How the power plant rule might change as its deadline nears

Source: By Jean Chemnick, E&E News • Posted: Sunday, April 14, 2024

Details in the climate rule are shifting as EPA prepares its release.

Wind turbines and a power plant along a wooded ridge in West Virginia.

Wind turbines are visible behind the Mount Storm power station in West Virginia. Chip Somodevilla/AFP via Getty Images

EPA’s marquee climate rule for power plants is entering the home stretch.

Two people who have spoken to administration officials about the rule say potential changes are on the table to make the rule’s toughest emissions standards apply to more gas-fired facilities. They also say the administration is mulling changes to the deadlines in last May’s draft. The most likely change involves giving utilities more time to retrofit plants with carbon capture equipment. A final rule is expected this month.

Environmentalists filed comments with EPA last year asking for changes that would make more gas plants subject to the rule’s strictest standards for reducing greenhouse gases. They also asked for earlier retirement deadlines for plants that would not be retrofitted. And utilities pleaded for more time to build out carbon capture and storage systems.

Ann Weeks, senior counsel and legal director at the Clean Air Task Force, which last year joined the Natural Resources Defense Fund in calling on EPA to require deep cuts from a broader swath of gas plants, said EPA’s decision in February to jettison existing gas from this rule made that request more urgent.

“We were obviously concerned that by removing existing gas from this rule that it opens up the opportunity to rely more on existing gas, and the emissions from gas plants could increase,” said Weeks, who said she had not talked with administration officials about the upcoming rule. “So if the idea is to rush to build new ones to fill that gap, it’s really important that those new ones be as tightly controlled as they can be.”

The upcoming rule covers future and reconstructed gas plants, along with existing coal-fired units. A 2015 rule for new coal-fired power remains in place, and EPA has begun taking public input ahead of issuing a rule for existing gas plants early in a potential second term for President Joe Biden.

Since EPA submitted the final draft to the White House budget office for review March 1, administration officials have met with a steady stream of environmentalists, congressional aides and industry advocates.

Those meetings are one-way conversations in which stakeholders ask for policy priorities and officials listen, participants say. One joked that it was like to talking to the stone heads on Easter Island — they listen impassively without offering any feedback. The Office of Management and Budget’s website shows that the last such meeting for this rule will be held April 26 with representatives from Duke Energy. That could indicate that the rule might come out soon afterward.

EPA declined to comment for this story, citing the ongoing OMB review.

But people from industry and environmental groups who have spoken to administration officials say discussion is focused on two possible changes that could show up in the final rule. They note that the process is fluid and could change between now and when the rule is released.

More gas plants included

The first potential change has to do with how the rule covers future gas plants. Last year’s draft required gas plants that break ground after the proposal to capture 90 percent of their carbon emissions by 2035. They were offered a secondary compliance pathway based on green hydrogen, but that is widely expected to be scrapped in the final rule after drawing fire from greens and industry alike.

That aggressive standard, which is based on capturing carbon with mechanical systems, applies only to plants that run frequently. How frequently varies by the plant’s technology, but it tracks roughly with 50 percent of the time.

But environmentalists filed comments last summer predicting that utilities would just run gas plants less to avoid making costly upgrades. Environmentalists asked EPA to lower the cutoff for requiring CCS installation to include plants that run roughly 40 percent of the time.

Amanda Levin, director of policy analysis at the Natural Resources Defense Council, said EPA’s own modeling showed that such a tweak would save about 11.7 million short tons of carbon a year. That’s because the rule, as proposed last year, would cause about 33 gigawatts of gas power to run just under the 50 percent threshold to escape the top-tier emissions standard.

But if EPA lowered the threshold to 40 percent, those utilities would need to decide whether to install carbon capture equipment and recoup the costs by running at higher capacities or run those units less.

“It’s probably 35 to 45 natural gas units or plants that are running right below 50 percent,” said Levin, referring to EPA’s analysis of the draft rule. “And essentially, they either have to run right below 40 or install CCS.”

Leah Stokes, a climate activist and professor at the University of California, Santa Barbara, said the change might cause utilities to scale back new investments in gas. Some projects might be cost-effective, she said, if they run half of the time, but not if they run less than 40 percent of the time.

“In general, when you make the capacity factor smaller to not have to comply, it just gets harder and harder for the finances to pencil out,” she said.

More time to retrofit

The other change that could be in the works has to do with when existing coal plants might be required to retrofit with carbon capture systems. The draft rule required plants that were slated to run beyond 2040 to capture 90 percent of their emissions by 2030. But two people who have spoken with administration officials said they were considering extending it from 2030 to 2032.

The Edison Electric Institute and other industry groups filed comments last year saying the 2030 timeline would be difficult to achieve in part due to the slow pace of permitting for infrastructure, including pipelines and injection wells.

EEI declined to comment for this story.

Environmentalists said the change would have limited effect on the rule’s environmental benefits because very few utilities are expected to keep coal plants online beyond 2040 and retrofit them. Units that shut down after 2032 but before 2040 would still need to meet emissions standards based on co-firing with natural gas.

Levin of NRDC pointed to modeling that showed a spate of coal plant retirements through 2032 because of the rule.

“This does not affect any of their decisionmaking,” she said, referring to administration officials.

A number of environmental groups including NRDC have pushed for a final rule that gives utilities a deadline of 2038 instead of 2040 to retire units that aren’t retrofitted with carbon capture equipment. It’s unclear whether that is still under discussion.