The Environmental Protection Agency (EPA) has unveiled a new proposal aimed at reducing carbon emissions from power plants under Section 111 of the Clean Air Act. This marks the agency’s third attempt, following previous unsuccessful endeavors that faced legal challenges.
The legal battle began in 2015 when the Obama EPA introduced the Clean Power Plan, which relied on “generation shifting” from fossil fuels to lower or zero-carbon energy sources. However, the rule was halted by the Supreme Court and eventually overturned in 2020 in West Virginia v. EPA. The Trump administration then introduced its own regulation, the Affordable Clean Energy Rule, which was subsequently set aside by the D.C. Circuit Court of Appeals. Despite being reversed and remanded by the West Virginia case, the Biden administration chose not to revive the Affordable Clean Energy Rule. Instead, they designed their own power plan, one that aims to accelerate the decarbonization of the national electricity grid while adhering to the Supreme Court’s opinion.
The proposed rule from the Biden EPA, which is yet to be officially named, is expected to trigger further legal battles. This raises the question of whether the third attempt will be successful.
One significant aspect of the proposal is its endorsement of clean energy technologies highlighted in the Inflation Reduction Act: carbon capture and sequestration (CCS) and green hydrogen. While the Inflation Reduction Act provides incentives for technology development through tax incentives and funding, the EPA’s new rule mandates the use of these technologies in specific applications.
Under Section 111, the EPA is directed to determine the “best system of emission reduction” based on demonstrated effectiveness, considering costs, environmental impacts, and energy requirements. For certain categories of power plants, the EPA has identified CCS and/or low-GHG (greenhouse gas) hydrogen (co-fired with natural gas) as the best systems. The proposed regulations outline pathways for large natural gas-fired power plants to adopt CCS technology or utilize low-GHG hydrogen, depending on their expected operation and lifetime. The treatment of coal-fired power plants also involves CCS, with different standards based on their remaining lifetimes. The goal is to incentivize the phaseout of coal and promote cleaner energy sources.
The EPA estimates that the new regulations could prevent 617 million metric tons of CO2 emissions through 2042, resulting in significant climate and public health benefits. The proposal is also expected to support the decarbonization of other sectors, such as transportation and building heating, by electrifying them. Additionally, it aims to reduce emissions contributing to particulate matter and ozone pollution, addressing environmental justice concerns in affected communities.
However, the EPA will face the challenge of persuading the courts that the technologies it relies on have been adequately demonstrated. While the utilization of CCS has seen some growth, its application in the power sector has been limited thus far. The EPA remains optimistic, citing recent cost reductions and increased funding from the Inflation Reduction Act as factors that will drive deployment.
Similarly, hydrogen technology’s economic feasibility is expected to benefit from tax credits and increased funding. The EPA’s proposal defines “low-GHG hydrogen” narrowly, aligning with the eligibility criteria for the maximum tax credit available. Critics may question the EPA’s authority to set carbon-intensity requirements for upstream hydrogen production.
These are just a few of the complex issues that will be closely monitored as the EPA aims to finalize the rule by June 2024.
