President Biden’s Environmental Protection Agency (EPA) is expected to announce limits on greenhouse gas emissions from power plants. If implemented, the proposed regulation would be the first time the federal government has restricted carbon dioxide emissions from existing power plants, as well as future plants. According to the regulation, almost all coal and gas-fired power plants would have to cut or capture nearly all of their carbon dioxide emissions by 2040. The regulation is now being reviewed by the White House’s Office of Management and Budget and could be adjusted. The power plant rule is also subject to a public comment period and is not likely to be finalized and implemented until next year when it would also face legal challenges. Electric utilities indicate that any policy that forces them to install carbon capture technology would be far too expensive, driving up energy costs significantly for consumers.
However, the EPA proposed rule is not expected to mandate the use of carbon capture equipment–an expensive technology–but it could lead to its broader adoption as the Inflation Reduction Act offers incentives to speed up adoption of carbon capture and sequestration technology (CCS). The law raises existing federal tax credits for electric utilities that capture their carbon dioxide emissions from $85 to $135 per ton of carbon dioxide, up from $30 to $50, which could translate into hundreds of thousands of dollars per year for major power companies who choose CCS.
Instead, the proposed rule would set caps on emission rates that plant operators would have to meet. They could do that by using a different technology or, in the case of natural gas plants, switch to a fuel source like “green hydrogen”—hydrogen produced by renewable energy. Instead of creating one limit with which all power plants must comply, the EPA plans to set various targets based on the size of the plant, whether it runs regularly or intermittently, and whether it is already scheduled for retirement. Some coal plants scheduled to shut down in the next decade may not have to meet the new standards, but the new standards may force plants to close prematurely.
Since most of the electricity produced in the United States last year — about 60 percent — was generated from coal, natural gas and petroleum, to regulate these plants out of existence would mean a costly and massive effort to build weather-dependent wind and solar plants along with very expensive battery backup just to keep the lights on and meet existing electricity demand. Since the Biden Administration is pushing to electrify everything, electricity demands will no doubt be increasing.
For example, In Wyoming, which has more coal reserves than any other state, Rocky Mountain Power will keep only two of its 11 Wyoming coal units operating by 2030. In fact, the utility will ditch coal entirely at its Rock Springs plant — the largest of its kind in Wyoming — seven years ahead of schedule. Rocky Mountain Power’s parent company, PacifiCorp, currently has about 5,000 megawatts of wind and solar in operation across its six-state service territory, made possible by tax credits and mandates. Over the next decade, it wants to quadruple that number, while adding more than 7,000 megawatts of energy storage to help balance out renewables’ intermittent power output that is also heavily subsidized in the Inflation Reduction Act.
U.S. grid operators, however, are raising alarms that the U.S. power grid is becoming less reliable and potentially more prone to blackouts as traditional fossil-fuel and nuclear plants are shutting down at a rapid pace and are replaced by renewables that are a less consistent forms of generation. Jim Robb, president of the North American Electric Reliability Corp., indicated that the rapid expansion of wind and solar farms in recent years was already testing the limits of existing natural gas generation, which grid operators rely on to supply electricity when changes in weather causes renewable power loads to drop.
This power plant proposal comes on the heels of another Biden administration plan to cut tailpipe emissions dramatically by speeding up the country’s transition to electric vehicles that would increase electricity demand tremendously. In other words, Biden is making the American transportation system dependent on electricity, no longer allowing it to be fueled with oil, gas, and diesel, but with electric-battery cars dependent on the power grid system that will be dismantled with this rule. The Biden administration is racing to implement these and other proposed regulations before the 2024 election when a new Congress could overturn agency regulations that were finalized within 60 days of the previous Congress by using the Congressional Review Act.
President Biden pledged to cut the country’s emissions roughly in half by 2030, and reach net zero carbon by 2050. Biden has said that he would use his executive authority to act on global warming regardless of what Congress legislates. Recently, he signed an executive order to create the White House Office of Environmental Justice and to require every federal agency to develop plans to address the impact of carbon emissions and climate change on minority and tribal communities. At a recent virtual meeting with leaders of other major economies, Biden said he would seek $500 million from Congress to fight deforestation in the Amazon.
Nearly a decade ago, President Obama’s EPA proposed limits on power plant emissions that were blocked by the Supreme Court and then rolled back by President Trump. However, last summer, the Supreme Court confirmed that the EPA had some authority, in a limited way, to regulate carbon emissions from power plants, allowing it to issue plant-specific rules. According to the New York Times, three factors have also changed since President Obama’s attempt to regulate those emissions: carbon capture technology has advanced, the Inflation Reduction Act added language that may have classified greenhouse gases as “pollutants” to be regulated by the EPA (which will certainly be litigated since it is very unclear), and the law provides tax credits to power plant operators that capture carbon, making the technology more financially feasible. The law offers more than $100 billion in electricity tax incentives, including a 70 percent increase in credits for each ton of carbon captured and sequestered.
The United States has a strong track record of reducing emissions without heavy regulation or policy mandates. Between 1970 and 2021, the combined emissions of the six common pollutants (PM2.5 and PM10, SO2, NOx, VOCs, CO and Pb) dropped by 78 percent. This progress occurred while U.S. economic indicators remain strong, as the following graph shows. Even carbon dioxide emissions have fallen in recent years, and more than in almost all other industrialized nations – thanks to the shale oil and gas revolution. In 2021, U.S. carbon dioxide emissions were 19 percent less than their high in 2007, despite a much larger economy and population.
The proposed power plant rule is one of six rules EPA is expected to advance this spring and summer that would levy new costs on coal-fired units with the goal of getting them to retire. Biden explained this in November of 2022, when he said he would be “closing coal plants across America,” although he later walked his comments back in the uproar that followed. The six rules include two actions teeing up tougher rules for mercury and air toxics, a final rule for emissions that cross state lines, a final rule for coal plant waste and a proposal for legacy combustion residuals. The result of these rules will be a utility grid that is unreliable, prone to blackouts, and very expensive for consumers as new wind and solar units with expensive battery backup will be needed to replace retired power plants–coal units that most likely have had their capital costs already paid.
Electricity prices have already increased for consumers as the government has been pushing wind and solar power through mandates and subsidies paid by taxpayers—meaning that many consumers are paying twice for electricity that is becoming increasingly unreliable. Further, the Administration is pushing policies that may require a doubling or more of electricity demand, making it even more expensive. But those cost increases will be nothing compared to what is likely to come if these regulations get implemented.