Abby L. Harvey
GHG Monitor
5/23/2014
As the Environmental Protection Agency gears up to release the much anticipated performance standards for existing power plants and wades through comments for its proposed new source performance standards (NSPS), the rhetoric from both supporters and opponents of the actions are reaching a fever pitch. The existing source performance standards, which would restrict greenhouse gas emissions from existing coal-fired power plants, are due to be released June 2 and it has been suggested by EPA Administrator Gina McCarthy that President Barack Obama will announce the rules himself. As industry waits for the release of the existing source standards and speculate at what they might entail, EPA is tasked with sorting through more than 1 million public comments submitted concerning the NSPS.
The yet unpublished existing source rule has already caused controversy throughout industry and government, garnering praise by some and harsh criticism by others. The controversial nature of the issue should not halt action to address it, McCarthy said during a Google+ Hangout Monday afternoon, noting that the president has continued to support efforts to confront the subject of climate change. “The president has stood up in front of the United States and has said on many occasions that addressing climate change is a moral obligation and that he’s not shying away from that. The climate action plan is not shying away from that … We’re getting at these issues and we’re going to marry them together and there will not be inconsistencies, but as everybody knows, a transition is just that, it’s not ‘shut everything off on day one.’ What everybody needs to recognize is like any other environmental movement or any other economic change, it needs to get out of the gate and make progress and we need everybody engaged.” McCarthy also said the president has “indicated his intent to announce [the rule] himself, which is a strong indication of how important he sees this.”
Congress Continues to Push Back
Following McCarthy’s statement concerning the president, a letter addressed to the president was released by a concerned group of seven democratic senators, many from coal states, urging him not to allow the NSPS to pass. Their concerns as stated in the letter mirror those expressed in many of the comments submitted during the public comment period for the NSPS which ended May 9. A focus was placed on the commercial viability of carbon capture and storage (CCS), as the technology is identified as the best system of emission reduction (BSER) in the regulations. Further focus was placed on the uncertain effect the regulations could have on the further development of CCS technology. “We are committed to improving air quality; however, the emission standards in the proposed rule are not based on technology that has been adequately demonstrated on a commercial scale. There has yet to be a completed commercial plant with the carbon capture and sequestration (CCS) technology mandated by the rule. As a result, these proposed requirements will inhibit the construction of new, cleaner-burning coal plants, and stall research into CCS technologies. Further, by impeding the development of CCS for coal-fired generation, the Administration is also placing in jeopardy the future uses of the technology for all other fossil fuel-fired applications. We urge you to reassess the proposal and consider the full implications of enacting the regulation in its current form,” the letter said.
The senators suggested an alternate path to lower emissions involving further increasing the efficiency of coal plants, which they credited for decreasing emissions below 2005 levels. The increased prevalence of higher efficiency plants in the form of ultra-supercritical coal-fired technology would be halted by the proposed regulations due to the high cost of CCS technology, the senators said. While the importance of CCS in the future was recognized in the letter, the underlying theme was that the technology is not ready for mandated use at this point and an alternate approach is necessary. The senators urged the president to “consider an approach that establishes a standard in the near-term that can be achieved by high efficiency coal-fired technologies operating without CCS and lower standards over the long-term as CCS becomes commercially available. Such an approach would encourage construction of new plants with the very best technology and truly encourage investment and innovation in more advanced clean coal technologies, with an ultimate goal of a CCS standard that will sustain American technology leadership.”
Legislation Proposed
Concern over the EPA regulations is not limited to the Senate, however. Under legislation recently proposed in the House of Representatives, states would be allowed to meet EPA standards by implementing a carbon tax. The market-based measure was proposed by Representative John Delaney (D-Md), who says his “State’s Choice Act” would provide states with “another path to get to the same location: reduced greenhouse gas emissions.” The legislation would require the EPA to offer the implementation of a state-level carbon tax as an alternate means to meet emissions limits. “Coming from the private sector, I understand that markets work.” Delaney said. “To tackle a problem this big, we need to unleash the power of the market and encourage the innovation and drive of our inventors and entrepreneurs. In many cases, a carbon tax will allow us to meet our environmental goals in a more efficient and effective way, ultimately accelerating our transition to a clean energy economy, while also providing businesses with greater certainty.”
The measure does grant some guidelines for a state-level carbon tax. The tax must be no less than $20 per metric ton of carbon dioxide or carbon dioxide equivalent in 2015 and higher each subsequent year by no less than 4 percent above inflation as measured by the Consumer Price Index.
