Home > Uncategorized > Murphy DEP’s Proposed New Greenhouse Gas (CO2) Emission Rule Is Far Weaker Than Obama EPA Clean Power Plan

Murphy DEP’s Proposed New Greenhouse Gas (CO2) Emission Rule Is Far Weaker Than Obama EPA Clean Power Plan

Would Reduce NJ CO2 Emissions From Power Sector Just 13% by 2035

Would reduce total State emissions just 2.6% by 2035

Methane Emissions Are Not Regulated

Unregulated free market in PJM grid would produce lower emissions than DEP rule

Proposal Would Allow NEW SOURCES of Greenhouse Gas Emissions

Proposal would allow current emissions to INCREASE

Transportation and Building Sector Emissions Remain Unregulated

Screen Shot 2021-12-06 at 10.15.31 AM

(*Source: Congressional Research Service Report)

The Murphy DEP just proposed the long awaited and long delayed “climate PACT” regulations regarding greenhouse gas emissions. You can read the full proposal here.

Before I begin to outline the details, we need the context.  According to the DEP’s most recent Greenhouse Gas Emission Inventory total GHG emissions in NJ were 97.7 million tons/year (2019).

Of that total, 19.2 million tons (20%) were from the electric power sector.

According to DEP, the best case, assuming full compliance with the rule and other rosy DEP projections, the power sector emissions would be reduced by 2.5 million tons per year by 2035. That’s just 13% of power sector emissions and just 2.6% of current total state emissions.

Transportation and building sector emissions are not regulated. They make up the large majority of GHG emissions.

Natural gas (methane) emission from major sources like pipelines, compressor stations, LNG plants, and LNG export projects are not regulated.

Electric demand is projected to double, which would greatly increase current emissions, not considering new emissions from economic growth. The proposal does nothing to address these concerns (e.g. by imposing a real cap on total emissions, prohibiting new major GHG emission sources and fossil infrastructure, phasing out current GHG power sources, mandating electrification of building and transportation sectors (new and retrofit  existing), mandating energy efficiency, increased renewable energy portfolio standards, emissions mitigation, mandatory offsets to get to “net zero”, imposing economic incentives like emission fees to reflect the “social cost of carbon”, or reviewing DEP air permits for consistency or compliance with the Global Warming Response Act emission reduction goals, like NY state climate law requires).

That is not a serious proposal and it was not designed to meet the old emissions reduction goal of the 2009 Global Warming Response Act or the new accelerated goal of Gov. Murpy’s recent Executive Order #274.

DEP even admitted that right up front, describing the proposal as an incremental “initial step“: (@ page 8)

this rulemaking is not meant to be viewed as the definitive action by the Department to ensure the State meets the 80×50 goal. Rather, this rulemaking is an initial step developed in response to current modeling and technology.

DEP also admits that the proposal would impact only a tiny handful of older power plants  – likely to retire anyway – that produce just 3-4% of NJ’s power.

But it is even worse than that.

More critical context. This lame DEP proposal comes shortly after dire warnings from scientists, and in the wake the Governor’s recent Executive Order accelerating greenhouse gas emissions reduction goals.

It is far weaker than the Obama EPA Clean Power Plan, which was proposed back in 2014 (see table above) in major respects, including total GHG emissions reductions and the allowable emission rates for the power sector.

[Note: I was a critic of the Obama CPP at the time it was proposed as far too modest. Proving that point, since it was proposed, market forces alone has delivered the projected 32% Obama emissions reductions, largely due to fuel switching from coal to natural gas.]

Read this Congressional Research Service analysis of the Obama CPP and compare the emission rates to DEP’s proposal:

Screen Shot 2021-12-06 at 9.21.00 AM

Here’s my first cut rapid review summary, limited to 10 bullet points:

1. Instead of simply regulating CO2 emissions (i.e. what actually goes up the stack), the DEP proposal is far narrower and only captures a small subset of the power sector that serves the grid and industrial boilers.

With respect to the power sector, the DEP proposal repeats all the loopholes and exemptions from the RGGI program.

