A Peek Into The Future?…U.S. EPA’s Energy Efficiency and Renewable Energy Roadmap Manual

About ten years ago, the U.S. EPA began publishing guidance regarding how states could take credit for emissions reductions realized through electric sector energy efficiency (EE) and renewable energy (RE) policies and programs. The initial guidance[1], was published in August 2004 and was followed by guidance related to addressing emerging and voluntary measures in state implementation plans[2] in September 2004, guidance on incorporating “bundled measures” in a state implementation plan (SIP)[3] in August 2005, and modeling guidance for demonstrating attainment with the Ozone and PM2.5 national ambient air quality standards (NAAQS) and Regional Haze[4] in April 2007.  These initial EE/RE guidance documents were intended to prompt states to take credit for emission reductions related to EE/RE in their SIPs.  However, the initial guidance apparently resulted in very few instances of states incorporating EE/RE policies and programs into SIPS. The reasons cited for the limited use of the initial guidance included a perception that the effort needed was not justified by reward (SIP credit), a lack of guidance from U.S. EPA, overly burdensome documentation requirements, and uncertainty regarding the achievable reductions.

On July 2, 2012, the U.S. EPA issued “new” guidance, referred to as the EE/RE Roadmap Manual (Roadmap); to assist states for incorporating EE/RE policies and programs into their SIPs.   The agency identified several reasons for the release of the new Roadmap, the most compelling for states being the increasingly stringent NAAQS levels, the need to find (and document) even greater emissions reductions where the majority of the larger emission point sources have already been controlled, and the realization that non-traditional emission reductions may be the most cost effective reductions available. In addition, the agency cited the increased state adoption of EE/RE policies and programs since 2004 that could result in air quality benefits (and that could be reflected in SIPs) and provided the following examples:

• At least 29 states have adopted renewable portfolio standards (RPS) requiring retail electricity suppliers to provide a fixed amount of retail power from renewable resources.
• States have significantly increased investment in EE programs with over 5 million dollars of ratepayer resources.

The Roadmap is comprised of a summary or “Main Body” document and a series of eleven (11) appendices that defines terms, explains the workings of the U.S. electric system, summarizes previous/existing EE/RE guidance, explains several state EE/RE programs and policies, describes the use and function of four alternative “mix and match” pathways, provides methodology for quantifying EE/RE emission and reductions and energy savings, and identifies examples of EE/RE policies and programs that have been adapted by states.  It also includes an extensive disclaimer which clearly states that it is not a regulatory action and does not create new guidance, but was issued primarily to “clarify existing guidance.”  The remainder of this article very generically identifies EE/RE strategies, summarizes the pathways identified in the Roadmap, provides a few examples of how several states are currently evaluating the use of the Roadmap, and identifies why this process is important for sources beyond EGUs.

What are EE/RE policies and programs?

Policies and programs are defined differently within the context of the Roadmap.  Policies are generally an enacted law or regulation by a state, locality or public utility commission (PUC). Both EE and RE and can be reflected in polices.  Examples of EE policies include energy efficiency requirements for new buildings or appliances, resource standards, and energy efficiency rebates that are enforced over multiple years.  Funding for such programs can occur via consumer surcharges, emission credit auctions (e.g. Regional Greenhouse Gas Initiative or RGGI), and federal funds.  RE policies are regulations, statutes, or PUC orders that require affected parties to acquire renewable energy or to commit to renewable energy funding, such as renewable portfolio standards (RPS).   EE/RE policies that result in emission reductions from fossil fuel-fired electric generating units (EGUs) that can be quantified can be addressed in a SIP and used as emission reductions for credit to attaining the NAAQS.

Programs are initiatives that are designed and implemented through education, outreach, incentives, and technical assistance and can be administered by a utility, state/local government, or a third party.  EE programs are designed to increase adoption of EE technologies/practices in targeted end use sectors. RE programs are designed to increase the production of and use of renewable energy sources.  EE/RE programs that result in emission reductions from fossil fuel-fired EGUs that can be quantified can be addressed in a SIP. Examples of programs include municipal building retrofit programs, municipal energy conservation plans, and EE awareness programs.

