June 2 --The existing fleet of fossil fuel-fired power plants would be
required to reduce emissions of carbon dioxide by 30 percent from 2005 levels
by 2030 as part of the first ever greenhouse gas emissions standards for
existing power plants proposed by the Environmental Protection Agency June
Each state would be required to achieve its own specific carbon
dioxide emissions rate as part of the proposed rule issued under Section 111(d)
of the Clean Air Act (RIN 2060-AR33). The EPA is proposing interim emissions
rate targets to be met during the initial phase in the period between 2020 and
2029 and a final goal that applies beginning in 2030.
“I promise you,
you will hear from critics who say the same thing they always say--that these
guidelines will kill jobs or crush the economy,” President Barack Obama said on
a June 2 call with environmental groups. “What we've seen every time is these
claims are debunked when you actually give workers and businesses the tools and
the incentives they need to innovate.”
Obama ordered the EPA to propose
the carbon dioxide emissions guidelines as part of his climate action plan. It
follows a similar proposed rule in January that would set the first carbon
dioxide new source performance standards for new fossil fuel-fired power plants
(79 Fed. Reg. 1430; ).
Additionally, the EPA proposed a separate rule June 2 that would set carbon
dioxide performance standards under Section 111(b) of the Clean Air Act for
existing power plants that are modified or reconstructed.
The EPA anticipates the proposed rules would produce net
climate and health benefits of between $48 billion and $82 billion at a cost of
between $5.4 billion and $8.8 billion to the power industry in 2030. The EPA
anticipates its proposals could reduce retail electricity bills by 8 percent as
states and power companies invest in measures to reduce electricity demand.
The EPA predicts about 30 gigawatts to 49 gigawatts of coal-fired capacity
will close by 2020. However, the agency said that coal and natural gas would
remain the dominant sources of electricity generation under the proposed rules,
with each providing more than 30 percent of generation.
Though the EPA
anticipates its proposed rule will reduce carbon dioxide emissions from the
existing fleet of power plants by 30 percent from 2005 levels by 2030, many of
those reductions already have been achieved as a result of the slowing economy
and a shift from coal to natural gas to fuel power plants. Carbon dioxide
emissions from power plants have declined by nearly 16 percent since 2005,
according to the EPA's Inventory of U.S. Greenhouse Gas Emissions and Sinks:
The rules would be administered by state and local air pollution officials
through a process similar to that used to approve state implementation plans.
States would have the option of demonstrating compliance either by meeting the
proposed carbon dioxide emissions rates or by converting that emissions rate
into a mass-based standard.
The mass-based standard could be used to
establish emissions trading programs such as the Regional Greenhouse Gas
Initiative in the Northeast.
The EPA's proposals would require the
largest carbon dioxide emissions rate reduction from Texas, which would be
required to reduce its emission rate by nearly 72 percent from 2012 levels (see
South Carolina and Arizona would be required to reduce
their emissions rate by more than 50 percent while Arkansas, Georgia,
Minnesota, New Hampshire, New Jersey, New York and Oregon would be required to
reduce their emissions rates by more than 40 percent from 2012 levels.
States would be required to submit their plans for implementing the
proposals to the EPA by June 30, 2016. However, the EPA said it will grant
extensions, if necessary, particularly for states trying to coordinate
proposed carbon dioxide standards for existing power plants would allow states
to claim emissions reductions achieved beyond the fenceline of the power plants
The EPA, in its proposed rule, describes four “building
blocks” that states will be able to use to craft their implementation
The proposed rule would allow states to take credit for carbon
dioxide emissions reductions achieved by making improvements to the heat rate
at individual power plants, switching electricity generation from coal-fired
units to more efficient gas-fired generation, investments in renewable energy
and other sources with no or few carbon dioxide emissions and investing in
programs to reduce demand for electricity.
The Clean Air Act requires
the EPA to determine the “best system of emissions reduction” to comply with
the proposed emissions limits. The EPA said it looked beyond simply improving
the heat rate at power plants because greater emissions reductions could be
achieved cost effectively through additional programs.
could only reduce emissions by an estimated 1.3 percent to 6.7 percent through
heat rate improvements alone, the agency said.
“Our assessment of heat rate improvements showed that
these measures would achieve CO2 emission reductions at low costs,
although compared to other measures, the available reductions were relatively
limited in quantity,” it said.
