POSTED BY Hunter Holman on October 18, 2013

Fossil fueled power plants are one of the largest sources of anthropogenic greenhouse gasses.  On June 25, 2013, President Obama announced that he would order the EPA to promulgate greenhouse gas emission standards for power plants utilizing fossil fuel technology in an effort to reduce the amount of greenhouse gasses emitted by this country.  Prior to this announcement, the EPA had already proposed standards for regulating greenhouse gasses in April 2012, but these proposals were never confirmed in the federal register due to the record number of comments the EPA received on the proposed regulation.  Subsequently, President Obama ordered the EPA to re-propose the regulation by September 20, 2013.

On September 20, 2013, the EPA re-proposed standards for greenhouse gas emissions from new electric generating units (EGUs)—primarily coal and natural gas-fired power plants.  These new source performance standards (NSPS) would only allow coal-fired EGUs to emit 1,100 pounds of carbon dioxide (CO2) per megawatt-hour of electricity and 1,000 or 1,100 pounds of CO2 per megawatt-hour of electricity (depending on the size of the unit) for natural gas-fired EGUs.  While these standards are less intrusive to natural gas-fired power plants, which release fewer emissions than coal-fired power plants, they would require new coal-fired power plants to reduce their CO2 output significantly.  The EPA projects that an average coal-fired power plant emits 1,800 pounds of CO2 per megawatt hour of electricity, which means that similar new power plants would need to reduce their CO2 output by 40% to meet these proposed standards.

In order to accomplish this reduction, new coal-fired power plants would likely need to incorporate technology that will reduce their CO2 emissions.  One such technology is carbon capture and sequestration (CCS).  This technology is used to separate CO2 generated by fossil fuel power plants from other emissions, which is then stored, typically, by injecting it into the ground.

One of the concerns with this technology is that it is not economically feasible because the equipment and process is very expensive, and it can consume as much as 30% of the energy generated by the power plant.  The EPA maintains that CCS is technologically feasible and that it has been successfully implemented many times before.  To ease the economic burden of implementing CCS technology, the EPA has provided two avenues for complying with the proposed regulation, one of which would allow new facilities the ability to distribute the cost of this technology over a longer period of time.  The first option of complying with the proposed regulation measures compliance using a rolling average of emissions over a 12-month period. This would require a new power plant to meet the 1,100 pounds of CO2 per megawatt-hour of electricity standard for each year of operation.  The second option measures the amount of emissions over an 84-month period, which would allow the facility the flexibility to exceed the proposed standard while the technology is incorporated, but this option ultimately requires the facility to meet a lower standard of 1,000 to 1,050 pounds of CO2 per megawatt-hour at the end of the period.

At first glance this regulation seems to provide a significant barrier to energy generation in this country, particularly the coal industry.  However, as the EPA argues, this proposed regulation seems to merely codify within the federal register the current market shift of the energy industry: moving away from coal and towards more efficient and costly fuels for energy generation such as natural gas.  The cost of natural gas is projected to be lower than the cost of coal for the foreseeable future.  Because of this, it is more likely that natural gas-fired power plants will be built in the future rather than coal-fired power plants, making this proposed regulation merely an assurance that the energy industry does not needlessly revert to older and dirtier methods of generating electricity.

Critics of this proposed regulation suggest that it would effectively prohibit construction of any new coal-fired power plants because the cost of incorporating CCS technology and bringing CO2 emissions down to the requisite level would be infeasible.  The Clean Air Act restricts the EPAs standard setting authority by requiring the standards to be achievable through the best adequately demonstrated system of emissions reduction.  The relevant question here is whether CCS technology has been adequately demonstrated.  If the proposed regulation becomes the new standard, the D.C. Circuit Court could be asked to answer this question.  The D.C. Circuit has stated in the past that in order for a technology to be adequately demonstrated it must be reasonably reliable, reasonably efficient, and reasonably costly.  One of the pertinent questions when determining if a technology meets these requirements is whether or not the technology is primarily theoretical or experimental, or whether there have been instances of its successful use, even if the industry has not adopted the technology as the norm.

Another question the D.C. Circuit may have to address is whether the EPA is forcing the adoption of CCS technology on those who wish to build new coal-fired power plants.  If so, the Clean Air Act would forbid the proposed regulation.  The EPA may not typically require a new source, a power plant, to adopt a particular technology to comply with new source standards.  If this proposed regulation is adopted and challenged on these grounds, how the court answers these questions will largely depend on how costly and efficient CCS technology is when the challenge is brought, as well as what alternatives are feasibly available at the time.

This new proposed regulation is not the standard yet, but as it is now, the proposed regulation is more symbolic than anything.  It is unlikely that any new coal-fired power plants will be built in this county any time soon because it is a more expensive fuel source than natural gas.  For that reason alone this proposed regulation would not significantly alter the energy market in this country.  However, the invaluable part of this proposed regulation is that it is a step towards closing the door on coal by requiring the level of emissions from fossil fuel EGUs to be lower, thus making it more cost effective to invest in cleaner forms of fuel such as natural gas.

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