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The Center for Climate and Energy Solutions seeks to inform the design and implementation of federal policies that will significantly reduce greenhouse gas emissions. Drawing from its extensive peer-reviewed published works, in-house policy analyses, and tracking of current legislative proposals, the Center provides research, analysis, and recommendations to policymakers in Congress and the Executive Branch. Read More
 

EPA Regulation of Greenhouse Gas Emissions from New Power Plants

This page discusses EPA's proposed standards for new power plants issued on Sept. 30, 2013. For a discussion of the standards for existing power plants, released on June 2, 2014, click here.

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The U.S. Environmental Protection Agency (EPA) released a new proposal to limit greenhouse gas emissions from new power plants on September 20, 2013. The proposed “Carbon Pollution Standard for New Power Plants” replaces an earlier proposal released by EPA in March 2012. It would establish New Source Performance Standards (NSPS) under the Clean Air Act to limit emissions of carbon dioxide (CO2) from coal- and natural gas-fired power plants. C2ES submitted public comments in response to this proposed rule, which can be found here. Under a June 2013 directive from President Obama, EPA is also developing a proposal to limit carbon emissions from existing power plants.

Why is regulation of greenhouse gas emissions from power plants important?

Electric power generation is responsible for about 40 percent of U.S. emissions of carbon dioxide, the primary greenhouse gas.

Figure 1: 2012 U.S. CO2 Emissions

Source: Energy Information Administration

Since the federal government adopted new vehicle standards in August 2012 to reduce transportation-related emissions, the power sector represents the next opportunity to achieve significant carbon reductions.

Coal and natural gas are used to fuel over two-thirds of U.S. electricity generation, and are responsible for nearly 100 percent of power sector CO2 emissions. As shown in Figure 2, the United States currently obtains 30 percent of its electricity from natural gas. Since 2000, however, natural gas has accounted for over 90 percent of new fossil generation capacity, and most new generation planned for the next few years will be fueled by natural gas.

There is one new coal plant planned for 2014: Southern Company’s Kemper Plant, which will employ carbon capture and storage (CCS). There is one new coal plant planned for 2015, which is a combined heat and power (CHP) plant that would likely not be subject to the proposed EPA standard.

Figure 2: 2012 U.S. Electricity Generation

Source: Energy Information Administration

Figure 3: Proposed U.S. Fossil Generation Capacity

Source: Energy Information Administration

How would the standards work?

New Source Performance Standards set limits on emissions based on EPA’s assessment of available technologies. As with many other Clean Air Act programs, EPA establishes a standard for a given category of facility, which state environmental agencies then translate into requirements for individual facilities.

EPA’s proposed "Carbon Pollution Standard for New Power Plants" was developed under Section 111(b) of the Clean Air Act. Section 111(b) calls for a standard that "reflects the degree of emissions limitation achievable through the application of the best system of emissions reduction which (taking into account the cost of achieving such reduction and any non-air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated." The emissions limit must take the form of a standard – in the case of power plants, maximum allowable CO2 emissions per unit of electricity – and may not prescribe a particular technology.

The Act ostensibly requires EPA to review the technological options available and, if appropriate, establish a new standard every eight years. In practice, standards have typically remained unexamined and unchanged for much longer than eight years, often because of resource constraints at EPA.

What does the standard require?

The proposed rules would set separate standards for power plants fueled by natural gas and coal. New, large plants (roughly 100 MW or larger) fueled by natural gas could emit no more than 1,000 pounds of carbon dioxide per megawatt-hour (MWh) of electricity produced, which is achievable with the latest combined cycle technology. Smaller natural gas plants, which tend to be less efficient and operate less frequently, would have to achieve a less stringent rate of 1,100 lbs CO2/MWh. Coal plants would have two compliance options, either of which would require the use of CCS technology. Under one option, coal plants would have to begin using CCS soon after startup to achieve a 12-month average emission rate of 1,100 lbs CO2/MWh. Alternatively, coal plants could begin using CCS within seven years of startup to achieve a seven-year average emission rate of between 1,000 and 1,050 lbs CO2/MWh, with EPA inviting comment as to the final standard within that range. CCS is not yet in use at any commercial-scale power plants, but is currently being built into large coal plants in Kemper County, Mississippi and Saskatchewan, Canada. CCS technology is also in place in several industrial facilities, some of which generate as much carbon dioxide as a commercial-scale power plant.

