The Alliance submitted comments to the EPA offering recommendations to improve the treatment of CHP, WHP and Industrial Efficiency in the Model Trading Rule and Federal Plan. While EPA clearly recognizes CHP and WHP’s emissions benefits and potential inclusion in a rate-based plan, we believe that the proposed Model Rule significantly undervalues CHP’s emission benefits under a rate-based plan and does not yet include details about how states can include CHP and WHP if they choose to develop a mass-based plan. Accordingly, our comments offer six key recommendations to strengthen the treatment of CHP and WHP in the final rule:
In a Rate-Based Rule, EPA should:
1. Expressly include CHP and WHP as eligible measures that can produce emission rate credits (ERCs) in both the model rule and federal plan;
2. More accurately account for the CO2-free MWhs generated by CHP by comparing it to actual emissions data from affected EGUs from the previous calendar year, rather than a future natural gas target; and
3. Clarify that line losses can be included in the calculation of ERCs for all non-affected CHP, regardless of size.
In a Mass-Based Rule, EPA should:
4. Provide states with a menu of allowance distribution mechanisms to promote CHP, WHP and IEE in the model mass-based trading rule; and
5. Include provisions to encourage CHP, WHP and industrial efficiency in a mass-based federal plan.
In the Clean Energy Incentive Program (CEIP), EPA should:
6. Expressly state that CHP and WHP projects in low-income communities are eligible for participation in the CEIP.