White House pressed EPA to toughen power plant rule

Source: By Benjamin Storrow, Scott Waldman, E&E News • Posted: Wednesday, May 17, 2023

EPA Administrator Michael Regan.

EPA Administrator Michael Regan testifies on Capitol Hill in March. Francis Chung/POLITICO

EPA strengthened its climate rule on power plants after White House officials pressed the agency to expand the proposal before it was released last week.

The officials urged EPA to include existing gas plants under the regulation and accelerate the date for installing carbon capture systems at coal facilities, according to six people who are familiar with the administration’s deliberations and were granted anonymity to speak freely.

The political maneuvering illustrates the stakes faced by the Biden administration as it crafted the country’s first federal standard for greenhouse gas emissions on the nation’s sprawling network of electricity generating sources. Previous efforts to reduce global warming emissions from power plants, which account for about a quarter of U.S. carbon pollution, have all failed.

The EPA proposal is an important step in fulfilling President Joe Biden’s promise to cut power sector emissions 80 percent by 2030, but some experts question whether the rule will deliver the emission reductions needed by the end of the decade. Others say the rule will be outpaced by the emissions cuts created by the Inflation Reduction Act (see related story).

At the same time, EPA’s plan is certain to face legal challenges and may have to navigate a Supreme Court gauntlet of six conservative justices, who have rejected past attempts by the agency to address power plant emissions.

The White House intervention on the rule could be tested in future court cases.

“They have to walk a careful line between a rule that is effective and force the electric industry to change and a rule that is viewed as too aggressive and too transformative by the Supreme Court and not survive judicial review,” said Michael Wara, climate and energy program director at Stanford University’s Woods Institute for the Environment.

E&E News spoke with six people who said the White House asked EPA to add more stringent pollution controls after it received the agency’s draft plan, with much of the pushback coming from the White House Office of Climate Policy. Three of the people said the greatest point of contention concerned existing gas plants, which were not included in the draft that EPA sent to the Office of Management and Budget.

The proposed rule — as seen by the public Thursday — calls on large gas facilities that run at least half the year to begin blending hydrogen in their fuel supplies in 2032, or install carbon capture by 2035.

Another person said the White House sought to make coal plants adopt carbon capture systems five years earlier than what EPA had planned to propose. The suggestion was not included in the rule. Under EPA’s plan, coal plants that would operate past 2040 are required to install carbon capture technology by 2030.

Neither the White House or EPA responded to requests for comment.

More money, less authority

Administration allies cast the deliberations as routine.

“The back-and-forth between the White House and EPA, or any agency, over a high-priority rulemaking is to be expected,” said Sam Ricketts, a former adviser to Washington Gov. Jay Inslee (D) and the co-founder of Evergreen Action, a climate group that met with officials from EPA and OMB before the rule’s release. “The administration across the board is working to bring the most effective and durable rule possible.”

The EPA proposal comes amid a shifting legal and regulatory landscape. The Supreme Court curbed EPA’s rulemaking ability in July, finding that the agency could not require utilities to close coal plants and replace them with renewables. Instead, the court said the agency’s emissions standards needed to be based on pollution control technologies available to power plants.

The legal setback was quickly followed by passage of the Inflation Reduction Act, which is pumping $369 billion into clean energy technologies ranging from renewables and carbon capture technologies to hydrogen.

Experts say the federal subsidies will help lower the cost of complying with EPA’s power plant rules, even though the Inflation Reduction Act doesn’t require power companies to actually cut emissions.

The result is a White House with more money to pursue its climate ambitions, and less legal authority to mandate emissions reductions.

“The Inflation Reduction Act subsidizes green, but doesn’t tax brown,” Wara said. “In order to succeed on climate as a country, we need to actually build the new green energy system and also use the brown energy system we have much less. That is what this rule will help to do.”

Carrie Jenks, who leads the Environmental and Energy Law Program at Harvard Law School, said EPA’s draft proposal appeared to take the Supreme Court’s recent rulings to heart.

“They came at it from the standpoint of what technologies are adequately demonstrated, and then they have to take into consideration cost and environmental impact,” she said. “I think the IRA dramatically changed the cost consideration.”

Much of the focus in the run-up to the rule’s release focused on emissions from coal plants and new gas facilities.

EPA nixed White House plan on coal

Environmentalists pushed to include existing gas plants under the rule as well. When Jay Duffy, an attorney from the Clean Air Task Force, met with administration officials last month, he made the case that carbon capture and hydrogen were proven technologies that could be used as the basis for lowering emissions at existing fossil fuel facilities.

Duffy would not comment on the administration’s deliberations, but he called EPA’s draft a good first step.

“We have a proposal that has all the elements of a really great rule. It can and should be made stronger,” he said.

EPA’s current proposal on existing gas plants would only apply to facilities larger than 300 megawatts that run half the year. Duffy pointed to an analysis by the Natural Resources Defense Council that found the plan would cover just 7 percent of gas-fired plants and 29 percent of emissions from gas-fired power plants.

Industry has raised concerns about regulating emissions from existing gas plants, saying the rule relies on technologies that have not been commercially proven. The Edison Electric Institute, a trade association, submitted a white paper to EPA outlining the difficulties of regulating existing gas plants when it met with administration officials last month.

The paper argues that the sheer diversity of gas plants, ranging from simple combustion turbines used to meet peak power demands to combined-cycle turbines that run around the clock, make it hard to determine the best system of emissions reduction. It also raised questions about the ability to retrofit facilities to burn hydrogen.

“To the extent that EPA moves forward with regulations for existing natural gas units, such a move should support and facilitate the emissions reductions and clean energy progress already being made by electric companies and their fleet transition plans,” EEI wrote.

In a statement, EEI called its engagement with the administration “constructive” and said it was reviewing the regulation.

Another point of tension between the White House and EPA centered on the timeline for closing coal plants, according to a person in the fossil fuel industry. The White House wanted a more aggressive plan and was determined to set a final timeline of 2035 for coal plants to curb emissions by 90 percent, said the person, who requested anonymity to shield sensitive conversations.

EPA officials pushed back on that idea, however, by arguing that the speed of such a transition was not realistic for some regions of the country, the person said. Instead, the proposed rule gives coal plants until 2040 to cut emissions by 90 percent.