Background

Section 111 of the Clean Air Act authorizes the Environmental Protection Agency to set “new source performance standards” (NSPS) for selected categories of air pollution sources.  These standards must require the regulated new sources to use “best available technology” to reduce emissions of any air pollutants that “may reasonably be anticipated to endanger public health or welfare.”  EPA has set more than 60 of these standards during the last 40 years.

In 2006, EPA updated its NSPS for power plants, but declined to regulate emissions of greenhouse gases (GHG), even though fossil fuel-fired power plants are the second largest source of such emissions in the nation, exceeded only by emissions from motor vehicles.  Several states and environmental groups sued to compel EPA to regulate GHG emissions.  In 2007, the Supreme Court ruled that GHGs, including carbon dioxide (CO2), are air pollutants under the Clean Air Act and that EPA was required to make a finding on whether these pollutants might reasonably be anticipated to endanger public health or welfare.  Massachusetts v. EPA, 549 U.S. 497, 127 S. Ct. 1438 (2007).

In December 2009, EPA concluded that GHG emissions “may reasonably be anticipated to endanger the public health and welfare of current and future generations.”  74 Fed. Reg. 66,496 (Dec. 15, 2009).  Then, in December 2010, EPA settled the GHG litigation brought against it by agreeing to develop a new source performance standard for GHGs in order to limit CO2 emissions from power plants.

EPA’s first proposed NSPS for GHGs from power plants, published in April 2012, would have limited emissions from new coal- and gas-fired power plants to 1,000 pounds of CO2 for each megawatt hour (MWh) of energy produced.  77 Fed. Reg. 22,392 (Apr. 13, 2012).  For more information about EPA’s 2012 proposal, see our prior update “EPA Proposes Rules to Limit New Power Plant CO2 Emissions.”  Under the Clean Air Act, EPA was required to issue a final rule by April 2013, but it missed the deadline.

In June 2013, as part of his Climate Action Plan, President Obama directed EPA to issue a new proposal by September 20, 2013 to reduce CO2 emissions from new power plants.  The president also directed EPA to propose federal guidelines by June 1, 2014 to be used in conjunction with state programs to reduce CO2 emissions from existing power plants.  Under section 111(d) of the Clean Air Act, EPA is required to issue such guidelines whenever it sets an NSPS for pollutants, such as GHGs, that are not regulated either by national ambient air quality standards or as a hazardous air pollutant.

EPA’s September 2013 Proposed Rule

In accordance with the president’s directive, EPA proposed a new NSPS on September 20, 2013.  The latest proposal establishes separate GHG standards for different types of new coal- and gas-fired power plants, and rescinds the April 2012 proposal, which would have created a uniform standard for all new plants.  EPA also stated its intention to propose guidelines for existing power plants, which EPA anticipates will “be different from, and less stringent than,” the standards proposed for new sources.

The proposed rule includes two sets of standards for new power plants. 

• The first set of standards would apply to natural gas-fired plants.  It would limit CO2 emissions to 1,100 pounds per MWh for small plants (that burn less than 850 mmBtu/hr) and 1,000 pounds per MWh for large plants (that burn more than 850 mmBtu/hr).
• The second set of standards would apply to coal-fired and integrated gasification combined-cycle (IGCC) power plants.  Depending on the compliance period that best suits the plant, CO2 emissions would be limited to either 1,100 pounds per MWh during a 12-month period, or 1,000 to 1,050 pounds per MWh during an 84-month period.

Today’s new natural gas-fired power plants should be able to meet the proposed standards without additional control technology.  However, new coal-fired power plants would not be able to meet the standards without installing carbon capture and storage (CCS), an expensive, energy-intensive technology that has not yet been commercialized.  While EPA maintains that “[t]he proposed standards are in line with investments in clean energy technologies that are already being made in the power sector,” the question whether CCS technology is actually available will be a central issue in the rulemaking. 

The proposed rule would not apply to any power plant that is smaller than 25 MW or that commences construction before the date the proposed rule is published in the Federal Register.  The proposed rule also would not apply to existing plants that undergo modification or reconstruction; liquid oil-fired plants; plants that burn biomass only; or plants that sell less than one-third of their power to the grid.

Commenting on the Proposed Rule

Comments on EPA’s proposed new rule will be due 60 days after publication in the Federal Register.  EPA has explained that comments on the previous proposed rule that remain applicable to the current proposal must be submitted again to be considered.