Mass. Final Rules Require More Stringent Carbon Emissions Reductions for Power Plants

Final rules issued by Massachusetts agencies to help the state meet its stringent climate goals will require 21 in-state power plants to tamp down their carbon emissions annually.

The Massachusetts Executive Office of Environmental Affairs and the Massachusetts Department of Environmental Protection (DEP) last week published a set of six rules designed to complement an executive order signed by Gov. Charlie Baker (R) in September 2016 and the state's 2008 Global Warming Solutions Act, which requires Massachusetts to slash its greenhouse gas (GHG) emissions 25% statewide from 1990 levels by 2020-and 80% by 2050.

The final rules seek to regulate emissions of carbon dioxide (CO₂) from power plants, sulfur hexaflouride from gas-insulated switchgear, and methane emissions from natural gas distribution mains and services. They also set a clean energy standard and requirements for transportation.

The power sector rules will require utilities and competitive generators to procure 16% of their electricity sales from clean energy sources in 2018, a figure that will increase 2% annually to 80% in 2050. Generators can comply using clean energy credits or alternative compliance payments.

Under the rule, clean energy suppliers-including hydro and nuclear generators-must demonstrate net lifecycle GHG emissions of at least 50% below those of the most efficient natural gas generator. They must also be located in ISO-New England's service area or close by.

Significantly, the new power sector rules establish an allowance trading program for CO₂ emissions from power generation. Also, it sets a sector-wide, annually declining limit on aggregate CO₂ emissions from the state's 21 large fossil fuel-fired power plants, from 8.96 million metric tons of CO₂ in 2018 down to 1.8 million metric tons in 2050. Allowance auctions are designed to begin in 2019, with direct allocations starting next year. Regulators are expected to complete a program review every 10 years, starting in 2021.

Compared to the proposed rule, the final Clean Energy Standard does not include requirements for municipal utilities beyond already-required emissions reporting. Additionally, it limits grandfathering of existing contracts between competitive suppliers and customers to accommodate power sold under existing contracts in 2018 and 2019.

According to the DEP, the final rules will have a minimal impact on customer bills, which are "unlikely to exceed 1% to 2%." DEP also claims allowance prices are likely to be low.

Regional power generators, however, are concerned about how to achieve required emissions targets. New England's power generators participate in a wholesale competitive market and the state is a participant in the Regional Greenhouse Gas Initiative.

Dan Dolan, who is the president of the New England Power Generators Association (NEPGA)-a trade association for competitive generators whose members include Dynegy, Calpine, NRG, PSEG Power, Dominion Resources, and other companies-said NEPGA and its members "stand ready to work with Massachusetts policymakers and other stakeholders to achieve the Global Warming Solutions Act mandates in a market-based, cost-effective and reliable manner."

However, he noted that power plants in the state have already cut GHG emissions by 60% since 1990. "This has driven Massachusetts economy-wide emissions down 24%, only 1% off its 2020 goal," he said earlier this year. "Despite this remarkable track record, DEP proposes to impose punitive regulations that would cause consumers across New England to pay more to increase emissions. That simply doesn't make any sense."

About 42% of the state's generation comes from natural gas-fired power plants, and it is likely that the majority of the target emissions cuts will need to come from those plants. Meanwhile, restructuring of the state power industry nearly 20 years ago has improved efficiency (measured in heat rate) for power plants in the states by 22%.

NEPGA stressed in testimony filed with the Massachusetts state senate and house in June that New England's electricity system is a region-wide market. "That means that policies in one state necessarily impact all the others," it said.

"Analysis conducted by ISO New England, however, demonstrated that if Massachusetts plants were compelled to run less, as they would need to in order to comply with the proposed regulations, emissions would actually increasein New England by 34,000 to 136,000 tons of CO₂ per year," it said.

"NEPGA is concerned that this proposed regulation, scheduled to be finalized in August, may have the dramatic unintended and unnecessary consequence of decreasing emissions within the Commonwealth at the expense of increasing emissions in the other states within the region."

-Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)

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