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Power Plant Rules Expected in Obama Plan On Climate Could Take Years to Implement

Tuesday, June 25, 2013

By Anthony Adragna

President Obama is set to unveil his climate change action plan June 25, and while he is expected to address rules to limit greenhouse gas emissions from power plants, analysts say implementing those rules will be a long process.

Regulating carbon emissions from new and existing power plants would require years of regulatory action--followed by certain litigation--before the rules enter into force, according to analysts interviewed by BNA.

Environmental advocates said Obama could begin the regulatory process for existing power plants under the Clean Air Act as it prepares to finalize carbon emission standards for new power plants. Industry groups, meanwhile, said Obama's legal authority to promulgate regulations on carbon emissions remained in question, and they cautioned against actions that violate the Clean Air Act.

“It is clear that the law does not allow the President a broad range of options for addressing carbon emissions from existing power plants,” Scott Segal, partner at Bracewell and Giuliani and director of the Electric Reliability Coordinating Council, told BNA in an e-mail. “If he pushes the envelope, and suggests a plan with unrealistic time tables or emissions limits, the plan may well violate the spirit and text of the Clean Air Act.”

Obama will outline his national plan for addressing the impacts of climate change in a speech at Georgetown University. He announced the speech in a video released by the White House June 22.

“This is a serious challenge, but it's one uniquely suited to America's strengths,” Obama said. “There is no single step that can reverse the effects of climate change. But when it comes to the world we leave our children, we owe it to them to do what we can.”

White House Press Secretary Jay Carney declined June to comment June 24 on the specifics of Obama's speech but said the president would use his executive authority to address the risks of climate change and would work with Congress if it appeared to have “the will” to reduce carbon emissions.

Obama will address regulation of new power plants--the Environmental Protection Agency already has a rulemaking under way--as well as rules to address emissions from existing power plants, according to a person familiar with the White House plans who spoke on the condition of anonymity in advance of the address. The president also is expected to emphasize the need for cleaner energy and for better plans to adapt to climate change. (See related story in this issue).

In his June 22 video, Obama also said, “We'll need scientists to design new fuels, farmers to grow them. We'll need engineers to devise new sources of energy, and business to make and sell them. We'll need workers to build the foundation for a clean energy economy.”

Obama Administration Greenhouse Gas Regulation

 

• April 17, 2009: EPA proposed rule finding that greenhouse gases endanger public health and welfare.

• Sept. 30, 2009: EPA proposed “tailoring” rule to require large industrial plants and other sources to control emissions of carbon dioxide and other greenhouse gases through prevention of significant deterioration permits.

• Dec. 7, 2009: EPA final rule finding that greenhouse gas emissions endanger public health and the environment and that cars and light trucks cause or contribute to the emissions.

• May 13, 2010: EPA final “tailoring” rule to require only the largest new and modified sources of greenhouse gases to control emissions, such as power plants and refineries.

• Oct. 25, 2010: EPA/NHTSA proposed rules to set the first-ever fuel economy and greenhouse gas emissions standards for medium- and heavy-duty trucks.

• Aug. 9, 2011: EPA-NHTSA final rules setting greenhouse gas emissions and fuel economy standards for medium- and heavy-duty trucks.

• Dec. 1, 2011: EPA-NHTSA proposed rules setting greenhouse gas emissions standards, and requiring an average fuel economy of 54.5 miles per gallon by 2025 for cars and light trucks for model years 2017 through 2025.

• April 13, 2012: EPA proposed new source performance standards for greenhouse gas emissions to limit emissions from new fossil fuel-fired power plants with a generating capacity greater than 25 megawatts to 1,000 pounds of carbon dioxide emissions per megawatt-hour.

• Oct. 15, 2012: EPA-NHTSA final rule requiring cars and light trucks--model years 2017 to 2025--to achieve an average fuel economy of 54.5 miles per gallon by 2025.

 

Options Previously Outlined

Environmental groups previously released reports outlining potential options for the administration to regulate carbon emissions of both new and existing power plants.

