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Obama Set to Issue First Carbon Limits on Power Plants

Photographer: Luke Sharrett/Bloomberg

Coal emits about twice the carbon dioxide as natural gas when burned to make power. Close

Coal emits about twice the carbon dioxide as natural gas when burned to make power.

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Photographer: Luke Sharrett/Bloomberg

Coal emits about twice the carbon dioxide as natural gas when burned to make power.

The U.S. Environmental Protection Agency is scheduled to unveil today its first limits on greenhouse-gas emissions from new power plants, a signature element of President Barack Obama’s plan to curb climate change.

The rules will effectively require coal-fired plants to capture and store a portion of the carbon dioxide they produce, something the industry says is so costly it would preclude the construction of new plants, according to people who have seen drafts of the proposal and spoke on the condition they not be identified before the announcement.

In an address on climate change in June, Obama gave the EPA until today to release the rules for new plants. Regulations governing emissions from existing plants will be proposed in June 2014, the agency has said. While restrictions on emissions of sulfur dioxide and other pollutants have been in place for years, these will be the first for gases blamed for global warming.

“The most important thing about the new plant rule is that it’s crossing the Rubicon to say that we are going to put limits on carbon pollution,” David Goldston, director of government affairs at the Natural Resources Defense Council, said before the rule was released. “It’s important as a precursor” for existing-plant rules, he said.

EPA administrator Gina McCarthy is scheduled to address climate change during a speech this morning at the National Press Club in Washington. Even before the rules were announced, McCarthy had to defend the plan to skeptical lawmakers.

‘Path Forward’

“We need to provide certainty for how you will construct power plants in the future, which will allow investments in that sector,” McCarthy told a Republican-led panel of the House Energy and Commerce committee Sept. 18. By establishing these rules, it will help coal by providing “a path forward in a future that will be carbon constrained,” she said.

The EPA’s move sets the stage for the more far-reaching set of final rules governing emissions from existing power plants, due by June 2014. With low-cost natural gas displacing coal in many power facilities, rules on existing plants will take on heightened importance.

The administration agreed in June to revise last year’s draft of rules on greenhouse-gas emissions from power plants after legal experts questioned its methodology in setting one standard for coal and another for natural-gas plants. Coal emits about twice the carbon dioxide as natural gas when burned to make power.

Megawatt Hour

The EPA’s new proposal would set the limit at 1,100 tons of pounds of carbon-dioxide per megawatt hour for coal plants and 1,000 pounds for most natural gas plants, according to a person who saw the draft that was sent to the White House for review.

To meet the new limit, coal plants would have to capture and store 20 to 40 percent of the carbon they produce, the Washington Post reported, citing an interview with McCarthy. The average U.S. coal plant emits 1,768 pounds per megawatt-hour, the newspaper said. Natural gas plants would not be required to capture their emissions.

A coal plant without carbon capture emits at least 1,600 pounds, and power producers had urged the EPA to set the standard at 1,800 pounds or higher.

Once issued, the proposed rules will be open for public comment before becoming final.

Carbon-dioxide emissions since the Industrial Revolution have led to a warming of the Earth’s temperature in the past 50 years, worsening forest fires, drought and coastal flooding, according to the U.S. Global Change Research Program.

40 Percent

To deal with the threat of global warming, Obama directed the EPA to cap carbon pollution from power plants, which account for 40 percent of U.S. emissions.

The would rules set a limit on carbon-dioxide emissions from coal plants that can only be met with technology to capture that gas, and then inject it underground for storage. That technology, called CCS, isn’t yet being used on a commercial scale as the first large-scale plant is under construction by Southern Co. (SO) in Mississippi. That plant, which received $270 million in aid from the federal government, is facing local opposition and $1 billion in cost overruns.

“Simply because EPA may set a carbon standard that requires CCS technology is insufficient to overcome the technical, legal, regulatory and financial hurdles facing CCS technology,” Scott Segal, a lobbyist at Bracewell & Giuliani LLP, which represents electric utilities such as Southern and coal producers such as Arch Coal Inc. (ACI), said in an e-mail before the EPA announcement.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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