For example, the EPA said natural gas
combined cycle power plants already are being relied upon to generate baseload
electricity, displacing coal generation. The EPA said gas-fired generators are
expected to generate more than 1,400 terawatt-hours of electricity by 2020, a
50 percent increase, as new generators begin operation.
industry has expressed early opposition to measures that would predicate
compliance with the carbon dioxide emissions rate based on actions taken
outside of the actual facility. They argue that they have little control over
those factors .
The EPA argues that the term best system of emissions
reduction is sufficiently broad to encompass actions taken beyond the fenceline
at power plants.
Jeffrey Holmstead, a partner with Bracewell &
Giuliani LLP who previously served as the EPA assistant administer for air and
radiation, argued that the Clean Air Act was intended to require pollution
controls that could be installed on-site.
“The question is at what point is the system of emissions
reduction applied,” he told Bloomberg BNA June 2. “For 44 years, the system of
emissions reduction is the system that can be applied to a regulated plant, and
we set a performance standard based on that system of emissions reduction. I
think they have a hard time getting around that. That's very clearly what the
Despite power industry objections, state
regulators praised the proposed rules for being flexible and accommodating
existing state climate change programs.
“The proposal is meaningful, yet
flexible,” Bill Becker, executive director of the National Association of Clean
Air Agencies, said in a June 2 statement. “It provides states and localities
with an ability to tailor their programs to the unique characteristics of their
individual economies. It allows more time to develop state strategies. And it
credits past actions that states have taken to reduce their greenhouse gas
emissions. Still, the regulatory and resources challenges that lie ahead are
daunting. Overcoming these challenges will require a heavy lift by all levels
of government, particularly state and local.”
Recent U.S. Supreme Court decisions in favor of the EPA
suggest the agency will be given due deference when it determines the best
system of emissions reductions, legal professors said.
The Supreme Court
in Am. Electric Power Co. v. Connecticut held that the EPA's ability
to regulate greenhouse gas emissions under the Clean Air Act displaced federal
common law climate change claims (Am. Electric Power Co. v.
Connecticut, 131 S.Ct 2527, 72 ERC 1609, 2011 BL 161239 (2011)).
The court specifically cited the EPA's Section 111 authority to regulate
carbon dioxide from power plants as one of the factors in its opinion, Tim
Profeta, director of the Nicholas Institute for Environmental Policy Solutions
at Duke University's Sanford School of Public Policy, told Bloomberg BNA June
“There is indication the EPA is using the right provision, and
there's clearly an ambiguous term that does not have a precedent available in
terms of how to interpret it. It does seem the agency should be given some
discretion,” he said.
Supreme Court decision restoring the EPA's Cross-State Air Pollution Rule,
which had been vacated by a lower court, also indicates the agency is due
deference when crafting cost-effective programs to deal with large air
pollution issues, Michael Livermore, associate professor of law at the
University of Virginia School of Law and senior advisor to the Institute for
Policy Integrity, told Bloomberg BNA June 2 (EPA v. EME Homer City
Generation LP, 2014 BL 118432, U.S., No. 12-1182, 4/29/14). He said
addressing air pollution that blows across lines is analogous to climate change
“You had a complex environmental problem that has vexed the
agency for some time,” he said. “The agency developed a sophisticated
regulatory plan based on modeling and the best science and came up with
cost-effective emissions reductions and large net benefits and does it in a
As part of its
proposed rule, the EPA is seeking comment on combining both gas-fired and
coal-fired power plants into a single emissions category to foster emissions
trading under its proposed carbon dioxide emissions standards for existing
The EPA said it is considering establishing a new subpart
UUUU under 40 C.F.R. Part 60 that would combine the carbon dioxide emissions
requirements for all fossil fuel-fired power plants. Setting a single standard
would make it easier for states to implement emissions trading programs, the
Treating gas-fired and coal-fired power plants as separate
emissions categories would prevent emissions trading between the two groups,
Thomas Lorenzen, a partner at Dorsey & Whitney LLP, told Bloomberg BNA June
2. The EPA would need to bring those two source categories together to ensure
the largest, most robust trading programs possible, he said.
