Abby L. Harvey
GHG Monitor
5/22/2015
The National Association of Clean Air Agencies, an organization comprised of the state air regulators who will be tasked with developing state action plans to come into compliance with the Environmental Protection Agency’s proposed carbon emissions standards for existing coal-fired power plants, this week released an in-depth encyclopedia of compliance options for the rule. The document explores a large number of carbon reduction mechanisms expanding well beyond the “building blocks” included in the EPA’s Best System of Emissions Reduction. Under the proposed rule, dubbed the Clean Power Plan, states would have to develop action plans to meet federally set emissions reductions goals. “The EPA proposed emissions rate standards, or targets, for each state based on a BSER determination comprised of four building blocks: onsite heat rate improvements, redispatch to natural gas, renewable and nuclear energy, and energy efficiency. It is important to note, however, that states will not be limited in selecting compliance options to reduce emissions only from these building blocks,” the document says.
The document includes a chapter on carbon capture and storage, which was left out of the EPA’s proposed rule due to the high cost of retrofits and potential space limitations at existing plants. “Although some individual facilities may find implementation of CCS to be a viable CO2 mitigation option in their particular circumstances, the EPA is not proposing and does not expect to finalize CCS as a component of the BSER for existing EGUs in this rulemaking. Nevertheless, CCS would be available to states and sources as a compliance option,” according to the proposed rule.
According to the NACAA document, only a few of the nation’s coal-fired power plants would be considered ineligible for a CCS retrofit. “There were more than 550 coal-fired power plants in the United States in 2012. Some of those plants will retire before the proposed initial 111(d) compliance period begins in 2020. However, the majority are likely to still be operating and could be candidates for CCS,” the document says. This determination, however, is made solely on the basis of location and does not consider the high cost of retrofits.
Regulatory Certainty Regarding Storage Needed
While CCS is considered a proven technology in the NACAA document, the regulatory climate surrounding the storage of CO2 makes the use of the technology to meet Clean Power Plans goals problematic. “Geologic storage of CO2 is a fairly new field for regulation. Among the steps in carbon storage that need to be addressed through regulation are site characterization, site operations, closure, and long-term stewardship,” the NACAA document says. “To date, there are federal regulations governing injection, to a degree, but not other aspects of storage,” the document says, referencing the Federal Underground Injection Control (UIC) Class VI Program for Carbon Dioxide Geologic Sequestration which provides permits for the injection of CO2.
Taxing Carbon Remain Politically Difficult
The menu also addresses controversial market-based emissions reduction mechanisms like carbon pricing. “Conceptually, carbon taxes can help correct the negative externalities associated with climate change, but taxing emissions is likely to have some economic consequences. Recycling of tax revenues, however, can help ensure that the tax is equitable and effective. The choice of these will impact such important questions as whether the tax is politically palatable and whether it positively or negatively impacts the economy,” the NACAA document says.
The document suggests recycling revenue collected by taxing carbon emissions into programs that would ease the economic burden of such a tax. Such programs may include weatherization, energy efficiency improvement projects, and the installation of zero-carbon emitting generation.
EPA’s Options When Developing a FIP
Under the proposed EPA regulations, if a state does not develop a state implementation plan (SIP) the EPA has the authority to then put in place a federal implementation plan (FIP). However, the tools available to the EPA in the development of a FIP have been called into question. Senate Majority Leader Mitch McConnell (R-Ky.), in a March 19 letter to the nation’s governors, stated that “by requiring states to submit a plan aimed at achieving a lower emissions target based upon four so-called ‘building blocks’ … the EPA is overreaching, as its authority under the Clean Air Act extends only to the first building block related to source specific energy efficiency upgrades. In other words, the EPA is attempting to compel states to do more themselves than what the agency would be authorized to do on its own,” he wrote.
However, according to a white paper released this week by the trade association, Advanced Energy Economy, it is within the EPA’s authority to work with power plants to implement outside the fence measures. “Current electric sector practices demonstrate that owners of EGUs have ample ability to directly invest in advanced energy or to procure credits associated with advanced energy investments as a means of offsetting their units’ output and associated emissions,” the white paper says, going on to recommend that the EPA “allow EGUs to comply, in part, through purchase of emission reduction credits generated by a wide array of advanced energy providers—including zero- and low-emission generation resources and demand-side resources—in an amount based on the contribution to avoid EGU emissions.”
AEE argued that using such market incentives is authorized by the Clean Air Act, which defines a FIP as including “enforceable emission limitations or other control measures, means or techniques (including economic incentives, such as marketable permits or auctions of emissions allowances).” The EPA is set to release a draft FIP mid-summer.
