REPORTS: UPCOMING EPA STANDARDS TO MAINTAIN CCS REQUIREMENT

Tamar Hallerman
GHG Monitor
9/13/13

Reports that retooled carbon emissions standards for new power plants would maintain a de facto carbon capture and storage requirement have begun circulating in recent days as stakeholders gear up for the Environmental Protection Agency’s rollout of the highly contentious rulemaking, expected next week. Bloomberg initially reported Sept. 11 that while the New Source Performance Standards (NSPS) would be “structured differently” from the initial draft rule published by EPA in March 2012, the new proposal “offers little solace to plant operators” in that they would be required to add costly CCS technology to all coal units.

Observers have long speculated that EPA would scrap the technology-neutral approach central to its initial proposal in favor of separate emissions performance standards for coal and gas-fired units that could withstand an all-but-certain legal challenge. That prediction appears to be true, according to reports, which have indicated that the new emissions performance standard for coal units would likely fall somewhere between 1,300 lbs CO2 per MWh and 1,600 lbs MWh. The average coal unit emits upwards of 1,800 lbs CO2 per MWh. 

Previous Standard Set 1,000 Lb Limit

EPA’s first NSPS proposal set a  single CO2 emissions performance standard for all fossil plants—regardless of whether they were coal or gas-fired—of 1,000 lbs per MWh, essentially the emissions rate of an unmitigated natural gas combined cycle unit. In order to comply, project operators would have had to install CCS technology onto coal plants, or switch to gas or other low-carbon generation, and that would remain the case if the standard is set between 1,300 and 1,600 lbs. Industry groups had argued that the technology-neutral approach EPA had first used had no legal precedent under the Clean Air Act and would codify the recent “dash for gas” instead of incentivizing CCS.

One media report this week indicated that EPA would also retain a 30-year averaging provision in order to incentivize investment in CCS. In its initial NSPS proposal, the agency said it was willing to average a unit’s emissions over a 30-year period, which could allow some electric generating units to run unmitigated for the first 10 years of the standard if operators then promise to install and run CCS technology for the next two decades.

EPA is expected to release the retooled NSPS by Sept. 20, the deadline established by President Obama when he unveiled his climate action plan in June. After collecting public comment on the new proposal, EPA is expected to unroll a final rulemaking in a “timely fashion” thereafter, before beginning to move forward with regulations for existing power plants next year.

Industry Calls for More Limited Standard

The power industry, coal and gas producers and environmental groups have streamed into the White House Office of Management and Budget, where the rulemaking has been undergoing interagency review, in recent weeks arguing whether or not CCS was commercially ready enough to be mandated under the revised standard. Many environmental groups have argued that CCS has already been demonstrated and that finalizing NSPS would provide the regulatory trigger needed to widely deploy the technology. Meanwhile, many industry groups have argued that requiring CCS on coal plants would be a death wish for coal and a boon for natural gas. “It is critical that carbon regulations are developed using the best available technical information to ensure that standards are set at achievable levels based on commercially and economically viable technologies and that new rules take proper account of potential impacts to the economy and jobs,” a coalition of 13 industry stakeholders wrote to EPA Administrator Gina McCarthy earlier this week. “…We urge you to provide a realistic path forward that does not foreclose the use of any one fuel source for generating electricity.”

The American Public Power Association said meeting EPA’s previous emissions standard with CCS was “unrealistic” and that “no commercial plant” could meet the 1,000 lbs per MWh level. In documents posted on the White House website, APPA instead suggested that EPA set the emissions performance standard for coal between 1,900 and 1950 lbs MWh and revisit CCS and whether it is commercially available in eight years. “CCS is highly unlikely to be commercially available within the eight-year NSPS review,” APPA said.

Most CCS industry groups, meanwhile, appear to be treading carefully as EPA prepares to unveil the retooled standards, with many taking a “wait-and-see” approach. At a roundtable event at the Atlantic Council earlier this week, the Global CCS Institute’s General Manager for North America Victor Der would not speculate on the standards, but said, “you have to put together regulations that are workable.” “You have to give industry the chance to make those transitions and do those things in concert with technology policy, the markets and [public] acceptance as well.” At the same event, Jonathan Pershing, deputy assistant secretary for Climate Change Policy and Technology at the Department of Energy, described CCS as facing “political constraints, not technology ones.”

Fierce Opposition Expected

Regardless of the content of EPA’s new proposal, opposition is expected to be fierce. The standards are expected to immediately be challenged in court, and Congressional Republicans who have opposed previous Agency rulemakings are also expected to put up a fight on Capitol Hill. GOP members tried, unsuccessfully, to attack previous agency regulations by using the Congressional Review Act, proposing to gut EPA’s budget, staging ‘symbolic’ votes against EPA regulatory authority and full-out barring EPA from regulating greenhouse gas emissions. A bill reintroduced by House Republicans earlier this summer would link the carbon standards to the feasibility of CCS as determined by multiple government agencies. House Energy and Power Subcommittee Chairman Ed Whitfield (R-Ky.) said this week that he is preparing a bill that would sharply limit EPA’s ability to regulate CO2 from power plants but stop short of stripping its power in order to gain some Democratic support.

Senators introduced amendments to energy efficiency legislation on the Senate floor this week also aimed at NSPS. Sen. John Barrasso (R-Wyo.) filed an amendment that would block the standards, while a separate provision submitted by Sens. Joe Donnelly (D-Ind.) and Roy Blunt (R-Mo) would thwart all future EPA CO2 regulations to what can be achieved with technology that is already commercially available.