Tennessee and the Clean Power Plan
This webpage has been created by the Tennessee Department of Environment and Conservation (TDEC) to provide resources to help inform Tennesseans about the U.S. Environmental Protection Agency’s (EPA) Clean Power Plan and Tennessee’s approach to stakeholder outreach and plan development for Clean Power Plan compliance. TDEC is updating this page as additional information and resources become available.
Using its authority under the federal Clean Air Act (CAA), in August 2015, the EPA issued its final rule for carbon pollution emission guidelines for existing electric utility generating units (EGUs), commonly referred to as the Clean Power Plan. The Clean Power Plan aims to reduce carbon pollution emissions from power plants, which produce nearly one-third of U.S. total greenhouse gas emissions, while advancing clean energy innovation, development, and deployment. The final rule follows the June 2014 and October 2014 release of EPA’s proposed rule and supplemental proposed rule, respectively, for review and public comment.
In the Clean Power Plan, EPA establishes nationally uniform carbon dioxide emission performance rates for two subcategories of fossil fuel-fired EGUs: fossil fuel-fired electric steam generating units and natural gas-fired combined cycle (NGCC) generating units. These nationally uniform carbon dioxide emission performance rates are utilized to establish individual state targets based on each state’s unique generation mix. States are responsible for determining how they will meet these targets through development and implementation of state plans. Learn more about the Clean Power Plan.
According to EPA, the Clean Power Plan is projected to result in substantial environmental, health, and economic benefits. It will contribute air pollution reductions, amounting to an estimated $20 billion in climate benefits and $14 to $34 billion in health benefits, such as fewer premature deaths, heart attacks, asthma attacks, and missed schooldays and workdays. The Clean Power Plan also spurs investment in renewable energy technologies, which can result in the creation of new jobs and drive economic development. Jobs that increase energy efficiency within homes, buildings, and equipment are also projected to rise. EPA also estimates that consumers will see their monthly utility bills decrease over the long run as a result of the Clean Power Plan. By 2030, EPA projects the average American family will save about $7 on their monthly electric bill, or more than $80 per year. EPA projects these benefits on a national scale and does not provide state-specific anticipated benefits. Learn more about Clean Power Plan benefits.
EPA establishes nationally uniform interim and final carbon dioxide emission performance rates for fossil fuel-fired electric steam generating units and NGCC generating units, and provides states guidelines for the development and implementation of state plans. The performance rates established by EPA have been translated into state-specific goals based on each state’s unique generation mix expressed in a mass-based form (short tons of carbon dioxide) as well as a rate-based form (pounds of carbon dioxide per megawatt-hour). States are responsible for determining which goal form they will select for demonstrating compliance and how they will meet these goals through development and implementation of state plans. EPA provides states with the flexibility to select which particular emissions reductions measures it will use to ensure that interim and final carbon dioxide emission performance rates are met between 2022 and 2029 and by 2030, respectively. States are also responsible for reporting progress towards achieving goals during the interim period as well as continued achievement of final performance goals beyond 2030 to EPA.
As the environmental regulatory agency in Tennessee that implements programs under the CAA, TDEC will be responsible for developing and implementing Tennessee’s plan for compliance with the Clean Power Plan and submitting it and all associated materials to the EPA. TDEC’s efforts to develop Tennessee’s state plan for Clean Power Plan compliance will be informed through a robust outreach and public participation process that considers input from many critical stakeholders, including but not limited to the Tennessee Valley Authority (TVA)1, local power companies, individual power distributors, the State Legislature, Tennessee industries and businesses, local governments, community organizations, and citizens across the state. TDEC will also be responsible for providing EPA with required reporting before, during, and after the Clean Power Plan compliance period.
By September 6, 2016, states are required to either submit a final state plan for Clean Power Plan implementation or submit to EPA an initial plan submittal and request for an extension until September 2018. States receiving an extension from EPA will be required to provide a status update on state planning efforts to EPA by September 6, 2017 and will be required to submit a final plan to EPA by September 6, 2018. EPA has indicated that it will approve or disapprove a final plan submittal within a year of the date that it is received.
