Lender, Insurers, manufacturers, regulators lack standardized methods to gauge the accuracy of predicted energy consumption thus financial savings from energy efficiency upgrades. This presentation captures the nexus of relevant issues in recently published case study and market experience. Author Don Macdonald of Veritatis Advisors, 2015
3. The Carbon Nexus
“Lenders, insurers, manufacturers, regulators,
building owners and even engineering firms
lack standardized methods to gauge the accuracy
of predicted energy thus financial savings from
energy efficiency upgrades.”
5. Clean Air Act
EPA carbon “endangerment finding” 2009
Legal obligations kicked into gear:
Mobile sources CO2 – fuel economy
Newly built stationary sources CO2 – 111b
Mostly power plants, big industrial complexes
Existing stationary sources CO2 – 111d
Clean Power Plan (CPP) final release in June
7. Intrastate Coordination
•State agencies key roles in crafting reasonable compliance
plans to reduce CO2
•Participation of state departments - environment, air quality,
energy offices, public utility commissions, and consumer
advocate offices.
Key Take-Away
•States will benefit from early and comprehensive internal
coordination among these groups.
8. Multi-State Coordination
•Options of coordinating with other states to maximize
opportunities for low- cost compliance:
joint implementation plans
REC trading
trading permits or credits,
capturing cheaper sharing renewable energy
capturing lost energy efficiency
Key Take-Away
•States working together to exploit these opportunities may
benefit from additional flexibility to achieve reductions at lower
cost.
9. Least-Cost Planning
•Building blocks are not required to be implemented in the way
EPA laid them out
•States need to undertake least-cost planning in order to
determine the right combinations of for reducing electric sector
CO2 emissions.
Key Take-Away
•This should include consideration of single- and multi-state
compliance options.
10. Mass- Versus Rate-Based Compliance
•Mass- versus rate-based compliance can drive costs
•Compliance requires modeling rate-based (lbs./mwh) to a mass-
based (total tons) target.
Key Take-away
•The more standardized this translation process the easier for
states to coordinate
•Gaming of translation process? EPA may provide guidance.
11. Out-of-Rule Emissions – New Units
•The treatment of new fossil generating units—those covered by
Section 111(b) of the Clean Air Act is not entirely clear.
Key Take-Away
•Another Key area with potential for gaming the system which
requires attention
12. Coal Retirement
•Treatment of coal retirement appears to be quite different under
the mass- and rate-based systems (depending on the final rule),
and the details of 111(b) new units
Key Take-Away
•Monitor opportunities for retirement of uneconomic coal plants as
a means of compliance, think holistically
13. Enforceability
•Federal accountability of enforcement actions?
•EPA exploring “state commitment approach” – “Trust Us”
Key Take-Away
•Some additional flexibility, big brother is watching
14. Nukes
•Retirement and failure to complete under-construction units could
drive up costs for state
•EPA’s proposal assumes credits for
• preservation of a portion of states’ existing nuclear capacity,
and
• Capacity under construction and available during the
performance period.
Key Take-Away
•The need to take small steps, the reductions associated with their
generation will have to be made up elsewhere.
15. Efficiency Measurement
•The rule will require some standards for energy efficiency
evaluation, measurement and verification (EM&V)
•Harmonization of state energy efficiency approaches on EM&V
Key Take-Away
•The more standardized these rules, the easier it will be for states
to coordinate for compliance
•Financial market securitization
16. Key Legal Issue
•The CPP takes a systems-based rather than a source-based
approach to emissions
Key Take-Away
•Illegal for EPA to take a systems approach when setting carbon
performance standards?
•Illegal for it not to?
17. Energy Assessments (EA)
Area Sources – existing coal, biomass or oil boilers with
ratings ≥ 10 MMBTU/hr
Major Sources – all existing boilers and process heaters,
1/31/2016
Duration of EA based on consumption/Unit size, etc.
Manufacturing Boiler
NESHAP – 40 CFR 63
DDDDD
18. Post 2008 energy assessments (EA) meeting
requirements usable
Existing ISO 50001 EnMS or compatible Mgmt.
system (IPMVP) that includes the affected units
Prior Energy Assessment or
Energy Management System?
40 CFR 63 DDDDD
19. Scope of Coverage
40 CFR 63 DDDDD
Major Sources
Industrial, commercial and
institutional Boilers
Process Heaters
19 Subcategories
•All Fuels
•New or reconstructed post
2010
•Existing Boilers
Area Source Boilers
Industrial, commercial and
institutional Boilers
7 Subcategories
•All sizes, gas fired exempt
•New or reconstructed post 2010
•Existing Boilers
20. Key Requirements
40 CFR 63 DDDDD
• Emission Limits
– Major Sources
• Single Units >10
MMBtu/hr
• Mlt Units < 10
MMBtu/hr
– Area Sources
• Units >10 MMBtu/hr
• Units < 10 MMBtu/hr –
W.P.
• Work Practices
– Tune Up’s
• Energy Management System or
Energy Assessment
– EA
• Major Sources One Time
• Limited Use exemptions
• Area Sources – Existing
Coal, biomass or Oil > 10
MMBtu/hr
• Compliance Demonstrations
– Performance Testing
– Monitoring
– R&R
21. Not required, to use results of the EA to increase the energy-efficiency and cost-
efficiency of their boiler system, However
Title V Implications
Option: Efficiency Credits
•Compliance Demonstration in lieu of installed controls
Energy Assessment Results
40 CFR 63 DDDDD
22. EM&V Performance
Improvement
One Off – Energy Assessment
Pro’s
•Quick Results
•Voluntary
•Cost Horizon
Con’s
•No drivers
•One Off Project Mentality
•Recurring Failures
Standardized EM&V
Pro’s
•Driver built-in to Culture
•Measured Results
•Clear Goals
Con’s
•Accountability
•Cost horizon
40 CFR 63 DDDDD Continuous Mgmt. System