1. Greenhouse Gases: Federal Regulatory Experience Spring Environmental Law & Texas Regulatory Symposium Austin, Texas April 15, 2010 James W. Yarbrough U.S. EPA-Region 6

2. Outline Greenhouse Gas (GHG) Mandatory Reporting Rule Endangerment and cause or contribute to findings Tailoring Rule GHG vehicular emissions and Combined Automotive Fleet Economy (CAFE) standards Renewable Fuel Standard Geosequestration Regulations Executive Order 13514 Summarizing: What more may happen in 2010? Partnerships

3. National Greenhouse Gas Reporting Rule Effective January 1, 2010 Requires emitters > 25,000 mt CO2-e per year and 16 all-in source categories to annually report to EPA 6 GHG pollutants Does not require GHG controls

4. Background Directed by Congress in 2008 Appropriations Act Proposal signed March 10, 2009 Public Comment Period (April 10 – June 10, 2009) Final rule signed September 22, 2009 Published in Federal Register October 30, 2009 Took effect January 1, 2010

5. Purpose of the Rule Requires reporting of greenhouse gas (GHG) emissions from all sectors of the economy in the United States Provides accurate and timely data to inform future climate change policies and programs Does not require control of GHG

6. Key Elements of the Rule Annual reporting of GHG by: 25 source categories 5 types of suppliers of fuel and industrial GHG Motor vehicle and engine suppliers (except light duty sector) 25,000 metric tons CO 2 e per year reporting threshold for most sources; capacity-based thresholds where feasible Monitoring begins January 1, 2010; first reports due March 31, 2011 Direct reporting to EPA electronically EPA verification of emissions data Coming up: FR notices in 2010 on new source categories, electronic reporting, CBI

7. About 10,000 U.S. Facilities Covered

8. What GHGs are Reported? CO 2 CH 4 (methane) N 2 O (nitrous oxide) Fluorinated GHGs HFCs (hydrofluorocarbons) PFCs (perfluorocarbons) SF 6 (sulfur hexafluoride) Other fluorinated gases

9. Who Reports? Facility based reporting for all source categories for which there are methods Limited exceptions for a few reporters (e.g., fuel importers, vehicle and engine manufacturers outside of the light-duty sector)

10. Source Categories Not Included in Final Rule EPA plans to further review public comments and other information before deciding on these subparts: Electronics manufacturing Ethanol production Fluorinated GHG production Food processing Magnesium production Oil and natural gas systems Sulfur hexafluoride (SF 6 ) from electrical equipment Underground coal mines Industrial landfills Wastewater treatment Suppliers of coal Geologic sequestration Facilities with these source categories could be covered by the rule based on GHG emissions from stationary fuel combustion sources.

11. Endangerment and Cause or Contribute Findings On April 2, 2007, in Massachusetts v. EPA, greenhouse gases are air pollutants covered by the Clean Air Act. Administrator must determine whether or not emissions of greenhouse gases from new motor vehicles cause or contribute to air pollution Administrator signed proposed Endangerment and Cause or Contribute Findings for Greenhouse Gases under the Clean Air Act April 17, 2009 (published in FR April 24, 2009) Administrator signed the final findings on December 7, 2009 Final notice appeared in FR December 15, 2009 Final rule was effective January 14, 2010 At least 9 legal challenges to date

12. Stationary Sources and Proposed PSD and Title V Greenhouse Gas Tailoring Rule December 18, 2008, memo from former Administrator Johnson February 17, 2009: reconsideration of Johnson memo but does not take action to stay Johnson memo effectiveness (Administrator Jackson to Sierra Club) Tailoring rule proposed September 30, 2009 Applicability Covers ~70% of the national GHG emissions from stationary sources 14,000 large sources will require Title V permits (3,000 new) 400 new/modifications will require PSD review (100 new) Tailoring rule to be finalized in April 2010 and effective January 2011?

