EPA’s proposed power plant rule hits coal plants particularly hard since they would need an extremely expensive technology that is not yet commercial to allow coal plants to generate electricity in the United States. But, the new proposed rule would also wreak havoc on natural gas plants. Biden’s 681-page Environmental Protection Agency (EPA) proposed rule would require natural gas plants to blend hydrogen into fuel to survive. Natural gas plants would have to co-fire with 30 percent hydrogen by 2032 and 96 percent hydrogen by 2038. But to be politically acceptable, that hydrogen would have to be produced from renewable electricity (green hydrogen), which is three to four times more expensive. If hydrogen produced from natural gas were allowed, which is generally the way hydrogen is produced today, it would defeat the purpose of forcing hydrogen in natural gas plants. With this rule, politicians are escaping the wrath of citizens for skyrocketing electricity prices by blaming it on electric utilities.
Blending more hydrogen into gas also increases NOx emissions and puts plants out of compliance with other EPA regulations. To reduce NOx, power plants would have to install new turbines and other costly equipment, some of which is only now being developed. Natural gas plants’ other alternative is to add expensive carbon capture and sequestration (CCS) equipment, similar to coal plants, which will also add to consumers’ bills. EPA’s new power plant rule makes coal and natural gas plants so expensive that utilities will be forced to build politically correct wind and solar plants, and raise rates to pay for the new generating technologies.
Existing natural gas plants get more leeway than coal plants in the proposed rule — only the largest natural gas plants, those over 300 megawatts that run over 50 percent of the time, will have to cut their emissions by 90 percent by 2035. Coal plants would have to do so by the end of the decade, unless the plant retires before the end of 2040. The proposed rule puts about 23 percent of existing gas plants in jeopardy. However, that percent could become much larger as EPA is considering lowering the threshold to 150 megawatts. New gas-fired “peaker plants,” used as backup generation to politically correct intermittent wind and solar plants, would face less stringent standards.
Coal plants that run past 2040, would be required to install CCS technology starting in 2030, while those shutting down between 2035 and 2040 would be required to co-fire with 40 percent gas by 2030, putting a “bounty” on closing coal plants. Only one commercial power plant in North America is currently operating with carbon capture– the Boundary Dam Power Station Unit 3 in Canada’s Saskatchewan province. The unit is outfitted with a $1.1 billion carbon-capture system, which is now collecting around 80 percent of the unit’s carbon-dioxide emissions. Removal of fly ash that fouled the capture system for several years after it began running in 2014 required modifications and additions of new equipment.
The EPA is using the Clean Air Act as a means to set the regulation. The proposal, taking more than 18 months to develop, reflects constraints imposed on the EPA by the Supreme Court, which ruled last year that the agency cannot impose a system-wide shift from fossil fuels to renewable energy, saying instead the agency could only mandate emissions cuts based on technology that could be deployed “within the fence line” of power facilities themselves. The EPA anticipates the new proposal will cost the power industry over $10 billion, although others expect it to result in costs multiple times higher for replacement power for the plants that will be closed.
The proposed EPA rule is being called a “job killer” and it would increase electricity prices for American consumers, as many of the plants could become stranded assets, if not choosing to add costly equipment, whose costs would be passed onto consumers. Retrofitting an existing commercial-scale 300-megawatt natural-gas plant with carbon capture would cost $372 million, while retrofitting a similar-size coal plant would cost $600 million, based on recent estimates from the Energy Department. For new plants the cost would be about 10 percent less. According to some U.S. power industry experts, carbon capture needs a longer test drive to determine operational challenges, maintenance issues, data and optimization of the system before building whole fleets of CCS technologies.
Senators Joe Manchin and Shelly Moore Capito of West Virginia highly criticized the proposal because their state’s economy is reliant on the fossil fuel industry and this new plan would essentially kill it. As of 2021, mining and coal-fired power generation had a $14 billion impact on West Virginia’s economy with the state’s mining industry spending over $2.1 billion on wages. WV coal operators generated roughly $9.1 billion in economic activity in 2019. Capito vowed to formally challenge the EPA’s new rule, using the Congressional Review Act – labeling it as an “illegal overreach.”
According to EPA, 120 natural-gas plants and 200 coal-fired plants would be affected by its proposed rules. It also said that there were plans already for 60 percent of coal generating units to go out of service by 2040 faced with six onerous rules from the EPA. The agency is expected to see lawsuits against the rule questioning whether EPA has the authority to force the use of technologies that are not economically or technically feasible for widespread use. The lawsuits will argue that the proposed rule represents government overreach and threatens to destabilize the electric grid, as intermittent solar and wind units would require very expensive battery back-up to release previously stored power when the sun isn’t shining and the wind isn’t blowing. Regardless which alternatives are chosen, if this new rule goes into effect, Americans’ electricity prices will increase greatly, and American businesses will have a harder time competing against manufacturing in China, India and other parts of the world building coal plants at a breakneck pace.