Letter to EPA on Clean Air Transport Rule

This letter responds to the Environmental Protection Agency’s proposed Clean Air Transport Rule, issued July 6, 2010. The rule would improve air quality by requiring major reductions in power plant emissions of nitrogen oxides and sulfur dioxide in 31 states and the District of Columbia, as specified in the Clean Air Act. Significantly, the proposed rule acknowledges energy efficiency as an approach to help reduce emissions.

In our comments, we recommend that EPA allow states to incorporate energy efficiency measures into their compliance plans and that EPA provide greater technical assistance and guidance to help them do so. 

Alliance Letter - Full Text

October 1, 2010

RE: Docket ID No. EPA–HQ–OAR–2009–0491

The Alliance to Save Energy (the Alliance) is grateful for the opportunity to comment on the proposed rule Federal Implementation Plans To Reduce Interstate Transport of Fine Particulate Matter and Ozone also known as and henceforth referred to as the Clean Air Transport Rule (CATR).

The Alliance is a nonprofit coalition of business, government, environmental and consumer leaders that supports energy efficiency as a cost-effective energy resource and advocates energy-efficiency policies that minimize costs to society and individual consumers, and that lessen negative environmental impacts. The Alliance has worked extensively with energy utilities, commercial and industrial firms, public agencies, consumer and environmental organizations, and others to promote energy efficiency as an approach to mitigate the environmental impacts of energy use as well as to achieve other benefits.

The Alliance commends the EPA for recognizing the benefits of end-use energy efficiency as a means to reduce pollutant emissions from electrical generation not only in the current Notice of Proposed Rulemaking (NOPR) but also in the previous Clean Air Interstate Rule (CAIR) and associated guidance. As stated in the NOPR, “EPA believes that achievement of energy efficiency improvements in homes, buildings, and industry is an important component of achieving emissions reductions from the power sector while minimizing associated compliance costs. By reducing electricity demand, energy efficiency avoids emissions of all pollutants associated with electricity generation, including emissions of NOx and SO2 targeted by this rule.”

The Alliance appreciates that the EPA wishes to expedite implementation of the CATR and relieve states and localities of significant workload by means of proposing a Federal Implementation Plan (FIP) in lieu of issuing a notice for State Implementation Plans (SIP Call).  However, the Alliance believes that the EPA does not provide sufficient guidance for states that may opt to submit a SIP, including SIPs that may recognize energy efficiency approaches to reduce regulated pollutant emissions. 

As noted in the NOPR, under a FIP the EPA allocates emission allowances directly to individual sources.  However, we understand that some states may prefer to use their own procedures, rather than EPA’s, to allocate emissions allowances to in-state sources.  In some cases states may wish to include set-asides for energy efficiency and renewable energy (EERE) measures.  The Alliance believes that states following their own procedures, including inclusion of EERE set-asides, should not affect the approvability of SIPs because the distribution of allowances within a state does not affect overall emissions in the state.

However, the NOPR does not provide guidance to states on what EPA would accept as allowance distribution approaches or mechanisms.  The Alliance urges EPA to:

• indicate to states that it will duly consider state SIPs that incorporate FIP components but only differ in terms of allowance allocation mechanisms; 
• provide guidance on what allowance distribution approaches or mechanisms it will accept; and
• provide guidance on criteria that state SIPs would have to meet to allow applicable emission sources in a state to participate in the interstate emissions trading program.

The Alliance understands that those states that incorporated EERE set-asides under CAIR required significant technical assistance from EPA, the Department of Energy (DOE), and outside consultants.  Each of those states individually struggled to determine EPA-acceptable SIP parameters, including such things as, among others, additionality and enforceability concerns, measurement & verification (M&V)  issues, and types of energy efficiency measures that could be eligible for set-asides.  Guidance offered in the previously cited 2004 EPA document “Guidance on State Implementation Plan (SIP) Credits for Emission Reductions from Electric-Sector Energy Efficiency and Renewable Energy Measures” is at a very high and broad level and was of limited utility for state and local air quality agencies seeking to incorporate EERE set-asides into their programs.

Thus, the Alliance urges the EPA to provide greater guidance and technical assistance to states on incorporating EERE set-asides or other energy efficiency provisions into a SIP, including:

• model rules; and 
• advice on measure eligibility, M&V, and other parameters that must be met for EPA acceptance of a SIP.   

We note that the Commonwealth of Massachusetts implemented a successful EERE NOx allowance set-aside program under CAIR in which EERE set-asides have been oversubscribed and such allowances have been sold in the market. Thus, Massachusetts may serve as a good case for guidance and assistance to other states.  (We also recognize that some states may opt for an alternative EERE set-aside program in which emissions allowances attributed to EERE are retired as creditable NOx reductions under the SIP rather than sold into the market.)

The EPA may find useful resources on energy efficiency options, programs, deployment, M&V, and other pertinent issues in the work conducted through the National Action Plan for Energy Efficiency (NAPEE) and the ongoing State Energy Efficiency (SEE) Action Network.   Further, a number of states affected by CATR have existing electric utility energy efficiency programs and requirements that have addressed questions of defining and determining energy savings, M&V, additionality, and other issues that may be useful in the development of SIPs acceptable to the EPA. The SEE Action Network also could serve as a vehicle for providing guidance and technical assistance to the states on EERE set-asides.  

Again, the Alliance applauds the EPA for recognizing end-use energy efficiency as an important means to reduce pollutant emissions. We thank you for the opportunity to comment on this important rule and hope that these comments are useful.

Sincerely,

Floyd DesChamps
Vice President, Policy and Research
Alliance to Save Energy