EPA Proposes First Carbon Standards for Power Plants

Image from USGS.gov

On March 27, 2012 the U.S. EPA proposed the first air emissions standards for “carbon pollution” under the Clean Air Act.  These are the first New Source Performance Standard (NSPS) emissions standards issued by the EPA for greenhouse gas (GHG) emissions from stationary sources.  The EPA contends that these NSPS rules are required under the Clean Air Act based on the Supreme Court ruling in 2007 that GHG emissions constitute air pollution, and the subsequent EPA “endangerment finding” for GHGs in 2009, resulting in regulation of GHGs under the Clean Air Act.  The proposed emissions standards limit carbon dioxide equivalent (CO2e) emissions from new electric utility power plants to 1,000 pounds of CO2e per megawatt-hour of electricity produced (1,000 lb/MWH) for new power plants with electric generation capacities greater than 25 MW.

The proposed standards can be met by natural gas-fired power plants that employ the most efficient “combined cycle” configuration.  However, because CO2 emissions from coal and oil combustion are significantly higher than from natural gas combustion (about 80% and 40% higher, respectively), coal-fired and oil-fired power plants will not be able to meet the proposed standard without the use of CO2 add-on pollution controls.

Unlike other air pollution control systems, capturing CO2 emissions from a power plant is a huge undertaking because of the magnitude of the CO2 emissions compared to conventional pollutants like PM, NOx, or SO2.  For every ton of carbon burned (fossil fuels are primarily carbon), more than three tons of CO2 are produced by oxidation of the carbon with air. Capturing the CO2 is extremely energy intensive and can be expected to lower the overall electric generation efficiency of a coal power plant by 8-12% due to the electric needs to operate a scrubber system.  Once the CO2 is captured it needs to be compressed and piped to an underground location where it can be geologically “sequestered” without the risk of releasing CO2. Carbon capture and storage (CCS) has only been used commercially in the oil and gas industry as a means of extracting oil and gas from older wells.   There are no US coal power plants using CCS other than a pilot system piping CO2 to Canada oil-fields where there are some concerns about CO2 seeping back out of the ground.  CCS also involves significant legal liabilities associated with injection of CO2 underground and the difficulty of obtaining permits for underground injection in many locations. In recognition of these technical/economic challenges, EPA is proposing a 30-year compliance period for new power plants.

The proposed carbon standards are significant because industry is concerned they will set precedent for future EPA GHG emission rulemaking.  In addition, the proposed standards are based on achievable GHG emission levels for one type of fuel (i.e., natural gas) and are being imposed on power plants that combust other fuels (e.g., coal).  As such, the rule appears to favor one fuel over another and may in effect mandate fuel switching, which is contrary to past EPA precedent and the commonly accepted notion that the Clean Air Act does not authorize the EPA to redefine source categories or to mandate fuel switching.  Consequently, legal challenges to the proposed EPA rule are almost a certainty.

The current very low price of natural gas (gas is less expensive than coal on a $/Btu basis as of April 2012 for the first time ever), that has been driven in part by the large new supply of shale gas to the US market, has resulted in the announced closure of over one hundred US coal power plants (108 closures announced as of 5/3/12) for economic reasons.  Recent environmental regulations promulgated by the EPA, including the Utility Mercury and Air Toxic Standard (MATS) and the 1-Hour SO2 NAAQS standard, are also contributing to the nation’s move from coal electric generation to gas and nuclear electric generation and the increased use of renewables like wind, solar, and hydro.

For more information on the EPA proposed carbon standards and other GHG regulations including the federal Part 98 GHG reporting rule and the Tailoring Rule, contact Liberty Environmental at 610-375-9301.