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Wednesday, July 3, 2013

EPA Standards for Greenhouse Gas Emissions from Power Plants: Many Questions, Some Answers

James E. McCarthy
Specialist in Environmental Policy

As President Obama announced initiatives addressing climate change on June 25, 2013, a major focus of attention was on the prospect of greenhouse gas (GHG) emission standards for fossilfueled— mostly coal-fired—electric generating units (EGUs). EGUs (more commonly referred to as power plants) are the largest source of greenhouse gas emissions, accounting for about onethird of total U.S. GHGs. If the country is going to reduce its GHG emissions by significant amounts, as the President has committed to do, emissions from these sources will almost certainly need to be controlled.

The President addressed this issue on June 25 by directing EPA to re-propose GHG emission standards for new EGUs, which the agency had proposed in April 2012, but had not yet finalized. He also directed the agency to develop standards for existing power plants by June 2015.

Under the Clean Air Act, the EPA Administrator has a great deal of flexibility in setting these standards. The statute requires that New Source Performance Standards (NSPS) reflect the degree of emission limitation achievable through application of the best system of emission reduction that has been “adequately demonstrated.” The Administrator can take costs, health and environmental impacts, and energy requirements into account in determining what has been adequately demonstrated.

The standard for new EGUs proposed in 2012 would have set a limit of 1,000 pounds of carbon dioxide (CO
2) per megawatt-hour of electricity generated—a standard that can be met by new natural gas combined cycle plants without add-on emission controls. Coal-fired plants, however, would find it impossible to meet the standard without controls to capture, compress, and store underground about 45% of the CO2 they produce—a technology referred to as carbon capture and storage (CCS).

Many in the electric power and coal industries view the 2012 proposed standard as effectively prohibiting the construction of new coal-fired power plants. Whether CCS technology has been adequately demonstrated is one question they raise. Other issues involve the cost of compliance, the increased energy required to capture and store carbon, and whether the agency should propose separate standards for gas-fired and coal-fired units. These questions may be addressed in the reproposal, which the President directed to be issued no later than September 20, 2013.

In its 2012 proposal, EPA maintained that the components of CCS technology have been demonstrated on numerous facilities. Despite this, the agency concluded that no new facilities (other than DOE-sponsored demonstration projects) will actually use CCS in the next 10 years. Given the projected low cost and abundance of natural gas, all new fossil-fueled units are likely to be powered by gas, according to EPA.

Interest in the power plant proposal extends far beyond the electric power and energy industries. Power plants are the first category of sources for which EPA has proposed to require CCS, but the agency expects to propose standards for the GHG emissions of other industries in the next few years. What the agency promulgates in this instance may serve as a precedent.

The potential impacts of the rule also extend beyond new sources, because the agency is obligated under Section 111(d) of the Clean Air Act to promulgate guidelines for existing sources within a category when it promulgates GHG standards for new sources. Using these guidelines, states will be required to develop performance standards for existing sources. These could be less stringent than the NSPS—taking into account, among other factors, the remaining useful life of the existing source—but the standards could have far greater impact than the NSPS, given that they will affect all existing sources.

Many in Congress oppose GHG emission standards. In the 112
th Congress, the House passed bills (H.R. 1, H.R. 910, and H.R. 3409) that would have prohibited EPA from promulgating GHG emission standards for any source; the Senate did not follow suit. The President’s climate change initiative is likely to stir renewed interest in this subject.

Date of Report: June 26, 2013
Number of Pages: 16
Order Number: R43127
Price: $29.95

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