Electric power generation is responsible for 25 percent of U.S. greenhouse gas emissions. These emissions come from burning coal or natural gas to make electricity. Greenhouse gas emissions from the power sector fell dramatically since their peak in 2005, but nonetheless represent a major source in the economy. Despite growing renewable generation, fossil fuels still account for about 60 percent of U.S. electricity.

Clean Air Act

Multiple laws and court cases give the U.S. Environmental Protection Agency (EPA) the legal authority to monitor and regulate greenhouse gas emissions. Regulations were proposed (and most were finalized) after EPA’s authority to directly regulate greenhouse gas emissions under the Clean Air Act was clarified in the U.S. Supreme Court decision in Massachusetts v. EPA (2007).

EPA regulates greenhouse gas emissions from power plants under Section 111 of the Clean Air Act, which allows EPA and the states greater flexibility in crafting and implementing a standard.

In response to Executive Order 13990 on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, in May 2023, the EPA issued a proposed rule to limit carbon dioxide emissions from fossil fuel-fired power plants. The proposed rule sets carbon dioxide emission standards for existing coal and natural gas plants, and for new gas plants.

In February 2024, EPA announced they would finalize the proposed rule for existing coal and new gas-fired plants later this spring. The rule for existing gas plants would take longer and will also cover criteria pollutants and air toxics.

Existing Power Plants

EPA has previously issued greenhouse gas regulations under Section 111(d) of the Clean Air Act for existing power plants, but these rules have not gone into effect. Section 111(d) allows EPA and the states greater flexibility in crafting and implementing a standard.

In May 2023, EPA proposed new greenhouse gas standards for existing coal and natural gas power plants. The proposed standards are based on the use of carbon capture and storage (CCS) and cofiring with clean hydrogen, and would repeal the Affordable Clean Energy (ACE) Rule.

For existing coal plants that plan to operate beyond 2040, the proposed rule requires these plants to install and operate CCS with 90 percent capture of carbon dioxide by 2030. Recognizing that coal plants may have varying operational life and capacity factors, EPA proposed three subcategories:

• For coal plants that plan to retire before 2040, EPA recognizes CCS would be less cost-effective for these plants and instead proposes these plants cofire 40 percent natural gas on a heat basis.
• For coal plants that plan to retire before 2035 and commit to operating with an annual capacity factor of 20 percent, EPA recognizes these plants may operate as peaking units and proposes the best system of emission reduction here would be routine maintenance and operation that maintains the current emissions rate.
• For coal plants retiring before 2032, EPA similarly proposes the best system of emission reduction for these plants would be routine maintenance and operation that maintains the current emissions rate.

For existing gas plants, with combustion turbines larger than 300 megawatts (MW) with a capacity factor greater than 50 percent, the proposed rule requires these plants to install and operate CCS with 90 percent capture of carbon dioxide or cofiring 30 percent by volume clean hydrogen starting in 2032 and increasing to 96 percent by 2038.

As part of the rulemaking process, EPA is seeking comments on how they should regulate fossil fuel turbines not covered by the proposed rule, including smaller, frequently used turbines and less frequently used turbines.

In January 2021, the U.S. Court of Appeals for the D.C. Circuit vacated the ACE Rule and remanded it to EPA. The appeals court ruled that EPA misinterpreted the Clean Air Act when crafting the ACE to regulate greenhouse gas emissions from power plants. The rule was sent back to EPA, which has proposed a new rule in May 2023 that includes repealing the ACE Rule.

The 2019 ACE Rule would have directed states to require existing coal-fired power plants to use prescribed technologies to improve their heat rate (i.e., increase efficiency), as a best system of emission reduction (BSER) for carbon dioxide. The ACE Rule was not expected to reduce power sector emissions. The ACE Rule replaced the 2015 Clean Power Plan, which set state-specific emission rates and provided various market-based flexible compliance provisions to reduce carbon dioxide emissions from existing power plants.

New Power Plants

EPA previously issued greenhouse gas regulations under Section 111(b) of the Clean Air Act, which applies to new, modified, and reconstructed power plants. Section 111(b) requires EPA to set numerical performance standards based on the best available technologies that have been adequately demonstrated.

In May 2023, EPA proposed greenhouse gas standards for power plants which included replacing the 2015 Carbon Pollution Standard for new, modified, and reconstructed gas plants. The proposed rule subcategorizes gas units by capacity factor and phases in requirements over time.

• Units with a capacity factor less than 20 percent (i.e., low load), the BSER is the use of lower emitting fuels (e.g., natural gas) with standards of performance similar to the 2015 rule.
• Units with a capacity factor more than 20 percent and about 50 percent (i.e., intermediate load), the BSER is highly efficient generation and depending on the subcategory, use of CCS or 30 percent cofiring clean hydrogen by 2032.
• Units with a capacity factor greater than about 50 percent (i.e., base load), the BSER is highly efficient generation, with two options, 30 percent cofiring clean hydrogen by 2032 and 96 percent by 2038 or 90 percent CCS by 2035.

In October 2015, EPA issued Carbon Pollution Standards for New Power Plants, which established New Source Performance Standards (NSPS) to limit carbon dioxide emissions from fossil fuel-fired power plants. In December 2018, EPA proposed revising the BSER determination for new coal-fired power plants as partial carbon capture and storage with a new determination that the best systems of emission reduction would be improvements in efficiency and operating practices. In January 2021, EPA issued a significant contribution finding for determining when standards are appropriate for greenhouse gas emissions from stationary sources under Section 111(b). In March 2021, EPA asked the D.C. Circuit to vacate and remand this rule since it was issued without public notice or an opportunity to comment. In April 2021, the D.C. Circuit vacated and remanded the rule back to EPA. The 2015 Carbon Pollution Standard for New Power Plants remains in effect.

Other Federal Regulations

Fossil fuel combustion at power plants emits other pollutants regulated by the Clean Air Act. Environmental controls on these other pollutants like SO2, NOx, and mercury often (though not always) result in greenhouse gas emission reductions. Other EPA rules on power plant air emissions include:

• The Cross-State Air Pollution Rule (CSAPR, pronounced “Casper”) covers the oxides from nitrogen (NOx) and sulfur dioxide (SO2) that create ozone and fine particulate matter (PM). Emissions of these pollutants from upwind states prevent downwind states from achieving air quality standards. CSAPR covers a few thousand sources in the Eastern part of the United States and employs tradable air permits to reduce emissions.

Source: U.S. Environmental Protection Agency, 2023

• The Mercury and Air Toxic Standards (MATS) rule limits emissions of mercury from coal- and oil-fired power plants (natural gas does not contain mercury). Since the rule took effect in 2015, some coal-fired power plants have retired, but most operators chose instead to install control technology to reduce these emissions.

In April 2023, EPA proposed revisions to MATS that reflect recent developments in control technologies and the performance of these plants. EPA proposed to tighten the emissions limit for mercury from existing lignite-fired power plants by 70 percent, a level that aligns with requirements other coal plants already have. The proposed rule would also strengthen emissions monitoring and compliance.

EPA has separate authority under environmental laws to regulate power plant emissions and activities that have other harmful impacts, such as cooling water intakes and coal ash disposal.