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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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US-China climate goals go well beyond business as usual

The climate targets announced this month by the United States and China will require a significant effort beyond a business-as-usual scenario for both countries. More details will likely follow in the weeks and months ahead, but here is what we know so far for each country.

China

China announced a goal for its greenhouse gas emissions to peak by 2030 or sooner. This marks the first time that China has pledged a peak or absolute target for greenhouse gas emissions, rather than an intensity-based target. In business-as-usual scenarios, China’s emissions wouldn’t peak until 2040 or later.

China also announced it would boost its share of zero-carbon energy, which includes nuclear, hydropower and renewables, to 20 percent – up from about 13 percent today. Meeting that goal will require a substantial build-out of nuclear power stations, hydroelectric stations, wind turbines, and solar panels, as well as transmission and other infrastructure. In a separate announcement, China said it plans to cap its coal consumption by the year 2020.

China can’t, as critics claim, sit idly by for 15 years and reach these targets. It will need to significantly restructure its energy system. China will have to add more than 1 GW of zero-carbon power a week for the next 15 years – an amount roughly equal to the entire installed electricity capacity of the United States.

Climate Resilience Toolkit is important resource

Anyone who needs to plan for future risks -- whether a city manager, a state official, or a business leader -- needs good information that’s easy to find and easy to use. The federal government took an important step to help managers plan for the impacts of climate change with the release this month of the Climate Resilience Toolkit.

This new online portal offers a wide range of resources and interactives that consolidate some of the “greatest hits” from federal climate data sets, guidance for resilience planning, and examples of resilience projects.

The toolkit is likely to be especially helpful for communities and businesses in the early stages of resilience planning, or for individuals who want to know more about managing climate risks. I took a spin through the toolkit’s resources and here’s my take on some of its components.

Process

The toolkit promotes a five-step process for building resilience: Identify the Problem, Determine Vulnerabilities, Investigate Options, Evaluate Risks and Costs, and Take Action.


The Climate Resilience Toolkit’s five-step process for building resilience.

 

What Works:The simple, linear process for addressing resilience demystifies tackling climate risks and builds on the actual experiences of practitioners. The five steps are quite similar to the steps C2ES found leading businesses are taking, and are almost a CliffsNotes version of more rigorous “how-to” guides for thinking about climate impacts.

What Needs Work: The process description, while valid, is insufficient for a user who might be farther down the road in resilience planning. For example, under Determine Vulnerabilities, only two sentences are offered to address “Dealing with Uncertainty.”

Bob Perciasepe's statement on US-China climate announcement

Statement from Bob Perciasepe
President, Center for Climate and Energy Solutions

On the U.S.-China Joint Announcement on Climate Change

November 11, 2014

The joint announcement by President Obama and President Xi is an extremely hopeful sign. Even if the targets aren’t as ambitious as many might hope, the world’s two largest carbon emitters are stepping up together with serious commitments. This will help get other countries on board and greatly improves the odds for a solid global deal next year in Paris.

These targets will require major undertakings by both countries. Clearly the leaders of the world’s two largest economies have decided the risks posed by climate change justify stronger action to cut carbon emissions. And they’re confident they can keep growing their economies at the same time.

In the case of the United States, the new target is pushing the limits of what can be done under existing law. We can get there if Congress doesn’t stand in the way, and if states roll up their sleeves and work with businesses and other stakeholders to craft smart, practical plans to cut emissions from power plants. But to go much further, we’ll ultimately need Congress to act. 

For too long it’s been too easy for both the U.S. and China to hide behind one another.  People on both sides pointed to weak action abroad to delay action at home. This announcement hopefully puts those excuses behind us. We’ll only avert the worst risks of climate change by acting together.

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Contact: Laura Rehrmann, rehrmannl@c2es.org or 703-516-0621

About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address the twin challenges of energy and climate change. Launched in 2011, C2ES is the successor to the Pew Center on Global Climate Change. Learn more at www.c2es.org.

Carbon Pricing Proposals of the 113th Congress

Comparison of Carbon Pricing Proposals in the 113th Congress

October 2014

Download the brief (PDF)

Although congressional leaders have not taken up the issue of a national price on carbon in the 113th Congress (2013-2014), six carbon pricing proposals have been introduced or released in draft form. Five would establish a carbon tax (also called a “carbon pollution fee”) and one would establish a cap-and-dividend program (a cap-and-trade program that would rebate program revenues to consumers).

This brief compares the proposals by key attributes, highlighting similarities and differences. The proposals are:

  • The Climate Protection Act of 2013 (S.332) introduced by Sens. Bernie Sanders (I-VT) and Barbara Boxer (D-CA) on February 14, 2013;
  • The Carbon Pollution Fee discussion draft released by Rep. Henry Waxman (D-CA), Sen. Sheldon Whitehouse (D-RI), Rep. Earl Blumenauer (D-OR), and Sen. Brian Schatz (D-HI) on March 12, 2013;
  • The State Choices Act discussion draft released by Rep. John Delaney (D-MD) on May 21, 2014;
  • The Managed Carbon Price Act, 2014 (H.R.4754) introduced by Rep. Jim McDermott (D-WA) on May 28, 2014;
  • The Healthy Climate and Family Security Act of 2014 (H.R.5271) introduced by Rep. Chris Van Hollen (D-MD) on July 30, 2014; and
  • America’s Energy Security Trust Fund Act of 2014 (H.R.5307) introduced by Rep. John Larson (D-CT) on July 31, 2014.
Jason Ye
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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

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.

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