A handful of states already have greenhouse gas limits in place for electricity generation. California, Oregon, and Washington all have limits of 1,100 lbs CO2/MWh. New York has a stricter limit of 925 lbs CO2/MWh. If finalized, EPA’s proposed standard would supersede the standards in California, Oregon, and Washington, while New York would be able to maintain its stricter standard since the Clean Air Act allows states to go beyond the federal standard.

What are the costs associated with the proposed standards?

EPA expects this standard to have negligible costs through 2022 (the intended time horizon of the standard), since very few new coal plants are planned, even without the proposed standard, and since developers of new natural gas plants should see minimal, if any, additional costs.

If a developer chooses to build a new coal plant, the proposed standards could add considerable costs to the project because it will have to employ CCS technology. Since CCS technology is so new, especially for power plant applications, its costs are still high. However, as with any new technology, costs will come down as developers gain experience and new innovations are made.

What effect is this proposal expected to have on carbon dioxide emissions?

In the near future, the proposed standard is expected to have very little impact on emissions because so few new coal plants would likely be built even without the standard. Nearly all new fossil-fuel power plants in the planning stages will be fueled by natural gas, using generation technology that should be able to comply with EPA’s proposed standards without any alterations. Power plant developers already have strong incentive to use the most efficient technology to maximize the amount of electricity that can be generated from each unit of fuel.

If a developer chooses to build a new coal plant, the requirement that the plant install CCS technology within seven years will drastically reduce its emissions. Increased deployment of CCS technology at power plants will very likely drive CCS costs down and make it a more viable option at other new coal plants. Through experience and innovation, CCS costs may come down enough to be viable on new natural gas power plants, or as retrofits on existing coal plants, to reduce carbon dioxide emissions from the power sector even further.

How is this different from the standard EPA proposed in 2012?

EPA’s first proposal for limiting carbon emissions from new power plants was released on March 27, 2012. Under that proposal, all new power plants would have been subject to a uniform standard: 1,000 lbs CO2/MWh. Under this standard, new coal plants would have been possible only if CCS technology were employed to capture an average of about 50 percent of CO2 emissions over 30 years. However, EPA viewed combined cycle natural gas plants as the primary compliance pathway because it did not project a demand for any new coal plants in the near future regardless.

Many of the public comments received by EPA on its initial proposal objected to the unprecedented use of a single standard for both coal- and natural gas-fired plants. EPA has responded in its new proposal by including a separate standard for each fuel. However, since CCS would still be required for new coal plants, the net effect of the new proposal would be similar.

What can power plants do to reduce emissions?

New natural gas plants can reach the proposed CO2 standard by employing the most efficient generation technology. In older steam turbine plants, natural gas is combusted to heat water, which creates steam to turn a turbine and generate electricity. These plants have thermal efficiencies of 30-35 percent, meaning about one third of the chemical energy stored in natural gas is converted to electricity. In contrast, new combined cycle combustion turbines more effectively take advantage of the energy in natural gas to operate with a thermal efficiency above 60 percent.

New coal plants, on the other hand, cannot achieve the proposed standard through efficiency alone. The most efficient type of coal plants, using ultra-supercritical boilers or integrated gasification combined cycle technology, can currently achieve a CO2 emission rate of around 1,700 lbs/MWh. Thus new coal plants can only meet the standard through the use of CCS, which traps CO2 exiting the plant, transports it, and injects it into an underground geological formation for permanent storage. New plants can either begin using CCS soon after startup, or begin using it later to reach a seven-year average emission rate between 1,000 and 1,050 lbs CO2/MWh, which would require the capture of about 40 percent of CO2 emissions. EPA is inviting comment on the appropriate point within this range to set the standard.

If new coal plants must use carbon capture and storage technology, what will that mean for the future of coal? How far along is CCS technology?

Even if EPA were not moving forward with this standard, very few new coal plants would likely be built, in large part because of the availability of affordable natural gas. The Energy Information Administration lists only four potential coal plants between now and 2018, compared with more than 200 expected natural gas plants.

Today, there are nine active commercial-scale CCS projects at industrial plants around the world (six of them in the United States). The world’s first two commercial-scale CCS power plants – Southern Company’s coal-fueled Kemper County energy facility in Mississippi and the Boundary Dam Power Station in Saskatchewan, Canada – are under construction and expected to be completed in 2014.

