New Coal Plants Must Capture Carbon Dioxide Output: EPA
New coal-burning plants will be required to limit the carbon dioxide they release under the U.S. Environmental Protection Agency’s first regulations aimed at curbing climate change by power generators.
The EPA issued the draft rules today, meeting a deadline President Barack Obama set out in an address on climate change in June. The rules 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.
“These carbon pollution standards are flexible and achievable,” EPA Administrator Gina McCarthy said today in remarks at the National Press Club in Washington. “They pave a path forward for the next generation of power plants.”
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. While restrictions on emissions of sulfur dioxide and other pollutants have been in place for years, these will be the first for gases most 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, government affairs director at the Natural Resources Defense Council, a New York-based environmental group, said before the rule was released. “It’s important as a precursor” for existing-plant rules, he said.
The administration agreed in June to revise last year’s draft 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.
Limits for new coal-fired plants would be 1,100 pounds of carbon dioxide for each megawatt hour of power they produce, a standard that can’t be met without carbon-capture technology, McCarthy said. Most gas plants would need to meet a 1,000 pound standard, which won’t require exceptional technology.
McCarthy said the law gives the agency a year to finalize the rule and she vowed to consider all the comments the agency will receive on the proposal.
On Capitol Hill, House Energy and Commerce Committee Chairman Fred Upton, a Michigan Republican, said his panel will hold a hearing soon to examine a proposal he says will devastate manufacturing and cost jobs.
“The consequences will be more job losses and a weaker economy,” Upton said in an e-mail. “These stringent standards will actually discourage investment and the development of innovative new technologies.”
Lawmakers from coal-producing states also denounced the new proposal.
“Never before has the federal government forced an industry to do something that is technologically impossible,” said Senator Joe Manchin, a West Virginia Democrat. “Forcing coal to meet the same emissions standards as gas when experts know that the required technology is not operational on a commercial scale makes absolutely no sense and will have devastating impacts to the coal industry and our economy.”
Senate Minority Leader Mitch McConnell, a Kentucky Republican, said in an e-mail, “The president is leading a war on coal and what that really means for Kentucky families is a war on jobs.”
Jay Timmons, CEO of the National Association of Manufacturers, said it will call on Congress to restrict the EPA’s ability to proceed on this and other efforts to limit greenhouse gases under the Clean Air Act.
“In this latest overreach, the EPA is regulating greenhouse gases under a statute never designed for this purpose,” Timmons said in a statement.
The rules were embraced by environmental groups and other lawmakers who have been seeking new methods to curb carbon emissions, even though have lacked consensus in Congress to achieve their goals.
“Whether it’s the increase in severe weather events like Superstorm Sandy or the unacceptably high levels of asthma among out kids, we have plenty of stark reminders that the dirty air poses serious and costly threats to our planet and public health,” said Senator Tom Carper, a Delaware Democrat. He praised Obama for his “willingness to take specific and effective steps to address climate change and protect public health by curbing greenhouse gases.”
Senate Commerce, Science and Transportation Committee Chairman Jay Rockefeller, a West Virginia Democrat, said Obama’s proposal only works if other steps are taken that help manufacturers reach the standards. That includes a bigger investment in clean-coal technology and creation of public-private partnerships, he said.
“These rules will only work if we act now to strengthen our investment in clean coal technology and to advance public-private partnerships more seriously than ever,” Rockefeller said in a statement. “This rule is undeniably a daunting challenge, but it’s also a call to action. West Virginia and America have overcome far greater technological obstacles than this one, and I refuse to believe we can’t do it again.”
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.
The fall in gas prices and regulatory efforts by the EPA have depressed investor enthusiasm for coal companies.
The stock of Peabody Energy Corp. (BTU), the biggest U.S. producer, fell from more than $70 a share in April 2011 to less than $19 a share today. Arch Coal Inc. (ACI)’s stock fell from $35 a share in April 2011 to less than $5 a share today. Meanwhile, utilities are shuttering old coal plants, and switching to gas for baseload power production.
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. carbon emissions.
The rules issued today 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. The plant, which received $270 million in subsidies 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, said in an e-mail before the EPA announcement.
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