Bill Harnett March 30, 2010 WESTAR Spring Meeting

EPA Actions Endangerment and Cause or Contribute Findings (Final December 15, 2009) 10 petitions to reconsider the action which EPA is currently carefully reviewing Mandatory Reporting Rule (Final October 30, 2009) Supplemental Proposed Actions (March 23, 2009) Oil and Natural Gas Industries that emit fluorinated gases Facilities that inject and store carbon dioxide (CO2) underground for the purposes of geologic sequestration or enhanced oil and gas recovery 60 Day comment period and public hearing on April 19, 2010 in Arlington, VA

EPA Actions (continued) In June 2009, the Administrator granted a Clean Air Act waiver of preemption to California. This waiver will allow California to implement its own greenhouse gas emission standards for motor vehicles beginning with model year Mobile Source Proposed Rule (EPA and NHTSA) (September 28, 2009) Apply to passenger cars, light-duty trucks, and medium-duty passenger vehicles, covering model years 2012 through Require these vehicles to meet an estimated combined average emissions level of 250 grams of carbon dioxide per mile, equivalent to 35.5 miles per gallon (MPG) if the automobile industry were to meet this carbon dioxide level solely through fuel economy improvements

EPA Actions (Continued) Proposed Reconsideration of Johnson Memorandum on “Regulated Pollutant” (October 7, 2009) Proposed GHG Tailoring Rule for Permitting (October 27, 2009)

Administrator Jackson to Senator Rockefeller IV (February 22, 2010) By April of this year, I expect to take actions to ensure that no stationary source will be required to get a Clean Air Act permit to cover GHG emissions in calendar year I expect EPA will phase-in permit requirements and regulation of GHGs for large stationary sources beginning in calendar year 2011 In the first half of 2011, only those facilities that already must apply for CAA permits as a result of non-GHG emissions will need to address GHGs GHG permitting for other large sources will begin in latter half of I expect the threshold will be substantially higher than the proposed 25,000 ton limit EPA does not intend to subject the smallest sources any sooner than 2016

Issues for States with GHG Permitting Resources Time for State Agencies to adopt the cutoffs Better estimates of numbers, types of sources, and workload Address key policy issues: BACT including redefinition of source Definition of “source” Cost effectiveness for BACT technologies What technologies are demonstrated Presumptive fee for Title V for GHGs and requirement for States and local agencies to charge for GHGs

Clean Air Act Advisory Committee Work Group on GHG Issues - Phase I Results and Follow-up Policy – Affirm where we are (or expand) on what control options “redefine the source”? What do “fundamental business purpose” and a project’s “basic design” mean? Does a proposed coal-fired power plant permit have to consider building a natural gas combine cycle unit as a BACT option? How should clean fuels be considered in the BACT process? Should carbon neutral CO2 (biomass) sources have to get PSD permits? How to evaluate energy efficiency in a BACT analysis? Can efficiency gains in other parts of the source (non-modified or non- emitting units) be considered? How to promote new and innovative control technologies? How to consider carbon capture and sequestration within the Top- down BACT process? Do power plants have to be made CCS ready even if not actually sequestering emissions for now

CAAAC Phase I Results and Follow-up (continued) Currently working directly with States on technical information, data and resource needs ORD GHG mitigation strategies database Performance and cost data on current/developing GHG control measures Current focus is on EGUs and cement industry Currently scheduled in summer 2010 RACT/BACT/LAER clearinghouse enhancements Working with States on format for GHG control data, gathering test data, links to State permit decisions, creating GHG controls message board, etc. PTE guidance Permit-by-rule Innovative control technologies Estimated resources for permitting GHGs Trade-offs with criteria pollutants and BACT Developing sector-based GHG control measures white papers Summarizing available technical information on sector-specific control options EGU, cement, refineries, iron and steel, pulp and paper Need for quick turnaround team to assist when unique questions or technologies are raised in permitting process OAR/OGC/Region 4 permit training development and workshop on GHGs