Approximately 50 additional commercial-scale CCS projects in the power and industrial sectors are in various stages of development around the world. Learn more about the status of CCS technology here.

How would existing state policies, such as the Regional Greenhouse Gas Initiative, be affected?

The proposed standard for new power plants would likely be layered on top of existing state programs. For example, a new plant operating in the Regional Greenhouse Gas Initiative (RGGI) territory would have to achieve the proposed federal standard, and would also have to submit tradable emission allowances annually to comply with the requirements of RGGI.

How does this proposal relate to EPA’s work on a standard for existing power plants?

Section 111 of the Clean Air Act requires EPA to regulate greenhouse gas emissions from new and existing power plants under two separate but related provisions. Section 111(b) requires EPA to set emission performance standards for new, modified, and reconstructed power plants, while Section 111(d) requires EPA to set guidelines for existing power plants. The guidelines for existing power plants cannot be finalized until a final standard is in place for new power plants.

Section 111(b) vests relatively more authority in EPA, and is more straightforward. EPA is required to find emission-reduction technology that has been adequately demonstrated and use this to set federal, numerical performance standards that new power plants must meet. These Section 111(b) standards are implemented by the states, as are most EPA air rules, but states do not have much flexibility to alter the standards set by EPA. On the other hand, under Section 111(d), states have greater flexibility in how they implement the EPA standard. For instance, Section 111(d) allows for the possibility of market-based mechanisms to reduce emissions system-wide, rather than focusing on individual power plants.

How long will it take EPA to finalize this standard?

President Obama’s June 2013 memo to EPA directed the agency to propose standard for new power plants by September 2013, but did not set a deadline for finalizing the standard. Federal agencies typically have a year to finalize proposed regulations.

EPA must finalize the standard for new power plants before it can finalize its guidelines for existing power plants. Since President Obama set a deadline of June 1, 2015, for the final standards for existing power plants, this may effectively serve as the deadline for a final standard for new power plants.

Under what authority is EPA regulating greenhouse gas emissions?

EPA is required by the Clean Air Act to develop and enforce regulations on greenhouse gases, much in the way it regulates other air pollutants. This authority was clarified in the U.S. Supreme Court decision in Massachusetts v. EPA (2007). The decision was a result of 12 states petitioning EPA to regulate greenhouse gases from new motor vehicles in 1999. The Supreme Court ruled that greenhouse gases meet the definition of air pollutants under the Clean Air Act and must be regulated if these gases could be reasonably anticipated to endanger public health or welfare. Responding to the Court’s ruling, EPA finalized an endangerment finding in December 2009. Based on overwhelming scientific evidence it found that six greenhouse gases, including carbon dioxide, constitute a threat to public health and welfare. Thus, it is the Supreme Court’s interpretation of the existing Act and EPA’s assessment of the scientific evidence that form the basis for EPA’s regulatory actions.

Once any substance becomes a regulated pollutant under the Clean Air Act, certain other provisions of the Act automatically kick in. Greenhouse gases first became regulated under the Act with EPA’s rule setting new standards for light-duty vehicles. This, in turn, triggered the requirement that major new or modified stationary sources be subject to a handful of Clean Air Act provisions, including Section 111(b).

Has EPA regulated greenhouse gas emissions before?

Yes. In addition to its existing greenhouse gas standards for new light duty vehicles, EPA regulates greenhouse gas emissions from new, large stationary sources through a process called New Source Review (NSR). If a new emissions source, including a power plant, will emit above a certain threshold, it must acquire a permit to emit greenhouse gas. This permit will include a requirement that the source employ the Best Available Control Technology (BACT) to ensure it will take all feasible steps available to limit greenhouse gas emissions. BACT is set on a source-specific basis, and so far EPA has determined BACT for greenhouse gas emissions from power plants to be efficiency improvements. Once EPA’s proposed NSPS is finalized, new power plants will have to comply with both this NSPS and NSR, as well as other permitting requirements already in place.

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Companies are part of the equation to address climate change

While the focus in New York this week has been on world leaders pledging to act on climate change, business leaders also stepped up to be part of the climate solution.