DEP notes: (@ p. 16)

The Department proposes this applicability threshold, which is consistent with the CO2 Budget Trading Program rules, N.J.A.C. 7:27C, because the proposed CO2 emission limits for EGUs in this rulemaking are intended to reduce carbon pollution from electric generating units that provide electricity to the grid. …  The proposed 25 MWe threshold is consistent with other State and Federal regulatory programs, including the CO2 Budget Trading Program

This retains huge RGGI loopholes found in definition of “compliance entity” and allowance purchase requirements:

“Compliance entityshall not include any cogeneration facility or combined heat and power facility that is an “on-site generation facility” as that term is defined in section 3 of P.L.1999, c.23 (C.48:3-51) and sells less than 10 percent of its annual gross electrical generation. […]

In exercising this authority, the department shall exclude from the requirement to purchase or acquire any allowances under any greenhouse gas emissions trading program any cogeneration facility or combined heat and power facility that is an “on-site generation facility” as that term is defined in section 3 of P.L.1999, c.23 (C.48:3-51) and sells less than 10 percent of its annual gross electrical generation.

But even within the narrow scope of the power sector that produces electricity for the grid, the impact is small: (@ p. 22)

As of the date of publication of this notice of proposal, there are 40 EGUs that operate in the State and emit CO2 at a rate greater than 1,000 lb/MWh and less than 1,300 lb/MWh. These units account for approximately nine percent of the power produced in the State and approximately 10 percent of the CO2 emissions from the electric generation sector.

The proposal also does NOT impose CO2 or GHG emission fees of $130/per ton air pollution emissions fees for other polluters.

DEP misleadingly uses the “Social Cost of Carbon” only to analyze the economic benefits of the proposal. DEP does not use SCC as basis for establishing emission limits or as a basis for imposing emission permit fees.

2. The proposal defines methane as a greenhouse gas – that’s nothing new. DEP defined methane as a GHG back in 2005 – but it does not regulate methane sources. That means that huge methane emissions from pipelines, compressor stations, gas plants, and LNG exports will continue to be unregulated.

DEP does not analyze any GHG emissions reductions from methane. Instead, atonshingly, DEP considers methane in the “hazardous air pollutant” impact section, showing reductions of just 81 – 92 tons per year as co-benefits.  (@ p. 65)

DEP not only fails to regulate methane, they significantly underestimate its warming potential.

Methane is 86 times more potent a greenhouse gas than CO2 in 20 year time horizon. But here is how DEP (under)estimated the warming potential of methane (top of page 30)

Direct methane emissions released to the atmosphere (without burning) are about 25 times more powerful than CO2 in terms of their warming effect on the atmosphere.

Gee, now why would DEP seriously minimize the warming potential of methane like that?

3. DEP’s “output based” emissions approach allows CO2 emissions to INCREASE as power production increases. Same trap as efficiency standards in cars. Emissions increase as the increase in vehicle miles traveled exceed the efficiency increases (e.g. 25 MPG traveling 10,000 miles emits less than a 50 MPG car traveling 25,000 miles)

DEP admits that: (if demand doubles, then efficiency would need to MORE than double or emissions would need to be reduce by MORE than 50% in order to reduce emissions)

“The Department acknowledges that fossil fuel-fired electric generation in the State will continue to be needed until clean energy sources come online and clean energy technology advances to meet anticipated electric demand. As depicted in the EMP, with the electrification of buildings and transportation, the EMP predicts more than doubling electricity demand.” (@ page 18)

4. The DEP emission standards are actually weaker then the Obama Clean Power Plan:

“For the first tier, on or before January 1, 2024, existing EGUs must meet an emission limit of 1,700 lb CO2/MWh gross energy output. For the second tier, on or before January 1, 2027, the applicable limit ratchets down to 1,300 lb CO2/MWh gross energy output. For the third tier, on or before January 1, 2035, existing EGUs must meet a more stringent limit of 1,000 lb CO2/MWhgross energy output.” (DEP @ p. 17)

Compare that to the emission rates in Table 1 on page 16 of this Congressional Research Service Report on the Obama Clean Power Plan:

Screen Shot 2021-12-06 at 9.21.00 AMExample: the DEP’s strictest limit (third tier) is 1,000 lbs/MWhr by 2035. Over 95% of this fossil power will be from gas plants.

