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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 are two new U.S. coal plants currently under construction: Southern Company’s Kemper Plant, which will employ carbon capture and storage (CCS) and 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 in use at a commercial-scale power plant in Saskatchewan, Canada, and will be employed at two commercial-scale power projects under construction in Kemper County, Mississippi and in Thompsons, Texas. 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 13 active commercial-scale CCS projects at industrial plants around the world (eight of them in the United States). The world’s first commercial-scale CCS power plant – the Boundary Dam Power Station in Saskatchewan, Canada – has been in operation since late 2014. Two additional commercial-scale power plants with CCS are under construction. Southen Company's Kempter County Energy Facility in Mississippi is expected to come online in late 2015 or early 2016, while NRG Energy's Petra Nove project in Texas is expected to come online in 2017. All three projects are coal-fired. 

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. EPA's current timeline notes that both rules will be finalized in the summer of 2015.

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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Smarter homes: comfortable, convenient and climate-friendly

States could go a long way toward meeting targets for reduced power plant emissions under the Clean Power Plan just by encouraging energy efficiency. One way to do that is to deploy more “intelligent efficiency” solutions at home. Interconnected systems and smart devices could not only help reduce energy use and climate-altering emissions, but also empower consumers to make money-saving choices.

More than 20 percent of U.S. greenhouse gases comes from the residential sector – where we use about 1.4 trillion kWh of electricity annually to power our heating and cooling systems, appliances and electronics. Although we pay for it all, a lot of that electricity is wasted. Tried-and-true solutions like weatherization and more efficient light bulbs will continue to be common sense solutions. But increasingly, homeowners, innovators, and policy makers are looking to leverage the average home’s 25 devices to reduce that waste.

Image courtesy U.S. Department of Energy

A homeowner installs a smart thermostat. Devices like this could be controlled though web platforms, along with water heaters, washing machines and LED bulbs with advanced controls.

So what is “intelligent” efficiency? More than just installing a high-efficiency washer, intelligent efficiency solutions involve that washer being part of a networked home management system. This means that eventually, you could automate and manage all of the appliances, devices, and heating and cooling in your home through the internet or an app. You will be able to turn down your thermostat and water heater as you board a flight for vacation. You’ll be alerted about which appliances are using too much energy, and how you can save money by shifting the times they run. You’ll also have a projection of your energy costs as the month goes on—reducing those painful cases of “bill shock.”

Intelligent efficiency solutions fall into three main categories, and their value compounds when all three work together:

Systems/Network: Smart meters and grid

Advancements in meters and grid components allow for a two-way flow of information between the customer and electricity provider. As utilities begin to deploy these technologies, they will likely roll out new residential programs that are made possible with better insights gleaned from data, such as time-of-use pricing to reduce peak demand or targeted, behavior-based efficiency programs.

Devices: Smart thermostats, appliances and lighting

In addition to smart thermostats that can be controlled through a web platform, manufacturers are now introducing water heaters, washing machines, and even LED bulbs with advanced controls.

Platforms/Analytics: Home energy reports, real-time dashboards

The smart devices described above are being designed for integration into home energy management platforms with increasingly sophisticated analytics capabilities. These platforms can give consumers personalized home energy reports, user-friendly dashboards that update in real-time, and more, ultimately creating simple portals for a household to manage its energy consumption.

Although the pace of intelligent efficiency advancements is quickening, availability in the residential sector is uneven, and adoption is slow. However, several strategies could lead to greater uptake. For example, retailer and consumer education about benefits and security issues is needed. Putting in place the right incentives will also increase the rate of adoption by homeowners. States, utilities, cities and businesses are trying a number of strategies to promote market deployment, including:

  • Consumer rebates for energy-efficient appliances and devices. Some utilities, such as National Grid, are partnering with Nest to provide customers with rebates on a new thermostat and the opportunity to join additional money-saving efficiency programs like Rush Hour Rewards.
  • Point-of-sale educational programs that build expertise among influential consumer-facing groups such as home store sales associates and energy audit companies. The New York-based utility NYSERDA delivered a training program to help sales associates at home stores speak knowledgeably about LED bulbs.
  • Demand response programs that help customers tailor their energy use for maximum savings. As more utilities invest in smart meters and grids, more consumers will be able to schedule appliance or water heater cycles to avoid peak rate times and lower their bill.
  • Behavioral demand response programs that use consumption data, behavioral science and targeted communication to influence residential electricity use. These programs can be as simple as sending messages asking consumers to reduce their use on a hot day, a strategy employed by O-Power and several utility partners last summer that achieved a 5% electricity reduction.
  • Community-based programs that leverage existing social networks to support pilot programs. This approach provides both scale and consistency for testing innovative home technologies and has been successfully implemented in Austin by Pecan Street and in other cities.

