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The U.S. Environmental Protection Agency Proposes New Standards to Regulate Carbon Dioxide Emissions from New Power Plants

September 25, 2013

 

On September 23, 2013, the U.S. Environmental Protection Agency (the “EPA”) proposed a new source performance standard (“NSPS”) for carbon dioxide (CO2) emissions from new fossil fuel-fired electric generating units (“EGUs”) under Section 111 of the Clean Air Act. The EPA previously proposed a NSPS for CO2 for fossil fuel-fired EGUs on April 13, 2012. Contemporaneously with issuing the new proposed rule, the EPA rescinded the prior proposal.

The new proposed rule will apply to any covered EGU that commences construction after the proposal is published in the Federal Register. While NSPSs can apply to modified or reconstructed emission sources, the EPA has not proposed a NSPS for CO2 for modified or reconstructed EGUs. As a result, fossil fuel-fired EGUs that undergo major modifications will not be required to comply with the proposed rule. The EPA also has not proposed CO2 emission standards for existing EGUs; however, under President Obama’s “Climate Action Plan,” it is required to do so by June 1, 2014.

Section 111 of the Clean Air Act requires that the EPA establish NSPSs for any category of stationary sources that “contributes significantly” to air pollution that endangers public health or welfare. The EPA typically cannot dictate the use of a specific emission control technology. Nonetheless, NSPSs are technology-based standards that must reflect the emission limits achievable through the best system of emission reduction (“BSER”) that the EPA has determined to be adequately demonstrated, taking into account costs, environmental impacts, and energy requirements.

The EPA’s April 2012 proposed rule established a single emission standard of 1,000 pounds of CO2 per megawatt-hour (lb CO2/MWh) for all fossil fuel-fired EGUs, including coal- and natural gas-fired units. This emission standard was based on a BSER of natural gas combined cycle technology and could not be met by coal- or petroleum coke-fired units without the use of carbon capture and storage.

The new proposal sets different emission standards for fossil fuel (primarily, coal and petroleum coke)-fired electric steam generating units, such as utility boilers and Integrated Gasification Combined Cycle (“IGCC”) units, and for natural gas-fired stationary combustion turbines. According to the EPA, the new standards reflect separate determinations of BSER for fossil fuel-fired utility boilers and IGCC units and for natural gas-fired stationary combustion turbines. In particular, the relevant emission standards and BSER are:

  • for fossil fuel-fired utility boilers and IGCC units, 1,100 lb CO2/MWh per rolling 12-month operating period or 1,050 lb CO2/MWh per rolling 84-month operating period, based on partial implementation of carbon capture and storage; and
  • for natural gas-fired stationary combustion turbines, 1,000 lb CO2/MWh for large (greater than 850 mmBtu/hr) facilities and 1,100 lb CO2/MWh for smaller facilities, in each case based on natural gas combined cycle technology.

In addition to partial implementation of carbon capture and storage, the EPA considered two other options for BSER for fossil fuel-fired utility boilers and IGCC units, (i) highly efficient new generation, such as supercritical pulverized coal or circulating fluidized bed boilers or IGCC units, without carbon capture and storage and (ii) “full capture” carbon capture and storage. The EPA rejected the first option because it would not provide a significant reduction in CO2 emissions or an incentive for technological innovation in CO2 emission control technology. The EPA rejected the second option because “partial capture” carbon capture and storage provides greater operational and design flexibility.

The EPA considered and rejected carbon capture and storage as BSER for natural gas-fired stationary combustion turbines due to the lack of information regarding technical feasibility and potential adverse impacts on electricity prices and the structure of the electric power sector.

The EPA does not expect the proposed emission standards to have significant economic costs or benefits; because few, if any, fossil fuel-fired electric steam generating units are expected to be built in the foreseeable future, and because gas-fired stationary combustion turbines are already being constructed with natural gas combined cycle technology.

The public comment period on the proposed rule will be open for 60 days after publication in the Federal Register.


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