EPA Proposes Greenhouse Gas Emissions Standard for New Power

March 27, 2012


On March 27, 2012, the Environmental Protection Agency (EPA) proposed a New Source Performance Standard (NSPS) for greenhouse gas emissions from fossil-fuel-fired electric utility generating units (EGUs or power plants). NSPSs are technology-based standards that apply to specific categories of stationary sources. The proposed regulation is the first source-specific greenhouse gas emissions standard for power plants proposed by EPA.

Section 111 of the Clean Air Act authorizes EPA to promulgate NSPSs, which typically apply to new and modified stationary sources. However, the proposed power plant NSPS applies only to future power plants, specifically new fossil-fuel-fired combustion units that supply more than one-third of their potential annual electric output and more than 25 megawatts (MW) output to any utility power distribution system for sale. EPA describes this as including the following fossil-fuel-fired EGUs: (1) electric utility steam generating units also known as “boilers”, (2) integrated gasification combined cycle units, and (3) stationary combined cycle turbines. The proposed rule does not apply to the following: (1) existing EGUs, including those making modifications, (2) permitted EGUs that start construction within 12 months of the proposal, or units seeking to renew permits as part of a Department of Energy demonstration project that start construction within 12 months of the proposal, (3) new EGUs located in non-continental areas such as Hawaii and US territories, and (4) new EGUs that do not burn fossil fuels.

The proposed rule limits emissions to an output-based 1,000 pounds of carbon dioxide per megawatt-hour. EPA estimates that new natural gas combined cycle power plants should be able to meet the proposed standard without add-on controls and further estimates that 95% of the natural gas combined cycle power plants built since 2005 would also be able to meet the standard without add-on controls. According to EPA, new power plants that are designed to use coal or petroleum coke should be able to meet the proposed standard through use of technologies such as carbon capture and storage. EPA expects that the proposed standard will not result in notable costs upon sources or impact electricity prices or reliability because “the standard is in line with current industry investment patterns.” Environmental Protection Agency, EPA FACT SHEET: Proposed Carbon Pollution Standard for New Power Plants, available here.

The Supreme Court held in April 2007 that greenhouse gases are air pollutants covered by the Clean Air Act. Massachusetts v. EPA, 549 U.S. 497, 528-29 (2007). The holding required EPA to determine if greenhouse gases threaten public health and welfare, which EPA concluded they did in December 2009. After making that finding, EPA began the process of adopting rules to regulate greenhouse gas emissions and was sued over its perceived lack of progress in adopting such rules. As part of a settlement in one such case, New York v. EPA, D.C. Cir., No. 06-1322, EPA agreed in December 2010 to issue rules addressing greenhouse gas emissions from certain EGUs. EPA missed two of the settlement deadlines to issue the proposed rule and is reportedly working with parties to that litigation to establish a new deadline for publishing a final rule. On the other side of the coin, Senator James Inhofe (R-Okla.), the ranking member of the Senate Environment and Public Works Committee, has reportedly announced that he intends to take steps to block EPA’s greenhouse gas regulations, including the proposed power plant rule.

Comments on the proposed rule must be received within 60 days of the date EPA publishes the proposed rule in the Federal Register. Details on the times, dates and locations of public hearings will be published in the Federal Register and available on the EPA website.