New power plant rule legally sturdier but still requires CCS — source
A source briefed on a draft of the new power plant proposal that dates back to July says it would rescind last year’s proposal, creating separate standards for coal- and natural-gas-fired power plants instead of putting forward one unified standard for all technologies.
But the standard for coal-fired units would still require them to use carbon capture and storage to trap about 60 percent of their CO2 emissions in order to comply with a limit of 1,100 pounds of CO2 per megawatt-hour. This is slightly laxer than the 1,000-pound standard proposed last year, but it does not include the earlier standard’s provision allowing plants to phase in CCS after the first decade of operation.
EPA has more frequently used a “technology first” approach of this kind in the past when drafting new source performance standards under the Clean Air Act. It tracks with many of the comments the agency received on last year’s proposal, which called the combined standard a legal liability.
But industry is already preparing to attack the CCS requirement as unachievable, especially in an economic environment that already heavily favors gas. National Mining Association spokesman Luke Popovich said in a recent interview that when coal industry representatives met with EPA Administrator Gina McCarthy earlier in the summer, they drove home the point that a proposal that relied on CCS “wouldn’t be helpful to us.
The revised proposal is undergoing interagency review at the White House’s Office of Management and Budget and is expected to be released next week. It is not clear whether its language has been changed since July.
The coal industry had hoped that EPA would promulgate a standard that would allow state-of-the-art pulverized coal plants to comply without using CCS. But the July draft dismisses those technologies as unable to provide significant emissions reductions.
The draft says partial implementation of CCS constitutes the best system of emissions reduction that has been adequately demonstrated, according to the source. It establishes this by citing “an extensive literature record,” the fact that CCS has been used for enhanced oil recovery and other purposes in the U.S., and the construction of the nation’s first integrated gasification combined cycle (IGCC) power plant with capture technology in Kemper County, Miss., by Mississippi Power, a Southern Co. subsidiary.
Industry representatives argue that the CCS requirement will place coal-fired power plants at an even greater disadvantage compared with natural gas facilities, which would not be required to use CCS.
Large gas plants would still be held to the 1,000-pound standard put forward in last year’s draft, but that limit would be relatively easy for them to meet. The draft dismisses a CCS requirement for natural gas as too costly and too likely to disrupt U.S. electricity supply.
Smaller gas plants and single cycle turbines would be limited to 1,100 pounds per MWh, like coal plants.
The draft says that coal with CCS can compete on a cost basis with nuclear energy, biomass, enhanced oil recovery and geothermal energy.
Bill Bumpers, a lawyer with Baker Botts LLP, said there appeared to be little value in EPA rescinding its previous rule if it was only to put forward another standard that relies on CCS.
But he said by proposing separate standards for the two source categories, EPA has probably strengthened its hand from a legal standpoint.
“I think it’s likely that the natural gas combined cycle standard will be easily defendable,” he said. Now that it is no longer tied to the more vulnerable coal standard, it is more likely that the rule for gas plants will stand, he added
“EPA is still going to have to defend its conclusion that CCS on a coal-fired power plant at this stage is commercially available,” Bumpers said. But he said industry might be able to poke holes in the agency’s argument that the current use of CCS at gas processing plants and elsewhere proves that the technology is ready to be applied to commercial power plants. The processes for the two kinds of plants are very different, he said.
“It’s not clear to me that capturing CO2 from a gas processing plant is truly analogous to trying to capture gas at a large coal-fired power plant,” Bumpers added.
Ann Weeks of the Clean Air Task Force said she would be “disappointed” if EPA rescinds last year’s proposal or if the agency does not include a flexible compliance provision for achieving the standard using CCS at new coal-fired power plants. The 2012 compliance provision allowed plants to delay capturing their emissions in the first years of operation if they committed to use a higher level of CCS beginning in their 11th year of operation. Such flexible compliance mechanisms help keep costs down. And, Weeks said, “We have been encouraging them to hold on to all of their options so that the final rule can be as strong as possible.”
But Bumpers said it might not be feasible for the agency to take comments on two proposals for new power plants at the same time.
Under the section of the Clean Air Act that EPA is using to craft the rule, he said, new sources are subject to the rule as of the day of the proposal.
“If the prior rule is not rescinded, a new source would face two different standards,” he said. “The source might be able to comply with one and not the other.”