The US Environmental Protection Agency (EPA) today proposed new standards intended to cut CO2 emissions from power plants that could allow states to use emissions trading, while also encouraging generators to use carbon capture or hydrogen.
The proposal would set standards for coal- oil- and natural gas-fired power plants that would kick in starting in 2030 and become more stringent over time. The standards would eliminate all coal-fired generation that does not have carbon capture and sequestration (CCS) technology by 2035, according to agency projections. EPA expects the standards to reduce power sector emissions by 617mn metric tonnes through 2042.
"EPA is using its clean air act authority to protect people from harmful pollution and safeguard the planet for future generation," EPA administrator Michael Regan said.
The proposal includes standards for new units and guidance for existing power plants, with the latter to vary by unit type, size and other factors such as expected remaining life and whether a power plant provides baseload or backup power.
The new unit limits initially would call for more efficient operations, but later would require the use of co-firing with low-GHG hydrogen or the use of CCS, EPA said. For existing power plants, states would be required to develop plans for setting performance standards that are at least as stringent as EPA's guidance. Existing steam generating units would have to comply starting in 2030, while combustion turbine units would have until 2023 or 2035, depending on their subcategory.
The proposal would allow states to use emissions trading, provided they can demonstrate that it will result in the same overall emissions reductions called for by the EPA guidance.
However, as currently written it discourages but does not explicitly prohibit the use of trading by certain sources, particularly units expected to retire in the next few years. EPA said it is taking comment on whether it should prohibit trading by units in any of the subcategories.
Hydrogen produced with an emissions intensity of less than 0.45kg CO2 equivalent per kilogram of hydrogen would qualify under the proposal, matching the eligibility threshold for the full $3/kg tax credit established by the Inflation Reduction Act.
This is the third attempt by EPA to regulate CO2 from existing power plants. The proposal would replace less-stringent standards issued under former president Donald Trump, while also setting more aggressive limits for new units.
Some industry groups warned the proposal would weaken the reliability of the US grid.
"If finalized, these aggressive rules will undoubtedly drive-up energy costs and lead to a substantial number of power plant retirements when experts have warned that we are already facing a reliability crisis," said Todd Snitchler, president of the Electric Power Supply Association, the trade group for competitive power suppliers.
The Edison Electric Institute, which represents investor-owned utilities, said it is reviewing the proposal and thanked EPA for engaging with the industry as it developed the standards.
Congress and the courts
The new standards, once finalized, are certain to invite legal challenges. But EPA said it is confident the new proposal can withstand court scrutiny.
Regan said EPA is following its "traditional approach" under the Clean Air Act to keep it in line with last year's ruling by the US Supreme Court that limited the agency's ability to curb CO2 from power plants.
"Absolutely, the proposed rulemaking does not implicate the concerns raised in the Supreme Court decision in West Virginia vs EPA," Regan said. "We feel really good that we are well within those bounds."
The court, in reviewing the Clean Power Plan issued under former president Barack Obama, said EPA lacked the authority to require generation shifting or other measures that would in effect "restructure" the nation's energy mix. But the ruling may not have closed the door on the use of emission trading or CCS.
One of the states that the court sided with last year said it expects the new proposal to meet a similar fate.
"It is not going to be upheld, and it just seems designed to scare more coal-fired power plants into retirement," West Virginia attorney general Patrick Morrisey (R) said.
The proposal could also run into opposition in Congress, which recently has attempted to overturn some administration regulations related to climate change and renewable energy.
US senator Joe Machin (D-West Virginia), who has backed some of these efforts, yesterday promised to oppose all nominees for EPA positions until the agency scraps its plan.
"This administration is determined to advance its radical climate agenda and has made it clear they are hellbent on doing everything in their power to regulate coal and gas-fueled power plants out of existence," he said.
Congressional Republicans also criticized the proposal.
"President Biden's rush-to-green agenda is shutting down American energy and threatening the security and reliability of our electric grid," House Energy and Commerce Committee chair Cathy McMorris Rodgers (R-Washington) and Environment, Manufacturing, & Critical Materials Subcommittee chair Bill Johnson (R-Ohio) said.
Regan said the agency expects "some coal retirements," but the proposal gives industry a "ton of flexibility" so that utilities can decide how long to keep plants operating.
"This is really a decision that will be made company by company and state by state," he said.