In recent years, many companies have acknowledged the risks of climate change and worked to improve their energy efficiency and sustainability. This week, companies announced new efforts to fund clean energy, reduce carbon emissions, and support a price on carbon.

For example, Bank of America announced an initiative to spur at least $10 billion of new investment in clean energy projects. Hewlett Packard announced plans to reduce emissions intensity of its product portfolio by 40 percent from 2010 levels by 2020.

Many companies joined together to take a stand:

Don't toss out the good electricity with the bad

One way to reduce power plant carbon emissions is to reduce the demand for electricity. Encouraging customer energy efficiency is one of the building blocks underpinning the Environmental Protection Agency’s (EPA) Clean Power Plan. But the plan does not distinguish among uses of electricity. That means, without further options, the Clean Power Plan could inadvertently discourage states from deploying electric vehicles (EVs), electric mass transit, and other technologies that use electricity instead of a dirtier fuel.

In all but very coal-heavy regions, using electricity as a transportation fuel, especially in mass transit applications, results in the emission of far less carbon dioxide than burning gasoline. In industry, carbon emissions can be cut by using electric conveyance systems instead of diesel- or propane-fueled forklifts and electric arc furnaces instead of coal boilers.

Under the proposed power plant rules, new uses of electricity would be discouraged regardless of whether a state pursues a rate-based target (pounds of emissions per unit of electricity produced) or a mass-based target (tons of emissions per year).

EPA has a few options to make sure regulations for power plants would not discourage uses of electricity that result in less carbon emissions overall.

Climate Interest, But No Action in the 113th Congress

The 113th Congress (2013-2014) is on track to be one of the least productive and most divided in history. No legislation explicitly mentioning climate change has been enacted into law, but more bills and resolutions related to climate change have been introduced in this Congress than in the previous one. (For brevity, we refer to all legislative proposals, including resolutions, and amendments, and draft bills, as “bills.”)


Only two bills loosely related to climate change (though not directly referencing it) have been passed and signed into law: the Disaster Relief Appropriations Act and the Hurricane Sandy Relief bill, which provided $17 billion and $9.7 billion, respectively, to cope with Sandy’s aftermath.

Of the 221 bills introduced that explicitly reference climate change or related terms, such as greenhouse gases or carbon dioxide, the majority support climate action. These focus primarily on building resilience to a changing climate, supporting the deployment of clean energy, and improving energy efficiency. A number would use some form of carbon pricing to reduce emissions.

Carbon Pollution Standards

The U.S. Environmental Protection Agency's (EPA) Clean Power Plan, proposed in June 2014, would limit carbon pollution from existing power plants.

Electric power generation is responsible for nearly 40 percent of U.S. carbon dioxide emissions – making it the largest single source. Reducing power sector emissions is a key part of President Obama’s Climate Action Plan, which aims to reduce overall U.S. greenhouse gas emissions 17 percent below 2005 levels by 2020. His June 2013 presidential memorandum directed EPA to set standards for both new and existing plants.

Under the Clean Power Plan for existing power plants, each state has its own target (due to regional variation in generation mix and electricity consumption). Overall, the rule is designed to cut emissions 30 percent from 2005 emissions by 2030, with an interim target of 25 percent on average between 2020 and 2029. EPA is expected to finalize this rule by June 2015.

In September 2013, EPA released a “Carbon Pollution Standard for New Power Plants,” replacing a March 2012 proposal. EPA proposed standards for coal- and natural gas-fired plants (measured as tons of greenhouse gas emissions per megawatt-hour of elec­tricity produced) that states would apply at each regulated plant. EPA is expected to finalize this rule in 2014.

Explore the issues and options involved in EPA regulation of carbon pollution from power plants through the following resources.

C2ES Resources

External Resources

President Obama's Climate Action Plan: One Year Later

President Obama's Climate Action Plan: One Year Later

June 2014

Download the full brief (PDF)

One year after President Obama announced his Climate Action Plan, the administration has made marked progress in its initial implementation. The plan, announced June 25, 2013, outlines 75 goals in three areas: cutting carbon pollution in the United States, preparing the United States for the impacts of climate change, and leading international efforts to address climate change. The administration has made at least some progress on most of the plan’s 75 goals; many of the specific tasks outlined have been completed. In several key areas, the administration has taken important first steps, but it is too early to gauge their success or ultimate impact.

