The highly-anticipated announcement outlined a suite of measures aimed at reducing air, water and land pollution from the power sector. As the sector makes long-term investments in the transition to clean energy, EPA said the rules are designed to work with power companies’ planning processes. Regulators say they project the rules will result in reductions of 1.38 billion metric tons of carbon pollution overall through 2047.

Notably, EPA’s final rule heavily relies on on carbon capture and sequestration/storage (CCS) as the best system of emission reduction (BSER) for the longest-running existing coal-fired units and most heavily utilized new gas turbines. Unlike the original proposal from nearly a year ago, decarbonizing these plants through clean hydrogen co-firing is not a factor in the new rule.

As we’ve reported, rules for existing natural gas-fired plants aren’t expected to come out until after the November election.

What are the changes from the original proposal?

Under EPA’s final rule, coal plants which plan to stay open beyond 2039 (a year earlier than previously proposed) would have to reduce or capture 90% of their carbon dioxide emissions by 2032.

Initially, the compliance date to implement CCS for this subcategory of coal plants was January 1, 2030, but the agency said it heard from stakeholders that this deadline did not provide adequate lead time.

Under the final rule, coal plants that are scheduled to close by 2039 would have to cut their emissions 16% by 2030. In this case, EPA said the BSER for this subcategory is co-firing with natural gas, at a level of 40 percent of the unit’s annual heat input. For reference, EPA said more than half (100 GW) of still-operating coal-fired units have already announced retirement dates or conversion to gas-fired units before 2039.

Coal plants that are set to retire by 2032 would be exempted from the new rule.

New natural gas-fired plants that run more than 40% of the time, considered “baseload” by the agency, would also have to eliminate 90% of their carbon dioxide emissions using CCS by 2032. Previously, the proposed rule required large turbines with at least a 50% capacity factor to capture 90% of their carbon by 2035 or co-fire with 30% hydrogen starting in 2032.

EPA has also removed hydrogen co-firing as a BSER in the final rule, prompted by cost uncertainties and concerns shared during the public comment process.

“While the EPA believes that hydrogen co-firing is technically feasible based on combustion turbine technology, information about how the low-GHG hydrogen production industry will develop in the future is not sufficiently certain for the EPA to be able to determine that adequate quantities will be available,” the agency said in its explanation.

EPA did say “certain sources may elect to co-fire hydrogen for compliance with the final standards of performance, even absent the technology being a BSER pathway.”

Read EPA’s full explanation for the final rules here.

EPA pivots to CCS

EPA called carbon capture and sequestration an “available and cost-reasonable emission control technology” that can be applied directly to coal and gas-fired plants.

The agency cited lower costs and continued improvements in CCS technology as a reason for it being a BSE. EPA said process improvements learned from earlier deployments of CCS, the availability of better solvent. and other advances have decreased the costs of CCS in recent years.

EPA also said tax incentives from the Inflation Reduction Act would allow companies to help offset the cost of CCS. The Infrastructure Investment and Jobs Act (IIJA) additionally includes billions of dollars to advance and deploy CCS technology and infrastructure.

The power industry has been fractured over EPA’s emissions-slashing proposal since the initial version was released last May. Opposition to the rule has mainly come with concerns that its implementation would jeopardize grid reliability and that the emission reduction technologies proposed by EPA aren’t ready for prime time.

Those concerns continued after EPA released its final rule. The Edison Electric Institute (EEI), the association that represents U.S. investor-owned utilities, reiterated that its members are not confident in CCS as a compliance technology based on the proposed implementation timelines.

“While we appreciate and support EPA’s work to develop a clear, continued path for the transition to cleaner resources, we are disappointed that the agency did not address the concerns we raised about carbon capture and storage (CCS),” said Dan Brouillette, who is EEI’s President and CEO. “CCS is not yet ready for full-scale, economy-wide deployment, nor is there sufficient time to permit, finance, and build the CCS infrastructure needed for compliance by 2032.”

Brouillette added: “While CCS and other 24/7 clean energy technologies could be important tools for reducing emissions in the future, EPA’s record does not support a finding that CCS is demonstrated today.”

MORE: Power industry “at an inflection point” regarding EPA rules

In response to the rule’s release, Electric Power Supply Association (EPSA) President and CEO Todd Snitchler said the final rule is a “painful example of aspirational policy outpacing physical and operational realities.”

Despite the skepticism, some companies have thrown their support behind EPA’s rule.

Constellation Energy issued a statement which reads in part: “EPA’s power plant rules offer a sensible roadmap for phasing in greenhouse gas emissions reductions from the power sector, while meeting rising demand from onshoring manufacturing, the electrification of transportation and heavy industry and the growth of emerging technologies.”

