In June 2019, the U.S. Environmental Protection Agency (EPA) finalized the Affordable Clean Energy (ACE) rule, changing greenhouse gas (GHG) emissions reduction standards for existing coal-fired electric utility units.
ACE repeals and replaces the Clean Power Plan. It revises ongoing and all future emission guidelines for existing sources issued under the authority of Clean Air Act Section 111(d). This new rule, coupled with emission reductions expected from various other industry trends, intends to reduce carbon dioxide (CO2) emissions from the electric sector to as much as 35% below 2005 levels by 2030.
ACE provides states with the framework and the authority to develop state implementation plans (SIPs) that should reduce CO2 from existing coal-fired units.
The most substantive change the industry will experience is the flexibility states are afforded under ACE as compared to the Clean Power Plan. Each state will submit an SIP to the EPA, outlining actions for each individual unit to reduce GHG emissions. Such flexibility could result in a variety of impacts, depending on the choices made by each state.
Under ACE, the following eight specific technologies must be evaluated. States must determine what heat rate improvements, or greenhouse gas emission reductions, each technology could achieve. States will then accept or reject the technology based on cost, feasibility or other reasons supported in their evaluations. The technologies:
- Air heater and duct leakage control
- Blade path upgrade (steam turbine)
- Boiler feed pumps
- Improved operations and maintenance practices (staff heat rate improvement training, on-site appraisals, condenser cleaning)
- Intelligent sootblowers
- Neural network
- Redesign/replace economizer
- Variable frequency drives
States have three years to evaluate every electric utility unit and submit a SIP to the EPA. This evaluation involves a heat rate assessment to identify improvements that would reduce GHG emissions. The heat rate is the thermal efficiency of electricity production, which measures the amount of energy used to generate one kilowatt-hour of electricity. Units with a lower heat rate can generate the same quantity of electricity while consuming less fuel, as compared to units with a higher heat rate. Improved heat rates help power plants lower fuel costs and reduce greenhouse gas production on a megawatt-hour basis.
It is critical that states consider the compliance method as they set their limits for ACE. The EPA has requested that states show ACE compliance with the CO2 emissions limits using measurements that facilities are already collecting for other regulations reports (such as acid rain). However, these monitored measurements have a large margin of error. Therefore, the emission limit under ACE could very likely end up higher than what the industry has seen in past actuals.
States differ in their approaches to implementing ACE. Some already have requested all the information on each electric utility unit required to submit a SIP to the EPA. Others are putting together information requests to gather the necessary information and evaluate each individual unit. Some states have yet to take any action, wary of potential regulatory changes which may occur with an administration change.
Once an SIP is submitted, the EPA has six months to determine if the SIP is complete or not. The EPA will then act on the SIP — within 12 months after determining if it is complete, or 18 months after it is submitted if it is incomplete. If a SIP is incomplete or disapproved, the EPA has two years to issue a federal implementation plan.
As states navigate what’s right for their SIP, they can lean on firms with a deep understanding of environmental regulations and engineering experience to help assess units, report on evaluations and determine which units would benefit from heat rate improvements.
Air quality regulations can be nuanced. It’s essential, however, to see that they’re understood so that facilities are kept operational and in compliance.
