Environmental Protection Agency Publishes Greenhouse Gas Standards
On January 8, 2014, the United States Environmental Protection Agency (“EPA”) published proposed performance standards for new electric utility power plants. The carbon emission limitations would apply to most coal-fired and gas-fired power plants obtaining construction permits after January 8, 2014, including any existing plant that is to be modified in a manner that increases emissions.
New or modified coal-fired power plants would be limited to an emission standard of 1,100 pounds of carbon dioxide per megawatt hour. This limitation assumes at least partial implementation of new carbon capture and sequestration technology. Such controls will substantially increase construction and operational costs for coal-fired plants while significantly reducing productivity.
New or modified natural-gas combustion turbine units would be required to maintain carbon emissions below 1,000 pounds of carbon dioxide per megawatt hour for larger units and 1,100 pounds for smaller units. By comparison to the coal standards, the proposed natural gas standards are relatively easier to satisfy, as average emissions for combined cycle units generally fall within the proposed limits, and an exemption applies to simple cycle turbines used only for peaking purposes.
The proposed new electric utility performance standards do not address unmodified existing power plants. Once adopted, however, the standards will trigger a requirement under the Clean Air Act for the EPA to implement carbon emission limitations for all existing power plants. The EPA has already announced its intent to publish draft carbon emission regulations for existing power plants by June 1, 2014.
On January 15, 2014, Nebraska Attorney General Jon Bruning sued the EPA in U.S. District Court in Lincoln. The State is requesting a declaratory ruling that the EPA’s proposed power plant performance standards violate certain statutory provisions. Specifically, the Complaint alleges that the reliability and cost-effectiveness of the carbon capture and sequestration technology for coal-fired plants have not been “adequately demonstrated” to be the “best system of emission reduction” as the Clean Air Act requires. It also alleges that the Energy Policy Act of 2006 prohibits the EPA from considering any results from federally-funded technology demonstrations for this purpose and seeks to enjoin such consideration.