13. Q&A on tailoring rule Administrator Jackson reply to letter from Sen. Rockefeller and other Senators February 22, 2010 March 3, 2010 New York Times report of Administrators comments

14. GHG Vehicular Emissions and CAFÉ Standards

15. Rapid Increase in Transportation Greenhouse Gas Emissions in US Source: US Emissions Inventory (April 2008) EPA 430-R-08-005 Electricity distributed to other sectors

16. GHG (2,193 mmt CO2-eq, 2007) INVENTORY OF U.S. GREENHOUSE GAS EMISSIONS AND SINKS: 1990-2007 (April 2009). U.S. Transportation Sector GHG Emissions

17. Joint Rulemaking to Establish Vehicle GHG Emissions and CAFÉ Standards Establishes Vehicle GHG Emissions and CAFÉ Standards EPA: standards for emissions of greenhouse gases under the Clean Air Act DOTs National Highway Traffic and Safety Administration: standards for fuel economy under EPCA as amended in 2007 Proposal was published September 28, 2009 Comments closed November 27, 2009 This rule was finalized April 1, 2010 Effective January 2011 for MY 2012

18. Joint Rulemaking By 2016 the fleet average will be 35.5 miles per gallon, that is four years earlier than the CAFE law now requires. Projected reduction in oil consumption of approximately 1.8 billion barrels over the life of the program. Projected total reduction in GHG emissions of approximately 900 million metric tons. Incentives for manufacturers to produce flex-fuel vehicles and dedicated alt fuel vehicles.

19. Renewable Fuels Standard Energy Independence and Security Act (2005, 2007) Renewable Fuel Standard 2 in effect July 1, 2010 Biomass-based diesel 1B gal by 2012 Cellulosic biofuel 16B gal by 2022 Advanced biofuel 21B gal by 2022 Renewable biofuel 36B gal by 2022 All with % lifecycle GHG thresholds

20. Geosequestration (GS) Rule July 25, 2008 Proposed rule for Class VI GS wells - extended comment period closed 12/24/08 and thousands of comments were received August 31, 2009 Notice of Data Availability (NODA) - comment period ended 10/15/09 Provided an update on ongoing projects and research Requested comments on the use of an injection depth waiver allowing injection into non-USDW located above the lowermost USDW Requested an update on current state GS regulation activities April 15, 2010 Projected Final Agency Review (FAR) OMB may request congruent timing and review of Class VI GS rule and greenhouse gas (GHG) mandatory reporting rule (MRR) to ensure there are no redundant burdens

21. Executive Order 13514 Affects all federal agencies – lead by example Reduce GHG emissions by Energy conservation Fleet management efficiencies (reduce petroleum use by at least 2% per year through 2020) Renewable energy Inventorying and reporting GHG emissions Sets new performance requirements Extends water conservation requirements (26% reduction by 2020) Extends high-performance building requirements (by 2020, ensure that all new federal buildings are designed to achieve zero-net-energy by 2030) Sets stormwater management guidelines Sets solid waste reduction targets (by 2015, divert at least 50% of non-hazardous waste)

22. What more may happen from a regulatory perspective in 2010?

23. Possible Graham-Kerry- Lieberman legislation Power plants would face an overall cap on emissions that would become more stringent over time motor fuel may be subject to a carbon tax whose proceeds could help electrify the U.S. transportation sector industrial facilities would be exempted from a cap on emissions for several years before it is phased in. the legislation would also expand domestic oil and gas drilling offshore and would provide federal assistance for constructing nuclear power plants and carbon sequestration and storage projects at coal- fired utilities. – Climate Progress February 27, 2010

24. Other related bills Cantwell-Collins Carbon Limits and Energy for Americas Renewal (CLEAR) Act Alexander-Webb bill to encourage nuclear power Alexander-Carper bill to reduce Hg, SO2, NOx from power plants

25. Some EPA Voluntary Partnerships Greening the 2010 Cowtown Marathon Fort Worth Texas

26. Cost per ton of CO2 reduced to replace a coal-fired unit with various technologies Generation cost data (except nuclear) from EPRI (Generation Technologies in a Carbon-constrained World, 2005, assuming gas at $6MMbtu)

27. Potential for Energy Efficiency, Demand Response, and Onsite Renewable Energy to Meet Texas's Growing Electricity Needs, ACEEE, March 2007 Energy Efficiencys Potential for Texas

28. Contact Information Jim Yarbrough Yarbrough.james@epa.gov 214-665-7232