Adele Morris, policy director for Climate and Energy Economics at the Brookings Institution and co-author of the recent report “A Carbon Tax in Broader U.S. Fiscal Reform: Design and Distributional Issues,” touched on the proposed bill at an event hosted by the Center for Climate and Energy Solutions, stating that state-by-state carbon tax implementation is not the best option, though it may be the closest the U.S. can get at this point. “I would consider the federal carbon excise tax approach that we’ve outlined in our paper to be the first bet. If you could get new authority and you could design it well, you’d have this comprehensive economy-wide price signal. That’s going to be the best approach. If you can’t do that, and you’re looking for alternatives, another approach might be something like the bill that Congressman Delaney just released yesterday that would give states a specific option to price carbon at the state level in compliance with EPA rules.” Her co-author, Aparna Mathur, Resident Scholar on the American Enterprise Institute’s economic policy studies team, agreed, saying “If you have a nation-wide carbon tax that would be a much more affective signal than having state-by-state legislation.”
NSPS Continues to be Sore Spot for Some
The release of the proposed existing source standards shortly follows the closing of the comment period on the NSPS, which largely mandates the use CCS on new-build coal-fired power plants. Both measures have been widely criticized in the industry with some referring to the measures as a “war on coal.” The EPA received more than 1 million comments concerning the NSPS from members of industry, government and individuals. The effect of these comments on the finalization of rule was doubted by some. “This administration has shown a marked disregard for anyone’s opinion that doesn’t mirror their own throughout the entire NSPS process. Sadly, therefore, comments that do not align with EPA’s tunnel- vision will likely be ignored just like the coal-based states were ignored during EPA’s so-called listening tour,” Laura Sheehan, senior vice president of communications for the American Coalition for Clean Coal Electricity said of the comment process.
McCarthy however says that EPA worked closely with states to develop flexible standards. “EPA has been working really hard to understand how we can make this rule both aggressive in terms of the amount of reductions it can achieve as well as make it implementable and reasonable for every state to really participate. I think it’s important that we get every state to actively engage on this,” McCarthy said, later going on to state, ”I think we’ve done a great job at reaching out, at understanding what we need to do, the flexibilities and the law and how we can use that to get significant reductions that will keep our lights on, keep our energy affordable, but also address what we all know is one of the greatest public health and environmental challenges of our time.”
While many comments submitted concerning the NSPS called for the removal of CCS as the BSER, those who support the measure see the standards as an opportunity for the U.S to forge new ground in the future of CCS technology and find it imperative that the administration no yield when it comes to the mandate of the technology on new-build plants. “We don’t have any reason to think that the administration is going to weaken the rule so much that it would not require CCS as a compliance strategy for coal. I think the administration has planted a flag in the field and said that there should not be any new uncontrolled coal plants built in this country. I think that is an important step to signal to the US and the world that we’re taking leadership on this part,” Conrad Schneider, Advocacy Director for the Clean Air Task Force, said of the standards.
Legality of standards called into question
The legal basis for the emissions standards themselves has been challenged by Oklahoma Attorney General Scott Pruitt who argues in his own Clean Air Act Section 111(d) plan that the EPA is “unlawfully regulating through and to the principles outlined in [President Obama’s Climate Action Plan].” His basis for this argument is that the climate action plan has “no legal basis or the force of law.” He further states that continuing down this path will lead to “energy rationing that will first eliminate coal-fired generation from each state’s fuel mix, then target and eradicate natural gas-fired generation.”
The standards do not comply with Clean Air Act Section 111(d), which “gives the States the authority to determine achievable emission standards for its fossil-fuel fired units,” Pruitt says in his plan. Pruitt believes that the plan he has developed better fits within the bounds of section 111(d). It allows each state to set emissions standards, instead of having the EPA set them. It also “institutes a unit-by-unit, ‘inside the fence’ approach to determining state emissions standards. It accounts for the practical reality that air quality impacts differ from state to state, as do costs and opportunities for carbon dioxide emission reductions.”
Pruitt is not the first to submit an alternate plan, recently Kentucky released a white paper of its own and several weeks ago Pennsylvania did the same. While differences exist between the plans – The Kentucky plan, Pruitt says, leans toward a cap-and-trade system – there is a general consensus that states themselves are best fit to set emissions standards. “The Environmental Protection Agency has played an important role historically in protecting the environment. But the Clean Air Act and other environmental laws envision a cooperative federalism where the states and federal government work together to protect our air and water,” Pruitt said. “Unfortunately, the EPA has grown increasingly unwilling to properly defer to state authority and instead is attempting to usurp the role of the states through initiatives like proposing new regulations on emissions from existing power plants.”