The Clean Power Plan compliance period, when states must begin complying by meeting interim targets, begins in 2022, and lasts through 2029. Within the compliance period, EPA has established three interim step periods with associated milestones, each of which are designed to foster state incremental progress towards required emissions reductions.2 States must meet their final carbon dioxide emissions reduction goals in 2030 and maintain performance thereafter.
EPA’s Clean Power Plan also includes a voluntary opportunity for states to obtain matching credit for early actions taken to reduce carbon dioxide emissions from the power sector through deployment of renewable energy projects and demand-side energy efficiency projects in low-income communities, also known as the Clean Energy Incentive Program (CEIP). EPA will make matching emission rate credits (ERCs) or allowances available to states to issue to projects that achieve carbon emission reductions in 2020 and/or 2021. Learn more about the CEIP.
EPA is the federal agency charged under the CAA to determine which air pollutants are harmful to public health and welfare. Under a Supreme Court decision in 2007 (Massachusetts v. EPA), it was determined that greenhouse gases meet the definition of air pollutants under the CAA, meaning they must be regulated if they are reasonably anticipated to endanger public health or welfare. EPA confirmed that greenhouse gases pose a significant threat to public health and welfare when it issued its endangerment finding in 2009. The power sector is currently the largest source of U.S. carbon emissions, followed by the transportation, industrial, residential, commercial, and agricultural sectors. In June 2013, President Obama directed EPA to work closely with states and relevant stakeholders to develop carbon emissions standards for existing power plants, and to finalize the standards by June 2015. EPA released its proposed rule in June 2014 and the final rule in August 2015.
Total U.S. Greenhouse Gas emissions by Economic Sector in 2013. Source: U.S. EPA.
In the Clean Power Plan, EPA issues nationally uniform emission performance rates for affected EGUs based on the “best system of emission reduction” (BSER),3 comprised of three potential pathways, or building blocks. These building blocks were developed by EPA based on the range of reductions that can be achieved at coal, oil, and gas plants at a reasonable cost. The three building blocks which reduce the carbon intensity of electricity generation in the Clean Power Plan are:
- Improving the operational efficiency (heat rate) of existing coal-fired power plants (Building Block 1).
- Shifting electricity generation from higher emitting fossil fuel-fired steam power plants to lower emitting natural gas-fired power plants (Building Block 2).
- Increasing electricity generation from zero-emitting renewable sources of energy (Building Block 3).
Recognizing the interconnected nature of electricity generation and distribution, these building blocks were applied by EPA to all coal plants and all natural gas power plants in the three regional electricity interconnects: Western, Eastern, and the Electricity Reliability Council of Texas. This determined an emission performance rate reflective of the application of BSER in each interconnect for each EGU subcategory. EPA chose the most readily achievable (highest) rate for each EGU subcategory from the three regions to become the emission performance rate reflective of BSER. This resulted in a final uniform carbon dioxide emission performance rate for existing fossil fuel-fired EGUs of 1,305 pounds per megawatt hour (lb/MWh) and a final uniform carbon dioxide emission performance rate for existing NGCC units of 771 lb/MWh. EPA also applied these rates to affected EGUs in each state to inform statewide goals in a rate-based form and a mass-based form. Each state has a different statewide goal based on its unique mix of affected sources.
EPA establishes two nationally uniform carbon dioxide emission performance rates: one for fossil fuel-fired electric steam generating units (1,305 lb/MWh) and another for nationally uniform carbon dioxide emission performance rate for NGCC generating units (771 lb/MWh). These nationally uniform carbon dioxide emission performance rates are utilized to establish individual state targets based on each state’s unique generation mix. Tennessee’s final (2030) statewide rate-based goal is 1,211 lb/MWh. Tennessee’s final (2030) statewide mass-based goal is 28,348,396 short tons.
