environment

1. Environmental Issues in
Electricity Demand Response
New England Demand Response Initiative
July 17, 2002, Holyoke, MA
Nancy L. Seidman
Massachusetts Dept of Environmental Protection
Bill White
U.S. Environmental Protection Agency, Region 1
Ken Colburn
Northeast States for Coordinated Air Use Management

2. Topics to Cover
 Background
– Pollutants of concern and their impacts
– Progress to date
• Remaining Environmental Challenges
– Regulatory outlook and timeline
– Regulatory framework: state and federal
permitting
– Distributed generation
• Economy–Environment Convergence?

3. Pollutant of Concern and
Regulatory Standards
• 7 federal (US-EPA) public health standards
– four important for power generation
– SO2, NOx, CO and PM2.5
• Ozone and PM2.5
– levels and trends
– next steps in federal programs
– next steps in state programs
• CO2 and Hg - emerging issues

4. Health Effects of
Exposure to Ozone
• Coughing
• Nose, and throat irritation
• Chest pain
• Reduced lung function
• Increased susceptibility to respiratory illnesses
• Aggravation of asthma
• Children and people with chronic lung diseases
are particularly at risk

5. Health Effects of Exposure
to Fine Particles
• Premature death
• Respiratory related hospital admissions and emergency
room visits for cardiac and other conditions
• Aggravated asthma
• Acute respiratory symptoms
• Chronic bronchitis
• Decreased lung function (shortness of breath)
• People with existing heart and lung disease, as well as
the elderly and children, are particularly at risk

6. Fine particles, or haze, impairs
health and visibility
Hourly conc. of
The Boston
fine particles in
skyline on a
the 9-11 µg/m3
clear day
(Jan. 12, 2001) range
The Boston Hourly conc. of
skyline on a fine particles
hazy day 55.4 µg/m3
(March 8, 2001)

7. CO2 emissions contribute to global climate change –
which is projected to have serious and wide-ranging
impacts on human health and the environment

8. Mercury poses serious risks to human
health and the environment
• Mercury bioaccumulates – concentrates – in fish and
animals that eat them – including humans
– 41 states now have mercury-based health advisories for fresh-
water fish, including all New England states
• High dose exposures can cause serious neurological and
developmental effects:
– Mental retardation, limb deformities
– Blindness, cerebral palsey, seizures
• Low dose exposures can cause:
– Adverse developmental effects on attention, fine-motor functions,
visual-spatial abilities and verbal memory
• Other possible effects: carcinogen, heart disease, adult
immune system, and reproductive system

9. Air Programs Have
Made Great Progress
• Automobile tailpipe, inspection & maintenance,
and cleaner gasoline programs
• VOC & NOx control requirements for industry
• Power plant control strategies:
• Acid rain program: SO2 and NOx
• NOx RACT in 1995
• OTC’s NOx budget program -- 1999 and 2003 caps
• Section 126 petitions and NOx - - SIP call reductions in 2004
• State multi-pollutant power plant programs – MA, CT and NH

10. Ozone: Downward Trend for Both
Old 1-Hr and New 8-Hr Standards

11. SO2 Emissions From New
England Power Plants
45 0000
400000
35 0000
300000
2 5 0000
2 00000
1 5 0000
1 00000
5 0000
0
1 980 1 990 1 995 2 000
Y ear s

12. NOX Emissions From
New England Power Plants
1 60000
1 40000
1 2 0000
1 00000
80000
60000
40000
2 0000
0
1 990 1 995 2 000
Y ears

13. Improvement in U.S. New Car Emission Standards,
1965 - 2005
Composite Relative Emissions
of a New Light-Duty Vehicle
25
20
15
10
5
0
1965 1970 1975 1980 1985 1990 1995 2000 2005
Source: NESCAUM

14. Outlook: Environmental
Challenges yet to be Addressed
• Implementation of eight-hour ozone
national ambient air quality standard
• Implementation of fine particulate standard
and regional haze program
• Acid rain
• Mercury from coal burning
• Greenhouse gas emissions

15. Fine Particles are a Significant
Problem in California and in the East
1999-2001 Annual Mean PM 2.5
Preliminary Estimates Without Consideration of Data Completeness
(Data from AQS - 4/5/02)
Virgin
Islands
Alaska Hawaii Puerto Rico
well above the level of the standard
at or above the level of the standard
approaching the level of the standard
EPA
Terence FitzSimons
AQTAG
well above the level of the standard

16. Areas Recommended by the States as
Not Meeting EPA’s Ozone Standard
Based on 1997-1999 ozone data

17. Timeline for Implementing
New Ozone and PM Standards
2003 EPA finalizes implementation guidance
2003-4 States recommend nonattainment designation
and boundaries
2004-5 EPA finalizes nonattainment designations and
boundaries
2007-8 States submit control strategy SIPs
Mercury MACT requirements take effect?
2009-15 Attainment deadlines for ozone and PM
2015?-18? Requirements for CO2, and additional
reductions in NOx and SOx?
¬ ISO NE projects peak electricity demand to increase
by 13-20+% in 2009-2015

18. Prognosis for Clear Skies / “4-P”?
• Key Issues:
– Carbon in or out?
– Levels and timetables; “re-opener”
– Allocation approaches (input, output, permanence, etc.)
– Trading constraints?
– “There’s a deal here…”
• Compared to 1990 Clean Air Act Amendments?
– President: Much less committed...
– Industry & Enviros: Much more committed...
• Best Guess:
– Clear Skies and S.556 (Jeffords) are DOA in the Senate
– Development of a “3rd Way” is underway
– 2003 Session or “Someday”

