On Aug. 3, President Obama and the U.S. EPA announced the final version of the Clean Power Plan. That same day, EPA issued final carbon pollution standards for new, modified and reconstructed power plants, and proposed a federal plan and model rule to assist states in implementing the CPP. These are the first-ever national standards that address carbon pollution from power plants. Nationwide, the CPP will help cut carbon pollution from the power sector by 32 percent from 2005 levels, by 2030.

Carrying out EPA’s obligations under section 111(d) of the Clean Air Act, the CPP sets CO2 emissions performance rates for affected power plants that reflect the best system of emission reduction (BSER), and leaves it up to the states to develop their own plans to achieve those rates, with guidelines for the development, submittal and implementation of those plans. The agency describes the steps toward compliance as a glide path, by having mandatory reductions begin in 2022, and the phasing in of the BSER measures between 2022 and 2029 to enable states the ability to chart their own individual emissions reduction trajectories. By September 2016, states will need to submit either a final plan or an initial submittal with a request for an extension. States requesting an extension will have until September 2018 to submit final plans, either alone or in cooperation with other states.

Since August, states and their utilities have begun reviewing the ruling and using that analysis to plan how they will incorporate low-emitting, renewable energy sources into state implementation plans (SIPs) to comply within EPA’s timeline.

There are two types of CPP state plans: a source-based “emissions standards” plan and a “state measures” plan. There are also two category-specific emission performance rates to calculate state rate-based goals and state mass-based goals that reflect a state’s mix of affected power plants. This gives states a range of choices in developing their plans, particularly for those seeking to adopt mass-based trading programs or other statewide policy measures. Within the CPP are three building blocks to help states gradually meet their goals. Building block one is improved efficiency at power plants, the second building block is shifting generation from higher-emitting coal to lower-emitting natural gas power plants, and the third building block is shifting generation to zero-emitting renewables.

Yet to be Seen
Biomass is one contender in states’ range of energy sources. The Biomass Power Association is advocating for the utmost benefits to the biomass industry by helping states and utilities understand the implications surrounding biomass in carbon reduction plans. The CPP is potentially a very positive development for biomass facilities that came online on or after Jan. 1, 2013, according to Bob Cleaves, president and CEO of the BPA. He adds that for older facilities, the plan holds little downside and, encouragingly, won’t regulate biomass as a carbon-emitting energy source. What remains to be seen is how facilities can become classified as “qualified biomass.” This will have a lot to do with which feedstocks states include in their plans, subject to the EPA’s approval.

The agency is also accepting comments on its model federal plan, which will go into effect in states that don’t submit their own plans. As a means to identify the types of feedstocks used in each state where biomass is an energy source, the BPA developed a survey. “When the CPP came out in August, it became very clear that this question of feedstocks is going to be an important one to answer, so we put together this survey,” says Carrie Annand, vice president of external affairs with the BPA. “What we hope to get from it is just a really defined list of all of the feedstock that not only our members, but everyone involved in the biomass industry, are using for fuel, and we’re going to use that to comment back to the EPA on the proposed federal implementation plan, which is the model plan that will go into effect if they don’t submit a plan by next September.”

The EPA tasked the Scientific Advisory Board to determine how to account for emissions from all biogenic sources. The SAB’s conclusion about biomass may soon be released, but how these proceedings will be reflected in the CPP and other policies is still unknown. “It’s still pretty unclear exactly what the impact is going to be,” Annand says.

The biomass industry is working together on the ruling, Annand continues. “I think everyone is still trying to come to terms with how the CPP is going to affect their industry,” she says. “For biomass, the most important thing to note is that biomass is recognized in the CPP as a low-emitting renewable, so that means that it’s not included as a fossil fuel, as an affected electric generating unit.”

In other words, biomass can be viewed by states as a reliable, baseload technology that can fill in the gaps if, and when, they start to reduce power from fossil fuel sources, Annand says. She explains that a lot more wind and solar developments are going to be able to participate in SIPs, and much of the existing biomass fleet just won’t have that opportunity, so it remains to be seen how states are going to build biomass into their plans.

