1. Clean Air Act Section 111 WESTAR Meeting Presented by Lisa Conner U.S. Environmental Protection Agency Office of Air and Radiation November 6, 2013

2. The President’s Climate Action Plan ► Calls on the federal government to work with states, cities, industries, consumers and the international community to address one of the greatest challenges of our time ► Reinforces the federal commitment to: ► Cut harmful pollution ► Protect our country from the impacts of climate change ► Lead an international effort to address a changing climate 2

3. Reducing Carbon Pollution From Power Plants President’s Directive to EPA: Set flexible carbon pollution standards, regulations or guidelines, as appropriate, for power plants under section 111 of the Clean Air Act Focus on these elements when developing the standards ► Stakeholder engagement on program design  States  Leaders in the power sector  Labor leaders  Non-governmental organizations  Tribal officials  Members of the public ► Flexibilities in the program design  Market-based instruments, performance standards, others ► Costs  Tailor regulations and guidelines to reduce costs ► Continued importance of relying on a range of energy sources ► Other regulations that affect the power sector 3

4. EPA’s Task Using the Clean Air Act Authority 1. Issue carbon pollution standards for new power plants ► Proposal issued on September 20, 2013  Informed by the more than 2.5 million comments received on the April 2012 proposal  Reflects recent developments and trends in the power sector 2. Issue carbon pollution standards for modified and reconstructed power plants  Proposal: June 2014  Final: June 2015 ► Will follow the agency’s open and transparent review process, including public comment and a public hearing 4

5. 3. Issue carbon pollution guidelines for existing power plants ► Issue federal guidelines for the states  Work in partnership with states  States will develop plans that set standards for existing sources  States use EPA guidelines as a reference ► Federal guidelines should build on states’ leadership and experience with programs that reduce GHGs ► Will follow the agency’s open and transparent review process, including public comment and a public hearing 5 EPA’s Task Using the Clean Air Act Authority

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7. ► Per the President’s Directive ► EPA will issue proposed carbon pollution standards, regulations, or guidelines, as appropriate, for modified, reconstructed and existing power plants  By no later than June 1, 2014 ► EPA will issue final standards, regulations or guidelines, as appropriate  By no later than June 1, 2015 ► EPA will include in the guidelines addressing existing power plants a requirement that states submit to EPA the implementation plans  By no later than June 30, 2016 7 Actions and Timing

8. What is state and stakeholder experience with programs that reduce CO 2 emissions in the electric power sector? ► What actions are states, utilities and power plants taking today that reduce CO 2 emissions from the electric power system? ► Including measures that may not specifically target CO 2 emissions but still lead to emissions reductions ► What systems do states and power plants have in place to measure and verify CO 2 emissions and reductions? ► How do state programs and measures affect electricity generation and emissions at a regional level? ► For example, are multi-state effects of state renewable portfolio standards, end- use energy efficiency resource standards, emissions performance standards and emissions budget trading programs currently accounted for by the state, and if so, how? ► How are interstate effects accounted for when measuring the progress of a state program? 8

9. How should EPA set the performance standard for state plans? ► Which approaches to reducing CO 2 emissions from power plants should be included in the “best system of emission reduction” that is used to determine the performance level(s) that state plans must achieve? ► Should EPA establish a system-based or source-based emission reduction requirement? ► How does the amount of flexibility that states are given to include different types of programs in their state plans relate to the “best system of emissions reduction” used to set the performance target for state plans? ► For example, if state standards to improve end-use energy efficiency would be included in state plans, should EPA consider potential improvements in end-use energy efficiency in setting the performance bar for states? ► What should be the form of the performance level in the EPA guidelines? ► Separate levels for each subcategory of sources, or one level for all covered sources in a state? ► When can emission reductions be achieved, considering different reduction strategies? ► What should EPA’s guidelines say about the dates by which state plans must achieve required reductions? 9

10. What requirements should state plans meet and what flexibility should be provided to states in developing their plans? ► What level of flexibility should be provided to states in meeting the required level of performance for affected EGUs contained in the emission guidelines? ► Can a state plan include requirements that apply to entities other than the affected EGUs? ► Must states place all of the responsibility to meet the emission performance requirements on the owners or operators of affected EGUs? ► Do states have flexibility to take on some (or all) of the responsibility to achieve the required level of emissions performance themselves or assign it to others? ► What components should a state plan have, and what should be the criteria for approvability? ► Can a state plan include programs that rely on a different mix of emission reduction methods than assumed in EPA’s analysis of the “best system of emission reduction” that is used to set the performance bar for state plans? 10

11. What requirements should state plans meet, and what flexibility should be provided to states in developing their plans? (cont.) ► What should be the process for demonstrating that a state plan will achieve a level of emissions performance comparable to the level of performance in the EPA emission guidelines? ► What enforceability, measurement and verification issues might arise, depending on the types of state measures and programs that states include in their plans? ► What issues are raised by actions that have indirect affects on EGU emissions, such as improvements in end-use energy efficiency and increased use of renewable energy? ► Do different CO 2 reduction methods under different state plan approaches necessitate different timelines for the achievement of emission reductions? ► What issues arise from the fact that operation and planning of the electricity system is often regional, but CAA section 111(d) calls for state plans? ► How should interstate issues be addressed, where actions in one state may affect EGU emissions in another state? ► Where actions have interstate impacts, which state would receive credit for the emission reductions in its state plan? Could EPA provide for coordinated submittal of state plans that demonstrate performance on a regional basis? 11

12. What can EPA do to facilitate state plan development and implementation? ► Many states are deploying a range of policies, programs, and measures that reduce electricity sector CO 2 emissions. ► In these circumstances, the potential role of a model rule is less clear, and any such model rule would need to consider the unique regional and sometimes integrated nature of these existing programs. ► What types and amount of guidance and implementation support should be provided to states? ► EPA is exploring whether and how to develop a “toolbox” of decision-making and implementation resources for states. ► Are there benefits for coordination among neighboring states in the development and submittal of state plans? Should EPA facilitate the coordination of multi-state plan submittals? ► Would certain types of measures that might be included in state plans increase the need for coordination among states? 12

13. Ongoing Engagement ► Continue discussions ► Within States - Connect with your stakeholders and state colleagues, especially energy regulators and energy offices ► With EPA – Share your insights on important design considerations Participate in meetings hosted by EPA Regions To initiate separate meetings with EPA, contact Lora Strine strine.lora@epa.govstrine.lora@epa.gov Submit written design suggestions to carbonpollutioninput@epa.govcarbonpollutioninput@epa.gov 13