19. How Does Permitting Work Today?
• State and Federal permitting roles
– Federal rules (large new sources – New Source
Review/Prevention of Significant Deterioration)
– State delegation – other sources
• Federal Air Quality Standards link to permit
limits
– For large power plants dispersion modeling used to
determine ground level impact
– Differences among states in how small sources are
handled

20. SIP – State Implementation Plan:
Links federal and state efforts
• SIP – state implementation plan
– EPA designates areas that don’t meet health
standards
– SIP = state regulations and programs to bring
areas into compliance with federal standards
– Some measures are required, others are
optional, i.e. up to each state
– Approved by EPA

21. A State Implementation Plan

22. What’s in a SIP
• Plans
• Commitments
• Regulations
• Letters and Attestations
• Administrative Documentation
• Technical Support and Background
Documentation

23. Considering Control Strategies
• Review Emission Inventory
• Review available Control Technologies
• Provide costs (for regulated community,
for state)
• Determine Effectiveness of Controls and
Programs

24. What is distributed generation
and why is it growing?
• Distributed Generation (DG) is electric generation
on site
– < 1 MW and up to 10 MW
DG is growing because:
• Need for greater reliability and power quality- tiny
outages can cost millions of dollars
• Load/demand response programs pay customers to
shed load - often switching to on-site generators
• High electricity prices mean on-site options more
attractive

25. DG has the potential to create
environmental benefits by . . .
• Achieving efficiencies of 80% and higher
through Combined Heat and Power (CHP)
• Increasing the contribution of low to zero
emissions technologies to power generation
• Reducing the need to run older, dirtier
reserve generating plants
• Reducing line losses

26. But, current DG trends present an
environmental challenge
• Diesel internal combustion (IC) engines
make up more than 90% of existing DG and
a similarly large share of new sales
• Diesel IC engines pollute at much higher
rates than new electric generating plants
• Even a few hours of operation can have big
impacts on air quality
• Regulations need to catch up with market
changes and new technologies

27. Diesel IC engines are far worse
polluters than new gas plants
3 SO2 NOx CO2 Mercury
(10 lbs/ MWh) (10 lbs/ MWh) (tons/ MWh) (0.0000001 lbs/ MWh)
2.5
2
1.5
1
0.5
0
Conventional Coal Diesel Engine Modern Gas Plant
Plant

28. Even low levels of DG use can
have big impacts on air quality
Potential Emissions Impact in Connecticut
(NOx tons on a given ozone season day)
90
80
70
60
50
40 tons/day
30
20
10
0
200MW x 200MW x 450 MW x 900 MW x OTC Budget
2 hrs 24 hrs 12 hrs 12 hrs
Source: Chris James, CT DEP
(post-contingency) (price-driven) (price-driven)
(capacity shortfall)

29. Some evidence that use of and
emissions from DG are rising
New Hampshire 1996 - 1999
• Share of electric generation ozone season NOx
emissions grew from 3.8% to 14% - nearly a four
fold increase
• Total NOx emissions from small diesel IC engines
doubled - from 278 tons to 576 tons - even as total
NOx emissions from all electric generators were
nearly halved, from 7314 tons to 3986 tons
Source: Andy Bodnarik, NH DEP

30. Regulations did not anticipate
today’s DG trends
• Most on-site generators are “emergency”
generators exempted from emissions requirements
• Emergency exemption assumed narrowly defined
circumstances for use - emergencies - not load
response or peak shaving
• Modification in CA, EPA has no plans to broadly
expand guidance for these units
• Many new units fall outside existing state and
federal permitting requirements

31. Permitting Requirements - MA
• No permit required < 3 MMBtu/hr fuel
input - 300 kw
• > 3 MMBtu/hr fuel input - best available
control technology (BACT)
• Emergency engine limits
• See 310 CMR 7.02, 7.03

32. Permitting Requirements - CT
• General permit language for emergency
engines - valid until 12/03
– units > 500 hp
• Annual tons per year limits - 5 tpy NOx,
SOx, 3 tpy PM
• Ultra low sulfur fuel required
• SW CT - 52 towns can participate in load
response

33. States and EPA are taking steps
to meet the DG challenge
• Ozone Transport Commission (OTC) Model
Rule lowers applicability thresholds for DG
• EPA and NESCAUM developing inventory
of installed on-site capacity in the Northeast
• Connecticut General Permit for Distributed
Generation issued earlier this year
• RAP model regulation

34. Bottom line: DG can be good for
the air, as long as it’s clean
• Update regulations to capture diesel IC engines
generating electricity
• Don’t increase use of emergency backup
generators
• Level the playing field for clean, efficient DG by
removing regulatory and market barriers and
creating incentives
• Clean DG can help add capacity while reducing
emissions

35. How Will EPA and States Meet
New Air Quality Challenges?
• Upcoming emission reduction programs:
– 2004 automobile tailpipe and clean fuel stds
– 2007 heavy duty diesel standards
• Local emission reduction measures
– E.g., diesel retrofit and low sulfur diesel fuel
programs
• Reduction of regional transport from power
plant emissions: Clear Skies Initiative

36. Simultaneous Economic Growth and
Environmental Improvement
Sources: 1970 - 1999 emissions data is from the National Air Pollutant Emissions Trend Report, (EPA, March 2000).
Projections for SO2 and NOx are derived from the Integrated Planning Model (IPM). GDP data through 2000 is from
the Bureau of Economic Analysis, GDP projections follow EIA’s assumptions in AEO 2001 of 3% growth per year.