Haynes and Boone's Newsroom
In response to a court order, EPA has announced proposed rules that would establish new source performance standards (“NSPS”) applicable to greenhouse gas emissions from new, fossil fuel-fired power plants (“power plants”). The proposal is a highly controversial one, which will effectively prohibit the construction of coal-fired power plants that do not capture carbon.
The proposal would limit GHG emissions from power plants that commence construction after the date the proposal is published in the Federal Register. Although EPA’s press release suggests that the standards apply only to sources that commence construction a year or more after the publication of the proposal, that press release language appears to apply only to a specific exemption in the rules for what are labeled “transitional sources.”
According to the proposal, a transitional source is one that meets a specified base load rating, received a prevention of significant deterioration (“PSD”) permit prior to publication of the proposal, and is participating in a Department of Energy carbon capture and storage funding program. Other power plants would not have the benefit of the 12-month grandfathering provision.
Power plants designed to allow for use of a carbon capture and storage (“CCS”) system would be afforded a thirty-year averaging time emission standard, but must meet interim standards and commence operating the CCS system beginning with the 11th year of operation. Sources not designed to use a CCS system must meet the annual emissions standard beginning with the first year of operation.
The emissions standard, 1,000 pounds of carbon dioxide equivalent per megawatt-hour, is considered to be the level typically achieved by a combined cycle natural gas-fired power plant. Coal-fired plants likely would have to use CCS or some other form of control to sufficiently reduce emissions to meet the standard.
Given the uncertainties regarding the cost and availability of carbon control systems, including CCS, EPA’s refusal to provide a more lenient standard for coal-fired plants has generated much criticism. Although environmental interests favor a fuel-neutral standard, they too may criticize EPA - for limiting the proposal to new sources and not including existing and future modified or reconstructed sources. It is unclear whether EPA will pursue an additional rulemaking to expand NSPS for greenhouse gas emissions to existing, modified or reconstructed power plants.
EPA will provide a sixty-day public comment period on the proposal, commencing on the date of publication in the Federal Register.
Please feel free to contact us if you have any questions regarding these matters.