The proposed new greenhouse gas (GHG) emissions control requirements would apply to existing and new power plants, with an emphasis on more efficient generating practices, including carbon capture and sequestration (CCS) and low-GHG hydrogen co-firing. The proposal could encourage adoption of technologies like CCS, the use of low-emissions hydrogen, and prompt a further transition of the U.S. power sector away from fossil fuel energy sources. However, the proposal is likely to be challenged in court.
On May 8, 2023, the US Environmental Protection Agency (EPA) released its proposed rule for new GHG emission standards for fossil fuel-fired power plants.1 The proposal would impose new emissions control requirements on existing and new power plants, with an emphasis on more efficient generating practices and emissions control methods, including CCS and hydrogen co-firing. EPA anticipates the proposal will cost the power industry over $10 billion, while yielding health and climate benefits of around $85 billion.2
EPA is proposing changes to regulations promulgated under Section 111 of the Clean Air Act:
- Revising the New Source Performance Standards (NSPS) for newly built and substantially modified fossil fuel-fired stationary combustion turbines (generally natural gas-fired) to require the use of more efficient fuels, CCS, and hydrogen co-firing.
- Establishing emission guidelines for existing fossil fuel-fired stationary combustion turbines, including requirements for existing coal and natural gas-fired plants to ultimately capture 90% of CO2 via CCS controls after a phase in period.
- Repeal of the Affordable Clean Energy Rule (ACE) promulgated under the Trump Administration.
Under Section 111 of the Clean Air Act, EPA is required to set emission standards for stationary sources that reflect the "best system of emission reduction" that is "adequately demonstrated," taking into account costs and energy requirements.3 The EPA says CCS and green hydrogen technologies are available, cost effective, and "adequately demonstrated," but legal challenges to the proposed rule could dispute whether such technologies satisfy this threshold.
The proposed emissions control requirements vary depending on the type of power plant, how frequently the plant is operated, and when it is scheduled to retire. But, in general, the new rules could encourage adoption of technologies like CCS, the use of low-emissions hydrogen, and prompt a further transition of the U.S. power sector away from fossil fuel energy sources.
Existing coal plants that are scheduled to operate past 2040 would be required to achieve a 90% CO2 capture rate, while those scheduled to retire between 2035 and 2040 would be required to co-fire with 40% natural gas by 2030. New and existing large natural gas plants will be expected to achieve a 90% CO2 capture rate by 2035, or alternatively to co-fire with 30% hydrogen by 2032 and 96% hydrogen by 2038.
EPA is projecting the proposed standards could achieve up to 617 million metric tons of CO2 emission reductions through 2042. As EPA works to finalize the rule, the agency will complete additional advanced modeling, align methodologies across the rule, and consider real-world scenarios within the power sector to best understand how components of the rule impact each other.
EPA's proposed rule is the latest move in a now decades-long legal battle over whether and how the U.S. federal government may regulate GHG emissions from existing power plants and other sources. In 2007, the Supreme Court ruled in Massachusetts v. EPA that CO2 and other GHG emissions are air pollutants under the Clean Air Act, paving the way for future regulations.4 EPA began requiring controls on GHG emissions from new fossil fuel power plants and major modifications to existing plants shortly after Massachusetts v. EPA. However, EPA has not yet regulated GHG emissions from existing plants that do not undergo major modifications. In 2015, the Obama Administration attempted to regulate these emissions when it proposed the Clean Power Plan, which determined that the best system of emission reduction for GHGs from existing plants included a requirement for a shift in existing generation sources from fossil fuels to renewable sources. This proposed rule never took effect. In 2022, the Supreme Court struck down this generation-shifting approach in West Virginia v. EPA, holding that EPA lacked express congressional authorization to require such a sweeping re-ordering of the electric power industry.5 The Biden Administration's new rule now attempts to fit within the confines established in West Virginia; the proposed rule places particular emphasis on the efficiency improvements, fuel-switching, and add-on controls expressly noted by Chief Justice Roberts in the majority opinion.
The proposal is subject to the regulatory rule-making process, including a public comment period. The rule must reflect public comments received and will likely take approximately a year to be finalized. EPA will accept comments on the proposal for 60 days after its publication in the Federal Register and will also hold a virtual public hearing and make additional information available on its website.6 Registration for the public hearing will open after the proposal's publication in the Federal Register. The rule is likely to be subject to litigation. State attorneys general and other opponents are expected to bring claims against EPA and argue that the proposal is inconsistent with West Virginia v. EPA because it will result in a transition away from coal as a fuel for electricity generation, and that the proposal is inconsistent with the Clean Air Act because it relies on unproven technologies that are not "adequately demonstrated", among other arguments.
- Supreme Court Rules EPA Cannot Require Existing Fossil Fuel Power Facilities to Shift to Lower CO2 Emitting Sources of Electricity (1 July 2022)
1 EPA proposed standard available here.
2 EPA Proposes New Carbon Pollution Standards for Fossil Fuel-Fired Power Plants to Tackle the Climate Crisis and Protect Public Health
3 42 U.S.C. § 7411(a)(1).
4 549 U.S. 497 (2007).
5 142 S. Ct. 2587 (2022).
6 Greenhouse Gas Standards and Guidelines for Fossil Fuel-Fired Power Plants
Sam McCombs (White & Case, Law Clerk, Houston) and Maria Roxo Bacha (White & Case, International Advisor, São Paulo) contributed to the development of this publication.
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