Utilities Want Credit for Carbon Reductions If EPA Decides to Regulate Existing Plants

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By Andrew Childers  

Any carbon dioxide emissions standards for existing power plants in the future should credit states and utilities for the emissions reductions they have already achieved, panelists said during a July 9 forum.

EPA has proposed a new source performance standard for carbon dioxide emitted from all new fossil fuel-fired power plants, but that proposal does not address existing or modified sources. EPA could achieve significant greenhouse gas emissions reductions from existing sources by focusing on the power system as a whole rather than regulating individual power plants, environmental advocates and utility executives said during the forum sponsored by the National Association of Clean Air Agencies, National Association of State Energy Officials, and National Association of Regulatory Utility Commissioners.

Frank Prager, vice president for environmental policy and services at Xcel Energy Inc., said his company reduced its carbon dioxide emissions 12 percent in Colorado even after building a new coal unit as a result of state emissions programs. Those reductions should be credited under any future EPA rule that addresses emissions from existing units, he said.

“Those reductions really should be credited in the carbon program going forward or EPA will be punishing people who got out in front,” Prager said.

EPA said it has no plans to regulate existing power plants. However, Section 111(d) of the Clean Air Act requires EPA to set standards for existing units as well.

Megan Ceronsky, an attorney in the Environmental Defense Fund's air and climate program, also recommended EPA “ look at the electricity system as a whole” and credit power companies for investing in demand reduction programs and cleaner generation when crafting any standards for existing sources.

“We want to support those actions and encourage other states and utilities to catch up,” Ceronsky said.

Proposal Effectively Bans New Coal Units.

The proposed carbon dioxide emissions limit for new fossil fuel-fired power plants effectively bans new coal units, utilities said. The carbon capture and storage technology that the plants would need to comply is not commercially available, the utilities said.

“The reality is no utility is going to invest now in a billion-dollar coal plant” until carbon capture has been adequately demonstrated at commercial scale, Prager said.

EPA's proposed performance standard would limit carbon dioxide emissions to 1,000 pounds per kilowatt-hour for all new fossil fuel-fired power plants. New natural gas combined-cycle plants would be able to meet the proposed performance standard with no additional controls. New coal plants would be required to install carbon capture systems (77 Fed. Reg. 22,392).

The comment period on the proposed rule closed June 25.

John Voyles, vice president for transmission and generation services for LG&E & KU Energy LLC, said his company plans to retire 800 megawatts of coal-fired capacity in Kentucky, 10 percent of its total capacity. It will replace much of that capacity with a new 600-megawatt natural gas combined-cycle plant.

“The proposed rule as written effectively eliminates coal from the national portfolio,” Voyles said.

Although EPA has not yet regulated carbon dioxide emissions from existing plants, utilities said they were concerned about the interaction between EPA's proposed performance standard and its new source review program. The performance standard sets the baseline of required emissions controls for new source review, known as best available control technology. Utilities said they worried that EPA's proposed performance standard would effectively make carbon capture and storage the best available control technology when power plants make modifications that require additional pollution controls.

If so, that would be “ catastrophic for existing units,” Voyles said.

EPA Defends Single Standard.

Utilities have criticized EPA's decision to propose a single carbon dioxide performance standard for all new power plants rather than setting individual emissions limits by fuel type.

However, Joseph Goffman, EPA senior counsel, said proposing the single emissions standard would “ meet a basic level of carbon performance.”

“We thought it was logical to define the category in terms of the function of these sources, which is to generate electricity at intermediate load or base load levels,” he said.

EPA has issued performance standards for 74 source categories under Section 111 of the Clean Air Act, Goffman said. The agency has taken several approaches to issuing emissions limits based on the individual characteristics of the industry and the nature of the pollutant being regulated.

“Each category we've done has a highly specific to the sector and pollutant rationale and that's the only kind of precedent we can follow,” Goffman said.

By Andrew Childers