EPA Tweaks, but Keeps, Carbon Capture in Final Rule

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By Anthony Adragna

Aug. 3 --The Environmental Protection Agency opted to keep in place a controversial provision essentially requiring the partial use of carbon capture and storage technologies to meet final carbon dioxide emissions limits for any new coal-fired power plants built in the U.S.

President Barack Obama's administration relaxed the carbon dioxide emissions limits any new coal-fired power plant would have to meet under Section 111(b) of the Clean Air Act, but it left unchanged the proposed requirements for new natural gas plants.

Those limits are:

• 1,400 pounds per megawatt-hour for new coal-fired power plants, less stringent than the 1,100 pounds per megawatt-hour standard proposed in 2014, and

• 1,000 pounds per megawatt-hour on a gross output basis for new natural gas plants.


The rule governing any new, modified or reconstructed power plants is important because it triggers a requirement for the EPA to issue carbon dioxide emissions standards for existing power plants under Section 111(d). Those limits, also released Aug. 3, are the centerpiece of Obama's plan to address climate change (see related story).

According to a fact sheet on the regulation, the final rule is not expected to have notable costs and will not have significant impact on electricity prices or reliability.

Partial CCS Mandate

For new coal-fired power plants, the agency said it anticipated units would have to capture at least 20 percent of their carbon dioxide emissions through carbon capture and sequestration (CCS) to meet the revised standards. The EPA concluded the best system of emissions reductions is a “highly efficient supercritical pulverized coal unit with partial carbon capture and storage.”

The emissions limits were relaxed for new coal-fired plants to reflect “information and comments regarding the cost to implement CCS on a new unit,” according to the EPA.

“CCS has been demonstrated to be technically feasible and is in use or under construction in various industrial sectors, including the power sector,” the EPA said in its fact sheet. “Partial CCS designed to meet the final emission standard will continue to promote implementation and the further development of CCS technologies.”

Inclusion of CCS technology has been controversial since the proposed rule's (RIN 2060-AQ91) release in January 2014 (79 Fed. Reg. 1430). That technology hasn't been “adequately demonstrated” as required under the Clean Air Act and isn't economically feasible, industry groups and many Republicans in Congress have said.

The EPA concluded the revised emissions limits for new coal-fired plants “better represents the requirement that the [best system of emissions reductions] be implementable at reasonable cost,” according to the rule text.

Some Attorneys See 'Big Mistake.'

Several attorneys expressed surprise that the agency opted to maintain the carbon capture language in the final rule, arguing it would open the regulation to legal challenges. That is significant, because an adverse court decision against the new power plant limits could scuttle the existing plant rule as well.

“I think EPA made a big mistake,” Brian Potts, a partner at Foley & Lardner LLP, told Bloomberg BNA. “They relaxed the limit a little bit, but ultimately why risk it when nobody is building coal plants anyway?”

“If the new plant standard gets overturned, it stops the Clean Power Plan in its tracks,” Potts added, calling the CCS issue “one of the best challenges” states and industry groups have to fight the regulation.

Another attorney tracking the regulation told Bloomberg BNA the treatment of CCS in the final rule--even at the relaxed emissions limits--ensures it will be a tempting target for those who want to challenge the rule.

Put in Stronger Legal Position

Michael Livermore, an associate law professor at the University of Virginia, disagreed and said the EPA had made a substantial concession by relaxing the limits new coal-fired plants would have to meet, thereby reducing its potential vulnerability to legal action.

“They made these changes to be responsive to comments,” Livermore told Bloomberg BNA. “Overall, they’ve put themselves in a stronger position in court.”

Simply abandoning the CCS component of the new power plant rule--suggested by some as a way to reduce vulnerability to legal challenges--would not have been defensible and could have exposed the agency to challenges from the environmental community, Livermore said.

“They really do have to be reasonable,” Livermore, former executive director of the Institute for Policy Integrity at New York University School of Law, said. “There’s no way for the agency to completely avoid all legal risk. So the question for them is how to get out a decent policy and one that mitigates those risks.”

Environmental Lawyers Pleased

Though they acknowledged use of CCS technology is not yet widespread, environmental attorneys told Bloomberg BNA they are confident the agency properly used its discretion and said courts would uphold the provision's inclusion in the regulation.

“Some of the objections [to CCS] are just simply not borne out by the facts,” Sean Donahue, an attorney with Donahue & Goldberg LLP, who represented environmental advocates in previous power plant litigation, told Bloomberg BNA. “I think we’re optimistic that EPA will be able to defend it.”

Ann Weeks, an attorney with the Clean Air Task Force, also said she was pleased the agency chose to move ahead with the CCS provisions in the final rule.

“It’s an available technology. I don’t see why they would leave it out,” Weeks told Bloomberg BNA.

Administration Previously Uneasy.

Despite confidence from environmental attorneys, even some in the Obama administration previously questioned whether the EPA was pushing the legal limits by relying on carbon capture and sequestration technologies in the proposed rule .

“EPA's assertion of the technical feasibility of carbon capture relies heavily on literature reviews, pilot projects and commercial facilities yet to operate,” January 2014 comments from the White House Office of Management and Budget stated. “We believe this cannot form the basis of a finding that CCS on commercial-scale power plants is 'adequately demonstrated.' ”

In its proposed rule, the EPA cited a number of carbon capture projects under development--although just one, in Canada, is currently operational--as well as engineering studies as its basis for concluding the technology is economically feasible and adequately demonstrated.

Attorneys had previously theorized that the EPA might remove the carbon capture and sequestration requirements from the final rule to eliminate a potential legal vulnerability that might cripple its ability to regulate greenhouse gas emissions from existing sources .

Modified, Reconstructed Plants Addressed

In the final rule, the EPA also addressed emissions limits for reconstructed or modified power plants.

For reconstructed coal plants, units with a heat input of greater than 2,000 million British thermal units would have to meet a standard of 1,800 pounds per megawatt-hour, while those with heat inputs of less than that would have to meet a standard of 2,000 pounds per megawatt-hour.

Modified coal-fired plants would have to meet different standards depending on the scale of unit's changes. Power plants with large modifications would have to meet emissions limits consistent with their best historical annual performance during the years from 2002 to the time of modification.

The EPA opted not to finalize emissions limits for modified natural gas plants or coal plants seeking to make small-scale modifications, meaning any changes that would result in less than a 10 percent increase in emissions compared to the five most recent years from that unit.

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