McCarthy Defends Viability of Carbon Capture Technologies Before House Energy Panels

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By Anthony Adragna

Feb. 25 — Carbon capture and sequestration technologies are available and will provide a path forward for the construction of new coal-fired power plants in the U.S., Environmental Protection Agency Administrator Gina McCarthy said Feb. 25.

McCarthy told a joint hearing of two House Energy and Commerce subcommittees that the EPA has never considered withdrawing its new source performance standards for future power plants, but she also said no final decision has been made about whether to effectively require carbon capture and sequestration technology, as was done in the proposed rule.

McCarthy's defense of carbon capture and sequestration technologies comes amid a series of high-profile setbacks for projects used by the EPA to justify the technology's availability and feasibility. McCarthy, though, said the agency didn't rely on those projects alone to justify its conclusion that CCS technologies are adequately demonstrated and economically feasible.

“We feel very confident that this technology is available,” McCarthy said. “We feel very confident that the use of CCS technology—at the levels we’re proposing—will leave a viable option for coal to continue to be a part of the future.”

In its proposed new source performance standards for carbon dioxide emissions from new fossil fuel-fired power plants (RIN 2060-AQ91), the EPA cited a number of CCS projects as the basis for the feasibility and availability of the technology. But one of those projects—Southern Co.'s Kemper County Energy Facility in Mississippi—is billions of dollars over-budget and another—the FutureGen 2.0 project in Illinois—lost federal funding in early February after it became clear it would not meet several statutory deadlines. 

In Canada, SaskPower International Inc. installed carbon capture equipment on the Boundary Dam plant, establishing the first commercial-level operation of its kind when it opened last year. Republicans said the fact only one project in North America was operational showed the technology was not feasible and could not be used to justify the regulations.

“Some [projects] haven’t been completed, some haven’t been started, one has been discontinued, one isn’t even in this country and none of them are large-scale,” Rep. Tim Murphy (R-Pa.), chairman of the House Energy and Commerce Oversight and Investigations Subcommittee, said. “I’m not sure that EPA is actually following the law on this.”

The EPA also has argued in a supplement to its proposal that engineering studies have shown that carbon capture systems are technologically viable.

Could EPA Back Off CCS?

Several observers of the EPA rulemaking process believe the agency might back off effectively requiring the use of carbon capture and sequestration in its final version of the rule, expected out sometime in mid-summer, despite McCarthy's continued vocal defense of the technology.

“There’s no guarantee what they’re going to do obviously, but I’ve thought for a while they were going to back off the CCS requirement,” Brian Potts, a partner at Foley & Lardner LLP, told Bloomberg BNA.

One potential obstacle to abandoning the carbon capture requirement in its final performance standards for new power plants is that rules for new facilities are typically more stringent than those for existing sources, Potts said. Removing the carbon capture component from the standards for new power plants could result in a rule less stringent than the EPA had proposed for existing sources as part of its Clean Power Plan.

Dropping the carbon capture component of the proposed rule could help insulate the final rule from some legal challenges, Jeffrey Holmstead, a partner at Bracewell & Giuliani LLP and former head of the EPA air office, told Bloomberg BNA Feb. 25. The Energy Policy Act of 2005 bars the EPA from setting standards that require carbon capture based “solely” on projects funded by the Energy Department, such as FutureGen and the Kemper project.

Under the Clean Air Act, the EPA may not implement the Clean Power Plan, which would set carbon dioxide limits on existing power plants, until it finalizes standards for new units. Dropping the carbon capture component of the performance standards could remove one potential legal vulnerability, allowing the EPA to focus on the Clean Power Plan, Holmstead said.

“I’m quite confident they’re looking seriously at whether they’re going forward with CCS and whether they want to take on vulnerability,” Holmstead said.

Skepticism Over Clean Power Plan 

In addition to the concern over CCS requirements, several House Republicans voiced concerns about the agency's plan to address carbon emissions from existing power plants through its Clean Power Plan (RIN 2060-AR33). 

“If this plan puts reliable baseload energy from sources such as coal and nuclear in danger, communities may face higher costs and potentially suffer brown outs when most in need,” Rep. John Shimkus (R-Ill.), chairman of the Environment and the Economy Subcommittee, said. “I believe there is a better way and that we can find solutions to these challenges without placing the burden on the backs of consumers.”

In response, McCarthy said she was “very confident” of the legality of the Clean Power Plan and told lawmakers that the agency would maintain reliability in the nation's energy supply. She also said there was never any consideration of withdrawing the proposed rule.

“We are not encouraging any state to do anything that they do not consider … right and cost-effective and reasonable for them to do,” McCarthy said. “There are just lots of choices. There’s maximum flexibility.”

McCarthy made a similar case for the Clean Power Plan before several governors during National Governors Association meeting Feb. 22.

At least one Republican, Rep. David McKinley (R-W.Va.), acknowledged there are not the votes in Congress to overturn the power plant regulations, but he urged the EPA to take greater account of the impacts its regulations would have on the economy in coal-dependent regions and on jobs.

“We know the EPA has the ultimate power to issue these regulations, and you well know that we don’t have the votes here to overturn them,” McKinley said. “So whatever you’re issuing, it’s becoming the law of the land.... We didn’t come here to Congress to be bullied by radical, environmentalist policy. The regulatory environment we’re facing here is very destructive here.”

RFS Coming ‘Very Soon.'

Both Democrats and Republicans on the subcommittees probed the EPA for information about how it would redress the problem of being chronically late in issuing the renewable fuel standard. However, they received few details from McCarthy other than the agency will issue the standards for 2014, 2015 and 2016 “very soon, in the spring.”

“Continued investments in this sector are going to be essential—we have to play some catch up here,” McCarthy said. “We had problems in 2014 that we all have learned from and we will not repeat those problems again.”

McCarthy did not directly respond when asked by Rep. Joe Pitts (R-Pa.) if the EPA would base its 2014 standard on actual volumes of renewable fuels used, but she acknowledged the need for certainty in the market and said the agency would “clearly” answer that question in its regulation.

Senior House members have been open to reviewing the EPA's ability to set minimum volumes of renewable fuel that must be blended into national supplies, and there is momentum in the Senate for review as well. Sen. Jeff Flake (R-Ariz.) told Bloomberg BNA he would attempt to roll back the renewable fuel standard and its ethanol mandate through the appropriations process. 

With assistance from Andrew Childers in Washington

To contact the reporter on this story: Anthony Adragna in Washington at aadragna@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com