U.S. Proposes Historic but Lax Carbon Regulations for Fossil Fuel Power Plants (Part 1 of 2)

The U.S. Environmental Protection Agency (EPA) proposed the country’s first federal standard regulating carbon dioxide (CO2) emissions from power plants last week. The introduction of a carbon standard has been long-awaited by the environmental community, and many groups are applauding the proposed rule as an important first step by the U.S. government to tackle climate change.

EPA promotes the clean air and health benefits of carbon regulation on the agency homepage. Image source: epa.gov

EPA promotes the clean air and health benefits of carbon regulation on the agency homepage. Image source: epa.gov

The carbon emission standard – which limits emissions to 1,000 pounds of CO2 per megawatt-hour (MWh) of electricity produced – will apply to future fossil fuel-fired power plants with an installed capacity greater than 25 megawatts (MW); plants that are currently operating or that will begin construction in the next 12 months are exempt.

The average natural gas plant in the U.S. emits between 800 and 850 pounds of CO2 per MWh, safely within the proposed standard. The average coal plant, on the other hand, emits 1,768 pounds of CO2 per MWh, which would exceed the standard. However, these existing plants will not be affected by the regulation, and EPA Administrator Lisa Jackson further emphasized that there are currently “no plans” to place standards on CO2 emissions from existing plants, including future modifications that could increase their emissions. However it is likely that the EPA will regulate carbon emissions from existing power plants at some point down the road, and the proposed standard for new sources is a vital step to ensuring that this will occur.

The regulation comes in response to the 2007 Massachusetts v. Environmental Protection Agency Supreme Court ruling which mandated the EPA to determine whether greenhouse gas (GHG) emissions “endanger public health or welfare.” In response, the EPA released its “endangerment finding” in 2009, which determined that GHG emissions are harmful to humans and the environment because they are the main driver of human-caused climate change. Based on the Supreme Court ruling, the endangerment finding legally required the EPA, under the Clean Air Act, to regulate GHG emissions from vehicles and stationary sources – including power plants.

The EPA statement released Tuesday to announce the proposed power plant standards focused heavily on the standard’s limited impact on the power sector. The news release claimed that the standard merely reflects “the ongoing trend in the power sector to build cleaner plants.” The announcement went further to say that the “proposed standards can be met by a range of power facilities burning different fossil fuels,” including coal. While the announcement highlighted new natural gas generation and coal with carbon capture and storage (CCS) as examples of energy sources that would be promoted under the proposed rule, it made no mention of renewable energy or energy efficiency technologies.

The energy industry’s transition from coal to natural gas is already underway due to abundant new reserves of relatively cheap shale gas extracted through hydraulic fracturing. The proposed EPA regulation guarantees that this shift will continue even if gas prices rise dramatically. While natural gas does emit only about half the amount of CO2 as coal, a transition to a natural gas energy system is still not enough to reduce U.S. emissions to a level consistent with avoiding catastrophic climate change.

An important risk of the proposed EPA carbon standard is that it will lock the U.S. into a natural gas economy. Large-scale investments in new natural gas power plants made over the next few years under the proposed regulation will continue to operate and emit fossil fuels over the next few decades – a crucial time for achieving dramatic carbon emission reductions.

The EPA’s statement goes on to in essence acknowledge that the regulations will not result in significant carbon emission reductions compared to business-as-usual, stating that EPA, Department of Energy, and industry projections indicate that “new power plants that are built in over the next decade or more would be expected to meet this proposed standard even in the absence of the rule.” Therefore, the EPA does not anticipate any additional cost to industry in order to comply with the standard. (I will examine other projections of future coal power capacity in Part 2 of this blog series).

In my opinion it is safe to say that the careful EPA language regarding the carbon regulations was aimed largely at minimizing backlash from the coal energy industry and opposition from Republicans and coal-state Democrats. Notably, President Obama did not offer a statement on the regulations, and they were released during a time when political attention was diverted by the arguments on health care legislation before the Supreme Court.

Despite the relatively mild expected effects on industry, there was an immediate backlash to the EPA proposal, with several Republican members of Congress speaking out against the agency’s overreach  even though the EPA was legally mandated by the Supreme Court to regulate GHG emissions. The American Coalition for Clean Coal Electricity, an industry group of coal electricity generators, claimed that the standard could lead to “the premature closure of coal-fired power plants operating today.” It is unclear how the group came to this conclusion however, as the regulations do not apply to existing plants.

While the recent boom in availability of cheap natural gas had already signaled the decline of significant future coal capacity in the U.S., the proposed carbon standard puts the nail in the coffin to ensure that no new coal plants will be built without CCS technologies. The future energy mix in the U.S. is unlikely to change significantly as a result of the new standard, but a guarantee of halting future conventional coal power production is a positive step nonetheless.

Placing regulatory limits on power plant CO2 emissions is a historic step for the U.S., and could set the precedent for stronger standards down the road. However the lax proposed standards and EPA’s conciliatory tone reflect the greatly reduced ambition of the Obama Administration to enact significant limits on GHG emissions. The EPA was designed to be an expert scientific agency immune from political maneuverings and election year influences. As such, the proposed carbon standard should be strengthened over time to reflect the environmental reality that we need a rapid shift to a renewable energy system, not a piecemeal transition to natural gas generation.

Shakuntala Makhijani is a Climate and Energy Research Associate at the Worldwatch Institute.

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