One report, released in December 2012 by the Natural Resources Defense Council, urged EPA to use its authority under Section 111(d) of the Clean Air Act to set statewide caps on carbon dioxide from existing power plants. NRDC said its plan would reduce greenhouse gas emissions by 26 percent in 2020, cost power companies $4 billion annually by 2020, but stimulate $90 billion in energy efficiency investments (233 DER A-25, 12/5/12).

NRDC's approach would allow each state to implement individualized emissions caps that reflect its existing power generation mix. Each state could adopt particular measures such as reducing the heat rates at power plants, shifting to cleaner power generation, investing in energy efficiency and renewable power, or establishing an interstate emissions trading or averaging program, to meet the emissions caps.

EPA in April 2012 proposed a new source performance standard of 1,000 pounds of carbon dioxide per megawatt-hour for all newly built, fossil fuel-fired power plants. The agency said gas-fired plants would be able to meet the standard without installing additional pollution controls, but new coal-fired plants would have to install carbon capture technologies (77 Fed. Reg. 22,992).

In its proposed rule, EPA allowed a 30-year averaging compliance option for coal-fired plants to meet the 1,000 pound of carbon dioxide per megawatt-hour standard.

If finalized, the standards would trigger a requirement under Section 111(d) for EPA to issue similar performance standards for greenhouse gas emissions from existing power plants. Under the Clean Air Act, EPA must set standards for existing sources when it establishes a new source performance standard for pollutants that have not previously been regulated.

Utility groups said in March that EPA has never before proposed a standard that combines all power plants into a single source category regardless of the fuel they burn or how the facility is operated and that the agency should repropose its regulation for new power plants (53 DER A-5, 3/19/13).

Very Long Time Frame

Jason Schwartz, legal director for the New York University Institute for Policy Integrity, said the regulation of existing power plants would require EPA to work closely in partnership with the states, which would ultimately slow the regulation's development.

“These things do take time,” Schwartz said. “When you have all 50 states involved, it's hard to move things through in a timely manner.”

Michael Gerrard, director of the Center for Climate Change Law at Columbia Law School, warned that it would be a “multi-year” and potentially “arduous” process for EPA to regulate existing power plants.

“EPA must issue guidelines, and then give the states an opportunity to amend their state implementation plans to conform to those guidelines,” Gerrard said. “For any states that fail to revise their plans satisfactorily, EPA can then issue federal implementation plans. This is an arduous process that will surely be litigated at every step. However, the fact that EPA is formally undertaking this process may affect decisions by generating plant owners whether to retire older existing plants that are already teetering on obsolescence.”

Schwartz said EPA's original proposal for regulating new power plants “doesn't do a whole lot” and said he would not oppose the agency reproposing the regulation if it had substantially altered its thinking.

“If [EPA] is not rethinking the rule in some fundamental way, then an additional delay would not be justified,” Schwartz said.

Industry Awaiting Speech

Several industry groups declined to comment until after Obama's speech, but warned an effort to regulate carbon emissions from existing power plants could impose crippling costs on the energy industry and endanger the economic recovery.

“We hope EPA gives the states the primary role they are accorded under the law to implement plans appropriate for local conditions and that the guidelines don't move the goalposts and strand the enormous investments already made [by industry],” Luke Popovich, spokesman for the National Mining Association, told BNA. “The devil will be in the details--and they may not be close to being made available to the public.”

Jo Ann Emerson, chief executive officer of the National Rural Electric Cooperative Association , told BNA her organization had adopted “a very specific resolution that says we will oppose any effort to use the Clean Air Act to reduce carbon dioxide emissions” over concerns the power plant regulations would impose enormous costs on senior citizens and other vulnerable citizens.

Tom Kuhn, president of the Edison Electric Institute, said in a statement the utility industry had been a leader in reducing emissions over the last several decades and recognized the importance of addressing climate change.

“As the Administration develops new climate change policies and potential regulations, EEI will be considering whether they mesh well with the industry's ongoing transition to a cleaner generation fleet and enhanced electric grid, contain achievable compliance limits and deadlines, and minimize costs to customers,” Kuhn said.

Nick Braden, spokesman for the American Public Power Association, said his organization would “prefer not to speculate” until after the speech.


Contributing to this report were Cheryl Bolen, Mark Drajem, Jim Snyder, and Rachel Leven