EPA Proposes Revised Carbon Standards for New Power Plants (UPDATED)

The Environmental Protection Agency (EPA) on Friday issued a revised proposal to curb carbon emissions from new power plants that sets separate standards for new gas-fired and coal-fired power plants. The agency also revealed it is developing new carbon standards for existing power plants.

Separate Standards for Coal and Gas and Forthcoming Existing Plant Standards

The proposal lays out separate standards (in pounds of CO2 per megawatt-hour (lb CO2/MWh gross) for certain natural gas-fired stationary combustion turbines and for fossil fuel-fired utility boilers and integrated gasification combined cycle (IGCC) units.

Two limits are proposed for fossil fuel-fired utility boilers and IGCC units, depending on the compliance period that best suits the unit. Both limits require capture of only a portion of the CO2 from the new unit: 1,100 lb CO2/MWh gross over a 12-operating month period, or 1,000-1,050 lb CO2/MWh gross over an 84-operating month (7-year) period. This gives generators of fossil fuel-fired plants the option to meet “a somewhat tighter limit if they choose to average emissions over multiple years, giving those units additional operational flexibility,” the EPA said.

Two standards, depending on size, are also proposed for natural gas-fired stationary combustion units. The limits proposed are based on the performance of modern natural gas combined cycle (NGCC) units. They would require 1,000 lb CO2/MWh gross for larger units (of more than 850 mmBtu/hr) and 1,100 lb CO2/MWh gross for smaller units (of 850 mmBtu/hr or less).

The rule does not apply to units undergoing modifications or to reconstructed units, nor does it apply to liquid oil-fired stationary combustion turbine generating units or new plants that do not burn fossil fuels (that is, biomass only units). Additionally, low-capacity factor electric generating units that sell less than a third of their power to the grid are exempt from the standards.

Meanwhile, power plants that were fully permitted but had not yet begun construction before April 2012 (when the EPA first proposed new source carbon rules) will no longer be treated as “potential transitional sources.” The agency said, however, that it was aware of only one project under development nationwide that was not designed to meet the proposed standard and asked for comment on whether the proposed standard or an alternate standard should be applied to the project.

Significantly, the agency revealed it is developing standards for existing power plants, but those will be set through a “federal-state” partnership that includes federal guidelines and state plans to set and implement performance standards. Standards for existing plants are expected to be “different from, and less stringent than, the standards proposed today for future sources,” the EPA said. “Over the coming months, EPA will be engaging with states and a diverse set of partners, including the power sector, environmental groups, and the public, to identify innovative, pragmatic approaches that build on the leadership that many states have already shown to cut carbon pollution from the power sector.”

The First Uniform Carbon Pollution Standards for Generators

The New Source Pollution Standards (NSPS) proposed Sept. 20 are the “first uniform national limits” on the amount of carbon pollution that future power plants will be allowed to emit. The long-anticipated measure is the “first milestone” outlined in President Obama’s June 25 Climate Action Plan, the agency said.

The standards will ensure power plants are built with available clean technology to limit carbon pollution in line with “investments in clean energy technologies that are already being made in the power industry,” the agency said. “Additionally, these standards provide flexibility by allowing sources to phase in the use of some of these technologies, and they ensure that the power plants of the future use cleaner energy technologies—such as efficient natural gas, advanced coal technology, nuclear power, and renewable energy like wind and solar.”

Technology and Costs Required

The EPA distinctly states it intends the new rule “to send a clear signal about the current and future status of CCS technology,“ identifying partial implementation—30% to 50%—of carbon capture and storage (CCS) technology as the best system of emission reductions (BSER) for coal-fired power plants. But only a few carbon capture and sequestration research and pilot projects are under way around the world, and most have been on-again/off-again ventures, mostly because of uncertain regulatory, legal, and financing environments. The agency said its own projections, along with those from industry and the Department of Energy “indicate that new power plants that are built over the next decade or more would be expected to meet these standards, even in the absence of the rule.”

Janet McCabe, acting EPA assistant administrator, told reporters on a call today that current and planned implementation of CCS projects—combined with widespread availability and capacity of geological storage sites—make it clear that the “technology is feasible,” though she did not comment on when the agency expects the technology will be commercially available. McCabe pointed to Basin Electric Power Cooperative’s Synfuels plant, which has been capturing 50% of the plant’s produced CO2 and selling it for enhanced oil recovery in Canadian fields for more than a decade. Of power plants under construction in the U.S., Southern Co.’s 582-MW Kemper County IGCC, which is more than 75% complete, is CCS-ready, she said. At least two other IGCC plants that are CCS ready are in the advanced stages of development, she said: Summit Power’s 400-MW plant in Texas and SCS’s 400-MW Petcoke project in California.

At the same time, several states have adopted measures to address carbon emissions from the power sector, including flexible market-based programs like California’s Assembly Bill 32 and the Regional Greenhouse Gas Initiative (RGGI) in the Northeast, and specific greenhouse gas (GHG) performance standards for new power plants in California, Oregon, New York, and Washington.

The power sector has long-contended that basing the NSPS standard for new coal plants on CCS implementation is “unrealistic.” In a statement on Sept. 20, the American Public Power Association (APPA) said projects cited by the EPA have not yet proven the technology is commercially viable and are located near oil fields, “only areas where CCS has been demonstrated to work. Locations such as these that are suitable for injection of CO2 are very limited within the U.S.,” said the organization, whose members include more than 2,000 not-for-profit electric utilities.

Financing CCS, an unproven technology, will also prove risky. “For a project to become commercially viable, it must be financed on its own and given the high risk of financing such unproven technology, it is extremely unclear where the funding would come from,” the APPA said.

According to the EPA, however, the newly proposed standards “are not expected to have notable costs and are not projected to impact electricity prices or reliability.”

In the agency’s 138-page “Regulatory Impact Analysis for the Proposed Standards of Performance for Greenhouse Gas Emissions for New Stationary Sources: Electric Utility Generating Units,” the EPA cites energy market data and projections to support the conclusion that, even in the absence of this rule, existing and anticipated economic conditions will lead electricity generators to choose new generation technologies that meet the proposed standard without the need for additional controls. Base modeling performed by the agency suggests that even in the absence of the new rule, new fossil-fuel fired capacity constructed through 2022 will likely be natural gas combined cycle capacity or coal capacity with partial CCS at costs that are “similar to the costs power companies are paying for other, lower CO2-emitting, non-natural gas, baseload generation technologies. ”

The agency further anticipates that the proposed new standards will result in “negligible COemission changes, energy impacts, quantified benefits, costs, and economic impacts by 2022.”

Setting Rules for Geological Sequestration

Significantly, the EPA’s Sept. 20 proposal also seeks to verify that captured CO2 is geologically sequestered by building on the agency’s GHG Reporting Program rules that are already in place.

According to the APPA, however, the proposed rule leaves unanswered several critical questions concerning regulatory treatment and liability for CO2 once it has been captured by a plant.

“Is CO2 an acid gas subject to Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) litigation?” asks the organization. “Who owns and pays for the CO2 monitoring requirements 100 years after a power plant closes under the Underground Injection Control (UIC) program?”

The EPA plans to tackle those and other issues once it receives comments on the Sept. 20 proposal, which will be accepted for 60 days after publication in the Federal Register. The revised proposal follows an evaluation of more than 2.5 million public comments, including those from the power sector, submitted in response to the agency’s April 2012 proposed rule, the EPA said.

The EPA rescinded the April 2012 proposal in a separate action. Commenters who submitted public comments concerning any aspect of the previous proposal will need to submit them again.

Sources: POWER, EPA

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)