	Introduction

On June 18, 2014, the Environmental Protection Agency (EPA) published in the Federal Register a proposed rulemaking under Section 111(d) of the Clean Air Act. The proposal would establish carbon dioxide (CO 2 ) emission guidelines for states to use when developing plans that address CO 2 emissions from existing fossil fuel-fired electric generating units. The proposed rule establishes state-specific CO 2 emission rate goals, measured in pounds of CO 2 emissions per megawatt-hour (MWh) of electricity generation. EPA based its intensity goals on each state's current portfolio of electricity generation and various assumptions involving opportunities for states to decrease their carbon intensity, including:
coal-fired power plant efficiency improvements; natural gas combined cycle displacement of more carbon-intensive sources, particularly coal; increased use of low-carbon sources, namely renewable energies like wind and solar, and continued use of existing nuclear power generation; and energy efficiency improvements. The proposal sets a final goal for each state for 2030 and an interim goal to be achieved "on average" between 2020 and 2029. EPA estimates that if the states achieve their individual emission rate goals in 2030, the CO 2 emissions from the electric power sector in the United States would be reduced by 30% compared to 2005 levels. This report discusses the methodology EPA used to establish the state-specific CO 2 emission rate goals. The emission rate goals described below do not apply directly to individual power plants, but to the state's overall electricity generation portfolio. Using the state-specific 2012 baseline data as its starting point, EPA applied the four building blocks to establish CO 2 emission rate goals for each state. Building blocks 1 and 2 directly affect the CO 2 emission rate at affected EGUs by factoring in efficiency improvements at EGUs and opportunities to switch from high- to low-carbon power generation. In contrast, blocks 3 and 4 involve so-called "outside the fence" opportunities that do not directly apply to electricity generation at affected EGUs. As indicated in Table 6 , building block 1 decreases state emission rate goals (compared to 2012 baselines) by a range of 0% to 6%. Note that the results of applying building block 2 do not require or predict a particular outcome in a state's electricity generation profile. The results are a function of the emission rate methodology. States may choose to meet their emission rate goals through alternative approaches. Renewable Energy

Building block 3 projects annual renewable energy (RE) increases for each state. These outcomes are a function of EPA's methodology. The impacts of applying building block 4 to the emission rate equation vary by state. In general, the effects appear to be more pronounced in states that generate a large percentage of their electricity from sources that are not already included in the emission rate equation. Concluding Observations

As Table 6 indicates, the building blocks affect each state's emission rate baseline in different ways, depending on each state's specific electricity generation circumstances. As Table 7 indicates, on average, building block 1 has the smallest impact (4%), decreasing state emission rate goals (compared to 2012 baselines) by a range of 0% to 6%. The largest changes are seen in states that have both coal-fired EGUs and under-utilized NGCC plants. The smallest impacts are in states without any NGCC and states that already have relatively high NGCC utilization rates. Although the nuclear component of building block 3 only affects three states, its impacts are considerable in those states. The RE component of building block 3, on average, reduces emission rate baselines by 9% (10% if the negative values are omitted). The impacts from the RE block application range from 2% to 33%. Building block 4 has the largest impact (tied with block 2) on emission rate baselines, reducing them, on average, by 13%, but the range of impacts is between 4% and 37%. This range is a result of several factors, including (1) the contribution of in-state electricity generation that comes from hydroelectric power or nuclear power; and (2) whether the state is a net importer or net exporter of electricity.
On June 18, 2014, the Environmental Protection Agency (EPA) published a proposed rulemaking that would establish guidelines for states to use when developing plans that address carbon dioxide (CO2) emissions from existing fossil fuel-fired electric generating units. The proposal creates CO2 emission rate goals—measured in pounds of CO2 emissions per megawatt-hour (MWh) of electricity generation—for each state to achieve by 2030 and an interim goal to be achieved "on average" between 2020 and 2029. EPA estimates that if the states achieve their individual emission rate goals in 2030, the CO2 emissions from the electric power sector in the United States would be reduced by 30% compared to 2005 levels.
This report discusses the methodology EPA used to establish state-specific CO2 emission rate goals that apply to states' overall electricity generation portfolio.
The emission rate goals do not apply directly to individual emission sources. EPA established the emission rate goals by first determining each state's 2012 emission rate baseline, which is generally a function of each state's portfolio of electricity generation in 2012. The resulting baselines in each state vary considerably, reflecting, among other things, the different energy sources used to generate electricity in each state.
To establish the emission rate goals, EPA applied four "building blocks" to the state baselines. The four building blocks involve estimates of various opportunities for states to decrease their emission rates:
Building block 1: coal-fired power plant efficiency improvements; Building block 2: natural gas combined cycle displacement (NGCC) of more carbon-intensive sources, particularly coal; Building block 3: increased use of renewable energy and preservation of existing and under construction nuclear power; and Building block 4: energy efficiency improvements.
Building blocks 1 and 2 directly affect the CO2 emission rate at affected EGUs by factoring in EGU efficiency improvements and opportunities to switch from high- to low-carbon power generation. In contrast, building blocks 3 and 4 involve so-called "outside the fence" opportunities that do not directly apply to electricity generation at affected EGUs.
The building blocks affect each state's emission rate in different ways, depending on each state's specific circumstances. On average, block 1 has the smallest average impact, decreasing state emission rate goals (compared to 2012 baselines) by a range of 0% to 6%.
Building block 2, on average, lowers rates by 13%, with a range of impacts from 0% to 38% (compared to baseline). The largest rate changes are seen in states that have both coal-fired EGUs and under-utilized NGCC plants. The smallest rate impacts are in states without any NGCC units and states that already have relatively high NGCC utilization rates.
The under construction nuclear component of building block 3 only affects rates in three states, but its rate impacts are considerable. An amount of at-risk nuclear generation was included in the 2012 baseline rates, lowering some state baselines by as much as 7%.
The renewable energy component of block 3, on average, reduces emission rate baselines by 9%, with a range from 2% to 33%. This block has a greater impact in states that use renewable energy (not counting hydroelectric power) to generate a substantial percentage of their total electricity.
Building block 4 reduces rates, on average, by 13%, with a range of impacts between 4% and 37%. This range is a result of several factors, including (1) the contribution of in-state electricity generation that comes from hydroelectric power or nuclear power; and (2) whether the state is a net importer or net exporter of electricity.
The results of applying the four building blocks do not require or predict a particular outcome in a state's electricity generation profile. The emission rates are a function of EPA's specific emission rate methodology. States may choose to meet emission rate goals by focusing on one or more of the building block strategies or through alternative approaches.