Emissions

EPA proposes carbon emission limits on coal and gas-fired plants

The proposal would set carbon pollution caps to be met by plant operators and is expected to usher in hydrogen co-firing and Carbon Capture and Storage (CCS) technologies.
EPA proposes carbon emission limits on coal and gas-fired plants
(Source: Flickr.)

The U.S. Environmental Protection Agency (EPA) proposed new carbon emission standards for U.S. coal and natural gas-fired power plants, its most ambitious effort yet to fight off planet-warming pollution and bring about a carbon-free power sector by 2040.

The proposed rule leans on hydrogen as a low-carbon fuel that could be used as one strategy to meet the carbon reduction goals.

The rule also would apply to future electric plants and would avoid up to 617 million metric tons of carbon dioxide through 2042, equivalent to roughly half the cars in the U.S., the EPA said.

Almost all the coal plants — along with large, frequently used gas-fired power plants — would have to cut or capture nearly all their carbon dioxide emissions by 2038, the EPA said. Plants that cannot meet the new standards would be forced to retire.

Through 2042, EPA estimates the net climate and health benefits of the new standards are worth up to $85 billion.

The technology-based standards EPA is proposing include:

  • Strengthening the current New Source Performance Standards (NSPS) for newly built fossil fuel-fired stationary combustion turbines (generally natural gas-fired)
  • Establishing emission guidelines for states to follow in limiting carbon pollution from existing fossil fuel-fired steam generating EGUs (including coal, oil and natural gas-fired units)
  • Establishing emission guidelines for large, frequently used existing fossil fuel-fired stationary combustion turbines (generally natural gas-fired)

EPA is projecting the proposed standards for existing gas-fired plants and the third phase of the NSPS could achieve up to 407 million metric tons of carbon emission reductions.

The EPA rules would not mandate use of Carbon Capture and Storage (CCS) — a technology that is expensive and still being developed — but instead would set caps on carbon dioxide pollution that plant operators would have to meet.

Some natural gas plants could start blending gas with another fuel source such as hydrogen, which does not emit carbon, although specific actions would be left to the industry.

Still, the regulation is expected to lead to greater use of carbon capture equipment, which EPA said has been “adequately demonstrated” to control pollution.

“The proposed limits and guidelines would require ambitious reductions in carbon pollution based on proven and cost-effective control technologies that can be applied directly to power plants,” the agency said in a statement May 11. “They also provide owners and operators of power plants with ample lead time and substantial compliance flexibilities, allowing power companies and grid operators to make sound long-term planning and investment decisions, and supporting the power sector’s ability to continue delivering reliable and affordable electricity.”

Mixed reaction

Edison Electric Institute President and CEO Thomas Kuhn said that EPA had “constructively engaged” with its members over the past 18 months in developing the rule. He said that during the process EEI had emphasized on including “critical clean energy technologies” including hydrogen and carbon capture and storage.

National Rural Electric Cooperative Association CEO Jim Matheson warned in a statement that the EPA proposal “could disrupt domestic energy security, force critical always available power plants into early retirement, and make new natural gas plants exceedingly difficult to permit, site, and build.”

And the Politico news site reported that Sen. Joe Manchin (D-WV) vowed to oppose President Joe Biden’s EPA nominees because the agency’s rules could push coal- and gas-fired power plants “out of existence.”

A statement from Manchin said “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, no matter the cost to energy security and reliability.”

Negligible price impact?

EPA said it believes power companies can implement the standards with a “negligible impact on electricity prices, well within the range of historical fluctuations.”

Installation of controls such as CCS for coal and gas plants, and low-carbon or green hydrogen co-firing for gas plants are more cost-effective for plants that operate at greater capacity, more frequently, or over longer time periods.

EPA said its proposal accounts for this by establishing standards for different subcategories of power plants, such as their capacity, their intended length of operation, and/or their frequency of operation.

The proposal requires states to engage with affected stakeholders, including communities disproportionately burdened by pollution and climate change impacts, as well the energy communities and workers. EPA said it also plans to engage with communities and stakeholders on opportunities to ensure the responsible deployment of CCS. Last year, the Supreme Court limited how the Clean Air Act can be used to reduce climate-altering emissions from power plants. The 6-3 ruling confirmed the EPA’s authority to regulate carbon emissions from power plants but said it could not force a nationwide transition away from the use of coal to generate electricity.

Push for lower carbon emissions

The EPA said that between 2010 and 2021, fossil fuel-fired generation declined from approximately 70% of total net generation to around 60%, with coal generation dropping from 46% to 23% during the period.

It said that many utilities and power generating companies have announced plans to permanently shutter many of their remaining coal-fired power plants. Some companies are planning to install combustion turbines with advanced technologies to limit GHG emissions, including CCS and hydrogen co-firing, along with advanced energy storage technologies.

It said the power sector has also been influenced by state actions to reduce GHG emissions. More than two-thirds of states have enacted policies to require utilities to increase the amount of electricity generated from sources that emit no GHGs. Other states have enacted legislation requiring the decarbonization of their utility fleets, using devices such as carbon markets, low-GHG emission standards, carbon capture and storage mandates, utility planning, or mandatory retirement schedules.

Additionally, Congress has recently enacted investments in GHG reductions. For example, the IIJA provided more than $65 billion for infrastructure investments and upgrades for transmission capacity, pipelines, and low-carbon fuels including low-GHG hydrogen.

In addition, the Creating Helpful Incentives to Produce Semiconductors and Science Act (CHIPS Act) authorized billions more in funding for development of low- and non-GHG emitting energy technologies that will provide additional low-cost options for power companies to reduce overall GHG emissions.

CAA section 111

EPA said it based its rulemaking on section 111 of the Clean Air Act, following a practice it has used since the early 1970s to write rules for more than 60 source categories. Federal courts have developed a body of caselaw interpreting section 111, including the 2022 Supreme Court decision in West Virginia v. EPA.

Based on that caselaw, EPA said it may determine a control technology to be “adequately demonstrated” even if it is new and not yet in widespread commercial use. It said it also “may reasonably project” the development of a control system at a future time and establish requirements that take effect at that later date.

The EPA rule leans heavily on improving operating efficiency, carbon capture and sequestration, and co-firing with low-greenhouse gas hydrogen as control strategies.

For example, for base load combustion turbine units, the EPA proposed two pathways as potential “best system of emission reductions”: the use of CCS to achieve a 90% capture of GHG emissions by 2035 and the co-firing of 30% (by volume) low-GHG hydrogen by 2032, and ramping up to 96% by volume low-GHG hydrogen by 2038.

EPA said that in recent years, the cost of CCS has declined in part because of process improvements and other advances. In addition, the 2022 Inflation Reduction Act extended and increased the tax credit for CCS under Internal Revenue Code (IRC) section 45Q. These changes support the EPA’s proposed conclusion that CCS is the BSER for several subcategories in these proposals.

Both the Infrastructure Investment and Jobs Act (IIJA), enacted in 2021, and the IRA, Congress provided support for the development of hydrogen produced through low-GHG methods. EPA said this support includes investment in infrastructure through the IIJA and the provision of tax credits in the IRA to incentivize the manufacture of hydrogen through low GHG-emitting methods. These changes also support the EPA’s proposal that co-firing low-GHG hydrogen is BSER for certain subcategories of stationary combustion turbines.

This article was updated on May 11 to include reactions on the proposed rule making.