EPA Unveils New Source Performance Standards for GHGs (Again)
Today the U.S. Environmental Protection Agency (EPA) re-proposed New Source Performance Standards (NSPS) for greenhouse gas (GHG) emissions from new power plants under section 111 of the Clean Air Act (CAA). Read the re-proposed NSPS here.
Following protests from interested parties and more than 2 million comments, EPA withdrew its original proposed NSPS, which set an emissions limit for new power plants of 1,000 lb CO2/MWh (12-month rolling average); a limit intended to match the performance of natural gas combined cycle turbine (NGCT) plants. The original proposal also provided an alternative compliance mechanism under which new units burning coal or pet coke would have been allowed to comply with the 1,000 lb CO2/MWh (12-month rolling average) standard using a 30-year averaging period by meeting a higher standard of 1,800 lb CO2/MWh in the first 10 years of operation and then implementing carbon capture and sequestration (CCS) to achieve an emissions standard of 600 lb/MWh for the next 20 years. Importantly, the original proposed NSPS did not distinguish between coal-fired units and natural-gas fired units.
Unlike the original, the re-proposed NSPS does make that distinction: It proposes one limit for coal-based generating units (utility boilers and Integrated Gasification Combined Cycle (IGCC) units) and another set of limits for natural gas-fired stationary combustion turbines (NGCT). In each case, the limits apply to units that sell one-third of their potential power output to the grid (over a 3-year period).
The coal unit standard presumes that CCS represents the best system of emission reduction (BSER) for the source category, and the standard for NGCTs presumes that combined cycle technology represents BSER for that broad source category. In addition, the NSPS further segregates the NGCT category into “larger units” (greater than 850 mmBtu/hr heat input) and “smaller units” (less than or equal to 850 mmBtu/hr). Larger NGCT units must meet an emissions standard of 1,000 lb CO2/MWh gross, while smaller units must only meet a standard of 1,100 lb CO2/MWh gross. EPA, however, invites comments on a range around those numbers, and on whether they should be expressed on a net output basis.
Unsurprisingly, EPA’s proposal for coal-fired units still requires CCS. Coal-fired units must meet 1,100 lb CO2/MWh gross over a 12-operating month period, or 1,000-1,050 lb CO2/MWh gross over an 84-operating month (7-year) period. The original proposal presented its own host of compliance issues, but the new proposal actually provides new units with three years’ less time to implement CCS and begin capturing CO2 emissions than the original. For a technology that has yet to see a successful large-scale commercial project, the reduced compliance timeframe appears lacking justification.
EPA’s re-proposal points to the yet-to-be completed Kemper Plant in Missouri as evidence that CCS represents BSER. Kemper is an IGCC project under development by the Southern Company, which will incorporate partial CCS to capture 65% or more of CO2 emissions from the 582 MW Plant,. Importantly, the Kemper Plant is not yet operational but is expected to complete construction and begin operation sometime later this year. The Kemper Plant highlights the biggest question raised by the newly proposed NSPS: Has CCS been “adequately demonstrated?”
The CAA requires EPA to engage in a balancing of factors when setting an NSPS. The statute requires EPA to set “a standard of performance [reflecting] the degree of emission limitation and the percentage reduction achievable through application of the best technological system of continuous emission reduction which (taking into consideration the cost of achieving such emission reduction, any non-air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.” CAA § 111(a)(1). Courts have found that, “[a]lthough it is conceivable that a particular control technique could be considered both an emerging technology and an adequately demonstrated technology, there is inherent tension between the two concepts.” See Sierra Club v. Costle, 657 F.2d 298, 341, fn. 157 (D.C. Cir. 1981). Demonstrated to date only through pilot projects, CCS arguably is still only an emerging technology. Courts have been hesitant to uphold EPA’s determination that a technology has been adequately demonstrated when available data is insufficient to predict performance in full scale plants throughout the industry. Id.
Courts generally provide EPA with a great deal of deference when setting an NSPS, see New York v. Reilly, 969 F.2d 1147, 1150 (D.C.Cir.1992); however, courts are more willing to overturn EPA’s actions if the environmental or economic costs of using the technology are exorbitant. See National Asphalt Pavement Ass’n v. Train, 539 F.2d 775, 786 (D.C.Cir.1976). EPA admits that all of the demonstration projects have required substantial taxpayer support and rely on co-production of steam or other product to justify their existence, and EPA must admit that the availability of CCS as an option depends on unique geological and market circumstances, even assuming it works at all. Significantly, no examples are provided of demonstrated projects applying CCS to coal-fired boilers. Also, the parasitic loads associated with CCS necessarily increase emissions on a mass per unit of useful power output. The costs of the proposal are minimized with the observation that few coal-based projects are planned anyway, but then the question becomes what remains of any value to the rule. EPA will face challenges justifying CCS as the best demonstrated technology for coal-fired power plants, at least taking into account economic, environmental, and energy considerations. See Sierra Club v. Costle, 657 F.2d 298 (D.C. Cir. 1981).
Notably, the proposal does not identify any specific environmental benefits to flow from adoption of the rules, instead justifying them on the basis of the endangerment finding undertaken to support rules governing automobile tailpipe emissions, and the assertion that power plants emit a “significant” amount of GHGs.
Comments on the re-proposed NSPS will be due 60 days after it is published in the Federal Register. Next week, V&E will release an in-depth analysis of the re-proposed NSPS.
Posted by Margaret E. Peloso
and Matthew Dobbins
at 9/20/2013 4:04 PM