Constellation also added: “This rule enables the U.S. to utilize its abundant, domestic natural gas resources to provide reliable and affordable power to American families and businesses while helping the U.S. achieve its emissions goals.”

Other final rules

Additionally, EPA updated regulations on mercury and air toxics emissions from coal-fired power plants, foreseeing reductions in harmful pollutants like mercury and fine particulate matter.

The final [Mercury and Air Toxics Standards] rule reduces the mercury emissions limit by 70 percent for lignite-fired units and reduces the emissions limit that controls for toxic metals by 67 percent for all coal plants. EPA said this final rule under the Clean Air Act is the most significant update since MATS was first issued in February 2012.

EPA is also strengthening wastewater discharge standards for coal-fired power plants to minimize water pollution. EPA’s final rule establishes technology-based discharge standards for flue gas desulfurization wastewater, bottom ash transport water, combustion residual leachate, and “legacy wastewater” that is stored in coal ash ponds. The standards include flexibilities for compliance. EPA said the standards are projected to have minimal impact on electricity prices while providing significant health and environmental benefits.

Finally, the agency moved to finalize rules to manage coal combustion residuals (coal ash) to mitigate public health risks associated with its disposal. These regulations aim to protect communities from contamination by requiring safe management practices for coal ash storage and disposal, especially focusing on legacy sites prone to leaks and structural issues. This rule is not expected to affect the current operations of power plants.

Kuhn was elected as EEI President and CEO in 1990 and is the trade organization’s longest-serving president. Kuhn joined EEI in 1985 as executive vice president and became chief operating officer in 1988. He was elected president and CEO in 1990. EEI represents U.S. investor-owned electric companies.

Prior to EEI, Kuhn was president of the American Nuclear Energy Council, which later merged with the Nuclear Energy Institute. And he headed the energy section of investment firm, Alex Brown and Sons, and served as White House Liaison Officer to the Secretary of the Navy.

The EEI board of directors said it would conduct a national search for a replacement, with the goal of having a new president in place by December 31.

Kuhn said in a statement, “As an industry, we are at a global inflection point, and EEI’s mission to deliver Power by Association will remain unchanged.”

Kuhn received a bachelor’s degree in economics from Yale University, served as a Naval Officer following his graduation, and received an MBA from George Washington University. He also completed the Stanford University Graduate School of Business Senior Executive Program.

Kuhn earlier served on the Secretary of Energy’s Advisory Board and the U.S. Chamber of Commerce Board. He currently serves on the boards of the Alliance to Save Energy, the United States Energy Association, and the U.S. Navy Memorial Foundation. He received the 2018 United States Energy Award for “unparalleled contribution and leadership in the energy sector” and the Keystone Policy Center 2019 Leadership Award.

In addition to U.S. members, EEI has more than 65 international electric companies in more than 90 countries as International Members, as well as industry suppliers and related organizations as Associate Members.

At its December 16 meeting, FERC issued a Notice of Inquiry (NOI) to examine the rate recovery, reporting and accounting treatment of utility industry association dues as well as civic, political and related expenses. It also will look at whether additional transparency is needed to define utility donations for charitable, social or community welfare purposes.

The NOI was issued following a March petition filed by the Center for Biological Diversity. In the petition, the group claimed that charging ratepayers for, in some cases, millions of dollars to pay dues for groups like the Edison Electric Institute (EEI) is “common among utilities.” It said that in 2019, the Public Service Commission of Wisconsin authorized charging ratepayers almost $500,000 in EEI dues. And in 2020, the California Public Utilities Commission approved charging ratepayers $300,000 for EEI dues.

The petition also alleged that the practice violates ratepayer rights as well as the First Amendment.

“This notice is an important first step toward keeping corporate utilities from diverting customers’ money to anti-environment trade groups,” said Howard Crystal, the center’s legal director. 

The FERC NOI seeks comment on 22 questions focused in three areas: 

• Delineation of recoverable and non-recoverable industry association dues by member utilities for rate purposes;
• Increased transparency in industry association expenses and segments of industry association dues charged to utilities as well as utilities’ and industry associations’ expenses from civic, political and related activities; and 
• A framework for guidance should FERC determine action is necessary to further define the recoverability of industry association dues charged to utilities and/or utilities’ expenses from civic, political and related activities.

At present, FERC does not have a “bright-line rule” delineating between recoverable expenses and those excluded from rate recovery. Instead, it allows regulated entities to determine the portion of their industry association dues to include in either accounts, based on information provided by the industry associations about their activities and associated costs. The Commission generally considers the appropriate delineation between the two classes of expenses on a case-by-case basis. 

Initial comments are due 60 days after the date of publication of the notice in the Federal Register. Reply comments are due 90 days after the date of publication in the Federal Register.