In response to a court order, EPA has announced proposed rules that would
establish new source performance standards (“NSPS”) applicable to greenhouse gas
emissions from new, fossil fuel-fired power plants (“power plants”). The
proposal is a highly controversial one, which will effectively prohibit the
construction of coal-fired power plants that do not capture carbon.
The proposal would limit GHG emissions from power plants that commence
construction after the date the proposal is published in the
Federal Register. Although EPA’s press release suggests that the standards apply
only to sources that commence construction a year or more after the publication
of the proposal, that press release language appears to apply only to a specific
exemption in the rules for what are labeled “transitional sources.”
According to the proposal, a transitional source is one that meets a
specified base load rating, received a prevention of significant deterioration
(“PSD”) permit prior to publication of the proposal, and is participating in a
Department of Energy carbon capture and storage funding program. Other power
plants would not have the benefit of the 12-month grandfathering provision.
Power plants designed to allow for use of a carbon capture and storage
(“CCS”) system would be afforded a thirty-year averaging time emission standard,
but must meet interim standards and commence operating the CCS system beginning
with the 11th year of operation. Sources not designed to use a CCS system must
meet the annual emissions standard beginning with the first year of
operation.
The emissions standard, 1,000 pounds of carbon dioxide equivalent per
megawatt-hour, is considered to be the level typically achieved by a combined
cycle natural gas-fired power plant. Coal-fired plants likely would have to use
CCS or some other form of control to sufficiently reduce emissions to meet the
standard.
Given the uncertainties regarding the cost and availability of carbon control
systems, including CCS, EPA’s refusal to provide a more lenient standard for
coal-fired plants has generated much criticism. Although environmental interests
favor a fuel-neutral standard, they too may criticize EPA - for limiting the
proposal to new sources and not including existing and future modified or
reconstructed sources. It is unclear whether EPA will pursue an additional
rulemaking to expand NSPS for greenhouse gas emissions to existing, modified or
reconstructed power plants.
EPA will provide a sixty-day public comment period on the proposal,
commencing on the date of publication in the Federal Register.
Please feel free to contact us if you have any questions regarding these
matters.