There is also room for innovative approaches to increase adoption of intelligent efficiency. PSEG’s Ralph Izzo suggests utilities could be the channel through which consumers learn of and acquire such technologies. This approach would lower barriers for consumers, and provide a compelling business case for their electricity provider.

Intelligent efficiency solutions are emerging at a critical time for U.S. energy policy, but there are still obstacles. States that incorporate these strategies into their implementation of the Clean Power Plan would need consistent evaluation, measurement, and verification standards. In addition, facilitated discussions between states, cities, and the private sector could help ensure that technology solutions are optimally designed and implemented.

 

Energy efficiency will play a key role in the Clean Power Plan

A new C2ES study outlines the significant role energy efficiency is expected to play in reducing carbon emissions from power plants under the proposed Clean Power Plan.

Energy efficiency can be an attractive way for states to meet the plan’s targets because, in addition to being relatively inexpensive to deploy on its own, energy efficiency reduces the need to build new, costly power plants in the future.

C2ES examined six economic modeling studies that project the likely impacts of the Clean Power Plan on the U.S. power mix and electricity prices. Despite starting with different assumptions, all of the studies project that energy efficiency will be the most used and least-cost option for states to implement the plan, and that overall electricity consumption will decline as a result.

The majority of the studies project either cost savings to power users under the Clean Power Plan or increases of less than $10 billion a year. That translates to less than $87 a year per household, or about 25 cents a day.

C2ES President Bob Perciasepe moderates a Solutions Forum panel with (l to r): Steve Harper, Global Director, Environment and Energy Policy, Intel Corporation; Alyssa Caddle, Principle Program Manager, Office of Sustainability, EMC; and Lars Kvale, Head of Business Development, APX Environmental Markets.

Our second Solutions Forum focused on how to spur more energy efficiency, especially through “intelligent efficiency” — a systems-based approach to energy management enabled through networked devices and sensors.

Carbon Pricing and Clean Power: A Solutions Forum

Promoted in Energy Efficiency section: 
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9 a..m-NoonCapitol View Conference Center101 Constitution Ave. NWNinth FloorWashington, DC 20001

States have an array of policy options to reduce carbon emissions from power plants. In the first of a three-part clean power series, C2ES brings together state leaders and industry experts to explore market-based approaches to efficiently and effectively implementing EPA's proposed Clean Power Plan.

April 15, 2015
9:00 a.m. – 12:00 p.m.

Capitol View Conference Center
101 Constitution Ave. NW
Ninth Floor
Washington, DC 20001
(Doors open at 8:30 a.m.)

Janet Coit
Director, Rhode Island Department of Environmental Management

David Paylor
Director, Virginia Department of Environmental Quality

Martha Rudolph
Director of Environmental Programs, Colorado Department of Public Health & Environment

____

Skiles Boyd
Vice President, Environmental Management and Resources, DTE Energy

Erika Guerra
Government Affairs and Corporate Social Responsibility, Holcim (US) Inc.

Kevin Leahy
Director of Energy and Environmental Policy, Duke Energy

Katie Ott
Senior Manager, Federal Government Affairs, Exelon

____

Adele Morris
Senior Fellow, Brookings Institution

Michael Wara
  Professor, Stanford Law School

Bob Perciasepe
President, Center for Climate and Energy Solutions

How can we use intelligent efficiency to reduce power sector emissions?

Nobody likes waste. And yet when we produce, distribute and use electricity, we’re wasting up to two-thirds of the energy.

Although we can’t eliminate all of these losses, we could reduce waste and increase reliability through “intelligent efficiency”— technology like networked devices and sensors, smart grids and thermostats, and energy management systems.

If we used energy more efficiently, we’d also reduce the harmful carbon dioxide emissions coming from our power plants — and reduce our electric bills.

