Bloomberg BNA — The Environmental Protection Agency's proposed carbon dioxide emissions limits for new fossil fuel-fired power plants should be reworked to be “grounded in reality,” an industry group said May 12.
The proposed rule, formally issued in January, set separatestandards for coal-fired and natural gas-fired generating units. The proposed performance standard for new coal-fired units would require the use of carbon capture systems, which power companies and utility trade groups say are neither commercially available nor economically viable.
“EPA must not mandate what technology cannot deliver,” RossEisenberg, vice president of energy and resources policy at the National Association of Manufacturers, said on a media call May 12. The association's membership includes companies from energy-intensive industries.
Public comments on the agency's proposed source performance standards for carbon dioxide emissions from new fossil fuel-fired power plants closed May 9.
In comments submitted on the proposal, the National Mining Association, the U.S. Chamber of Commerce, and others urged the EPA to withdraw and re-propose the rule to make it more achievable for coal-fired power plants.
Environmental groups and public health advocates, including the Sierra Club and the American Lung Association, meanwhile led mass comment campaigns that defended the agency's proposal to set a stringent standard for coal-fired power plants based on carbon capture as a necessary step in fighting air pollution and climate change.
The power plant rule is the centerpiece of President Barack Obama's climate change plan.
Under the EPA's proposal, new gas-fired units would be limited to 1,000 pounds of carbon dioxide per megawatt-hour, while new coal-fired power plants would face a limit of 1,100 pounds of carbon dioxide per megawatt-hour.
Those limits effectively mean any new coal plant must employ carbon capture and storage (CCS) technology to capture at least 40 percent of its carbon dioxide emissions and store this captured carbon dioxide underground.
Industry groups have vigorously opposed this requirement for CCS because the technology has not been “adequately demonstrated” as Section 111(a)(1) of the Clean Air Act stipulates.
The agency's proposal cites four power plants under construction in the U.S. and Canada that include carbon capture systems as part of the design: Southern Co.'s Kemper County energy facility, the Texas Clean Energy Project, the Hydrogen Energy California project, and a 100-megawatt power plant being constructed in Saskatchewan.
“While EPA cites several major projects in determining that CCS is ‘adequately demonstrated,' ” the National Mining Association said, “these projects are either under construction and not yet operational, in the planning phase and facing difficulties, or not designed to function primarily as a power plant.”
“The lack of commercially operating facilities with real world performance data belies the demonstrated nature of these projects cited by EPA,” NMA said in its comments.
Environmental groups disagreed, saying carbon dioxide separation and capture technologies have been in use in gas processing and other industrial applications for decades and the technology is transferable.
They also said the EPA's carbon standards for new power plants “must be forward-looking and technology-forcing.”
“The ‘best system of emission reduction' need not be in actual commercial use in the regulated industry at the time the standards are initially set,” the Sierra Club, the Clean Air Task Force and other environmental groups said in combined comments.
Costs of CCS
Energy researchers questioned the economic viability of CCS without support through tax credits or other financial subsidies. Carbon capture systems remain expensive and fraught with legal liabilities that would make investing in new coal-fired capacity expensive and impractical.
“The proposed NSPS rule requires CCS for new coal plants, but it provides no framework (e.g., financial subsidies or limits) to help make these plants with CCS financially viable,” the Electric Power Research Institute, Inc. commented.
The Center for Climate and Energy Solutions (C2ES) agreed that there is currently no economic reason to include CCS on a new coal plant.
While the rule provides a regulatory reason to include it, “federal financial support through tax credits, such as the Expanding Carbon Capture through Enhanced Oil Recovery Act of 2014, and/or grants is also critical to help technology companies and power providers gain experience and reduce the costs of CCS,” the group said in its comments.
Picking Winners, Losers
Industry groups further criticized the EPA's proposal for picking winners and losers in energy markets.
The American Coalition for Clean Coal Electricity, whose members include American Electric Power Co. and Arch Coal Inc., called the proposal “biased against the future use of coal to generate electricity” and “inconsistent” with the president's all-of-the-above strategy.
The proposal's effective ban on new coal-fired power plants “is bad energy policy for our nation because it will result in an overreliance on natural gas for new base load generation—a fuel that has a long history of price volatility and deliverability challenges,” ACCCE said in its comments.
Commenters also saw room for improvement in the EPA's proposed emissions limits for natural gas units.
Pacific Gas and Electric Co. (PG&E), a combined natural gas and electric utility that provides energy to 15 million Californians, recommended that the proposed rule be modified to ensure that the performance standards for natural gas units “reflect a wide range of operating conditions,” such as the integration of intermittent renewable energy.
‘Precedent' for Other Sectors
Section 111 of the Clean Air Act gives the EPA one year to finalize the performance standards.
Doing so will trigger a requirement under Section 111(d) of the Clean Air Act for the EPA to issue similar emissions guidelines for existing units, which are scheduled to be released by June 1.
Power plants are the largest source of greenhouse gas emissions in the U.S. The EPA also plans to tackle emissions from other sectors, including refineries and cement manufacturing.
If the agency's proposed carbon limits for new power plants succeed at “mandating technology that's not commercially available, we have concern that will set a precedent” for other sectors, Dan Byers, senior director for policy at the U.S. Chamber of Commerce's Institute for 21st Century Energy, said onthe media call.
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