By Rich Heidorn Jr.

The Trump administration on Wednesday finalized its repeal of the Obama administration’s Clean Power Plan, saying its replacement will correct its predecessor’s overreach of the Clean Air Act and restore power to the states.

Under the Affordable Clean Energy (ACE) rule, EPA has determined that the best system of emissions reductions (BSER) is heat-rate efficiency improvements that can be achieved at individual coal plants, not the “beyond the fence line” generation-shifting, fuel-switching and state emission caps required under the CPP.

EPA proposed the ACE rule last August. (See EPA: CPP Replacement Could Boost Coal-Fired Power by 6%.)

EPA Administrator Andrew Wheeler said in a statement that U.S. power sector CO₂ emissions will fall by as much as 35% below 2005 levels after ACE’s full implementation. But most of the reductions will result from industry trends toward renewables and natural gas and away from coal.

The agency outlined the proposal at a press briefing Wednesday, insisting the briefing leader be referred to only as a “senior EPA official.” The official said EPA rejected carbon capture and sequestration as “not technically feasible and not cost effective,” although it said states could impose such requirements on their own.

The official dismissed comparisons with the CPP as “fictitious” because it was never implemented and was stayed by the Supreme Court.

“It’s a fantasy to say there’s any real comparison here. But even if you were to try and compare … even if we were to implement CPP beginning today, it would produce no real change in the glide path that the industry is on right now,” he said.

That’s because the CPP’s implementation was blocked, the official acknowledged, and because “the world keeps changing around us. There are fundamental changes occurring in the power sector that have nothing to do with our regulation and have everything to do with market economics and the shale gas boom. There’s a pronounced move out of coal and into gas; there’s a pronounced move into renewables for reasons unrelated to the price of gas.”

The official said the ACE rule is, in part, a recognition of state’s rights.

“The Obama administration actually imposed emission-reduction obligations on each and every state. We think that’s not EPA’s role,” he said. “We’re revising the framework regulations primarily to make it abundantly clear that we, as the federal government, identify [the] best technology; states … develop the emissions limits … and then we review and approve. The Clean Power Plan was way too federal-heavy, and this part of the ACE final rule is going to rebalance the relative role of the states and federal government.”

The new plan will cover about 600 coal-fired generating units at 300 facilities.

States will have three years from the date of the final rule to submit their plans for 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.

New Source Review

In its ACE proposal last year, EPA also proposed allowing states to adopt an hourly emissions increase test for determining whether power plant upgrades are a “major modification” triggering a new-source review under CAA Section 111d. 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, an NSR review can be triggered if annual emissions increase because of increased dispatch even if hourly emissions drop — putting it in conflict with the ACE plan, the official said.

“Our projection is that the cost of having to go through the permitting process and the cost of corresponding emission controls and measures would make an otherwise viable efficiency project not viable and not sustainable under a state plan.”

The official said EPA will be back within several months with a final revision to the NSR regulations. “We fully intend to finalize the new-source review fix, but frankly with everything we have in the final [ACE] rule, we’ve bitten off as much as we can chew.”

The official was asked about studies predicting that up to 28% of coal plants will increase their total emissions because the efficiency improvements will improve their competitiveness.

“We project at full implementation that emissions from the sector are going to decrease,” the official said. “It’s entirely possible that for some individual [plants], emissions may go up. But even if they go up based on greater utilization, the emissions rate will go down because that’s what this regulation would require.”

Reaction

Reaction to the plan was unsurprisingly split.

Coal lobbying group ACCCE called it a “sensible and legally sound approach to regulating carbon dioxide emissions from the nation’s coal fleet.”

“We are especially pleased the ACE rule provides flexibility to set reasonable carbon dioxide standards that do not force the premature retirement of more coal-fired generating units,” ACCCE CEO Michelle Bloodworth said. “For that reason, we commend EPA for not attempting to use environmental regulations to drive energy policy.”

U.S. Rep. Bill Johnson (R-Ohio) said the rule shows President Trump making good on his promise to end “the War on Coal.”

“The current leadership at the EPA understands we can have smart environmental regulations and protect coal jobs and our economy at the same time,” he said in a statement.

Rhea Suh, president of the Natural Resources Defense Council, vowed to fight the plan in court. “President Trump’s dirty power scheme would do nothing to address the rising economic costs and the increasing dangers wrought by climate change,” she said. “Instead, it would give polluters free rein and doom future generations to a dangerously hostile world.”

Analysts at ClearView Energy Partners noted that parties will have 60 days from the rule’s publication in the Federal Register to appeal, meaning the Trump administration would still be in office to defend the rule. “If there are significant delays to the pace of the appeal, the potential that a differently minded administration (should one be elected in 2020) could mount a less aggressive defense or reconsider the rulemaking (as the EPA under the Trump administration did) could grow.”

ClearView said the rule does not prevent states from enacting higher renewable portfolio standards or other climate measures. “Indeed, we think the less stringent replacement for CPP may further galvanize subnational decarbonization efforts,” they said.