TN Final Statewide Rate-Based Goal:
(1,305 lb/MWh * 2012 fossil steam share of affected generation) + (771 lb/MWh * 2012 NGCC share of affected generation) = (1,305 lb/MWh * 82%) + (771 lb/MWh 18%) =
TN Final Statewide Mass-Based Goal:
(TN Statewide Rate-Based Goal * TN 2012 Adjusted Generation) + (TN Statewide Rate-Based Goal * TN share of not capture BB3 * 2) = (1,211 lb/MWh * 41,706,940 MWh) + (1,211 lb/MWh * 2,553,524 MWh * 2) =
28,348,396 short tons
EPA also establishes interim period emissions performance goals and interim step period goals for both rate- and mass-based compliance options designed to keep states on target to reaching final emissions performance requirements. EPA also provides states with a mass-based goal with a new source complement for states as a mass-based compliance option which readily addresses leakage. Learn more about Tennessee’s goal and additional calculations.
States have a number of different opportunities available to reduce emissions for the purposes of Clean Power Plan compliance. Generally, these include: improving plant operational efficiency; shifting generation from fossil steam units to natural gas units; adding generation from new renewable energy or nuclear sources; increasing the efficiency of transmission and distribution; and reducing electricity demand through demand-side energy efficiency programs in industrial, commercial, and residential sectors.
In response to concerns raised by EPA’s proposal, the final Clean Power Plan includes a several components designed to ensure electric system reliability. States are provided eight years beginning in 2022 to phase in emissions reductions such that they comply with final emissions performance standards in 2030. This longer compliance period allows states to properly plan for necessary changes to electricity generation. EPA is requiring each state to demonstrate that it has considered reliability issues during the development of its state plan including consultation with appropriate reliability or planning agencies. States are also able to seek revisions to state plans in the event that unplanned or significant reliability challenges arise during plan implementation. Last, the Clean Power Plan includes a “reliability safety valve,” which allows for individual EGUs to temporarily exceed emissions standards under extraordinary circumstances where electric system reliability will be compromised. The Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) have committed to working together to monitor Clean Power Plan implementation to ensure reliable electricity generation and transmission. The plan is also expected to encourage energy efficiency, which helps lower demand growth and improve reliability. Learn more about maintaining reliable electricity in the Clean Power Plan.
Because EPA’s Clean Power Plan provides states the flexibility to determine how they will comply with emissions performance standards, it is difficult to predict which choices states will make in developing their state plans, and therefore, how the Clean Power Plan will influence electricity rates. However, EPA evaluates impacts associated with two illustrative approaches within its Regulatory Impact Analysis—a rate-based approach and a mass-based approach. Based on these illustrative compliance approaches, EPA has indicated that the Clean Power Plan will result in a 7% decrease in average electricity bills due to increased energy efficiency and reduced energy waste by 2030. By 2030, the Average family will save $7 on their electric bill each month ($84 annually). However, EPA does not provide state-by-state analysis of potential ratepayer impacts. Learn more about the Clean Power Plan Regulatory Impact Analysis.
The Tennessee Valley Authority (TVA) has indicated that it anticipates impacts to its electric generation strategy and rates to be minimal in Tennessee. TVA’s recently completed 2015 Integrated Resources Plan places the utility in a favorable position to comply with the Clean Power Plan. TVA has stated that their generation strategy and their existing projection of rate increases (an estimated 1.5% annually for the next 10 years, less than estimated inflation) have not been changed due to initial reviews of the Clean Power Plan. Individual state plan decisions and changes in the cost of natural gas could impact rates in the future.
Given the wide range of approaches that states may use to meet the requirements of the Clean Power Plan and uncertainty with regard to which choices states will make, quantifying the associated employment impacts is difficult. However, EPA evaluates estimated employment impacts for the utility sector, coal and natural gas production, and demand-side energy efficiency activities associated with two illustrative approaches in its Regulatory Impact Analysis. The EPA estimates that the Clean Power Plan will result in a decrease in the amount of work performed in the electricity, coal, and natural gas sectors and an increase in the amount of work performed pertaining to demand-side energy efficiency. EPA does not evaluate state-specific impacts to power sector jobs. Learn more about the Clean Power Plan Regulatory Impact Analysis.
