EPA's McCarthy on Energy Sector Collaboration, Reliability, and 316(b)

Environmental Protection Agency (EPA) Administrator Gina McCarthy underscored the agency’s collaboration with the energy sector as it develops environmental rules in her keynote address at IHS CERAweek in Houston on Thursday. While her focus was centered on the proposed New Source Performance Standards (NSPS) for greenhouse gas (GHG) emissions, POWERnews asked about the status of some other rules.

“Energy issues and environmental issues are two sides of the same coin,” she said at the beginning of her speech. “We don’t have to choose between a healthy environment and a healthy economy. And when we look at our challenges holistically, we can shape them into opportunities. That win-win mentality is the lens we’re using to take on climate change,” she said.

President Obama’s commitment through his Climate Action Plan makes it clear that the EPA should finalize “common sense” carbon pollution standards for power plants, McCarthy noted. “We’ve engaged in unprecedented outreach to states, health groups, industry, and more to make sure these rules are flexible, pragmatic, and achievable.”

Reliability Is Sound?

Coal and natural gas will continue to play a “critical role” in a diverse U.S. energy mix, the EPA’s head acknowledged. “This rule will not change that. It will recognize that,” she said, but tempered that statement by noting that new power plants powered by conventional fuels must generate “cleaner” electricity. States and cities are already leading this charge, she said.

And the EPA won’t threaten energy reliability, she countered. The agency has made this a priority, conducting extensive outreach with other federal agencies as well as with the power sector, she added.

Yet, Cheryl LaFleur, the acting chairwoman of the Federal Energy Regulatory Commission (FERC)—the agency that oversees the nation’s bulk electric reliability—in a dialogue following McCarthy’s speech at CERAweek on Thursday didn’t reinforce that point. How the carbon rules will play out for power generators remains uncertain, she said, because a patchwork of approaches is likely, given that the rules allow states to establish their own targets and programs.

“I think [the GHG rules] could have a very significant impact on the power markets—the way they choose resources as well as on the infrastructure needs … to meet the targets,” LaFleur said in a separate CERAweek session on electric policy. “We had a model for this when we were working on the Mercury and Air Toxics Standards a couple of years ago, but that was a much simpler regulatory scheme. That’s not how I understand that the carbon [rule] is going to work. Rather, states will be asked to come up with carbon rules for a broader area. As states try to attain their goals, that will mean the regions will need to be looked at overall, because we dispatch power in the U.S. as regions, not just within specific states,” she explained.

But for McCarthy, perhaps the EPA’s biggest challenge when developing carbon rules has been to build consensus. “No matter what we do, there are going to be naysayers that claim we go too far,” she said. “They’ll say the sky is falling and that climate rules will put the brakes on business. We’ve heard this tired argument again and again before. And every single time, it’s fallen flat on its face. It won’t be true this time around either.” The real “scary cost” that should concern the public is “the cost of climate inaction,” she added.

On Other Rules

In her keynote speech, McCarthy did not address the agency’s cache of proposed rules affecting U.S. baseload power plants that are awaiting finalization, such as its coal ash regulations that have garnered more attention following the recent Dan River spill, or standards for cooling water intake structures under Section 316(b) of the Clean Water Act.

The EPA missed a legally set deadline at the end of January to issue the 316(b) rule. “The delay is to just work some of the final issues,” McCarthy told POWERnews on Thursday, though she declined to pin down a definitive timeframe for when the agency is expected to issue the final rule. “I’m hoping that it will move forward soon.”

“I know that that is something the utility industry is looking forward to getting certainty on. I appreciate that and we’re working hard on it,” she said. “I think they will find that when this final rule is released that we have listened very closely to their comments.”

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