Climate Challenge Participation Accord
Between
Tennessee Valley Authority
And
U.S. Department of Energy

This Participation Accord describes the commitments that the Tennessee Valley Authority (TVA) and the U.S. Department of Energy (DOE) have made to participate in the Climate Challenge Program in pursuit of the President's goals for reducing greenhouse gas emissions. The Climate Challenge Program is a joint, voluntary effort of DOE and the electric utility industry to reduce, avoid or sequester greenhouse gas emissions. The framework of the Climate Challenge Program was established in the Climate Challenge Program Memorandum of Understanding and exhibits thereto dated April 20, 1994 (the Climate Challenge Program MOU), which is hereby incorporated by reference.

A. Consistent with paragraph 11.B.1 of the Climate Challenge Program MOU, TVA commits to reduce its annual emissions of greenhouse gases by the equivalent of 22.7 million tons of CO₂ by Year 2000. Most of these reductions are relative to Year 2000 greenhouse gas emission levels for a modified reference case that was projected from the average of TVA's 1987-1990 baseline of approximately 92.7 million tons of CO₂ emissions by excluding the specific reduction activities identified in Attachment A from the production model of the TVA power system. The reference case and the business operations involved in the reference case are more fully described in Attachment B. TVA's commitment applies to all of the agency's activities including its power system program and appropriated-funded programs. This commitment and all other commitments established by this Accord are subject to the conditions stated in the Climate Challenge MOU, the results of TVA's integrated planning process activities, and satisfactory completion of any environmental reviews.

B. TVA will report annually on its activities and achievements under the Climate Challenge Program. Results achieved during each year shall be reported in a clear and understandable manner that is consistent with the guidelines adopted pursuant to subsection 1605(b) of the Energy Policy Act and the Climate Challenge accounting protocols in Exhibit B of the Climate Challenge Program MOU. The first such report may include a description of TVA's greenhouse gas reduction activities and achievements prior to execution of this Accord.

C. TVA will confer with DOE on or before January 30, 1996 to evaluate jointly TVA's progress in achieving its Climate Challenge Program goals and to discuss possible adjustments to its voluntary commitments.

D. TVA's Climate Challenge Program representative shall be:

Mr. Jerry L. Golden
Manager, Clean Air Program and Generation Technology
Tennessee Valley Authority
Chattanooga, Tennessee 37402-2801

TVA agrees to notify DOE prior to or, in any event, no later than 30-days after any change of its representative.

A. DOE's commitments to TVA are those set out in section III of the Climate Challenge Program MOU, which are hereby incorporated in this Accord by reference.

B. DOE will provide an annual report to TVA describing the actions that it has taken to fulfill its commitments under section III and Exhibit C of the Climate Challenge Program MOU and the results of those actions.

C. DOE's Climate Challenge Program representative, who will serve as liaison to TVA will be:

Mr. Allan Hoffman
U.S. Department of Energy
1000 Independence Avenue, S.W.
Washington D.C. 20585
(202) 586-1786

DOE agrees to notify TVA prior to or, in any event, no later than 30 days after any change of its representative.

A. Use of DOE-developed materials by TVA will be governed by provisions of section IV of the Climate Challenge Program MOU, which are hereby incorporated in this Accord by reference.

B. In addition to the foregoing provisions, DOE and TVA agree to act in accordance with the principles set out in section I of the Climate Challenge Program MOU and the general provisions set out in subsections V.A - V.D, V.F, and V.G of the Climate Challenge Program MOU, which are hereby incorporated in this Accord by reference.

 C. Either party may withdraw from this Accord or any of its activities under the Climate Challenge Program without penalty and without being subject to remedies at law or equity.

D. No member of or delegate to Congress, or Resident Commissioner, shall be admitted to any share or part of this MOU or to any benefit that may arise therefrom, but this provision shall not be construed to extend to any corporation or unit of Government contracting for its or the public's general benefit.

_________________________________
Director
Tennessee Valley Authority

__________________________________
Secretary
U.S. Department of Energy

The CO₂ reduction estimates identified below are generally derived through the use of a modified reference case that compares the CO₂ equivalent emissions generated by TVA's activities with and without the identified reduction activity.

1. Nuclear Unit Operation: TVA restarted its Browns Ferry Nuclear Unit 2 in August 1991. It plans to restart its Browns Ferry Nuclear Unit 3 and start Watts Bar Nuclear Unit 1 prior to the Year 2000. Operation of these nuclear units is expected to result in annual CO₂ emissions reductions in the Year 2000 of 15,898,000 tons.

2. Biomass Cofiring: TVA has initiated a biomass cofiring test program at its fossil fueled units. The biomass used is wood waste from the wood products industry in the TVA region. Based on these tests, TVA will initiate commercial cofiring projects at various fossil plants that will result in annual greenhouse gas reductions in the Year 2000 equivalent to 2,422,000 tons of CO₂. In addition to the avoided CO₂ emissions associated with combusting coal, this reduction includes the CO₂ equivalent of avoided methane emissions (approximately 75,000 tons) due to wood waste carbon conversion to CO₂ by combustion rather than conversion to CO₂ and methane by decomposition. A global warming potential of 21 was used for the avoided methane emissions.

