Regulation of carbon emissions for existing power plants under the Clean Air Act § 111

 

By Kevin Jones, Deputy Director, Senior Fellow for Energy Technology and Policy, Institute for Energy and the Environment, and Mychal Ozaeta, JD/MELP ‘15

Summary:
Will the U.S. EPA finally propose regulations that significantly reduce carbon emissions from existing coal fired power plants?

Article:
CAAPowerPlants2While the Environmental Protection Agency’s (EPA) recently proposed emissions standards for new power plants were controversial, the debate over how to limit the greenhouse gas (GHG) emissions of the largest source in the country, existing fossil-fueled power plants, is of much greater consequence.

Carbon dioxide (CO2) constituted 84% of GHG emissions in 2011. The electric power industry accounted for 33% of these GHG emissions, with coal plants leading the way as the worst source of this pollution.

While there has been industry backlash over the recently proposed standards of performance for new power plants, the “Holy Grail” to reducing carbon emissions rests with existing coal-fired power plants. The EPA’s 2013 power plant rule was just the first step in President Obama’s plan to act on “Power Sector Carbon Pollution Standards,” and ultimately culminates in EPA-proposed standards for existing power plants in June 2014.

While the scientific imperative and legal authority to act are clear, there is much less known about the EPA’s plan for existing power plants. Section 111(d) is a seldom-used statutory backstop through which the EPA is empowered to issue standards of performance that the states then implement through EPA-approved plans. Traditionally, the EPA has based its standards of performance on the best system of emissions reductions, but for existing fossil-fueled generation, the unit-specific alternatives are extremely limited when it comes to reducing CO2 emissions. Some believe that the EPA will base its standard on generation efficiency improvements, but this could pose challenges for a large number of units. While industry is often in favor of flexible compliance mechanisms, there is some industry fear that flexibility in compliance could lead to the EPA adopting a more stringent standard.

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Although the EPA’s proposed standards for new power plants embrace the flexible compliance approach by allowing new sources to phase in the use of clean energy technologies, the plan for existing power plants is uncertain. The Natural Resources Defense Council (NRDC) has proposed to cut existing power plant emissions from 2005 levels by 26% in 2020 and by 34% by 2025. The NRDC plan would have the EPA set state-specific emissions rates based on the individual percentage of coal- versus gas-fueled generation. The states would then have broad flexibility in meeting the standards through a range of technologies, as well as the ability to invest in new renewables or energy efficiency to earn and trade credits toward compliance. The NRDC proposal would facilitate alternative compliance approaches, such as the cap and trade regimes already in place in the Northeast and California, as long as those approaches achieve equal or lower emissions.

Various industry groups have criticized the NRDC plan. For example, the National Climate Coalition (NCC), which includes electric generation companies and other industrial giants, has embraced an approach that sets separate performance standards for coal- and gas-fired power plants, but allows the utilities to calculate average emissions across their facilities. The states would have the ability to use market-based mechanisms in achieving overall compliance. Whether the EPA chooses one of those two approaches or something completely different, the Obama administration has set the EPA on a path to finally reduce carbon emissions from existing coal plants. The country can only hope that some combination of market and regulatory forces will end the decades-long reign of king coal as the dominant source of carbon pollution.