Take 2: EPA Re-Proposes Its
Regulation of Greenhouse Gas Emissions from New
Power Plants
By Mike
Nasi, Jacob
Arechiga, and Ben
Rhem
Today,
September 20, 2013, the U.S. Environmental
Protection Agency (EPA) re-proposed its
regulations to limit greenhouse gases (GHGs)
emitted from newly constructed power plants,
known as the GHG New Source Performance
Standards (NSPS) for power plants, available
here. President Obama has requested that the
rule be finalized in a "timely
fashion." 1
Having
withdrawn its original proposal from April 2012,
EPA is once again moving forward with an
incredibly burdensome regulation that, although
proposed with a slightly different rationale,
would reach the same outcome. The rule
would make it practically unlikely, if not
impossible, to construct a new
coal-fired power plant in the United States in
the foreseeable future. The proposal also
sets the groundwork for EPA's impending
regulation of the country's existing
power plant fleet, with regulations scheduled to
be proposed in June 2014.
How did
we get here?
On December 30,
2010, EPA reached a settlement agreement with
certain states and environmental groups to move
forward on GHG NSPS for power plants. The
agreement included that by July 26, 2011, EPA
would propose a rule under Clean Air Act Section
"111(b) establishing standards of performance
for GHGs for new and modified EGUs," as well as
propose a rule under Clean Air Act Section
"111(d) that includes emissions guidelines for
GHGs from existing EGUs." EPA did not meet
this deadline. EPA published its original
version of a new-source NSPS proposal in the
Federal Register on April 13,
2012.
Rather than
establishing separate limits for the different
categories of gas-fired power plants and
coal-fired power plants, the April 2012 version
of the rule proposed one overarching
"fossil-fueled power plant" category which
included coal, coal refuse, oil, petroleum coke,
and natural gas power plants. The limit
for all of these plants was set at 1,000 pounds
of carbon dioxide per megawatt-hour (lb
CO2/MWh). This is a standard of
performance based on the most modern natural gas
fired combined cycle (NGCC) power plant.
EPA concluded that these natural gas power
plants qualified as the "best system of emission
reduction"2
for the entire "fossil-fueled category," even
for coal-fired power plants. The result
was a standard that even the most advanced
coal-fired power plants could not meet without
the installation of carbon capture and storage
(CCS) technology – a technology that has not yet
been demonstrated to be feasible on a full scale
project, much less available on a commercial
level.3
EPA's combining
of source categories was unprecedented, as EPA
has historically proposed emissions limits by
source category or subcategory. For
example, EPA has looked at the best performing,
or group of performing, gas-fired power plants
and has set limits for all gas-fired power
plants based on that standard of performance;
EPA has done the same for coal and the other
categories. EPA has also historically
established subcategories to account for
differences within the categories, such as
different types of combustion technology or
different characteristics of fuel.
This
combination of categories led to intense
opposition by numerous parties. Perhaps
because of this pressure and a fear of the legal
frailty of such an approach, the President in
June 2013, requested that the April 2012 rule
proposal be withdrawn and be re-proposed, which
is what the EPA has done today.
What
does the rule proposal require?
The rule
proposed today includes only minor substantive
changes from the April 2012 proposal and will
have the same effect on the development of new
electric generation resources, particularly coal
generation sources. Unlike the April 2012
proposal, this new proposal establishes separate
categories for coal-fired and gas-fired power
plants. However, while the gas-fired
emission limit remains at 1,000 lb CO2/MWh4,
the coal-fired power plant limit is raised only
to 1,100 lb CO2/MWh5;
still far below what even the most
technologically advanced coal-fired power plant
can meet and well below the standard that EPA's
own assessment of what the newest coal-fired
power plants can meet (1,800 lb
CO2/MWh).
Rather than
relying on the emissions rate of a natural-gas
combined cycle power plant like it did in the
April 2012 proposal, EPA in this rule proposal
claims to be basing its 1,100 lb CO2/MWh limit
for new coal plants on the implementation of
"partial" carbon capture and
sequestration. EPA believes that a
carbon-capture-based standard for new coal
plants complies with the Clean Air Act's
requirements that these limits are "adequately
demonstrated" and appropriately takes into
account the cost of achieving these reductions,
nonair quality health and environmental impacts,
and energy requirements. This is despite
the fact that, as stated above, carbon capture
is prohibitively expensive; has yet to be
installed on a full scale project; is not
commercially available and won't be for many
years; and will prevent the development of new
coal generation for the foreseeable
future.
The new rule
proposal also changes the applicability of the
standards to simple-cycle gas units, often
referred to as "peaker" units because they
typically come online during times of peak
electricity demand. The April 2012
proposal explicitly excluded these units from
regulation, but this new proposal removes that
exclusion. Instead, it sets a criteria that the
standards would apply only to a power plant that
supplies more than one-third of its potential
electric output, based on a rolling three-year
average, and more than 219,000 MWh net electric
output to the grid per year. EPA predicts
that this practically will still likely exclude
"most" simple-cycle units.
What
happens next?
EPA has
proposed a 60-day comment period on the rule
proposal released today.6
The comment period will begin to run once EPA
formally publishes the rule proposal in the
Federal Register, likely in the next
few weeks. After which, it is expected
that EPA will move relatively quickly to
finalization. Once final, the rule will
almost certainly be challenged in federal court
by numerous companies and states opposing the
rule.
EPA has stated
that once it has issued new-source NSPS, it then
has the legal authority to proceed with an
existing-source NSPS. The President has
requested that an NSPS for existing sources be
proposed by June 1, 2014, with finalization by
June 1, 2015. The Clean Air Act and
EPA rules require that EPA establish a yet to be
determined "standard of performance" for
existing sources. Each state is then
required to prepare and submit a state
implementation plan to EPA, based on EPA
guideline documents, that details how that
state's power plants will meet the EPA's
standard of performance. Under the
President's proposed timeline, states would be
required to submit their implementation plans by
June 30, 2016.
The legal
certainty of the new-source NSPS and the process
and substantive requirements for the
existing-source NSPS are still unclear at this
time, but what is clear is that EPA is closer to
regulating GHGs from power plants than it ever
has in its history.
1Presidential
Memorandum -- Power Sector Carbon Pollution
Standards, June 25, 2013.
Available HERE.
2The
Clean Air Act states that the “standard of
performance” is to reflect the degree of
emission limitation achievable through the use
of the “best system of emission reduction” that
has been adequately demonstrated; the standard
also takes into account the cost of achieving
the reduction and any nonair quality health and
environmental impacts and energy
requirements. See Clean Air Act §
111(a)(1).
3Simple
cycle natural gas plants were not included in
the category or factored into the April 2012
standard.
4This 1,000
lb CO2/MWh for gas plants only applies to larger
units, those with a heat input rating over
850 mmBtu/hr. Smaller units
(those with a heat input rating less
than 850 mmBtu/hr) will have a limit of 1,100 lb
CO2/MWh.
5The
1,100 lb CO2/MWh standard applies over a
12-month operating period. EPA is also
seeking comment on a proposal
to allow for a 1,000-1,050 lb CO2/MWh
standard over an 84-month operating
period.
6Comments
to the Office of Management and Budget should be
submitted 30 days after
publication. |