 

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Risky Business report shows need to act on climate change

You expect a business leader to keep a close eye on the bottom line and to act when a threat is clear. As C2ES and others have noted, it is increasingly clear to many business leaders that climate change is a here-and-now threat that we all -- businesses, government and individuals -- must address.

Today’s “Risky Business” report lays out in stark numerical terms the likely economic impact of climate change on U.S. businesses and the U.S. economy. The initiative – co-chaired by former New York City Mayor Michael Bloomberg, former Treasury Secretary Henry Paulson, and former hedge fund manager Tom Steyer – brings high-profile attention to this issue in the hopes that highlighting the risks and potential costs will help spur action to manage the impacts and curb climate-altering emissions.

The report’s outline of the many costs of climate impacts is likely an underestimate. For example, the impacts of diminishing groundwater are difficult to calculate and are not included.

Using Captured Carbon Dioxide for Enhanced Oil Recovery

Promoted in Energy Efficiency section: 
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2-4 p.m.Russell Senate Office BuildingRoom SR-385

An Energy, Economic and Environmental Solution for Our Nation:
Using Captured Carbon Dioxide for Enhanced Oil Recovery

Thursday, June 26, 2014
2-4 p.m.

Russell Senate Office Building
Room SR-385
2 Constitution Avenue, NE
Washington, D.C., 20002

Carbon dioxide enhanced oil recovery (CO2-EOR) is a decades-old, proven commercial practice that involves injecting CO2 into already developed oil fields to coax additional production. Increasing the supply of CO2 captured from power plants and industrial sources for use in CO2-EOR has the potential to increase American oil production by tens of billions of barrels, while safely storing billions of tons of CO2 underground. The event will focus on CO2-EOR’s benefits for domestic energy production, the economy, and the environment.

Welcome

BRAD CRABTREE
Vice President, Fossil Energy, Great Plains Institute
 

Introductory Remarks

The Honorable RICHARD GEPHARDT
Former Majority Leader, U.S. House of Representatives (D-MO)

The Honorable TIM HUTCHINSON
Former U.S. Senator (R-AR)


Panel Discussion

THOMAS ALTMEYER
Vice President, Government Affairs, Arch Coal, Inc.

HUNTER JOHNSTON
Counsel, Leucadia Energy

BRAD MARKELL
Executive Director, Industrial Union Council, AFL-CIO

JOHN STEELMAN
Climate Program Manager, Natural Resources Defense Council


Closing Remarks

PATRICK FALWELL

Solutions Fellow, Center for Climate and Energy Solutions


The National Enhanced Oil Recovery Initiative (NEORI) brings together industry, labor and environmental advocates, and state officials to foster increased domestic oil production through the capture, use and storage of CO2 from power plants and industrial facilities.  NEORI is convened by the Center for Energy and Climate Solutions (C2ES) and Great Plains Institute (GPI).

Climate change poses national security risks at home and abroad

More than a dozen military leaders say the impacts of climate change threaten military readiness and response and will increase instability and conflict around the globe.

Their assessments are included in a recent report, National Security and the Accelerating Risks of Climate Change, by the CNA Corporation’s Military Advisory Board. The report’s authors – including 16 retired generals and admirals from the Army, Navy, Air Force, and Marine Corps – conclude that climate change impacts will act as threat multipliers and catalysts. Projected warming, changes in precipitation, sea level rise, and extreme weather events will pose risks to security within the U.S. and abroad.

At home, some of the threats are here and now. Many of the nation’s military installations are in coastal areas vulnerable to rising sea levels and storm surges. For example, the low-lying Hampton Roads area of Virginia is home to 29 military facilities. Sea level in the area is projected to rise 1.5 feet over the next 20-50 years and as much as 7.5 feet by the end of the century. One advisory board member, Brig. Gen. Gerald Galloway, stressed that “unless these threats are identified and addressed, they have the potential to disrupt day-to-day military operations, limit our ability to use our training areas and ranges, and put our installations at risk in the face of extreme weather events.”

Figure 1: Sea level rise projections for the Hampton Roads region, which is home to 29 different military facilities. Source: CNA, 2014

Carbon Pollution Standards

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Our map shows each state's proposed targets under the EPA's proposed emissions standards for existing power plants, and how the agency derived them.
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