Utility companies view the uncertainty surrounding how biomass will count towards CPP compliance as an issue. “The notion of a “qualified biomass,” in our view, should be any biomass from any source—as opposed to just closed loop, or biomass grown specifically for bioenergy utilization,” says Al Rudeck, vice president of strategy and planning with Minnesota Power. “We anticipate the EPA’s SAB determination on qualifying biomass will have an impact on how states look at which resources will be utilized in their plans.”

According to Annand, some of BPA’s utility members are looking at the fact that they have biomass assets as an advantage, but for companies without biomass, she could not speculate as to what their outlook is on incorporating new biomass assets.

Minnesota Power has been working on reshaping its energy mix from predominately coal to its EnergyForward mix of one-third renewables, coal and natural gas. As late as 2005, MP was a predominately coal-based utility with about 95 percent of its power supply coming from coal-based energy. “Our renewable strategy includes wind, water, wood and wavelength (solar), and we see a role for biomass to play in this future renewable energy portfolio, as it is an abundant natural resource, particularly here in northeastern Minnesota,” Rudeck says.

South Carolina utility Santee Cooper also has been working toward reducing its carbon emissions. “The notion that we are heading toward a carbon-constrained world is not a surprise. Because of that, Santee Cooper actually started planning a decade or more ago for this very moment,” says Mollie Gore, manager of corporate communications with Santee Cooper.

The company set a goal that by 2020, 40 percent of its customers’ energy needs would be met through nongreenhouse gas emitting sources. “We know we’re going to have to, we know we need to and we know we will be adding renewables, taking other steps to, again, further impact that emissions reduction,” Gore says.

The company is in the process of figuring out exactly what that looks like, she adds, but indicates that biomass is a big part of the company’s renewable portfolio. The company currently generates 130 MW from renewables, with about 100 MW of it from biomass. “That is a resource that is available in South Carolina, so it’s been a good fit for us,” Gore says.

Compliance Coordination
Planning for compliance is still in the early stages. “In our view, the rule represents among the most sweeping regulations that EPA has ever developed,” Rudeck says. “It is quite complex, and several important technical documents were not released by EPA until it was published in the Federal Register on Oct. 23, so Minnesota Power continues to evaluate the rule and its potential impacts.”

Rudeck says that the SIPs, specifically, will be an important part of finalizing compliance plans around the rule, if it should survive legal challenge. EPA believes the CPP is lawful and will, indeed, withstand the lawsuits currently filed, which includes 24 states.

“State coordination will be most important—with our Minnesota Pollution Control Agency, Public Utilities Commission and Large Power customers, other regional utilities and other interested stakeholders,” Rudeck says. “A CPP that meets state stakeholder expectations is under development and Minnesota Power is actively engaged. As well, we are coordinating with our industry partners in North Dakota, as a large percentage of North Dakota power production is utilized by Minnesota customers, including some on our system.”

Biomass comprises about 2 percent of MP’s energy mix, but represents about 100 MW of capacity on the company’s system.  “We see this biomass footprint remaining relatively constant moving forward, as any biomass additions are expected to be modest and will likely come from increased biomass percentage utilization for the most part,” Rudeck says. “As laid out in our 2015 Integrated Resource Plan, we are planning solar and natural gas additions and a major new 500-kilovolt transmission line called the Great Northern Transmission Line to bring clean Canadian Hydro to our system.” He adds that MP believes diversity of the nation’s energy supply is important, and coal can and needs to remain in the mix.

At this time, Rudeck says, wind energy certainly has an economic advantage over biomass in the Midwest. “That said, we like biomass, as it is a reliable and dispatchable energy source, so we believe it can and should be part of a balanced, diversified energy mix,” he says. “The local nature of biomass, and the role harvest and utilization of coproduct wood waste plays must also not be overlooked.”

Another point Rudeck mentions that in many federal forests, and some state forests, poor management practices have left forests unhealthy and prone to fire hazards. “We think a marriage of healthy and sustainable forest practices with niche biomass generating facilities, particularly in combined-heat-and-power design mode can make a lot of sense.”

