Florida Department of Environmental Protection FDEP Regulatory Updates Greg DeAngelo Florida DEP, Division of Air Resource Management July 30, 2009

Status Updates and Future Projects Greenhouse gas cap-and-trade Ozone nonattainment areas Clean Air Interstate Rule (CAIR) New Source Review (NSR) rule Other upcoming regulations July 30, 2009 | 2

Florida's Cap-and-Trade Project Drivers for the department’s rulemaking Governor’s Executive Order Florida Climate Protection Act § , Florida Statutes Rulemaking process Initial notice of rule development, July 2007 Additional notice, May 2009 Five workshops to date, one planned for late Aug FECC interaction, ERC hearing, Legislature July 30, 2009 | 3

Federal Cap-and-Trade in Development “Waxman/Markey bill” Henry Waxman (D-CA) & Edward Markey (D-MA) “American Clean Energy and Security Act of 2009” “H.R. 2454” Economy-wide legislation Cap-and-trade for utilities (and other industries) CO 2 emission standards for new coal power plants Renewable energy and energy efficiency mandates Transportation and fuels provisions Reports, studies, project funding, etc. July 30, 2009 | 4

H.R Design Features Track Florida Federal legislation mirrors many design elements that have been emerging as a consensus opinion during our rulemaking. Declining cap to reach goals by 2050 Phase-in period with free distribution of allowances Split allocation between emissions and generation Transition to an auction Creation of a strategic reserve Direction of allowance value to energy efficiency, demand side management, and rate payer relief July 30, 2009 | 5

Florida vs. Federal CO 2 Caps (proposed) July 30, 2009 | 6

Continuing Our Process Continue the valuable work Building consensus Identifying issues important to Florida Laying groundwork for influencing federal rules Develop offset policies Key to early success of cap-and-trade Methodologies and verification are critical Many potential biomass-related projects in Florida July 30, 2009 | 7

EPA's New Ozone Standard (March 2008) Primary (health) Secondary (public welfare) Both standards set at ppm over 8-hours Compliance determined via monitoring network 3-year average of the annual fourth highest maximum daily 8-hour concentration If any monitor in a "core based statistical area" shows ozone greater than 75 ppb, then whole CBSA is presumed to be in nonattainment. July 30, 2009 | 8

Ozone Compliance Values, 2006—2008 Violating CBSA as per the 2006—2008 data Pensacola Panama City Tampa—St. Petersburg—Clearwater Sarasota—Bradenton—Venice EPA to make designations by March 2010 Bay, Sarasota, and Manatee counties on the cusp Depends on consideration of 2009 data July 30, 2009 | 9

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Then What? State plan in place by March 2013 Adequacy of current regulations CAIR will reduce NO X emissions at coal-fired power plants; most controls will be added by Gasoline vapor emissions rule reduces VOC; it is expanding from 7 counties to statewide by Federal emission and efficiency standards for new cars and trucks will also reduce NO X. Not reinstating vehicle inspections! Determine which regulations are necessary Statewide NO X and VOC rules likely July 30, 2009 | 11

Status of CAIR CAIR trading rule is back…for now EPA working on CAIR replacement rule No proposal or schedule yet DEP going ahead with orders Allocating CAIR NOX ozone-season and annual allowances according to Rule Populating source accounts at Clean Air Markets Division Final orders will be posted July 30, 2009 | 12

CAIR Replacement Rule Many issues facing EPA: How to ensure sufficient upwind emission reductions, without over-control? How to determine whether one state significantly contributes to nonattainment in another state? What remedies to apply? (Still a role for trading? Expand to cement kilns and industrial boilers?) EPA goal: Adopt legally defensible replacement rule in two years 2012 is earliest possible year for any resulting benefits Too late for inclusion in nonattainment SIPs for 1997 standards; may help with 2008 ozone standard July 30, 2009 | 13

CAIR Implementation in Florida Proposed order allocating new-unit set-aside allowances for 2009 issued mid-July Proposed order re-allocating baseline-unit allowances for (August) Proposed order allocating compliance supplement pool allowances for 2009 (September) Proposed order allocating baseline-unit allowances for (October) Requests for ozone-season/annual new-unit set- aside allowances for 2010 due February/May 2010 July 30, 2009 | 14

CAIR Controls in Florida Controls in place or being added during 2009—2010 to coal-fired EGU SCR or SNCR systems at 24 of 31 units 83% of Florida's coal-fired rated generating capacity FGD or other SO 2 control systems at 25 of 31 units 88% of Florida’s coal-fired rated generating capacity Large NO X and SO 2 reductions expected July 30, 2009 | 15

Other Nonattainment Area Rulemaking Nonattainment area new source review (NSR) Need to revise rules Add NSR reform provisions Previous NSR reform effort only updated the attainment (PSD) rules New national ambient air quality standards (NAAQS) New nonattainment area designations Update standards and designations to match pending federal ones July 30, 2009 | 16

Other Nonattainment Area Rulemaking Annual operating report revision Streamline reporting requirements for minor VOC and NO X sources Create new emissions statement rule; less burdensome alternate Revise VOC & NO X RACT rules Allow transition period for new nonattainment areas Consider statewide applicability July 30, 2009 | 17

Other Upcoming Regulations Air general permits and exemptions Convert Title V to non-Title V Update rules to account for new federal internal combustion engine (ICE) requirements Repeal mercury budget (Clean Air Mercury Rule) Streamline, clean up, remove obsolete material Stay updated at our new web page! July 30, 2009 | 18

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