Retooling Regulation: a Closer Look at Integrating Energy and Environmental Policy


Part one of this series described why it is increasingly necessary to integrate energy and environmental planning and introduced one way to do so, the E-Merge approach. Improvements in public health science, detection technologies, and modeling over the last 25 years require parallel improvements in our decades-old regulatory approach for air quality. Likewise, the rapidly transforming electric sector presents equally formidable challenges for energy regulators. And energy efficiency and renewable energy should be considered alongside other measures to improve air quality in any evaluation, due to their breadth and cost-effectiveness.

Many jurisdictions are also considering vehicle electrification programs or policies and the electrification of space and water heating in buildings. Environmentally beneficial electrification offers significant opportunities to reduce emissions, improve renewable energy integration, and provide other services to the electric grid. These opportunities suggest that now is the time to convene E-Merge discussions involving all associated disciplines: air quality, energy, transportation, and buildings to ensure coordinated policy development, reveal potential synergies or constraints, and secure maximum cost savings and co-benefits.

E-Merge Combining the Strengths of Traditional State Air Planning and State Energy Planning

In this post, we discuss the conceptual steps of the E-Merge process. E-Merge seeks to combine the best of integrated resource plans (IRPs) and state implementation plans (SIPs) and to overcome their deficiencies (like inattention to externalities, inadequate appreciation of costs, and serial pollutant-by-pollutant rather than multi-pollutant methods). E-Merge endeavors to address such key questions as:

  • What negative health impacts should be reduced or eliminated, and over what time period?
  • How many tons of pollutants would need to be removed from the airshed to do so, and by when?
  • How could compliance costs be optimized, while satisfying electric reliability and environmental requirements?
  • Would this kind of process also meet federal SIP requirements?

Every airshed has a finite carrying capacity; only a limited amount of pollution can be emitted into it before air quality standards will be exceeded. Carrying capacity also varies from year-to-year based on climate and weather trends, changing levels of economic activity, etc. It can also differ from airshed to airshed, influenced by:

  • Which sectors emit which pollutants in what quantities and when;
  • Population characteristics and local geographic features (e.g., latitude, terrain, waterbodies, etc.);
  • Diurnal weather patterns; and
  • How much pollution is transported into the airshed from other areas and when.

E-Merge Conceptual Process Steps

The first step of the E-Merge process is to establish a goal regarding public health and welfare outcomes. For some jurisdictions, the goal might be as simple as “meet all existing federal requirements.” Other jurisdictions may want to go beyond existing mandates to reduce the risk of encountering future air quality non-attainment problems and the economic sanctions they impose.

The next few steps of an E-Merge process are familiar to air regulators because they echo ones already taken in preparing SIPs.

1. Determine current ambient air quality status using the most recent emissions inventory and monitoring data to identify the airshed’s “design values” for criteria pollutants. Design values reflect whether an area is in attainment with national ambient air quality standards (NAAQS), and serve as baselines against which the results of emission reduction measures can be assessed. The calculation of design values is specified by the Environmental Protection Agency (EPA) and varies for each pollutant.

2. Compare the existing design value for each pollutant that is needed to reach attainment with current (and, if desired, expected future) NAAQS.

3. Conduct air quality modeling to determine the number of tons of each pollutant that must be removed from the airshed to reach current (and/or expected future) NAAQS. Conduct a similar analysis to identify emission reduction targets for toxic pollutants and greenhouse gases. There are no NAAQS for these pollutants, but current emissions can be compared to EPA emission limits to determine compliance requirements.

We emphasize the importance of determining the number of tons of each pollutant to be removed to reduce pollution to below the airshed’s carrying capacity and to account for future economic activity. The “top-down tons” values calculated in step 3 provide the foundation for conversations between air and energy regulators, and with stakeholders and the public once an E-Merge plan is developed.

The next steps of an E-Merge process require coordination between air quality and energy officials:

4. Utilize system dynamics or an optimization model working against a database of potential emission reduction measures (e.g., a cost curve) to achieve the level of “top-down tons” identified along with other specified outcome criteria (e.g., reserve margins, reliability metrics, etc.). The model would be run iteratively until the target emission reductions are achieved by one or more scenarios. This process will identify optimal groups of control measures that achieve the shared goals of clean air and reliable electricity at the lowest cost. As in any modeling exercise, assumptions about variables that influence energy, environmental, and economic systems (such as fuel prices or technology costs) should be chosen to bound potential outcomes. Sensitivity runs are also advisable.

(System dynamics and optimization models are complex, time-consuming, and expensive to construct however. As a result, they may not be available for the first jurisdictions to pursue an E-Merge process. In the absence of these models, energy and air quality regulators could collaborate to identify potential energy supply (or energy savings) scenarios achievable through measures to boost the use of cost-effective, low-emission resources such as energy efficiency, demand response, distributed and utility-scale renewable energy, nuclear energy, etc. over the period contemplated by the plan. Steps 5, 6, and 7 describe the steps of this regulatory collaboration absent the availability of a comprehensive model.)

5. Estimate how much energy would be saved or generated by each resource and when. Local utilities may be able to help in this quest through dispatch and other modeling. For example, utilities could include “top-down tons” values as constraints in the model that must be met, or run their models as they normally do, but compare the results to the top-down ton goals.

6. Translate these energy values (the MWh saved or generated by each resource and when) into associated emission reductions. This too can be a complex endeavor, but several tools can facilitate the task, such as EPA’s Avoided Emissions and Generation Tool (AVERT), an RTO’s marginal emissions analysis, NERC’s regional data or state-specific data, etc. Ultimately, we expect new and better tools to evolve, whether from EPA or sector players like the Electric Power Research Institute (EPRI) or the National Energy Efficiency Registry (NEER) effort, that will enable jurisdictions to make compliance-quality emissions reduction estimates.

7. Add up these emissions reductions reflecting all resources and compare the sum to the “top-down tons” value determined in step 3 above. If the total emission reductions are less than those needed to meet air quality requirements or goals, the analysis should be reviewed to ensure that all cost-effective options are included, and then repeated with additional and/or modified measures as warranted. If additional control measures are needed, additional emissions reductions could be considered from power plants, industrial emissions, area sources, the transportation sector, or other sources.

8. Commence the administrative and/or legislative proceedings necessary to implement the optimal, least-cost suite of measures that reduces emissions enough to achieve the “top-down tons” goals.

Technologies, policies, and opportunities are all moving fast today, so new value is continually being created. Retooling regulation for cleaner air and cleaner energy through an E-Merge approach is one way to recognize and realize new value as it arises. Let’s seize the moment.

This is the second in a four-part series. Subsequent posts will elaborate on:

  • What obstacles states might face in conducting an E-Merge process; and
  • Where efforts similar or related to E-Merge have been undertaken around the globe, and what their results have been.

A version of this post originally appeared in Utility Dive.