MP’s and Santee Cooper’s paths toward compliance will differ, and the CPP was designed that way. “I do know of some states that are moving right ahead with their plans and are asking utilities and others involved in the energy industry to contribute and to comment on their sources of power and how they can help meet the standards,” Annand says. “It probably will vary from state to state, but I imagine that there is probably a lot of coordination going on, if what I’ve seen so far is any indication.”

Rudeck acknowledges that each state will play a critical role in how the rule is shaped and implemented, and as such, working with Minnesota stakeholders to recognize biomass as a part of the path forward is something MP is working on.

Gore says that as a utility, Santee Cooper is focused on working with other states’ stakeholders on exactly what the state’s response needs to be. “Early on, as the CPP authors were doing their work in Washington, South Carolina stakeholders got together and really began reviewing the situation—talking about different initiatives and building spreadsheets—all that we needed to do to be ready for when the draft plan was announced and then coordinate a response for when we had common things to say.”

Biomass cofiring continues to be implemented at foreign power plants, but has yet to be deployed to the same degree in the U.S. “As long as SIPs recognize biomass generation as a viable means to comply with the CPP—either under a mass-based program or receiving emission reduction credits under a rate-based program, companies will certainly consider biomass cofiring, so long as it can be done safely and economically,” Rudeck says. “Natural gas and wind are formidable competitors to biomass cofiring, both from an economic and efficiency standpoint.  We see biomass playing more of a niche role, where companies could keep existing facilities operating and take the edge off the carbon dioxide emissions with some cofiring.”

MP believes more work needs to be done to advance the safety and economics of biomass cofiring for it to become a widespread, viable option, but many in the biomass industry believe there’s great potential, especially for cofiring with wood pellets. 

Forward-Looking Path
Both MP and Santee Cooper have biomass facilities, but not all that came online after the EPA’s cutoff. “One of our concerns is that EPA has arbitrarily selected 2013 as a new benchmark for qualifying actions—whether they are adding renewable energy, improving efficiency at customer sites or at our power plants, we believe this is a mistake and states will see through this and come up with solutions that work for each individual jurisdiction,” Rudeck says. 

He says MP’s Hibbard Renewable Energy Center is somewhat in the scope of the EPA’s CPP, as it was originally a coal-fired power plant repurposed to provide steam to Lake Superior Paper Industries, now owned by Verso. “Minnesota Power recently increased the amount of biomass to about 95 percent of the HREC’s fuel supply, in response to the EPA’s Industrial Boiler MACT rule, which will be part of the state’s implementation plan,” Rudeck says.

Santee Cooper has its Pinelands Biomass project with EDF Renewable Energy, which consists of two nominal 17.8-MW generating facilities located in Allendale and Dorchester Counties in South Carolina. The two projects interconnect to Santee Cooper’s transmission system adjacent to the sites with the generated renewable energy contracted to the utility under 30-year power purchase agreements. As for new projects, however, Gore says the company is too early in the planning process to identify specific projects for compliance. “Santee Cooper participates in the South Carolina Biomass Council, and we are part of a group there advocating for biomass credit as part of the Clean Power Plan,” Gore says. “Beyond that, corporately we are analyzing some of the different scenarios that could impact whether our existing biomass plants count, but we aren’t far enough down that road to speak about it. The biomass industry is a big part of the South Carolina economy, though, and so it would definitely be to the state’s benefit to get as much credit as possible under the plan.”

The BPA remains hopeful that the CPP could positively impact the biomass industry. “We see the CPP as definitely encouraging for biomass, and it is still unclear as to exactly how states are going to be formulating their plans, but we’re hopeful that biomass is going to play a big role,” Annand says. “We’re looking forward to working with states to make sure they know how to incorporate biomass and that all biomass assets are able to be counted in some way.”

Now, with the ruling out, questions remain, but utilities have begun their preparation toward compliance. “Now that we do have a final rule and we have a clear target, we are already rolling up our sleeves and getting to work,” Gore says. “We'll comply and be ready when the deadlines roll around.”


Author: Katie Fletcher
Associate Editor, Biomass Magazine
701-738-4920
kfletcher@bbiinternational.com