By Rich Heidorn Jr.
The EPA on Tuesday announced its replacement for the 2015 Clean Power Plan, saying it will be cheaper and give states more control while producing similar CO2 emission reductions even as it increases coal-fired electric generators’ market share.
“The CPP exceeded the agency’s legal authority, which is why 27 states, 24 trade associations and 37 rural electric coops and three labor unions challenged the rule,” Acting EPA Administrator Andrew Wheeler said during a press briefing announcing the Affordable Clean Energy (ACE) rule. “… The era of top-down, one-size-fits-all federal mandates is over.”
Compared to the CPP, EPA says the ACE rule will result in 0.2% to 0.5% lower electric prices in 2025 while increasing coal production for power sector use by 4.5% to 5.8%.
The ACE rule defines the “best system of emission reductions” (BSER) as heat-rate efficiency improvements that can be achieved at individual coal plants, in contrast with the CPP, which set state emissions limits and encouraged switching to natural gas and renewables.
The new plan will cover about 600 coal-fired generating units at 300 facilities. EPA is not proposing a BSER for natural gas-fired combined cycle plants. Instead, the agency is seeking comment on available emission reductions for them.
The rule also slows down the implementation schedule and introduces a new test for determining whether physical or operational changes to a power plant qualify as a “major modification” triggering New Source Review.
EPA’s regulatory impact analysis (RIA) for the proposal concludes that ACE will cut compliance costs by up to $400 million annually compared to CPP while reducing 2030 carbon emissions by up to 1.5% from projected levels without the CPP. “When states have fully implemented the proposal, U.S. power sector CO2 emissions could be 33% to 34% below 2005 levels, higher than the projected CO2 emissions reductions from the CPP,” EPA said in a press release.
EPA notes that power sector emissions have declined without the CPP due to industry trends favoring increased natural gas and renewable generation. “The ACE rule will continue this trend,” EPA said.
Yet Assistant EPA Administrator Bill Wehrum undercut the agency’s projection, telling reporters that the flexibility being afforded states makes predictions difficult. “We believe the law requires states to have primary authority for implementing this program and determining what emission limitations or other measures actually should be applied at the power plants within their jurisdiction. That flexibility and that latitude means, beyond a certain point, it’s difficult to predict what states are going to do,” said Wehrum, who heads the Office of Air and Radiation.
EPA’s RIA calculated benefits and costs of three replacement scenarios and one repeal scenario, all of which would result in CO2 emission reductions from current levels. “The RIA projects small increases in emissions of CO2, sulfur dioxide (SO2) and nitrogen oxides (NOX) under all four scenarios compared to CPP,” EPA said. “However, comparing the replacement scenarios to the full repeal scenario shows a replacement would lead to significant reductions in emissions for these pollutants in the future.”
`Overly Burdensome’
EPA said it would be “overly burdensome” to require states to evaluate all options for reducing emissions.
Instead, the agency identified a list of the “most impactful” heat rate improvement measures states should consider. EPA’s list of “candidate technologies” includes: improved operating and maintenance; boiler feed pumps; air heater and duct leakage controls; variable frequency drives; blade path upgrades for steam turbines; redesign or replacement of economizers and “neural network/intelligent soot blowers.”
“Opportunities for heat rate improvements are source-specific and dependent upon the individual unit’s design, configuration, age and operating and maintenance history,” EPA said.
States’ Role
The rule will allow states to establish “standards of performance” based on the emission limitations achievable through the BSER. “EPA is not setting a presumptive standard of performance. States will be given the flexibility to design a plan that, in the state’s judgment, will work best under its particular circumstances,” the agency said, citing as considerations the plant’s current technology and practices and its remaining useful life.
States will have three years from the date of the final rule to submit their plans EPA approval, compared with nine months under the CPP. EPA will have 12 months to approve or reject state plans, up from four months under CPP. For states that fail to submit an approvable plan, EPA will have two years to develop its own plan, up from six months.
Because efficiency upgrades reduce the amount of coal burned — and CO2 released — per unit of electricity generated, the rule will improve the plants’ competitiveness against alternative fuels, potentially increasing coal’s share of the generation mix.
The RIA’s scenario assuming 4.5% heat rate improvement at $50/kW projects coal production for power sector use will be 5.8% higher than under CPP by 2025, rising to 9.5% by 2035 — the same as the 2035 scenario with no CPP.
