EPA Proposes New Carbon Standards for Power Plants

Today the Environmental Protection Agency is proposing carbon dioxide emission standards for new power plants that will, in effect, bar the construction of new coal-fired power plants without costly carbon capture technology.  The proposed standards would require both natural gas and coal-fired power plants to meet stringent new limits — limits that most new natural gas plants can meet, but that are not (yet) met by any coal-fired plant in regular operation.  At present, the average U.S. coal plant emits over 1,700 pounds CO2 per megawatt-hour (Co2/MWh).   The average natural gas plant emits around 850 lbs CO2/MWh.  Although the new rule sets slightly different thresholds for coal and gas plants (and distinguishes between smaller and larger gas plants), if finalized, all power plants would have to meet an emission standard of 1,100-1,000 lbs. CO2/MWh. Here’s a graphic illustrating the standards.

As the Washington Post reports, the standard (if finalized) is sure to be challenged in court.  The relevant statutory provision provides that the EPA should set a

standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.

The problem is that the only coal-fired power plant capable of meeting the new standard is a federally funded demonstration project set to open next year at which carbon capture and sequestration may be easier (and less expensive) than at other plants.  In the alternative, the only way to meet the standard would be to use natural gas instead of coal.

If the rule is finalized in its present form, coal interests will sue.  At issue will be whether such a plant can be used as the benchmark for the “best system of emission reduction . . . taking into account the cost . . . [that] has been adequately demonstrated.”  In the past, it seemed the EPA was wary of making this case in federal court.  For this reason, it was reported, the agency reconsidered a proposed rule that would have set identical emission standards for new coal and gas plants.  The new proposal makes some distinctions between coal and gas plants, but effectively forces them to meet similar standards.  It’s not clear this will be enough to blunt a legal challenge.

UPDATE: RFF’s Nathan Richardson observes this proposal is quite similar to the one EPA put forward last year.  He also notes that by classifying coal and natural gas plants together, the proposed rule could lay the groundwork for carbon dioxide emission trading.

Meanwhile, Ronald Bailey finds this gem in the EPA’s Regulatory Impact Analysis: ” . . . the proposed rule is anticipated to yield no monetized benefits and impose negligible costs over the analysis period.”