3. Demand Side Management (DSM) Programs: TVA has identified a number of DSM programs that may be implemented as a result of its ongoing integrated resource planning (IRP) process. TVA expects to initiate cost-effective DSM programs that will result in estimated annual CO₂ emissions reductions in the Year 2000 of up to 1,383,000 tons.

4. Fossil Fueled Unit Efficiency Improvements: TVA expects to continue to initiate activities to offset thermal performance degradation and to improve the efficiency of its fossil fueled generating units. These activities include improved operation and maintenance, upgrading plant equipment, and upgrading plant instrumentation and controls. The activities TVA completed in 1991 through 1994 to improve unit efficiency are expected to result in annual CO₂ emissions reductions of approximately 1,018,000 tons in the Year 2000. Additional unit efficiency improvement activities TVA plans to initiate in 1995 through 2000 are expected to result in additional annual CO₂ emissions reductions of approximately 459,000 tons in the Year 2000.

5. Transmission System Efficiency Improvements: TVA expects to continue to improve the efficiency of its transmission system and thereby reduce power generation requirements. Such improvements include reconductoring existing transmission lines, constructing new transmission lines, constructing new substations, and replacing transformers. The activities TVA completed in 1991 through 1994 to improve transmission system efficiency are expected to result in annual CO₂ emissions reductions of approximately 183,000 tons in the Year 2000. Additional transmission system efficiency improvement activities TVA plans to initiate in 1995 through 2000 are expected to result in additional annual CO₂ emissions reductions of approximately 545,000 tons in the Year 2000.

6. Hydro Modernization Activities: TVA expects to continue to initiate activities to improve the performance of its hydroelectric generating units such as modernizing and upgrading the turbines and generators to increase their efficiencies. The activities TVA completed in 1991 through 1994 to modernize its hydro facilities are expected to result in annual CO₂ emissions reductions of approximately 20,000 tons in the Year 2000. Additional hydro modernization activities TVA plans to initiate in 1995 through 2000 are expected to result in additional annual CO₂ emissions reductions of approximately 375,000 tons in the Year 2000.

7. Fossil Fueled Unit Flyash Sales: Sales of flyash from fossil fueled units to the cement manufacturing industry result in CO₂ reductions due to lower energy consumption and reduced calcination in the manufacturing process. TVA plans to increase its marketing of flyash to the cement industry from approximately 140,000 tons in 1990 to 290,000 tons in the Year 2000. The increased TVA flyash sales are expected to result in additional annual CO₂ emissions reductions in the Year 2000 of 155,000 tons.

8. Heat Pump Program Activities: TVA intends to continue to encourage its customers to install efficient heat pumps through such activities as providing low-cost loans and heat pump inspections. The heat pump program activities TVA completed in 1991 through 1994 are expected to result in annual CO₂ emissions reductions of approximately 40,000 tons in the Year 2000. Additional heat pump program activities TVA plans to initiate in 1995 through 2000 are expected to result in additional annual CO₂ emissions reductions of approximately 97,000 tons in the Year 2000.

9. Utility Forest Carbon Management Program (UFCMP): TVA is a participant in the UFCMP in which a portfolio of greenhouse gas reduction and carbon sequestration projects will be funded and has committed to provide $75,000 annually for five years to this effort. The greenhouse gas emissions reductions and carbon sequestration that will result from this program have not yet been identified but TVA's proportionate share is estimated to be equivalent to 50,000 tons of CO₂ annually in the Year 2000.

10. CFC Management Activities: TVA expects to continue its activities to manage and phase-out the use of chlorofluorocarbons (CFCs) in TVA-owned equipment. CFC management activities include elimination of venting during equipment maintenance and replacement of high global warming potential CFCs with lower global warming potential materials. The CFC management activities TVA completed in 1991 through 1994 are expected to result in annual greenhouse gas emissions reductions of approximately 8,000 tons CO₂ equivalent in the Year 2000. Additional CFC management activities TVA plans to initiate in 1995 through 2000 are expected to result in additional annual greenhouse gas emissions reductions of approximately 1,000 tons CO₂ equivalent in the Year 2000. Global warming potentials ranging from 310 to 8,000 were used for the various affected CFCs to derive CO₂ equivalent tons.

11. Internal Energy Management Activities: TVA expects to continue to reduce its internal consumption of energy. This will be done through such activities as the installation of high efficiency electric motors, building heating and air conditioning efficiency upgrades, and water heating efficiency upgrades. These efficiency improvement activities are expected to result in annual CO₂ emissions reductions of approximately 26,000 tons in the Year 2000.

12. Transportation Efficiency Improvement: TVA expects to continue to improve the efficiency of its transportation fleet. For example, TVA's automobile fleet fuel efficiency was increased 0.4 miles per gallon from 1990 to 1993 by replacing less efficient automobiles with more efficient models. The TVA truck fleet fuel efficiency improved by 5.7 miles per gallon from 1990 to 1993. The activities TVA completed in 1991 through 1994 to improve its transportation fleet efficiency are expected to result in annual CO₂ emissions reductions of approximately 5,000 tons in the Year 2000. Additional activities TVA plans to initiate in 1995 through 2000 to improve its transportation fleet are expected to result in additional annual CO₂ emissions reductions of approximately 1,000 tons in the Year 2000.

