EPA Proposes GHG Limits for Power Plants

On March 27, 2012, the Environmental Protection Agency proposed the first ever Clean Air Act standard for carbon emissions from future power plants. The rules have the potential to end the construction of conventional coal-fired facilities in the United States.

Background
In April 2007, in the landmark case Massachusetts v. EPA, the U.S. Supreme Court ruled that greenhouse gases (GHG), including carbon dioxide, are potentially air pollutants covered by the CAA. The court further ruled that the EPA was required to determine whether emissions of GHGs from new motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare.

On December 15, 2009, the EPA Administrator found that the current and projected concentrations of greenhouse gases endanger the public health and welfare of current and future generations. A year later, the EPA agreed to issue the power plant rule as part of a legal settlement with the Natural Resources Defense Council, other environmental groups, and some states (New York v. EPA, D.C. Cir., No. 06-1322).

Proposed Standards
The proposed rule, issued under the authority of section 111 of the CAA, would apply only to new fossil‐fuel‐fired electric utility generating units (EGUs). For purposes of this rule, fossil‐fuel‐fired EGUs include fossil‐fuel‐fired boilers, integrated gasification combined cycle (IGCC) units and stationary combined cycle turbine units that generate electricity for sale and are larger than 25 megawatts (MW).

The EPA is proposing that new fossil‐fuel‐fired power plants meet an output‐based standard of 1,000 pounds of CO2 per megawatt‐hour (lb CO2/MWh gross). According to the EPA’s fact sheet on the proposed rule:

• New natural gas combined cycle (NGCC) power plant units should be able to meet the proposed standard without add‐on controls. In fact, based on available data, EPA believes that nearly all (95%) of the NGCC units built recently (since 2005) would meet the standard.
• New power plants that are designed to use coal or petroleum coke would be able to incorporate technology to reduce carbon dioxide emissions to meet the standard, such as carbon capture and storage (CCS).
• New power plants that use CCS would have the option to use a 30‐year average of CO2 emissions to meet the proposed standard, rather than meeting the annual standard each year.
  • Plants that install and operate CCS right away would have the flexibility to emit more CO2 in the early years as they learn how to best optimize the controls.
  • A company could build a coal‐fired plant and add CCS later. For example, a new power plant could emit more CO2 for the first 10 years and then emit less for the next 20 years, as long as the average of those emissions met the standard.
  • CCS is expected to become more widely available, which should lead to lower costs and improved performance over time.

Impact
According to EPA's regulatory impact analysis of the proposed rule, the proposed standard would have “negligible [carbon dioxide] emission changes, energy impacts, quantified benefits, costs, and economic impacts by 2020.” This is because the EPA is assuming that power plants currently projected to be built going forward would already comply with the standard. As a result, the EPA does not project additional cost for industry to comply with this standard.

The EPA's regulatory analysis projects only 2 gigawatts of new coal-fired capacity with carbon capture will be built by 2020. Meanwhile, the agency anticipates 7 gigawatts of natural gas-fired capacity will be built during that period while renewable energy will provide another 26.9 gigawatts of capacity.

The rule is expected to further that trend toward natural gas, as industry representatives say the controls that would be required for coal-fired plants are too expensive, particularly the untested carbon capture and storage systems highlighted in the rule as a control option.

The cumulative impact the proposed rule and of other CAA rules targeting the power sector, including the utility MACT rule and the Cross State Air Pollution Rule, has industry groups concerned that the current regulatory climate is a de facto ban on new coal-fired plants.

Future Actions
During the press conference announcing the rule, EPA Administrator Lisa Jackson said that she has no plans to pursue regulations that would curb greenhouse gas emissions from existing power plants. However, Section 111(d) of the Clean Air Act requires the agency to issue performance standards for existing sources when it regulates pollutants that are not previously regulated. The EPA acknowledged as much in its proposed rule, stating “The proposed rule will also serve as a necessary predicate for the regulation of existing sources within this source category under CAA section 111(d).”

The agency will seek public comments on the proposed rule during yet-to-be-announced public hearings and during a 60 day comment period that will start when the rule is published in the Federal Register.

This post was authored by GLLF staff attorney Emily Kelchen.