How Are Emission Reductions Quantified?

The emissions reductions associated with EE/RE policies and programs are almost entirely associated with the electric generating sector.  The Roadmap identifies a four step process for quantifying emission reductions associated with EE/RE policies and programs:

• Develop future projected baseline inventory[5] – The projected baseline inventory must document base year EGU emissions for the area (e.g., state).  Information that is needed to develop the inventory for the EGU’s in the area includes generation data, emission factors (e.g., lb pollutant /MMBtu energy input) and/or continuous emissions monitoring data.  Projected future emissions can be based on historic trends about the impact of population growth and migration, economic growth, fuel availability and prices, and technological progress. The baseline projection forecasts future emissions absent any additional policies but includes policies that are already in place.   Care must be taken to avoid double counting reductions.
• Estimate energy savings of EE/RE policies and programs – Energy savings represent the reduction in energy demand that result from EE/RE policies and programs.  In simplistic terms, the energy savings that result from the EE/RE policies and programs are subtracted from the baseline energy usage. While EE policies and programs may result in reduced demand, RE policies and programs in actuality will displace fossil fuel consumption with less polluting sources of energy, such as cogeneration.
• Understand EE/RE policy and program emission impacts in nonattainment areas – The impact of displaced EGU emissions on nonattainment areas must be evaluated to ascertain how the reductions will impact local air quality.  Following the quantification step (Step 4), regional air quality modeling should be used to evaluate how the reductions will improve air quality in the nonattainment area.
• Quantify “displaced” EGU emissions as a result of EE/RE policies and programs-  U.S. EPA identifies four (4) approaches to quantifying displaced EGU emissions as: 1) e-GRID sub region “non-base load” emission rates (basic approach), 2) capacity factor emission rates (basic approach), 3) historical hourly emission rates (midrange approach), and 4) energy models (sophisticated approach).  The basic approaches are appropriate for screening analyses while more complex approaches (energy modeling) will simulate EGU operation and emissions taking into account various factors including electricity imports, exports, fuel price, and technology performance.

How Are EE/RE Policies and Programs “Captured” in SIPs?

U.S. EPA describes four available “pathways” in the Roadmap as:

• Baseline emissions projection pathway – This option is available for states to account for the impact of already adopted (i.e., on the books) EE/RE policies in their SIP. Revisions could be required through a SIP call if EE/RE reductions are relied upon and the EE/RE policy is not implemented as EPA has now detailed.
• Control strategy pathway – This option is available for states that are considering new (i.e., on the way) EE/RE policies prior to submittal of the SIP.  Any EE/RE policies that are incorporated into a SIP must be quantifiable, surplus, enforceable, and permanent.
• Emerging/voluntary measures pathway – This option is available for instances where states have adopted emerging and/or voluntary EE/RE initiatives (policies or programs) that are difficult to both quantify and enforces with limited SIP credit.
• Weight of evidence (WOE) determination pathway – This option is considered a supplemental analysis to an attainment demonstration where an area is not predicting attainment with a NAAQS based on modeling and the area wants to account for EE/RE policies and programs that could affect air quality.

As mentioned above, the use of EE/RE emission reductions by states in response to the 2004 and subsequent U.S. EPA guidance through 2007 was less than anticipated.  However, several states (Maryland, New York, and Massachusetts) are currently using the 2012 Roadmap in a pilot program with U.S. EPA in an effort to take credit for SIP reductions resulting from EE/RE initiatives using several of the pathways identified as described below.

Maryland[6] is evaluating the WOE pathway to take credit for existing non-traditional EE/RE programs such as RGGI, Maryland RPS program, and clean car/clean building programs to name a few.  Maryland is also approaching their SIP process from a “multi-pollutant” perspective which includes taking advantage of emission reductions associated with existing EE/RE initiatives.  The WOE approach includes the use of more actual monitoring data and more realistic future emission projections while including credit for EE/RE programs.  Maryland is working with the Northeast States for Coordinated Air Use Management (NESCAUM) and state universities to quantify emission reductions for multiple pollutants, model those reductions, and quantify the public health and economic benefits. The program has identified “meaningful” emissions reductions associated with EE/RE programs.

