Catching carbon is a pillar of historic EPA power plant rules

Source: By Jean Chemnick, E&E News • Posted: Monday, April 24, 2023

Emissions from a coal-fired power plant are silhouetted against the setting sun in Kansas City, Mo.

Emissions from a coal-fired power plant are silhouetted Feb. 1, 2021, against the setting sun in Kansas City, Mo. Charlie Riedel/AP Photo

The Biden administration’s upcoming attack on one of the nation’s largest contributors to climate change is expected to rest on a novel technology for capturing power plants’ greenhouse gas pollution, according to two people familiar with the deliberations.

That would be an aggressive — even transformational — approach from EPA, ushering in the most stringent regulations on fossil fuel plants in the nation’s history. And it would come just 10 months after the Supreme Court restricted the agency’s options to reduce power plants’ carbon output, heightening the risks that judges could block this proposal from ever taking effect.

But environmental groups have been pressing President Joe Biden to go bold in meeting his campaign promises to take on climate change, even if it means testing the limits of what the court will tolerate. And the administration appears to have toughened its proposal in recent months, according to the two people, who were granted anonymity to speak freely about the still-unreleased proposal.

They say the proposal would require power companies to capture most of their carbon emissions rather than letting it enter the atmosphere. No commercial power plants in the United States use carbon-capturing technology now, but the agency views it as ready to be used widely, the two people familiar with the discussions said.

EPA is poised to release the two power plant rules near the end of the week, the people said. One rule would target existing coal- and natural-gas-fired plants, and the other would address new gas plants.

One of the people, who was briefed by EPA recently, said the rules could be postponed until May.

The White House Office of Management and Budget, which is reviewing the rule, declined to comment on the proposal. EPA did not immediately respond to requests for comment.

“We have to commit ourselves to action,” Biden said last week when announcing a new executive order on climate change. “Will we step up to our ambitions? Will we stand together to meet the great challenges we have? Will we preserve our planet for future generations? History is going to judge us by how we answer these questions.”

The newest proposal comes as EPA continues along an ambitious regulatory agenda to sharply ramp down the use of oil, natural gas and coal in vehicles and the power sector to cut U.S. greenhouse gas emissions in half by 2030. The agency proposed nation’s strongest-ever limits on cars and trucks’ greenhouse gas pollution earlier this month, with the goal of spurring a huge surge in sales of electric vehicles.

“We’ve been encouraged by what we’ve heard from EPA” about the power plant proposal, “and what we’ve seen from them in other rules,” said Lissa Lynch, director of the federal legal group for the Natural Resources Defense Council.

The power plant rules stand to be more stringent than EPA’s past two attempts to regulate the sector’s carbon emissions — made under the Obama and Trump administrations.

And they appear to be stronger than what EPA signaled earlier this year.

In March, days before the rule was submitted to the OMB, EPA Administrator Michael Regan hinted that his agency was eyeing a standard that would require new power plants to be built with the ability to use carbon capture at a later date. But people following the proposals say the administration is now preparing to release draft rules that would require new gas plants to employ carbon capture more quickly.

Not every coal- and gas-fired power plant will have to meet the rules’ most stringent standards. The largest facilities would be required to make the deepest, earliest cuts to their carbon emissions, according to one person briefed by EPA. Coal plants that are scheduled to retire and gas units that run at times of peak demand will face laxer standards. New gas plants will be given a schedule by which they must begin using carbon capture systems or meet an alternative standard based on hydrogen.

Obama’s 2015 power plant rule would have pushed utilities to switch from coal to cleaner sources of power, but federal courts blocked it before it could take effect, and the Supreme Court rejected it last year. The justices said in June that EPA lacked the legal authority to command such a sweeping change in how the United States generates electricity.

Greens say the 2022 decision, historic as it was, leaves ample space for EPA to regulate power plant carbon aggressively.

“They need to identify the technologies that are adequately demonstrated and cost-reasonable at the facility level, and that can make a transformation,” said one person who is familiar with the proposal.

Environmentalists say carbon capture has been adequately demonstrated even though it hasn’t been widely deployed. And they point to expanded incentives under last year’s climate spending law, known as the Inflation Reduction Act, to argue that it’s affordable. That law provides companies $85 for every ton of captured carbon dioxide through a tax credit known as 45Q, up from $50 a ton.

Green groups including Evergreen Action and NRDC have filled EPA’s docket with comments arguing that even established coal and gas plants can now retrofit with carbon capture to reduce the bulk of their emissions. New gas plants, which escaped meaningful standards under the Obama administration, should be expected to capture as much as 90 percent of their CO2, Evergreen and NRDC wrote in separate comments.

Such a rule would help deliver Biden’s pledge of an 80 percent zero-carbon power grid by 2030.

But there are risks with taking such an aggressive approach. If the agency spends years trying to finalize its power plant rules, only to see them thrown out in court, it could threaten Biden’s broader climate goals, which rely on a clean grid to support expanded use of electricity in transportation. EPA has estimated that its car and truck pollution rule could lead to EVs making up two-thirds of new sales by 2032.

“I recognize that it is absolutely a difficult needle to thread,” said Lynch, of NRDC. “And we’ve got the Supreme Court sort of looming waiting to take this up again. And so we understand the difficulty that they’re facing.”

Jeff Holmstead, who led EPA’s air office during the George W. Bush administration, said the agency’s stringent car and truck standards released earlier this month convinced him that EPA would use carbon capture as the basis for its power sector standards.

“I think the EV rule suggests that they’re likely to be pretty aggressive here,” said Holmstead, who now represents industry clients as a partner with the firm Bracewell LLP. “So I think [carbon capture and storage] is in the mix. But exactly how they do that and how they justify it, I don’t know.”

But even if EPA taps carbon capture as the basis of its rules — and if it holds up in court — that may not mean a rapid expansion for the technology.

Under the Clean Air Act, EPA sets emissions limits consistent with the “best available control technology” and then leaves it to utilities and states to decide how to meet it. The rules that EPA proposes this week could help carbon capture go mainstream. Or it could rapidly increase the percentage of electricity coming from wind, solar or other renewable sources or foster widespread use of some other technology, like hydrogen.