Biden Administration Finalizes Power Plant Rule

Biden’s Environmental Protection Agency (EPA) has finalized its power plant rule and, in most cases, has made it more restrictive than what it proposed last year, incorporating comments from environmentalists rather than addressing concerns about the impacts on consumers and the utilities who serve them. EPA’s power plant rule targets electricity from coal and natural gas, which together make up about 60 percent of the electricity generation in the United States while providing firm power to the grid and back-up to intermittent and weather-driven solar and wind plants. The rule is likely to face challenges in court and from Congress.

The changes include:

• Coal plants will need to start capturing 90 percent of their carbon dioxide emissions by 2032 rather than in 2030, as originally proposed. However, Carbon capture and sequestration technology is neither commercially available nor economic.
• Future gas-fired plants must install carbon capture systems by 2032, rather than 2035.
• The threshold for future gas facilities that are considered high-capacity — and thus covered by the rule’s strictest standards—now applies to plants that run 40 percent of the time, rather than 50 percent, as originally proposed.
• Green hydrogen is no longer being used as a benchmark technology for future gas plants.
• Facilities that broke ground after the proposal came out last year and that will run frequently must capture 90 percent of their emissions, or prevent that amount of emissions some other way, or close down.
• Fossil fuels plants that are not retrofitted with carbon capture systems must exit the grid by January 2039, instead of January 2040 as originally proposed. Environmental groups, the National Resource Defense Council (NRDC) and the Clean Air Task Force had asked EPA to set that date to January 2038.

Existing natural gas plants are not included in the current rule as EPA administrator Michael Regan says the agency is taking more time to strengthen rules for existing gas power plants. For now, the agency is gathering input for that proposed rule in a “non-regulatory docket,” which the EPA website says are “not related to the development of a rule.” The agency did not say how long that process might take, but some believe it will be after the election so as not to alarm Americans by the threat to the grid that a very restrictive regulation would cause. The reliability of the U.S. electric grid is being threatened by intermittent and weather-driven wind and solar power and a reduction of firm power from retirements of coal, natural gas and nuclear power capacity.

According to Jim Matheson, CEO of the National Rural Electric Cooperative Association, “The path outlined by the EPA today is unlawful, unrealistic and unachievable” because the rule oversteps EPA’s authority, relies on technologies that are not ready to deploy and does not give existing coal and new gas power plants enough time to comply. The group’s members spread throughout rural America get 63 percent of their electricity from fossil fuels, as does most of the nation.

Besides the power plant rule, the EPA is also finalizing rules to limit toxic wastewater pollution from coal plants, strengthen regulations on coal ash and limit mercury and other toxins from burning coal for electricity. This is consistent with President Biden’s promise to end fossil fuels in the United States, despite those fuels supplying the vast majority of energy.

Bipartisan Congressional Objections

A group of House Democrats, led by House Energy-Water Appropriations Subcommittee ranking member Marcy Kaptur (D-Ohio), urged EPA Administrator Michael Regan to “defer finalizing the proposed rules until an updated reliability assessment of the proposal is complete and made public.”  Congresswoman Kaptur is worried that closing so many electricity plants will lead to power disruptions whose effects will ripple through the economy and people’s lives.

Rep. Andrew Garbarino (R-N.Y.), the co-chair of the bipartisan House Climate Solutions Caucus, said that while “decarbonization of the electric power sector is an important environmental priority,” it “must be accomplished in a manner that preserves electric affordability, reliability, and security.” He also said that EPA and the White House ought to go through Congress in pursuing an emissions reduction blueprint rather than relying on regulations.

Last year, Senate Environment and Public Works ranking member Shelley Moore Capito (R-W.Va.) and Senate Energy and Natural Resources ranking member John Barrasso (R-Wyo.) asked the Federal Energy Regulatory Commission to hold “a series of technical conferences to analyze the impact of the [rule] on electric reliability.”  FERC did not respond to the request so there is no independent analysis of the potential impact on the grid.

Carbon Capture Technology Still in Its Infancy

EPA’s justification for the rule relies on projections about how fast new technologies to reduce carbon dioxide emissions develop, notably carbon capture and storage (CCS) on power plant smokestacks. CCS proposes to capture carbon dioxide to keep it out of the atmosphere and would store it, usually underground. That technology is not fully proven despite the Department of Energy (DOE) spending hundreds of millions of dollars funding carbon capture projects, and comes with controversies, such as building more pipelines through communities, which in many cases are not wanted. The carbon dioxide that is captured also can be sold to enhance oil recovery, something environmental groups also oppose.

DOE spent $684 million on carbon capture projects at six coal plants with just one currently operating in Texas after shuttering in 2020 because it could not sustain itself during the pandemic. The other five plants could not sustain themselves financially from the outset. Since the CCS technology is far from being economically viable, if generators are required to add it to reduce 90 percent of their carbon dioxide emissions, the generators will be forced to close. Prospects might be more advantageous if the Biden administration treated all technologies alike. However, with severe penalties and restrictions on fossil fuel technologies and massive subsidies and regulatory exceptions on renewable technologies, the playing field is not level.

Chamber of Commerce Found Multiple Errors in the Original Rule Analysis

An analysis by the US Chamber of Commerce’s Global Energy Institute found significant issues with EPA’s modeling and assumptions associated with the original rule that are likely to still apply. The analysis questioned the EPA’s methodology, highlighting exaggerated emissions reduction claims, overlooked electricity demand factors and questionable deployment timelines for carbon capture and sequestration. As such, the Global Energy Institute found that the EPA may have had its “thumb on the scale” when it came to justifying the rule, in pursuit of its political goals.

Specifically, the Chamber of Commerce found:

• Unrealistic claims of massive emissions reductions occurring in the absence of the new rule, which leads to significantly suppressed cost projections.
• Omitting materially increased electricity demand from other EPA rulemakings, which will place greater stress on the power grid.
• Modeling outputs and real-world data that call into question the deployment timelines of carbon capture and sequestration, which is the technology that EPA is relying on as the centerpiece for industry compliance with the rule.

Conclusion

EPA’s final power plant carbon rule would give some units more time to capture their carbon dioxide emissions, but most aspects of the final rule are stricter than what the agency proposed last year. Under the EPA final rule, newly-built gas plants and existing coal plants will need to eventually control 90 percent of their carbon emissions, which means capturing carbon dioxide emissions using technologies that remove it out of the smokestack before they can be released into the atmosphere, using a technology, carbon capture and sequestration, that is not commercially available or economic. That means that U.S. consumers will be faced with either exorbitant costs for control equipment and greater electric usage being forced upon them by President Biden through his mandates, regulations and standards or be put in a situation of electric reliability akin to third world nations as wind and solar power are inherently unreliable.