1. The Regulatory Tsunami
Rich Trzupek
Trinity Consultants, Inc.

2. “In 2010, total U. S. greenhouse gas emissions were 6,865
“In 2010, total U.S. greenhouse gas emissions were 6,865.5 Tg or million metric tons CO2 Eq. Total U.S. emissions have increased by 11.0 percent from 1990 to 2010…”
Source: USEPA DRAFT INVENTORY OF U.S. GREENHOUSE GAS EMISSIONS AND SINKS: 1990 – 2010 – Executive Summary

3. “In 2010, total U. S. greenhouse gas emissions were 6,865
“In 2010, total U.S. greenhouse gas emissions were 6,865.5 Tg or million metric tons CO2 Eq. Total U.S. emissions have increased by 11.0 percent from 1990 to 2010…”
Source: USEPA DRAFT INVENTORY OF U.S. GREENHOUSE GAS EMISSIONS AND SINKS: 1990 – 2010 – Executive Summary

4. GHG Reductions Continue
Directly Targeted Regulations & Programs
GHG Permitting & Limits
Regional Programs
Renewable Portfolio Standards
Renewable Subsidies/Grants/Other Wastes of Money
Indirectly Targeted Regulations
Ambient Air Standards
Industrial and Utility Boiler Rules
Aggressive Enforcement

5. Coal BAD! Gas Good

6. GHG Permitting COAL RIP 300,000,000 BC to 2012 AD
Targets plants with 100,000 tpy CO2e emissions or more
Roughly a 10 MW coal plant or larger
VERY small in power generation world
Plants must use “Best Available Control Technology” to reduce GHG emissions
Detailed guidance to permit authorities
RIP
COAL
300,000,000 BC to 2012 AD

7. GHG Limits COAL RIP You Kept Us Warm 1,000 lbs CO2e/MW Generated
Combined cycle gas can do
Coal can not
EPA dances around Clean Air Act
30 year averaging!
Ignores financial reality
RIP
COAL
You Kept Us
Warm

8. Regional Programs COAL RIP We Dead Dinos
Regional Greenhouse Gas Initiative (East Coast)
Trading Program – active since 2009
Midwest Greenhouse Gas Reduction Accord (Midwest)
Western Climate Initiative (West Coast)
More regional trading on the way?
RIP
COAL We
Dead Dinos

9. Renewable Portfolio Standards

10. RPS Examples State RPS Target Target Year GHG Reduced (tpy) California
33%
2025
50,500,000
Illinois
25%
2026
37,800,000
Michigan
10%
2015
8,400,000
Ohio
27,000,000
Texas 7%
21,700,000

11. Why Subsidies?
Solar
Wind
Cost
Gas
Coal
Nuclear
Reliability

12. Obama’s Energy Policy
I’m bound to find
a parachute
somewhere….

13. New Ambient Air Regs.
National Ambient Air Quality Standards (NAAQS) define “clean air”
A moving target
Keeps EPA, enviros and consultants in business
Big projects must model to show compliance
New short term Nitrogen Oxides (NOx) NAAQS
VERY stringent
Coal plants can’t meet
New short term Sulfur Dioxide (SO2) NAAQS
Compliance by modeling, NOT monitoring!
Coal plants, refineries are targets

14. New Boiler Rules Boiler MACT Utility MACT
Targets industrial boilers
Stated goal: reduce toxic emissions
Real goal: stick it to coal
Unrealistic emissions limits
Energy efficiency requirements
Will hurt manufacturing
Utility MACT
Targets utility boilers
Real goal: (see Boiler MACT)
Both rules put EPA in the control room for first time

15. Enforcement Small coal boilers targeted too
Option 1: switch to biomass
Option 2: shut down
Option 3: enforcement
As rules pile on, enforcement opportunities grow
Less environmental return
BUT – keeps $ flowing in to EPA

16. Result 50 – 80 GW of Coal Plant Retirements over next ~5 years
Natural Gas fired turbines to fill most of gap
Solar/Wind can’t be base-loaded
Natural Gas meets GHG standards
Natural Gas plants can be built quickly
Much more GHG reductions – 500,000,000 tons +
Natural Gas VERY cheap now, but:
Prices historically not as stable as coal
Current glut will create demand
Increased shale gas regulation can affect price
Grid stability issues?
Unlikely – cost certainty the bigger issue

17. Thank you!