CHP should also be part of EPA’s Clean Power Plan building blocks

Blog Post | September 04, 2014 - 9:43 am
By Meegan Kelly, Senior Research Analyst, Industry Program

EPA’s Clean Power Plan outlines four building blocks, each of which represent a category of measures that states can use to meet the first-ever federal regulation for reducing carbon dioxide from existing power plants. By including energy efficiency, EPA created a path for states to reduce both greenhouse gases and consumer energy bills, but the agency overlooked combined heat and power (CHP), a readily available energy resource that would provide states with substantial energy savings.

For a policy measure to be included as a building block under EPA’s proposal, the energy savings it provides should be cost-effective, adequately demonstrated, and there should be lots of it. Recently, we posted a blog explaining why the agency should have included building codes in its four building blocks. For similar reasons, EPA should also consider CHP when setting emission reduction goals and as a clearly defined compliance option for states.

CHP uses fuel more efficiently than other forms of power generation, providing both energy and environmental advantages over separate heat and power systems. In a recent report, ACEEE found that more than 68 million MWh of energy could be saved in 2030 from installing CHP, which represents around 18 GW of avoided capacity. Those energy savings could cut carbon dioxide emissions and offset the need for about 36 power plants.

In addition to offering energy and environmental benefits, CHP is a well-established resource that is widely used at industrial facilities, hospitals, and universities to reduce operating costs and ensure reliability. It currently represents 8% of installed U.S. electric generating capacity and over 12% of total electricity generation , but has the potential to achieve much more. ICF International estimates that CHP could supply 13% of U.S. generating capacity. Including CHP in the setting of CO2 reduction goals will encourage greater investment in this suite of efficient technologies and drive us closer to those environmental and economic benefits.

As an energy efficiency measure, CHP can provide emissions reductions at a lower cost than other sources. To overcome existing regulatory and market barriers, a handful of states, including New York, California, Massachusetts, Connecticut, and others, have developed innovative approaches to increase deployment of CHP for its energy savings and emissions benefits. Now, under the 111(d) rule, CHP represents a rapidly deployable option for achieving reduction targets. EPA should encourage states to use CHP and provide guidance to help states include energy savings from CHP in their compliance plans.