HEARING EXAMINES EPA GHG RULES

Karen Frantz
GHG Monitor
11/15/13

Republican lawmakers took the Environmental Protection Agency to task this week for holding up the Kemper County Energy Facility and other large-scale demonstration projects using carbon capture and storage technology as national models for deploying CCS as it attempts to set CO2 emission limits for power plants and essentially mandate that new coal-fired plants be built using CCS technology in proposed new source performance standards. Janet McCabe, acting assistant administrator of the EPA’s Office of Air and Radiation, testified before the House Subcommittee on Energy and Power on the proposed regulations, which identify the partial use of carbon capture and storage technology as the “best system of emission reduction” (BSER), and she took tough questions from Republicans over whether or not CCS is ready for large-scale commercial use. “EPA cannot point to a single completed operational facility that meets the emission standard … for coal in this proposed regulation,” said Rep. Ed Whitfield (R-Ky.), who chairs the subcommittee. “All of the demonstration projects that they refer to have seen huge government subsidies. All of them have cost overruns. None of them are in operation.”

He later demanded of McCabe, “How can you issue a regulation that will dramatically change the possibility of even building a plant on such speculative processes?” McCabe answered:  “With respect, I wouldn’t refer to these as speculative technologies. Carbon capture and sequestration has been used in industrial applications for many years.” “But is it commercially available?” Whitfield asked. “It is commercially available,” McCabe answered, pointing to Kemper, along with Hydrogen Energy California, Texas Clean Energy Project and Canada’s Boundary Dam.

But some Republicans zeroed in on that comment. In one exchange, Rep. Steve Scalise (R-La.) noted that Southern Company, which is building Kemper, earlier testified before Congress that the project should not be used as a model because it cannot be “consistently replicated on a national level.” Scalise added: “[Kemper’s] testimony was they shouldn’t be used as a national standard and yet you’re sitting here using it as a national standard and you know that they said it shouldn’t be used as a standard. So why are you still using it?” McCabe responded: “We don’t base our rules on the thoughts and comments of one company.” But that response didn’t satisfy Scalise. “You’re not living in the real world. You’re using an example where the people that you’re citing have said they shouldn’t be used as a national example because that doesn’t replicate themselves nationally. You should be talking about things that can actually be replicated in the real world.”  And Rep. John Shimkus (R-Ill.) demanded of McCabe whether the EPA believes “it is appropriate to rely on government-subsidized demonstration projects to show that technology is adequately demonstrated.” “With respect, Congressman, I would not call these demonstration projects,” McCabe said. “These are commercial projects that are going forward.”

Whitfield/Manchin Bill Would Block Proposed Rule

Also at issue at the hearing was a bill drafted by Whitfield that would render the EPA’s proposed rules for new power plants of no effect. Instead, Whitfield’s proposal, unveiled two weeks ago, would set various requirements for any future regulations establishing emission standards for new plants, including that any future limits for coal-fired plants be achieved by at least six units at different U.S. commercial power plants over a one-year period. Although Sen. Joe Manchin (R-W.Va.) intends to introduce sister legislation in the Senate, and the U.S. Chamber of Commerce recently said it is supporting the bill—saying CCS is “nowhere near commercial viability”—the measure faces a tough uphill battle with Senate Democrats and the virtual guarantee of a presidential veto.

The bill takes square aim at the EPA proposal, unveiled in September, that sets separate CO2 emissions standards for coal and gas units. Depending on whether plant operators decide to measure CO2 emissions over a 12- or 84-month operating period, individual coal units would have to cap emissions at between 1,000 and 1,100 lbs CO2/MWh. Gas-fired turbines, depending on their size, must also meet a CO2 emissions limit of between 1,000 and 1,100 lbs MWh over a 12-month period. The Clean Air Act requires EPA to determine which type of compliance technology, when taking into account factors like cost, technical feasibility and size of emissions reductions, constitutes the BSER for fossil units—for which the EPA determined partial capture and storage fit the criteria. Although EPA’s proposed regulations do not set emission standards for existing power plants, Whitfield’s draft bill also takes aim at any future EPA regulations governing emissions from those plants. The draft bill states that any such rules would not go into effect unless Congress first passed legislation setting an enactment date.

McCabe said the administration does not currently have a position on the draft. But she did say that it “would delay action and regulatory certainty for future power plants by repealing the pending proposed carbon pollution control standards. Further, it would indefinitely delay progress in reducing pollution by discouraging the adoption of innovative technology that is available and effective today and would limit future development of future technologies. The draft bill could also prevent timely action on the largest source of carbon pollution in the country—power plants—by prohibiting the EPA rules from taking effect until congress passes legislation setting the effective date of the rules.” But many Republicans declared support for the bill, including Rep. Fred Upton (R-Mich.), who chairs the Committee on Energy and Commerce. “Their proposal is a good faith effort that requires a critical check on EPA’s misuse of the Clean Air Act to try to accomplish through regulation what was rejected in Congress through legislation,” he said.

EPA Rules as a Path Forward for CCS

McCabe said in her testimony that the new source performance standards are intended to be technology-driving, and that she expected they would provide a “path” for advancements in carbon capture and storage. “The history of development of technologies in the power sector and in many other industrial sectors has been that with the new source performance standards, which put in place requirements based on the clean and forward-looking technologies that this country is so good at inventing, that those then allow those technologies to become widespread, the costs will come down, and they become routine examples and standard equipment in the future,” she said.

Democrats also contended that CCS could not advance without government regulation requiring that industry make the shift. “It is not clear why utilities would deploy any carbon pollution control technology in the absence of a requirement to do so,” said Rep. Jerry McNerney (D-Calif.). Rep. Henry Waxman (D-Calif.) agreed, adding that, looking forward to a carbon constrained world, “If this committee is truly concerned about the future of coal, it should be doing everything possible to advance the carbon capture technologies.”

McCabe and others also pointed to examples of other technologies that have gotten more efficient and less expensive after being pushed forward in new source performance standards, including the use of scrubbers. “Since that time they have now become mainstream standard equipment,” McCabe said.

EPA rules for existing coal-fired plants questioned

Several Republicans looked ahead at the hearing to EPA carbon pollution standards for existing power plants expected to be unveiled in June 2014. While the agency was required to issue a lbs/MWh standard for CO2 under the rule for new power plants, the Clean Air Act requires that EPA issue procedural guidance for states to hammer out and submit their own standards for the existing source rule. But Republicans wanted assurances from McCabe that the new standards would not force the early retirement of existing plants. “States are in the best position to figure out how best to comply with environmental targets,” McCabe said. “The ultimate outcome of what’s expected of the existing fleet will be very different from what’s expected of a new source performance standard. And as administrator McCarthy has said, there is no expectation that carbon capture and sequestration would be a technology that would be appropriate for existing plants.” She added that “EPA will set the target, but then the states will have flexibility to meet that in whatever way makes sense to them.”