By Jean Chemnick
May 9, 2023 - The Biden administration will plunge into transforming the U.S. power sector on Thursday by requiring utilities to capture much of their carbon emissions — or not produce as many to begin with.
The release of EPA’s proposed rules for power plants will answer a slate of questions about how the agency plans to achieve maximum carbon reductions from natural gas- and coal-fired generation.
It’s something EPA has tried — and failed — to do twice before. Both times, the courts threw the rules out — once for trying to replace fossil fuels with renewable energy, and once for not doing enough to confront climate change.
This time, the agency will push utilities to capture a share of their carbon emissions before it escapes into the sky.
Here are four things to look for.
Will the rules cause coal-fired plants to shut down?
Maybe. But only incidentally. There’s a general consensus among legal experts that the Clean Air Act doesn’t allow EPA to set a date certain by which U.S. coal generation will cease to exist.
In fact, the Supreme Court made it plain in its decision last year in West Virginia v. EPA that the agency can only require power plants to use emissions controls that they can employ themselves.
In other words, a coal plant must be able to comply with the rules while remaining a coal plant. EPA can’t regulate by cutting coal’s market share in favor of cleaner fuels — like gas, nuclear or renewables.
People who have spoken to EPA about its upcoming proposals say the agency is preparing to make the case that the coal fleet can be retrofitted to capture emissions.
Two unanswered questions center on time and flexibility. EPA is expected to let coal plants stay online for a few extra years without retrofitting for carbon capture if they commit to a retirement date. Dates by which those plants would need to exit the grid range from 2030 to 2040, according to people who were briefed by EPA officials and granted anonymity to speak freely. Plants that retire later in that period may have to meet some form of carbon standard.
Rich Nolan, president and CEO of the National Mining Association, said a proposal that treats plants differently based on their retirement dates would exceed EPA’s statutory authority.
“The Clean Air Act [calls for] a performance standard,” he said. “And shutting down coal plants is not a performance standard.”
Another question is whether EPA might let utilities comply by capturing a percentage of their overall emissions — a move that could allow some plants to operate without capturing carbon. The ability of utilities to comply by averaging reductions between units or purchasing carbon credits will depend on built-in flexibilities and the stringency of EPA’s standards.
Will gas plants have to capture carbon, too?
Yes — if they’re big and run most of the time.
The question is what EPA will propose for gas plants that run part-time and ramp up and down to provide the grid with power at times of peak demand.
Utilities have argued that these so-called peaker plants play a vital role in maintaining grid reliability and facilitating the transition to renewables. EPA has signaled that it will treat those units “differently” to keep more of them online — though it’s unclear what, exactly, the agency has in mind. Some environmental justice advocates have expressed dismay that EPA may let dirty plants comply with its rules more easily.
But some clean energy experts say peaker units remain useful.
“I think we need to be realistic about the current state of play of where technologies are to provide the kind of stability of the grid that people need,” said Nathaniel Keohane, president of the Center for Climate and Energy Solutions.
He said legislation would be required to speed the build-out of transmission and allow more renewables to come online — eventually rendering peaker units obsolete. So far, Congress hasn’t tackled that problem.
Can utilities skip using carbon capture?
Yes. Power companies and state regulators can meet the rules’ standards any way they like.
It falls to states to decide how to implement the standards for existing power plants. And the Supreme Court’s prohibition against federally mandated fuel switching doesn’t necessarily apply to the states, environmentalists say.
“There’s a much wider array of options available to states, and one of those is clean energy resources,” said Julie McNamara, a deputy policy director at the Union of Concerned Scientists.
States may be able to use existing cap-and-trade programs to meet the rules’ requirements. Utilities could then comply with the rule by purchasing credits from another plant that exceeded its required carbon reductions. Cap-and-trade programs already exist in California and the Northeastern states.
EPA is also expected to propose alternative compliance pathways for gas plants that choose to burn hydrogen.
Doesn’t EPA already require new coal plants to use carbon capture?
Yes. A 2015 standard requires new coal plants to capture approximately 40 percent of their carbon.
And that raises the question: Can EPA propose stronger standards for other kinds of power plants this time around?
Environmental groups have urged EPA to require new gas plants and existing coal and gas plants to capture and store most of their emissions. Evergreen Action argued recently that a 90 percent capture rate was feasible for existing plants and new gas — though it stopped short of suggesting that as the standard.
Environmental attorneys say there isn’t a statutory requirement that prevents EPA from setting stricter rules for existing plants than for new ones.
“EPA is required to consider costs, and the costs of retrofitting a plant can be more expensive than for building the pollution control into the new plant — so sometimes the dynamic is such that limits for new plants are tighter than for existing,” said Jay Duffy, litigation director for Clean Air Task Force. “But it is not a requirement.”
David Doniger, senior strategic director for climate at the Natural Resources Defense Council, said it would be “odd” for EPA to rely on its 2015 analysis for carbon capture at new coal units when crafting an existing source standard eight years later.
“A lot has changed in those years,” he said, pointing to expanded tax incentives for carbon capture, including those in the Inflation Reduction Act.