Greenhouse Gas Standards for New Power Plants

On March 27, 2012, the U.S. Environmental Protection Agency (EPA) proposed standards for the emission of greenhouse gases (GHG) from new electric power plants.

Read [1] Eileen Claussen's statement on EPA's proposed greenhouse gas standard for new power plants.

What are New Source Performance Standards (NSPS)?

The Clean Air Act requires the Environmental Protection Agency (EPA) to regulate pollution from new, modified and reconstructed facilities through the “New Source Performance Standards” (NSPS) program, established in Sec. 111 of the Act. (Confusingly, the New Source Performance Standard provisions of the Clean Air Act also require EPA to set standards for existing sources, as described below.) NSPS [2] are technology-based performance standards which apply to specific categories of stationary sources. 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.

On March 27, 2012, EPA’s proposed “Carbon Pollution Standard for New Power Plants [3]” under Section 111(b) [4] of the Clean Air Act. Under Sec. 111(b), EPA is required to establish performance standards for new and modified sources. An NSPS requires facilities to attain an emissions level 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 limit EPA sets must take the form of a standard, and it may not prescribe a particular technology itself. The law ostensibly requires EPA to review the technological options available for emissions reduction and, if appropriate, establish a new standard every eight years, but in practice, standards have typically remained unexamined and unchanged for much longer than eight years, often because of resource constraints at EPA.

Under Sec. 111(d) of the Clean Air Act [5], EPA is required to set standards for existing stationary sources. Again, EPA designates categories and establishes minimum technology-based standards, and states are delegated the authority for establishment, implementation, and enforcement of these performance standards. Sec. 111(d) appears to allow EPA to give the states broad discretion in establishing their programs. In particular, EPA appears to have the authority to allow states to take the remaining useful life of a facility into consideration for any affected source, and to use “economic incentives, such as fees, marketable permits, and auctions of emission rights,” in implementing the program. In this way, Sec. 111(d) may offer more flexibility and diversity of state responses than Sec. 111(b). At this time the timetable for issuance of regulation under Sec. 111(d) is unclear.

Who are the covered entities?

EPA’s Clean Air Act standards for carbon pollution from new power plants proposal would apply to electric generating units, which are used at power plants in all regions of the United States. These units account for about forty percent of all U.S. GHG emissions. The proposed standard applies to new and modified sources, under Sec. 111(b). No GHG regulations have yet been proposed for existing power plants.

Under the proposed standard (1,000 pounds of CO2 per megawatt/hour), all new power plants would need to match the GHG emissions performance currently achieved by highly efficient natural gas combined cycle (NGCC) power plants. EPA has proposed phasing in the requirements so that coal-fired power plants already operating or permitted would continue operation or construction unaffected by the new rule. Based on factors such as the relative price of natural gas to coal, EPA, Department of Energy, and industry itself currently project that all new power plants are likely to natural gas-fired power plants, and there is no expectation that new coal-fired power plants will be constructed. Accordingly, EPA does not expect compliance costs for industry, as the new natural-gas power plants were already expected to meet the standards of the proposed rule, even in its absence.

However, new coal-fired power plants could meet the standard by capturing and permanently sequestering their GHG emissions using carbon capture and storage (CCS) technologies. The proposed rule would offer plants flexibility by allowing a phased-in approach for facilities using CCS. These facilities can comply with the standard by using a 30-year emissions average. This provision would allow facilities to improve CCS equipment over time or allow facilities to wait to deploy CCS technologies until after plant construction when CCS technologies increase in availability.

Why is EPA proposing a Power Plant NSPS for greenhouse gases?

Electric generating units from power plants have been subject to new source performance standards for a variety of pollutants since the Clean Air Act was passed in 1970. EPA is required [6] to establish NSPS for GHGs under the Clean Air Act, as was clarified in the US Supreme Court case Massachusetts v. EPA.

Following other required regulatory steps, in a 2010 judicial settlement [7], EPA committed to a timeline for promulgating NSPS for GHGs for two GHG source categories: power plants [8] and oil refineries [9]. EPA held five, broad-based, sector-specific listening sessions [10] on the topic and received comments from numerous stakeholders. The original deadline for a proposed power plant rule outlined in the settlement was July 26, 2011. At EPA’s request, this deadline was extended to September 30, 2011, and then a further delay was agreed to. The proposed NSPS for power plants were finally announced on March 27, 2012.

C2ES Resources:

• Read more from EPA [11] on Power Plant NSPS.
• Read a statement [1] from C2ES President Eileen Clausen on the release of the proposed rule.
• Read about what state policies already exist [12] and are proposed [13] similar to this proposed rule.

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