The EPA had proposed creating a single
emissions category for newly built fossil fuel-fired power plants in 2012. The
agency dropped that proposal in light of opposition from the power sector.
Instead, the agency proposed separate carbon dioxide emissions standards for
natural gas-fired and coal-fired power plants in January.
“They do want
that for the broadest possible cap and trade programs, and if you exclude gas
from the category, you can't really offset your coal emissions,” Lorenzen said.
“It's an odd thing to have gone out of their way to separate the two categories
previously in response to public comment and now be reproposing to re-merge
Lawyers said whether the EPA can treat coal- and gas-fired power
plants as separate emissions categories for the purposes of the new source
performance standards while lumping them into a single category for the
existing power plant rule may prove difficult to defend legally.
In addition to the
carbon dioxide emissions guidelines for existing power plants, the EPA also
proposed June 2 emissions standards for modified and reconstructed power
plants. The emissions requirements largely would consist of operating practices
and equipment upgrades.
The EPA is proposing two options for modified
boilers and integrated gasification combined cycle plants. Under one option,
the specific form of the standard would depend on whether the source makes the
modification before or after becoming subject to the existing power plant
standards under Section 111(d).
That would take into account
improvements made to comply with the existing power plant standards. The other
option would set a single performance standard for all units.
natural gas-fired units would be required to achieve the performance equivalent
to natural gas combined cycle units.
Reconstructed utility boilers,
integrated gasification combined cycle units and natural gas-fired units would
be required to achieve the standards of performance based on the most efficient
generating technology that is applicable to each category.
The EPA in its proposal to regulate existing power plants
argues the proposed rule to regulate carbon dioxide emissions from modified and
reconstructed power plants would be sufficient to trigger regulation of
existing power plants.
The agency's January proposal to regulate carbon
dioxide emissions from newly built fossil fuel-fired power plants under Section
111(b) of the Clean Air Act triggers a requirement for the EPA to set similar
emissions limits for existing power plants under Section 111(d).
power industry has opposed the EPA's proposed rule for new sources because new
coal-fired units would be required to install carbon capture systems to comply,
and industry argues carbon capture technology isn't yet viable at commercial
If the new-source rule were invalidated, it also would eliminate
the Clean Air Act trigger that the EPA needs to regulate existing power plants,
which account for 40 percent of greenhouse gas emissions. However, the EPA in
its proposed rule to regulate existing power plants argues that either the
January proposal to regulate new power plants or its June 2 proposal to
regulate modified units--both of which were issued under Section 111(b) of the
Clean Air Act--are sufficient to trigger the requirement to regulate existing
“The EPA intends to
complete two CAA section 111(b) rulemakings regulating CO2 from new
fossil fuel-fired [electric generating units] and from modified and
reconstructed fossil fuel-fired [electric generating units] before it finalizes
this rulemaking, and either of those section 111(b) rulemakings will provide
the requisite predicate for this rulemaking,” the EPA said.
questioned whether the EPA's legal reasoning would withstand judicial review,
but Lorenzen said that gives the EPA an alternate argument to pursue regulating
existing power plants even if its proposal for new units is ultimately
“What they've done is a careful job of giving themselves
belts and suspenders. Where they perceive vulnerabilities in their approach,
they try to address those by coming up with alternative theories,” he said.
The EPA will accept comment on the proposals for 120 days after they are
published in the Federal Register. Comments can be made at http://www.regulations.gov and should reference docket ID
Nos. EPA-HQ-OAR-2013-0602 and EPA-HQ-OAR-2013-0603.
The agency also will
hold public hearings in Atlanta, Denver, Pittsburgh and Washington, D.C.,
during the week of July 28.
To contact the reporter on this
story: Andrew Childers in Washington at firstname.lastname@example.org
To contact the editor
responsible for this story: Larry Pearl in Washington at email@example.com
The EPA's proposed rule
for existing power plants is available at http://www2.epa.gov/sites/production/files/2014-05/documents/20140602proposal-cleanpowerplan.pdf.
The EPA's proposed rule for modified and reconstructed power plants is
available at http://www2.epa.gov/sites/production/files/2014-05/documents/20140602proposal-modsreconstructs.pdf.
For more information, contact Amy Vasu in the EPA's Sector Policies and
Programs Division at (919)
541-0107 or firstname.lastname@example.org.
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