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Power Plant Carbon Standards: The EPA Should Use the Clean Air Act’s Flexibility to Help Reduce Emissions

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The Environmental Protection Agency (EPA) will be reissuing a draft carbon standard for new power plants on or around September 20. These standards, particularly the one for existing power plants which will be issued in draft form in June 2014, could help reduce carbon emissions significantly if EPA uses existing flexibilities in the Clean Air Act to help ensure a transition away from polluting coal plants to clean sources like renewable energy and energy efficiency.

I’ve blogged a lot on this subject including when EPA issued its original draft standard last year.

What’s new about the carbon standard for new power plants?

What is likely to be different this time, based on news reports that have been trickling out over the past week, is that EPA will likely be setting separate standards for new coal and new gas-fired power plants. Previously the standard was common, set at 1000 lbs CO2/MWh for both coal and natural gas. The main impetus for this seems to be to make the rule as legally airtight as possible.

Draft carbon standards are bing released for new power plants. Image courtesy of W Jones

Draft carbon standards are being released for new coal and gas-fired power plants. Image courtesy of W Jones

For most large natural gas fired plants, it has been reported that the standard will be in the range of 900-1000 lbs CO2/MWh (smaller, less efficient, peaking plants could have a higher emissions rate or be exempted). For coal, news articles suggest anything from 1,100 to1500 lbs CO2/MWh. (We won’t have official confirmation on any of these numbers until the standard is released publically but these scenarios provide a useful basis for discussion).

If the stories are correct, the standard for gas could be strengthened by bringing it down to the average emissions from a new natural gas combined cycle plant, which is approximately 800 lbs CO2/MWh. The average new supercritical pulverized coal-fired plant emits approximately 1773 lbs CO2/MWh, a higher emissions level than the standard is expected to be. But the fact is that very few conventional coal plants are projected to be built through 2040 anyway, according to the Energy Information Administration’s most recent projections.

A role for coal with carbon capture and storage technology?

As in the draft we saw last year, the re-proposed draft standard will likely include a carbon capture and storage (CCS) provision would allow a coal-fired power plant to average its emissions over time (say, 30 years) to meet the standard. This leaves open a role for coal with CCS in our future power plant builds. Research from UCS and MIT shows that, if CCS is to be employed, it is most cost-effective and least risky for coal plants to have the technology installed from the outset rather than to retrofit a conventional coal plant after the fact.

The averaging provision in the original proposal (which you can see summarized on p. 3 here) said that new power plants would also have the option to meet the 1000 lbs CO2/MWh standard by using a 30-year average of its emissions rather than meeting it on an annual basis. So, for example, a conventional coal plant could be built starting out with ~1800 lbs CO2/MWh for the first ten years and then install CCS and ratchet down emissions to no more than 600 lbs/MWh (a 67 percent reduction) over the next twenty years – just as long as the overall 30-year average was no more than 1000 lbs CO2/MWh. (See graph)

As I mentioned in my blogpost at the time,  there are a lot of reasons to be concerned about that provision based on where atmospheric concentrations of CO2 are right now (growing quickly and reaching some pretty ominous milestones – 400 ppm, not to mention we are already seeing significant climate impacts), and worries about whether CCS technology would really deliver as promised, especially since the provision didn’t require that plants have it installed and operational from the get-go but can promise to install it later.

Under the re-proposed rule, let’s assume a scenario where the standard for gas is ~900-1000 lbs CO2/MWh and the standard for coal is much higher; say 1500 lbs CO2/MWh. If the 30-year averaging provision is left in, coal plants would have a much higher overall level of emissions that would be locked in for a long period of time (cumulative emissions are what the atmosphere sees after all). For example, a plant could meet the standard by emitting 1800 lbs CO2/MWh for the first ten years and 1350 lbs CO2/MWh (a 25 percent reduction) for the next twenty. (See graph)

It would also mean that the incentive for developing high-performance CCS technology (with 90%+ capture rates) is greatly weakened. (See graph) A plant would need much lower capture rates to meet a weak standard. If the 30-year average that new coal plants have to meet is the natural gas standard of 900-1000 lbs/MWh, then that could potentially be better (but my concerns as outlined in the original blogpost still stand).

Potential emissions implications of a different standards for new coal plants (30-year average standard, lbs CO2/MWh)

Illustrative examples of different emissions standards for new coal-fired power plants with 30-yr averaging provision

Illustrative examples of different emissions standards for new coal-fired power plants with 30-yr averaging provision

Note that the installation of CCS technology imposes an energy penalty on coal plants. For example, according to the EIA, a new coal PC plant with CCS has a heat rate of 12,000 Btu/kWh vs. 8,800 Btu/kWh for a coal PC plant without CCS.  

CCS technology has not yet been commercially deployed at scale, fully integrated with a large power plant but there is a chance that it could become available in the coming decade or two. If that is the case, wouldn’t we want to set a high bar for what this new technology would deliver in terms of capturing CO2? Especially if we are investing taxpayer dollars in a research and development program to bring the technology to market more quickly.

Meanwhile, it is very ironic that the coal industry keeps touting coal with CCS as “clean coal” on one hand and is now complaining that CCS is in fact not ready and cannot contribute to lowering power sector emissions, even within a generous 30-year timeframe! They are essentially admitting that the emperor has no clothes.

Carbon standards for existing power plants

Issuing draft carbon standards for new power plants is a welcome step forward in regulating future emissions from the power sector. It is critical that EPA now proceed to setting standards for existing power plants because that’s the single largest source of U.S. CO2 emissions. Under section 111(d) of the CAA, EPA will propose guidelines for a standard for existing plants but it is up to states to develop their own implementation plans for meeting it. There is a very important role for states to play here and EPA will be consulting with them extensively in setting the standard. We think the standard should be strong and flexible so that it can help reduce emissions cost-effectively.

A key element will be including ways to provide incentives for renewable energy and energy efficiency to play a role in helping meet the standard. To do this effectively, EPA must adopt a “system-based approach” to regulating emissions from the power sector as a whole instead of a “source-based approach” which focuses on just reductions possible at the regulated fossil-fired plants, a flexibility allowed under the Clean Air Act approach. This would, for example, give power plant owners the option to reduce their overall emissions rate by investing in new renewable energy generation.

We’ve also got to avoid a dangerous over-reliance on natural gas as we move to decarbonize our electric sector. A rush to gas comes with significant climate, health, and environmental risks and could also interfere with a transition to truly low and zero carbon sources like wind, solar and energy efficiency.

How much emissions reduction can we get from the power sector by 2020?

Last year UCS released an analysis that showed that retiring the most polluting and uneconomic coal-fired plants from the fleet and replacing them with cleaner sources could reduce carbon emissions by up to 16.4 percent, while maintaining electric reliability and bringing significant public health benefits. While this wasn’t an analysis of carbon standards, it shows the potential for cutting emissions in the power sector in a cost-effective way.

We’ve waited a long time for these carbon standards and they won’t be finalized until 2015 with implementation likely to take until at least 2016. But the wait could be worth it if we see standards that would help deliver power sector emission reductions of 15 to 20 percent from current levels by 2020.

 

Posted in: Energy, Fossil Fuels, Global Warming Tags: , , , , , ,

About the author: Rachel Cleetus is an expert on the design and economic evaluation of climate and energy policies, as well as the costs of climate change. She holds a Ph.D. in economics. See Rachel's full bio.

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