Under the CAA, if a state does not submit an approvable implementation plan, EPA has the authority to impose a federal plan. EPA issued a proposal for a rate-based federal plan and a mass-based federal plan concurrent with the release of the final Clean Power Plan in August 2015. EPA intends to finalize the federal plan upon the necessity to implement it within a state and has indicated that it plans to finalize only one approach, either rate-based or mass-based. Based on the proposal, the federal plan would provide a state with less flexibility with regard to Clean Power Plan compliance than it would be afforded under a state plan.
If a federal plan is put in place for a state, that state has the option to submit a plan which, if it were approvable, would allow the state and its sources to exit the federal plan. Additionally, states may choose to take ownership over administrative aspects of implementation of the federal plan or may opt to submit partial state plans in order to take over a portion of federal plan implementation. Learn more about the federal plan.
TDEC welcomes input from all types of stakeholders on the development of its compliance plan and associated submittals to EPA. For this purpose, TDEC has developed a webpage dedicated to provision of the most current information pertaining to opportunities to engage in this process. Please visit the Tennessee Clean Power Plan Public Participation page for additional information and the latest updates regarding opportunities to get involved.
TDEC will provide the public an opportunity to provide feedback regarding Tennessee’s plans to comply with the Clean Power Plan. In fact, both the Clean Power Plan and Tennessee state law require TDEC to provide the public an opportunity for review and comment on the state’s compliance plan and its development. This includes participation opportunities prior to the following potential deliverables: TDEC’s initial plan submittal and request for extension, due to EPA September 6, 2016; TDEC’s final plan development progress update, due to EPA September 6, 2017; and TDEC’s final plan submittal, due to EPA no later than September 6, 2018.
EPA’s Clean Power Plan requires states to engage with stakeholders of all types, including stakeholders within low-income, minority, and disadvantaged communities, and to describe approaches utilized to identify vulnerable communities. TDEC is using a combination of methodologies and tools for this purpose.
Several fellow state agencies have existing relationships with vulnerable communities and TDEC will leverage these connections and established datasets for highlighting communities which may warrant additional consideration. For example, the Tennessee Housing Development Agency (THDA) is Tennessee’s housing finance agency created to promote the production of more affordable new housing units and the preservation and rehabilitation of existing housing units for very low, low, and moderate income individuals and families in the state. THDA has experience with identifying communities with a greater density of low-income households. The Tennessee Department of Economic and Community Development (ECD) has developed a county profile tool, which provides demographic, housing, income, tax, labor force, industry, employer, transportation, education, health and public safety, climate, and community data, and information for each county in Tennessee. ECD also has experience with working in locations across the state to drive industrial, community, and rural development.
TDEC has a Title VI and Environmental Justice Manager who has experience with managing disproportionate community impacts resulting from environmental regulatory actions. TDEC also plans to utilize present partnerships with community organizations which typically work with low-income and other vulnerable communities to identify specific stakeholders.
At the national level, EPA has developed a Clean Power Plan Environmental Justice Screening Report and proximity analysis, which provides demographic information for communities located within a 3-mile radius of affected power plants within the U.S. EPA’s EJSCREEN tool provides demographic information and environmental indicators for communities across the country.
For additional information about EPA’s Clean Power Plan, please visit EPA’s Clean Power Plan webpage.
1 The vast majority of electricity consumed in Tennessee is generated by TVA, whose service area covers 99.7% of the state. TVA is the only known owner and operator with affected EGUs subject to EPA’s Clean Power Plan in Tennessee. TVA also plays a significant role in electricity transmission, operating substations, switchyards and transmission lines across the state and serves as the balancing authority across the Tennessee Valley, responsible for maintaining balance between supply, demand and generation within the TVA service area and system connection to the Eastern Interconnect.
3 Under section 111(d) of the CAA, EPA determines BSER that has been demonstrated for a particular pollutant and a particular group of sources by examining technologies and measures already being used.