NRDC Urges EPA to Cut GHGs from Existing Fleet via Flexible Approach

The Natural Resources Defense Council (NRDC) on Monday made public a proposal that calls for the Environmental Protection Agency (EPA) to use its authority under the Clean Air Act (CAA) to set greenhouse gas (GHG) emissions standards for existing power plants. The NRDC approach would have the EPA create “systemwide standards” rather than ones based on individual generating units.

The NRDC announcement says the proposal “enables states and electricity plant owners to use a wide range of existing technologies, including energy efficiency and renewable energy sources, to meet carbon pollution standards in the most cost-effective way. States would also have broad flexibility to design their own plans to meet the standards.”

“We are overturning the conventional wisdom that reducing carbon pollution through the Clean Air Act would be ineffective and expensive,” said Dan Lashof, NRDC’s director of Climate and Clean Air programs, and a principal author of the plan.  “We show that the EPA can work with states and power companies to make large pollution reductions, by setting system-wide standards, rather than smokestack-by-smokestack ones, and by giving power companies and states the freedom to choose the most cost-saving means of compliance.

The NRDC says its analysis shows the plan would, among other results, cut carbon dioxide emissions from existing power plants 26% by 2020 and 34% by 2025 while making large reductions in other pollutants, such as sulfur dioxide and nitrogen oxides.

The NRDC estimates the cost of its plan at about $4 billion in 2020 but says it will “save Americans between $25 billion and $60 billion in lives saved, avoided illnesses, and reduced climate change.”

The NRDC commissioned ICF International to analyze the proposal using the company’s proprietary Integrated Planning Model (IPM). The utility industry and the EPA often use the IPM model to determine cost-effective ways of meeting the nation’s electricity needs and to assess the effects of new standards. The NRDC provided the depiction of the plan and other assumptions required for the analysis. (ICF International contributed to POWER’s 2012 forecasting issue.)

Under the NRDC’s proposal, the EPA would use Section 111(d) of the CAA to set state-specific carbon emission rates that “reflect the diversity of the nation’s electricity sector and fuel mix. Broad compliance flexibility would enable power plant owners and states to reduce emissions through cost-effective means that could be accomplished by:

  • Reducing an individual plant’s carbon emissions by improving combustion efficiency, burning cleaner fuels, or installing carbon capture and storage.
  • Shifting generation from high-emitting to lower- or zero-emitting plants. Lower emitting sources such as gas, wind, and solar would earn credits that other plants could use, to reduce average emissions rates.
  • Expanding energy efficiency. State energy-efficiency programs could earn credits for avoiding power generation and its pollution. Generators could purchase those credits to use toward their emissions targets.

“States would have additional freedom to adopt alternative approaches—such as those already adopted by California, the Northeast states, and Colorado—as long as they are equally effective in cutting emissions.”

The organization’s “issue brief” on the report says that the plan “addresses the challenge of creating equitable regulations for these sources under Section 111(d), recognizing that the type and mix of power plants varies among the states. If all existing power plants were limited to 1000 lbs of CO2/MWh, for instance, states with a high percentage of coal-fired plants would face a much larger task compared to those with lots of natural gas plants or renewables. The flexible approach NRDC proposes will help reduce the carbon pollution from existing power plants in a fair, affordable, and achievable manner.”

The emissions standard for each state would be, under the NRDC approach, “an overall emission rate average of all fossil fuel plants in the state. An individual plant could emit at a higher or lower rate.” Individual plants could reduce their emissions through a variety of means, and owners of multiple plants could average the emissions rates of their plants and lower that rate in various ways, including fuel switching, retiring coal plants and building cleaner plants, or trading credits between companies within and across state lines. Credit is also given for energy efficiency.

On the inclusion of energy efficiency, the issue brief notes: “Energy efficiency consistently delivers over three dollars in savings for every dollar invested, which is one of the many reasons utilities have scaled up annual investment from $2.7 billion in 2007 to nearly $7 billion in 2011, with a corresponding increase in energy savings.”

The NRDC says the ICF model shows the emissions reductions could be achieved “while modestly reducing the nation’s electricity bill. This is because energy efficiency programs adopted in response to the incentives created by the approach would cause overall demand to decline by 4 percent, rather than increase by 7 percent. Meanwhile, coal-fired generation would drop 21 percent from 2012 to 2020 instead of increasing by 5 percent without the proposed carbon standard. Natural gas generation would rise by 14 percent, while renewables rise by about 30 percent (assuming no new state or federal policies to expedite an increase in market share for renewables).”

In July, the EPA promulgated a final GHG Tailoring Rule. That final rule came just days after a federal appeals court ruled the EPA was “unambiguously correct” in its interpretation of the CAA to regulate carbon dioxide emissions. It was the third step of the agency’s phased-in approach to GHG permitting under the CAA of new facilities with GHG emissions of at least 100,000 tons per year (tpy) of carbon dioxide equivalent (CO2e) and existing facilities with at least 100,000 tpy CO2e making changes that would increase GHG emissions by at least 75,000 tpy CO2e.

The Obama administration has taken important steps toward reducing GHG emissions, the NRDC said, by setting fuel efficiency standards for mobile sources such as cars and trucks, and proposing standards for new power plants, but the biggest pollution source remains the hundreds of existing power plants.

Sources: POWER, POWERnews, NRDC

—Gail Reitenbach, PhD, Managing Editor (@POWERmagazine)

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