Clean Power Plan Kyra Moore Director, Air Pollution Control Program Prepared for: Midwest Energy Policy Conference October 6, 2015

EPA Actions on August 3, 2015 Carbon dioxide (CO 2 ) emissions from power plants Final rules –CO 2 emission standards for new power plants - 111(b) –CO 2 emission standards for existing power plants - 111(d) Proposed rule –Proposed Model rules for existing plants - 111(d) –Proposed Federal Plan for existing plants - 111(d) 2 Clean Power Plan

EPA Proposed Rules cont. Model Rule –EPA guide for acceptable Clean Power Plan –States can choose to use entire model rule, parts of model rule or create own rules Federal plan –Draft EPA Plan –Required if state does not submit a plan or submits a plan EPA cannot approve 3

Clean Power Plan - Overview The Clean Power Plan sets CO 2 emissions performance rates for existing power plants that reflect the “best system of emission reduction” (BSER) EPA identified 3 “Building Blocks” as BSER and calculated nationally consistent performance rates for fossil fuel-fired electric steam generating units and another for natural gas combined cycle units EPA translated the performance rates into mass-based and rate-based state goals using each state’s unique mix of power plants in 2012 The rule establishes guidelines for states to develop plans that require existing power plants to achieve either the performance rates directly or one of the state goals 4

Note: All goals are listed in units of lbs CO 2 /MWh 5 Mid-U.S CPP Rate-Goals Final vs. (Proposal) ND 1,305 (1,783) SD 1,167 (741) MN 1,213 (873) WI 1,176 (1,203) IA 1,283 (1,301) NE 1,296 (1,479) KS 1,293 (1,499) OK 1,068 (895) MO 1,272 (1,544) IL 1,245 (1,271) AR 1,130 (910) LA 1,121 (883) TX 1,042 (791) Mid-U.S. Range (ND and TX) Proposed Rule Range: (791 – 1,783) Final Rule Range: (1,042 – 1,305)

Missouri’s Statewide Clean Power Plan Goals Timeframe Rate Based Goals Mass-Based Goals (Existing Units Only) CO 2 Rate (lbs/Net MWh) CO 2 Emissions (Short Tons) 2012 Actuals 2,00878,039,449 Interim Average (2022 – 2029) 1,49062,569,433 Final (2030 and beyond) 1,27255,462, % 37% 26% 28%

General Process for 111(d) Plans EPA issues guidelines for existing sources –Often guidance contains “Model Rules” States develop plans and rules for affected sources in their state State submits plan to EPA for approval 1.EPA approves plan => complete 2.EPA disapproves plan – Federal Plan 7

Process for Clean Power Plan 111(d) Identify Sources – 21 Affected Sources Understand Goal – Missouri, 1272 lbs CO 2 /MWh Draft plan –Public Outreach –Stakeholder Input –Dialog with affected sources Public comment Missouri Air Conservation Commission approval Submittal to EPA 8

Plan – Work Ongoing Reviewing Final Rule/Technical guidance Webinars/Conference Calls –EPA and other experts –NGA Policy Academy Coordination with DED’s Division of Energy and Public Service Commission –Regular meetings and communication Outreach and Coordination - continuous 9

Path to Compliance CO 2 /MWh Current coal plants: –Newer plants ~1800 – 1900 lbs CO 2 /MWh –Rest of fleet ~ ~2400 lbs CO 2 /MWh Current Natural Gas Plants –Average of fleet 894 lbs CO 2 /MWh Increasing utilization of Natural Gas not enough to meet goal –Need Renewables and Energy Efficiency 10

Compliance Options Three Building Blocks: –Improve efficiency at existing plants –Redispatch coal to existing Natural Gas –Increase renewable energy Other options include: –Demand-side Energy Efficiency –New nuclear/upgrades to existing nuclear –Combined Heat & Power –Biomass –Natural gas co-firing/convert to natural gas –Transmission & distribution improvements –Energy storage improvements –Retire older/inefficient power plants 11

State Plan Approaches Choose form of the compliance goal –Rate-based: (lbs CO 2 /MWh) Performance rates, statewide rate-goal, or state-defined rates –Mass-based: (tons CO 2 ) Include or Exclude new units State measures option Different plan elements required depending on plan approach Interstate trading ability is affected by plan approach 12

Option for Compliance Clean Energy Incentive Program (CEIP) States award CEIP allowances for eligible Energy Efficiency (EE)/Renewable Energy (RE) projects and EPA matches the award Eligibility Requirements: –Construction (RE) or implementation (EE) must begin after the State submits final plan –Generation (RE) or savings (EE) must occur in 2020 and/or 2021 (EM&V plan required) –EE measures must serve low-income communities State participation is optional 13

Items for Consideration Coal retirements –Helps in Mass Based Approach Nuclear –Final Rule allows efficiency improvements to count towards compliance Trading Ready Rate Vs. Mass State Energy Plan 14

What 2030 Could Look Like Fuel Mix 2030 Rate-based Fuel Mix * 2030 Mass-based Fuel Mix * 2030 fuel mixes projections. Actual 2030 fuel will vary based on compliance options selected. NGCC = Natural Gas Combined Cycle; RE = Renewable Energy Draft – For Illustration Purposes

16 Clean Power Plan - Missouri Timeline * Tentative DateMilestone July 2016 Public Hearing for Initial Submittal/Extension Request August 2016 Adoption for Initial Submittal/Extension Request September 6 th, 2016 Initial Submittal Deadline August 2017 Missouri Air Conservation Commission (MACC) Adoption of 2017 CPP Progress Report September 6 th, CPP Progress Report Submittal Deadline April 2018 MACC Public Hearing for Final Plan May 2018 MACC Adoption of Final Plan September 6 th, 2018 Final Plan Submittal Deadline January 1 st, 2022 Interim Compliance Period Begins January 1 st, 2030 Final Compliance Period Begins * This timeline is tentative and gives the maximum time allowed to meet a Final Plan submittal deadline of September 6 th, 2018.

Clean Power Plan Website and List Serve 17 To receive updates on this topic: 1.Go to web page: Click on envelope and add your information

18 Questions? Kyra Moore MDNR Air Pollution Control Program (573)

Division of Environmental Quality Director: Leanne Tippett Mosby Date: 10/6/15 Nothing in this document may be used to implement any enforcement action or levy any penalty unless promulgated by rule under chapter 536 or authorized by statute. 19