That’s why energy efficiency is expected to be a critical, low-cost path for states looking to reduce power plant emissions under the proposed Clean Power Plan.

C2ES is pulling together top experts in sustainability, efficiency, and technology from cities, states and business to explore how we can deploy intelligent efficiency to help reach Clean Power Plan emissions targets. (RSVP for our event Monday, May 18, in Washington, D.C.)

Just as technology can instantly connect us with people across the globe or monitor our calories and whether we’re burning enough of them, we have technology that will allow us to network and monitor how we produce, deliver and consume electricity.

 

In Brief: Legal Options for U.S. Acceptance of a New Climate Change Agreement

In Brief: Legal Options for U.S. Acceptance of a New Climate Change Agreement

May 2015

By Daniel Bodansky, Sandra Day O’Connor College of Law, Arizona State University

Download the full report (PDF)

U.S. acceptance of the new climate agreement being negotiated under the United Nations Framework Convention on Climate Change (UNFCCC) may or may not require legislative approval, depending on its contents. U.S. law recognizes several routes for entering into international legal agreements. The president would be on relatively firm legal ground accepting a new climate agreement with legal force, without submitting it to the Senate or Congress for approval, to the extent it is procedurally oriented, could be implemented on the basis of existing law, and is aimed at implementing or elaborating the UNFCCC. On the other hand, if the new agreement establishes legally binding emissions limits or new legally binding financial commitments, this would weigh in favor of seeking Senate or congressional approval. However, the exact scope of the president’s legal authority to conclude international agreements is uncertain, and the president’s decision will likely rest also on political and prudential considerations.

The brief is based on the report, Legal Options for U.S. Acceptance of a New Climate Change Agreement, which provides a fuller legal analysis.

Daniel Bodansky
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Legal Options for U.S. Acceptance of a New Climate Change Agreement

Legal Options for U.S. Acceptance of a New Climate Change Agreement

May 2015

By Daniel Bodansky, Sandra Day O’Connor College of Law, Arizona State University

Download the full report (PDF)

The success of ongoing negotiations to establish a new global climate change agreement depends heavily on the agreement’s acceptance by the world’s major economies, including the United States. The new agreement is being negotiated under the United Nations Framework Convention on Climate Change (UNFCCC), a treaty with 195 parties that was ratified by the United States in 1992 with the advice and consent of the U.S. Senate. U.S. acceptance of the new agreement may or may not require legislative approval, depending on its specific contents.

U.S. law recognizes several routes for entering into international agreements. The most commonly known, under Article II of the Constitution, requires advice and consent by two-thirds of the Senate. In practice, however, the United States has accepted the vast majority of the international agreements to which it is a party through other procedures. These include congressional-executive agreements, which are approved by both houses of Congress, and presidential-executive agreements, which are approved solely by the president.

The President would be on relatively firm legal ground accepting a new climate agreement with legal force, without submitting it to the Senate or Congress for approval, to the extent it is procedurally oriented, could be implemented on the basis of existing law, and is aimed at implementing or elaborating the UNFCCC. On the other hand, if the new agreement establishes legally binding emissions limits or new legally binding financial commitments, this would weigh in favor of seeking Senate or congressional approval. However, the exact scope of the President’s legal authority to conclude international agreements is uncertain, and the President’s decision will likely rest also on political and prudential considerations.

Daniel Bodansky
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Canadian hydropower can help states achieve carbon-cutting goals

About 10 percent of Canadian electricity, much of it generated from hydropower, is exported to the United States. With Canada expected to expand its hydropower capacity in coming years, could some states take advantage of this non-emitting resource to meet Clean Power Plan goals to reduce carbon emissions?

A new C2ES report, Canadian Hydropower and the Clean Power Plan, explores this question, including how the proposed plan would need to be adjusted, and how select states could benefit.

While U.S. hydropower is not expected to significantly expand in the near future, hydropower is growing in Canada, where it already supplies 60 percent of the country’s electricity. More than 5,500 megawatts (MW), enough to power about 2.4 million homes, have been added in the last decade. An additional 11,000 MW is either under construction, nearing the construction phase, or has been announced. To put this in perspective, Canada’s entire electricity generation system is about 128,000 MW.

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