13. Forest Management Activities: TVA expects to continue reforestation and active forest management activities on TVA-owned lands. These activities are planned for approximately 150 acres per year. The activities completed from 1990 to 1994 and planned for 1995-2000 are expected to result in CO₂ sequestration in the Year 2000 of 3,000 tons.

14. Office Waste Paper Recycling: Paper recycling results in reduced greenhouse gas emissions from the paper manufacturing industry due to lower energy consumption relative to paper manufacturing using raw materials. Paper recycling from TVA offices is expected to reach 1,700 tons in the Year 2000 resulting in annual CO₂ reductions of 3,000 tons.

15. Cogeneration: In 1995, TVA will begin supplying steam in addition to electricity to an industrial customer near TVA's Johnsonville Fossil Plant. This energy supply arrangement will result in an annual CO₂ reduction in the Year 2000 of 23,000 tons compared to previous energy supply arrangements.

16. Animal Waste Methane Recovery: TVA expects to implement several animal waste methane recovery and utilization demonstration projects over the next five years. The annual CO₂ equivalent in the Year 2000 of the avoided methane emissions from these projects is expected to be 8,000 tons. A global warming potential of 21 was used to calculate the CO₂ equivalency of avoided methane emissions.

 17. NOX Emission Reductions: TVA plans to achieve an approximate annual reduction of 225,000 tons of NOX emissions from its fossil-fueled units by the Year 2000 and intends to begin reporting these in 1997 as part of its Climate Challenge efforts, consistent with DOE's Section 1605(b) Reporting guidelines. These expected reductions would be in addition to the greenhouse emission reduction tonnage commitment made by TVA.

18. Public Power Initiatives: TVA is participating with public power industry groups and other public power utilities in the development of industry initiatives for greenhouse gas reductions. TVA commits to continue this effort to develop such reductions and initiatives and to consider participating in appropriate initiatives. Any reductions associated with this activity would be in addition to th.

(Original Attachment A)

The greenhouse gas (GHG) emissions reductions resulting from many of the actions described in Attachment A are relative to GHG emissions for a modified reference case for the Year 2000. The modified reference case emissions are projected using widely accepted electric utility planning techniques and mathematical models. In summary, the models were used to determine the difference between the modified reference case emissions assuming no GHG-reduction activities had been taken and the level of emissions with reduction actions.

The modified reference case emissions for the power system related actions are the result of power system production modeling. The modified reference case model runs were configured to meet the predicted Year 2000 system load with power system resources and performance characteristics that were in service in 1990. An output of the model is predicted CO₂ emissions. Low GHG emitting supply side additions to the system completed or planned for completion since 1990, such as nuclear units and hydroelectric generation facility upgrades, were excluded from the system resources modeled for the modified reference case. Generation load reductions resulting from transmission system upgrades and DSM programs implemented or planned for implementation since 1990 were excluded from the modified reference case model runs. Fossil unit heat rate performance improvements completed or planned for completion since 1990 were excluded from the modified reference case CO₂ emissions predictions. The total system load growth from 1990 to 2000 is expected to be about 34 %. In the modified reference case, the additional load and the absence of new nuclear unit generation is met by combustion turbine capacity additions, pulverized coal fired capacity additions, additional generation from the existing pulverized coal fired capacity, and additional off-system power purchases.

TVA has included the CO₂ emissions associated with the generation of purchased power in its emissions total. Based on historical purchases, it is assumed that the off-system purchased power would be generated by coal fired facilities. In turn, CO₂ emissions associated with the generation of power sold off-system were deducted from total emissions.

The modified reference case emissions from the transportation fleet were predicted by calculating the emissions from a fleet with the average fuel efficiency of the 1990 fleet traveling the vehicle miles predicted for 2000.

The modified reference case emissions for chlorofluorocarbons (CFCs) were predicted by calculating the CO₂ equivalent of CFC emissions based on CFC consumption rates and the types of CFCs in service in 1990.

The emissions reductions resulting from the remaining actions described in Attachment A are relative to the baseline period of 1987-1990, i.e., a basic reference case. For example, TVA had no biomass cofiring activities, no animal waste methane recovery activities, and no participation in the Utility Forest Carbon Management Program during the baseline period. For other reduction actions such as flyash sales to the cement manufacturing industry and forest management activities on TVA owned lands, TVA had ongoing activities during the baseline period. For these actions, the reductions are based only on the activities initiated since 1990.

The TVA total modified reference case GHG emissions for the Year 2000 are equivalent to 127.3 million tons of CO₂. The total GHG emissions reductions, including reductions relative to modified and basic reference cases, are equivalent to 22.7 million tons of CO₂.

Please send comments to:
Lawrence.Mansueti@hq.doe.gov