EPA Releases Draft Carbon Dioxide Emissions Rule for Existing Power Plants

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--On Monday, the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) released its first-ever draft rule to reduce carbon dioxide (CO2) emissions from existing power plants. By 2030, the EPA's Clean Power Proposal aims to reduce CO2 emissions from the Power sector 30% below 2005 levels. It is expected to cost between $7.3 billion and $8.8 billion per year to implement, and would generate annual benefits of between $55 billion and $93 billion in climate and health by 2030, the agency estimated.

The agency will take public comment on the draft for 120 days after it is published in the Federal Register. As part of its comment-taking, the EPA will hold four public hearings on the proposed rule during the week of July 28 in Denver, Atlanta, Washington, D.C., and Pittsburgh. Based on this input, the EPA expects to finalize the rule by next June. States and utilities will be required to file compliance plans by June 2016, though one- or two-year extensions may be granted.

The 645-page draft rule applies to about 3,000 electric generating units (EGUs) at approximately 1,000 sites across the country, the EPA said. Power plants account for roughly 33% of all U.S. greenhouse gas emissions, the EPA noted.

The EPA said it plans to use a "best system of emission reduction" (BSER) approach to assess ways to cost-effectively reduce CO2 emissions on a state-by-state basis. The agency said it plans to use four "building blocks" to reduce CO2 emissions:
1) Reducing the carbon intensity of generation at individual affected electric generating units (EGUs) through heat rate improvements at those plants
2) Reducing emissions from the most carbon-intensive affected EGUs by substituting generation at those EGUs with generation from less carbon-intensive affected EGUs (including NGCC units under construction)
3) Reducing emissions from affected EGUs by expanding low- or zero-carbon generation
4) Reducing emissions from affected EGUs by increased deployment of customer-facing efficiency programs

EPA noted that carbon capture and sequestration (CCS) technology was one of the ways to lower carbon intensity of generation in building block 1.

"Climate change, fueled by carbon pollution, supercharges risks to our health, our economy, and our way of life. EPA is delivering on a vital piece of President Obama's Climate Action Plan by proposing a Clean Power Plan that will cut harmful carbon pollution from our largest source--power plants," EPA Administrator Gina McCarthy said in a statement. "By leveraging cleaner energy sources and cutting energy waste, this plan will clean the air we breathe while helping slow climate change so we can leave a safe and healthy future for our kids. We don't have to choose between a healthy economy and a healthy environment--our action will sharpen America's competitive edge, spur innovation, and create jobs."

In an accompanying fact sheet, EPA said climate and weather disasters in 2012 cost the U.S. economy more than $100 billion.

McCarthy and other EPA officials emphasized the flexibility of the new draft rule. Rather than mandating installation of CCS technology, the four building blocks in the draft rule offer states and generation owners a variety of ways to meet the new standards while keeping the lights on.

The National Association of Manufacturers (NAM) had a different perspective. In a statement, NAM President and Chief Executive Jay Timmons said abundant, low-cost domestic energy has been an important driver in the resurgence of U.S. manufacturing. But "today's proposal from the EPA could singlehandedly eliminate this competitive advantage by removing reliable and abundant sources of energy from our nation's energy mix," he said.

"We need a more balanced approach, one that allows our nation's manufacturers to do what they do best: find solutions and innovate," Timmons said. "With the right policies that give us access to affordable and reliable energy, manufacturers in the United States will continue to develop sustainable solutions that power our economy, drive growth and, most importantly, create jobs here at home."

The American Public Power Association (APPA) (Washington, D.C.), the trade group representing about 2,000 locally owned electric utilities, said the Clean Air Act "is ill-suited to regulate CO2 emissions. ... Climate change should be addressed but Congress, not the EPA, should determine the best" way to proceed "while ensuring affordable, reliable electricity from all fuel sources, including coal and natural gas. ... If the EPA moves forward with regulations that call for too much change too fast, we will likely see unnecessary coal-plant retirements without long-term plans for viable, cost-effective alternatives; higher electricity prices; and potential shortage of electricity supply."

"Public power utilities are good environmental stewards. But we need a middle path, one that respects the needs of energy producers and the pocketbooks of energy customers," said Sue Kelly, APPA's president and chief executive. She warned that the U.S. risks going down the path of Germany, whose wholehearted embrace of renewables has doubled residential electric bills since 2000, and another 40% increase is projected to take place by 2020.

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