On September 20, 2013, the U.S. Environmental Protection Agency issued a new proposed rule for emissions of greenhouse gases from new power generating facilities. The vast majority of the commentary on the rule since its issuance has focused on the standard for new coal-fired power plants, and references to the natural gas-fired power plant standard mentioned it as an aside or afterthought. A closer read, however, suggests a few points to contemplate.
In his Climate Action Plan issued in June 2013, President Obama instructed EPA to propose regulations for new power plants that utilize fossil fuels. Natural gas provides the fuel for a substantial number of electricity generating units - approximately thirty percent of nationwide capacity is gas-fired. However, nearly all of the new generation in recent years has been gas-fired, and this trend is expected to continue. Accordingly, while the coal standard for new plants may be generating most of the controversy, the gas standard is the one most generators will have to achieve.
The proposed rule replaces an earlier April 2012 proposal, which would have set the standard for all electric utility steam generating units at 1,000 pounds per megawatt-hour. EPA assessed a range of options to determine the "best system of emissions reductions" (BSER), including full or partial carbon capture and storage (CCS), high efficiency simple cycle aeroderivative turbines, and natural gas combined cycle (NGCC) technology. The revised proposal for new natural gas-fired units has two parts. Units with a heat rate above 850 mmBtu/hr must keep CO2 emissions below 1,000 lb/MWh. EPA based this limit on the NGCC technology option without the use of carbon capture and storage. Unlike the coal standard, EPA did not mandate CCS "because of insufficient information to determine technical feasibility." Smaller units have a higher limit of 1,100 lb CO2/MWh. The rule also exempts certain simple cycle "peaker" units by excluding units that sell one-third or less of their potential electric output to the grid. Many commenters had encouraged EPA to exempt simple cycle units entirely from the rule.
Developers of gas-fired units should ensure that they can meet the proposed limits, but also consider whether optimization can be implemented to provide additional operating flexibility. Although the proposed limit is manageable for many units, particularly when running at full baseload conditions, periods of startup and shutdown or other non-ideal circumstances may erode the ability of the unit to meet the standard. As the proposed rule notes, EPA is seeking comment on whether the final standard should stay at 1,000 lb CO2/MWh. Indeed, as one commenter on the original proposal noted, lower standards have been proposed at the state level. Other commenters on the original proposal urged EPA to set a higher limit.
Developers and owners of new gas-fired power plants thus have an incentive to participate in the rulemaking process going forward. Once the proposed rule appears in the Federal Register, comments should be submitted for the record. Depending on how the Agency reaches its final decision, stakeholders will likely seek judicial review. Like many environmental rules over the past several years, the final power plant greenhouse gas standards will be resolved in the courts.