A scenario assuming the same heat rate improvement at a cost of $100/kW would see coal’s use increase 4.5% in 2025, rising to 7.4% in 2035.
“The Clean Power Plan would have caused more fuel-secure coal-fired power plants to retire prematurely even though policy makers have become increasingly concerned that coal retirements are a threat to grid resilience and national security,” said Michelle Bloodworth, CEO of the pro-coal group ACCCE, which estimates almost 40% of the nation’s coal fleet has retired or plans to do so.
Changes to New Source Review
EPA proposes allowing states to adopt an hourly emissions increase test for determining whether power plant upgrades are a “major modification” triggering New Source Review under Clean Air Act Section 111(d).
Only projects that increase a plant’s hourly rate of pollutant emissions would need to undergo a full NSR analysis, which could result in additional pollution controls.
Under current rules, NSR review can be triggered if annual emissions increase because of increased dispatch even if hourly emissions drop.
“Existing plants might therefore forego investing in efficiency improvement projects, rather than risk triggering NSR by undertaking such projects,” EPA said. “Worst case, if compelled to undertake efficiency improvement projects in order to comply with state-developed standards of performance, some existing facilities might choose to shut down altogether, in advance of the end of their expected useful life.”
EPA will accept comments on the proposal for 60 days after publication in the Federal Register.
The CPP replacement, following the proposed rollback of automobile efficiency standards, is another indication of the Trump administration’s determination to reverse Obama-era environmental policies and its reluctance to address climate change.
The CPP would have required a 32% cut in power sector carbon emissions below 2005 levels by 2030. The Trump administration says the CPP overstepped EPA’s authority by imposing regulations “beyond the fence line” of individual plants.
The U.S. Supreme Court stayed the CPP pending legal challenges in February 2016. The D.C. Circuit Court of Appeals heard arguments in the case, but Trump’s EPA asked the court to delay action so it could rewrite the rule. (See Analysis: No Knock Out Blow for Clean Power Plan Foes in Court Arguments.)
Reaction
Some conservatives were disappointed in the new rule, urging instead that the administration seek reversal of the 2009 finding that greenhouse gases endanger public health.
But their criticism was muted compared to that from CPP supporters.
“The administration’s own analysis shows this proposal would be wholly ineffective in addressing carbon pollution from power plants, and therefore harmful to our citizens, who are already suffering from the dangerous impacts of climate change,” officials from 14 states said in a letter to Wheeler.
“In regulating greenhouse gas pollution, the EPA is legally required to use the ‘best system of emission reduction,’ not a mediocre or downright counterproductive system of emission reduction,” said Richard Revesz, director of New York University’s Institute for Policy Integrity. “This proposal is an enormous step backwards, and it will have severe repercussions for public health and the climate.”
But Tracy Terry, director of energy at the Bipartisan Policy Center, said the rule “isn’t necessarily a slam dunk for coal,” noting that plants’ fates will depend on the aggressiveness of their state’s implementation plan. “There are a number of coal-heavy states with gubernatorial elections in November. The outcomes of those races could have an impact on how the rule is eventually implemented,” Terry said.
Attorney Timothy McMahan, chair of Stoel Rives’ Climate Change Practice Initiative, predicted Pacific states will erect a “green wall” against the Trump administration’s efforts.
He noted that California’s cap and trade has been extended through 2030. “As the fifth largest economy in the world, California’s efforts are a significant test case for the premise that carbon regulation can coexist with economic growth and jobs creation,” he said in a statement. “This summer, in both Oregon and Washington, the groundwork is being laid to enact sweeping new greenhouse gas legislation. … With other states pursuing their own climate legislation, and given market forces making coal investments questionable, the impact of the ACE rule to reverse state efforts is uncertain, particularly if states will truly be free to enact their own legislation free from administration efforts to manipulate energy markets in favor of coal generation.”
Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School, tweeted that “GHGs, the Clean Power Plan, and 111(d) are the distractions in today’s proposal.
“Rewriting the New Source Review regards will likely result in far more emissions,” he said.
David Doniger, senior strategic director of the Natural Resources Defense Council’s Climate and Clean Energy Program, responded to Peskoe, noting that Wehrum, while a member of the George W. Bush EPA, “tried this loophole before.
“Lost in court,” Doniger said. “Won’t go better this time.”
