GOP SPARS WITH EPA OVER IMPACT OF PERFORMANCE STANDARDS ON CCS, COAL

Farris Willingham and Tamar Hallerman
GHG Monitor
07/06/12

Rep. Mike Pompeo (R-Kan.) and Environmental Protection Agency Assistant Administrator for Air and Radiation Gina McCarthy sparred last week over the implications of EPA banking on the commercialization of carbon capture and sequestration technology under its recently proposed performance standards for new fossil fuel-fired power plants. During a June 29 House Energy and Commerce subcommittee hearing, Pompeo argued that it is unwise for EPA to count on the development of the technology within the next decade. “The rule makes it abundantly clear that CCS is nowhere near ready for mass-scale deployment, and yet your own rule states that the technology would be jump-started by the rule itself…Any reason [why] we would create a set of rules [when] we have no evidence that anybody can actually build one of these creatures in the real world?” he asked McCarthy. Refuting Pompeo’s claims, McCarthy said that the value chain for CCS technology has been proven separately and that full-chain demonstration-scale projects are currently under development. “There are a number of power plants that are coal-fired that are proposing to be constructed using CCS today,” she said.

EPA Offers 30-Year Averaging Compliance Pathway

Proposed in late March, EPA’s New Source Performance Standards set a limit on the amount of carbon dioxide that can be emitted by new fossil fuel-fired units larger than 25 MW. The proposal calls for an emissions limit of 1,000 pounds of CO2 per megawatt hour—similar to the emissions rate of an uncontrolled natural gas combined cycle unit—and would essentially bar any unmitigated coal units from being built. Instead, utilities must switch to natural gas or install CCS technology in order to comply, EPA said. In order to incentivize CCS, EPA said operators could choose to average the emissions of a unit over a 30-year period. Under that pathway, operators could build a new unmitigated coal unit and emit up to 1,800 lbs CO2/MWh during the first decade of operation and later add CCS and emit less—roughly 600 lbs CO2/MWh—for the remaining 20 years, as long as the emissions average 1,000 lbs of CO2 over the 30-year period. At the hearing, McCarthy said the rule will provide a “path forward for coal with CCS.”

During the hearing, Pompeo asked whether EPA would shut down any coal units that aim to install CCS but are unable to meet emissions averaging requirements during the 30-year period due to a lack of technology availability. “What are the penalties for [utilities] that get to year 13 and…it becomes very clear they can’t make the 30-year option?” he asked McCarthy. She said EPA would work with individual utilities on a compliance strategy and that premature shutdowns are rarely used as a compliance tool. Pompeo said that regardless of the compliance flexibilities, he does not think utilities will want to take the risk to invest in CCS if it has not yet been proven on a demonstration scale. “Do you believe that if somebody’s out trying to finance one of these plants when the technology doesn’t exist, that there is an entity in the world that would possibly commit the capital to build one of these when they have no idea what the risk is if, in fact, their technology doesn’t pan out, as so often is the case?” he asked McCarthy.

Subcommittee Chairman Ed Whitfield (R-Ky.) highlighted comments made by CONSOL Energy Vice President Steven Winberg during a June 19 hearing on the rulemaking, where he said that CCS will likely not benefit from the rulemaking because utilities will probably choose to invest in other cheaper technologies like natural gas rather than wait for CCS to commercialize. “In effect, what EPA’s rule does is eliminate any new coal for years to come because EPA is requiring new coal-fueled power plants to meet a natural gas equivalent CO2 standard before CCS is commercially available,” said Winberg, who also works as chairman of the board of the FutureGen Alliance, said. Without guarantees from CCS technology suppliers, utilities will not be able to get approved for financing from state public utilities, and without that power companies will not build units with CCS, Winberg said at the time.

Republicans Criticize Rule as Part of Administration’s ‘War on Coal’

Republicans criticized the rulemaking as indicative of what they say is the Obama Administration’s continued “war on coal.” “I’ve had a real problem with EPA. I know that you’re doing your job, you’re trying to meet the requirements, but you all continue to mislead the American people,” Whitfield said. “Sure, natural gas prices are one factor, but I don’t know how you possibly deny that these regulations…are not having an impact on coal being competitive?” He added: “Although EPA officials constantly refer to health benefits of their multitude of rules, they do not even consider the health impact on the families of the coal miners and others who lose their jobs.”

Most Democrats on the subcommittee defended the performance standards. Energy and Commerce Committee Ranking Member Henry Waxman (D-Calif.) denied Republican claims that EPA is singling out coal. “Coal and natural gas are both fuels used to generate electricity. They’re market competitors,” he said. “What my Republican colleagues appear to want is for EPA to treat coal differently than other fuels, particularly natural gas. They wanted EPA to give coal a pass for the pollution it generates when burned.”

Waxman: Coal Industry Should Invest in ‘Clean Coal’ Tech

Waxman said that the coal industry should be more willing to invest in its future by helping fund CCS and other ‘clean coal’ research. “I would submit that the coal industry is going to suffer even more because they’re not willing to work with us to try to find a way to make coal a viable option in our energy portfolio by figuring out the technology to remove the carbon emissions,” he said. Waxman’s remarks mirror those made in a floor speech by Sen. Jay Rockefeller (D-W.Va.) ahead of a disapproval vote of another controversial EPA regulation last month. “Let me be clear. I’m frustrated with some of the top levels of the coal industry, but I’m not giving up hope for real solutions for clean coal,” Rockefeller said, adding, “we have the chance here to not just grudgingly accept the future—but to boldly step into that future.”