•“Base-load oil-fired steam generating unit”;
•“Intermediate-load oil-fired steam generating unit”; and
•“Low-load oil-fired steam generating unit”.
Draft Rules under Development
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Department of Environmental Quality
02D .2703 Standards of Performance for Carbon Dioxide
•Provides the individual EGU emission limits based on application of BSER:
•medium-term and long-term unit-specific emission limits for coal EGUs; and
•natural gas-fired and oil-fired emission limits for base load, intermediate load,
and low load units.
•Also allows the EGUs to apply for alternative-form emission limits in lieu of the
individual EGU limits for coal-fired EGUs, including:
•An aggregate rate-based emission standard (i.e., averaged emission limit across
multiple units); or
•A less-stringent standard using the remaining useful life and other factors
(RULOF) provisions of 40 CFR Part 60, Subparts Ba and UUUUb.
Draft Rules under Development
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Department of Environmental Quality
02D .2704 Compliance Flexibilities
•Short-term reliability mechanism: Provides that coal-fired EGUs may exclude CO2
emissions from the compliance calculation for a given year, if those emissions occur
during periods of operation used to maintain electric service reliability during a system
emergency consistent with 40 CFR 60.5740b(a)(12)(i)-(vi).
•Reliability assurance mechanism: Allows extensions of up to one year for operation of
affected EGUs that are necessary for electric grid reliability.
•Allows an EGU to apply for a compliance date extension of up to one year if the EGU is
installing add-on control technology and is unable to meet the applicable control standard
due to circumstances beyond the owner or operator’s control. The request must include a
demonstration of the progress already achieved towards installing the controls, and
identification of the circumstances beyond the owner or operator’s control that
necessitate the additional time required.
Draft Rules under Development
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Department of Environmental Quality
02D .2705 Monitoring, Recordkeeping, and Reporting
•Provides the monitoring, recordkeeping, and reporting requirements to show compliance with the
emission rate standards, including:
•procedures for determining valid data for determining the CO2 emission rate for the
compliance year;
•procedures for monitoring CO2 emissions and electricity generation output;
•the requirements for recordkeeping and reporting of the results to the DAQ; and
•a requirement for the EGUs to maintain a publicly-accessible Carbon Pollution Standards for
EGUs website.
•Milestone Reports are required for medium-term EGUs:
•Initial Milestone Report no less than 5 years before the planned retirement date;
•Annual Milestone Status Reports each subsequent year; and
•Final Milestone Report no less than 6 months after the EGU is permanently retired.
•Near-Term coal-fired EGUs must maintain the records and submit the reports required in Subpart
UUUUb (40 CFR 60.5876b(a)(1)-(3)).
Draft Rules under Development
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Department of Environmental Quality
02D .2706 State Plan Materials
•Requires the EGUs to submit the information needed by DAQ to prepare the State Plan,
including:
•Classification of each EGU into a subcategory based on their planned retirement
date.
•Information on any additions of control technology.
•Changes to the fuel type for any of the affected EGUs.
•The DAQ must review this information, can request any additional information needed,
and incorporate the materials into the State Plan for submittal to EPA.
•Upon EPA approval of the State Plan, the provisions of the State Plan become binding
upon the affected EGUs.
Draft Fiscal Analysis under Development
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Department of Environmental Quality
Objective:
•Describe the potential effects of the proposed 111(d) Rules on the regulated EGUs, including costs and changes in emissions.
Approach:
•Review the 111 Sensitivity Analysis filed by Duke Energy for the CPIRP and determine the most likely compliance pathway for each EGU.
•Baseline = 2023 CPIRP Pathway 3 Fall Load Forecast (“P3 Fall Base”)Policy = CAA 111 Sensitivity Analysis
•Distinguish the impacts likely resulting from the CAA 111(d) Rules from those likely attributable to the CAA 111(b) Rules.
•Summarize the estimated impacts on the mix of electricity generation, fuel usage, emissions, and the present value of revenue requirements (PVRR) presented in the 111 Sensitivity Analysis.
•Estimate climate and health benefits using the social cost of carbon dioxide (SC-CO2) and EPA’s COBRA Tool for collateral emission impacts.
Draft Fiscal Analysis under Development
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Department of Environmental Quality
Additional Costs to the Private Sector May Include:
•Labor costs associated with developing and submitting the Interim Milestone Reports,
Annual Milestone Reports, and Final Milestone Reports;
•Labor costs for updating the EGUs’ Title V permits; and
•Labor costs associated with developing and maintaining a Carbon Pollution Standards
for EGUs website.
Costs to State Government May Include:
•Labor costs associated with reviewing Title V permit applications and Milestone Reports;
•Labor costs associated with developing and maintaining a DEQ website with information
pointing to Duke Energy’s Carbon Pollution Standards for EGUs website.
Current Status and Next Steps
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Department of Environmental Quality
Currently, DAQ is:
•Reviewing the data provided and CPIRP 111 Sensitivity Analysis;
•Drafting Rules and Fiscal Analysis; and
•Planning outreach and meaningful engagement.
Next Steps:
•Finalize draft rules and fiscal note; and
•Conduct outreach to stakeholders affected by the rulemaking.
Department of Environmental Quality
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 May 2024 Concept to Air Quality Committee (AQC)
March 2025 Draft Rules to AQC
May 2025 Request to Environmental Management Commission (EMC) to Proceed to Comment and Hearing
summer 2025 Public Comment Period and Hearing
Sept 2025 Adoption by EMC
Oct 2025 Rules Review Commission Approval
Nov 2025 Tentatively Effective
May 2026 State Plan due to EPA
EGU GHG Emission GuidelinesTentative Rulemaking Timeline (Subject to Change)
Contact
Department of Environmental Quality
Bradley Nelson
Rule Development Branch
NC Division of Air Quality
919 707 8705 office
[e-mail]
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Katie Quinlan, EIT
Rule Development Branch Supervisor
NC Division of Air Quality
919 707 8702 office
[e-mail]
Randy Strait
Planning Section Chief
NC Division of Air Quality
919 707 8721 office
[e-mail]
Department of Environmental Quality
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Questions?