On June 2, the EPA released its proposed rules on existing coal fired power plants. In our press release, we discussed that the proposed standards call for reductions in carbon emissions from the power sector by 30 percent nationwide below 2005 levels by the year 2030.
In the proposed rule, the best system of emissions reductions (BSER) proposed is based on “a range of measures that fall into four main categories, or “building blocks…” Today, I want to talk about building block #4, demand-side energy efficiency, my most favorite compliance option!
In the proposed rule, the EPA developed a scenario to estimate the potential, at a reasonable cost, for demand-side energy efficiency, as they did with each “building block” that comprises the proposed best system of emissions reductions. In the demand-side energy efficiency scenario, EPA assumes that states are able to achieve an annual incremental savings rate of 1.5 percent of the electricity demand in 2030 (and before). EPA assumes that states will be able to ramp up their energy efficiency savings rate at 0.2 percent each year, starting in 2017.
That is a lot of technical mumbo jumbo. What does this actually mean for the Southeast? Significant increases in energy efficiency.
This chart shows that, if states use EPA’s reasonable assumptions regarding energy efficiency potential for compliance, energy efficiency savings in all Southeastern states will increase by up to 6 times over what they are currently offering, between now and 2029.
The cumulative EPA proposed goal in 2029 (red bar) is directly from the EPA’s proposed rules. The baseline, or the cumulative savings based on 2013 performance, (blue bar) is a number I calculated. I took energy efficiency as a percent of sales for each utility in 2013, and assumed that they would continue to save that exact same amount from 2014 to 2029. I assumed that, after 10 years, the energy efficiency measures would need to be retired, and the savings would expire. As you can see in the chart, different utilities would be closer to the EPA proposed goal than others. Gulf Power, if it continued to save the same amount of energy, every year, as it did in 2013, would be pretty close to the EPA goal. At the other end of the spectrum, two other Florida utilities FPL and OUC, would be nowhere near meeting the EPA proposed energy efficiency goals if they continue down their business as usual path.
The big caveat is that the utilities would need to continue to perform at the level they did in 2013. As you may know from our recent press release on Florida utility energy efficiency goals, the utilities in Florida are not planning to continue to perform as they did in 2013. They plan to basically eliminate their goals, which does not seem prudent given the direction of the EPA.
However, the States have incredible flexibility in designing their compliance plan. They could use even more energy efficiency if they decided to include state building codes and appliance standards. Or, they could also not use any energy efficiency at all. Regardless of the compliance strategy that will be adopted in your state, it is critical for all interested parties to let their elected officials know that they support EPA’s proposed rules.
More to come as we continue to dig into the rules and check out our newly-updated Carbon Pollution Standards page.