New York[7] is using the Roadmap to evaluate three programs as part of a case study: the Combined Heat and Power (CHP) conversion project for boiler MACT compliance, the NY – Sun Initiative, and the Build Smart NY Initiative.  Under the CHP program, the goals include the implementation of best practices and policies to support increased investment in CHP systems and industrial energy efficiency.  The NY Sun Initiative provides financial incentives for large photovoltaic projects and residential/commercial systems and provides funding for larger scale/aggregated systems with a focus on businesses and universities located in and around New York City.  A few stated goals of the Sun Initiative include the development of a robust solar industry in New York, improve grid reliability, and reduce air pollution.  Several Build Smart NY initiative goals include a 20% reduction of New York’s energy use intensity (EUI) within seven years, reduce greenhouse gas emissions, and job creation. New York is currently evaluating the emissions reductions associated with the three programs.

Massachusetts[8] is testing the baseline emissions projection pathway for existing state EE programs including the Massachusetts Global Warming Act and the Green Communities Act, with no imminent SIP intentions. The Massachusetts Global Warming Act requires 25% and 80% reductions of greenhouse gases (GHG) by 202 and 2050, respectively as compared to a 1990 baseline.  The Green Communities Act requires the “acquisition of all available energy efficiency and demand reduction resources that are cost effective or less expensive than supply.”

So What’s The Point?

The point is that taking credit for emission reductions that may or may not occur in a SIP as a result of an emerging or voluntary program that also may or may not materialize is a daunting task with many moving parts, and now U.S. EPA has laid out acceptable means and methodology to allow states to define and get credit for these emission reductions.  As mentioned above, this article barely scratches the surface regarding how such actions will occur and are actually occurring.  States are also discovering that quantifiable emissions reductions associated with EE/RE policies, programs, and initiatives exist and the use of the Roadmap is anticipated to expand as more states become familiar with the process and potential SIP benefits, especially in an era of increasingly stringent NAAQS.

Given the additional emerging interest in energy efficiency as a result of federal regulations (e.g., GHG Reporting Rule, GHG Tailoring Rule, proposed GHG NSPS for new EGUs (proposed 40 CFR Part 60 – Subpart TTTT Standards of Performance for Greenhouse Gas Emissions for Electric Utility Generating Units)), international regulations (e.g., Canada GHG Rule for New/Existing Powerplants), states emerging interest in “multi-pollutant” SIPs, and increasing interest from non-governmental organizations (NGOs) regarding the incorporation of energy efficiency/GHG standards into new regulations and permitting decisions, it may be only a matter of time before efficiency standards will be a mainstream emission reduction strategy given the current momentum.

References

[1] U.S. EPA, Guidance on State Implementation Plan (SIP) Credits for Emission Reduction Measures from Electric-sector Energy Efficiency and Renewable Energy Measures, August 2004.

[2] U.S. EPA, Guidance on Incorporating Emerging and Voluntary Measures in a State Implementation Plan (SIP), September 2004.

[3] U.S. EPA, Guidance on Incorporating Bundled Measures in a State Implementation Plan, August 2005.

[4] U.S. EPA, Guidance on the Use of Models and Other Analyses for Demonstrating Attainment of Air Quality Goals for Ozone, PM2.5, and Regional Haze, April 2007.

[5] Baseline projections, including energy supply and demand and related emissions, describe future year conditions and typically assume continuation of current trends and no changes in laws and regulations.

[6] Presentation at NACAA Spring Membership Meeting May 6, 2013 St. Louis, MO, Tad Aburn – Air Director, Maryland Department of Environment

[7] Presentation at NACAA Spring Membership Meeting May 6, 2013 St. Louis, MO, Robert D. Bielawa, P.E. – New York State Department of Environmental Conservation

[8] Presentation at NACAA Spring Membership Meeting May 6, 2013 St. Louis, MO, Nancy L. Seidman Assistant Commissioner Massachusetts Department of Environmental Protection