In comparison, the 2014 Obama EPA CPP set a standard of 898 lbs/MWh by 2022 for gas plants!

The DEP plan is also weaker than the Obama plan because NJ has almost all natural gas generated fossil (little coal) while the Obama plan had far lower rates for natural gas plants and the overall rates included higher emitting coal. Obama EPA also required some fossil power generators to procure renewable energy to achieve the average emission rates.

DEP notes this fact: (@ p. 11)

Of the total CO2e emissions from the electric generation sector, natural gas-fired electric generating units (EGUs) contribute 83 percent of these emissions, while coal-fired units account for 11 percent.

5. The DEP admits that the free market in current PJM grid will actually produce LOWER emissions than their regulations:

First tier:

“The Department’s rough projection calculated a 1,132 lb/MWh PJM CO2 marginal rate in 2024,which is lower than the proposed 1,700 lb/MWh CO2 emission limit that existing EGUs in New Jersey would need to meet by January 1, 2024.” (@ p. 20)

Second tier:

“the Department roughly projects a PJM CO2 marginal emission rate of 1,051 lb/MWh in 2027, which is lower than the January 1, 2027, proposed emission rate of 1,300 lb/MWh CO2 for in-State existing EGUs.”

Third tier:

“Again, looking at the 2015 through 2019 annual marginal on-peak CO2 emission rate trend, the Department roughly projects a PJM CO2 marginal emission rate of 834 lb/MWh in 2035, which is lower than the proposed emission rate of 1,000 lb/MWh by January 1, 2035.”

The FREE MARKET PJM grid (unregulated) will produce LOWER EMISSIONS than the DEP rule!

CO2 emissions will INCREASE under the DEP rules.

6. And the cherry on top is that DEP allows extension of the deadlines:

“the Department proposes to allow affected existing EGUs to apply for an extension of compliance, if the EGU must continue to operate to ensure electric grid reliability. Proposed N.J.A.C. 7:27F-2.5 sets forth the circumstances under which the Department will grant an extension of the compliance deadline(s).”

7. The “modification of exiting sources” section allows “case by case” standards. This is weaker than EPA’s “New Source Review” program under the Clean Air Act, where modifications trigger stricter new source standards. Polluters will be able to extend the life of the old plants without triggering stricter new emission standards.

8. Ironically, the emission standards for NEW units are consistent with the Obama CPP.

But there should NOT BE ANY NEW UNTIS ALLOWED!!!!!!

The New York State DEC just denied air permits for a new gas plant for exactly this reason: new fossil sources fundamentally contradict the goal of reducing current emissions. For an analysis of how the NY law differs from NJ’s toothless climate laws, see:

9. In terms of estimated emissions reductions that potentially could result from the DEOP proposal (i.e. best case, 100% compliance, rosy assumptions and projections hold) DEP estimates that reductions would be 2.5 million tons per year by 2035. This is just 2- 3% of current total emissions. It is not clear if RGGI alone would exceed these reductions (I haven’t looked at the RGGI cap lately). Regardless, such paltry reductions are a joke.

But again, DEP admits that the free market alone will provide greater reductions, absent the DEP rule. DEP openly admits this on page 58:

“Nevertheless, if PJM resources are called upon to meet the State’s capacity needs, then based on the projected PJM marginal rate, the State would still realize a net avoided CO2 emissions benefit.” 

10. The DEP estimates of the fossil boiler emissions reduction provisions of the proposal are even lame – just 71,000 tons per year.

DEP estimates that the fuel requirements would be less, just 101 tons per year

Bottom line: This is not a serious proposal.

It Will allow and result in increases in emissions.

It will not regulate methane or transportation and building sectors.

This is my first cut. More to follow.

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