What You Need to Know About the Clean Power Plan

    September 3, 2015 8:43 AM by Russell Ray, Chief Editor, Power Engineering

    The minute the Obama administration unveiled its final plan to cut greenhouse gas emissions from U.S. power plants, opponents launched the first of many legal efforts to kill what some have described as the most prejudicial regulation ever proposed by the U.S. Environmental Protection Agency (EPA).

    The Clean Power Plan calls for sweeping new requirements to cut carbon dioxide (CO2) emissions 32 percent below 2005 levels by 2030. The rule will require a massive restructuring of the power sector. It will decimate coal by establishing unattainable CO2 standards for coal plants. It does nothing to promote the use of cleaner-burning natural gas, but it will stimulate the deployment of intermittent wind and solar power with new incentives.  What’s more, it will require states to spend billions to comply with a rule that may ultimately be vacated by the U.S. Supreme Court.     

    Several states have asked a federal appeals court to stay the controversial plan until the courts decide whether the EPA has the authority to force states to limit CO2 from U.S. power plants. More states are expected to join a lawsuit challenging the rule, a case that will likely end years from now at the Supreme Court.

    What are the plaintiffs’ chances of winning the case against the EPA? Better than average, I would say.

    On June 29, the high court struck down the EPA’s Mercury and Air Toxics Standard, better known as the MATS rule, which established the first limits on mercury, arsenic and acid-gas emissions from coal-fired power plants. The final MATS rule was issued back in 2012 and became effective earlier this year. However, the Supreme Court remanded the rule to the D.C. Circuit Court, saying the EPA failed to consider the $9.6 billion cost of implementing the new rule when drafting it. The industry spent billions to comply with the MATS rule, which now faces the possibility of being vacated.   

    How the Supreme Court will rule on the Clean Power Plan is anyone’s guess, but its ruling on the MATS rule is compelling evidence the high court may reject the plan.

    The states’ case against the Clean Power Plan centers on the EPA’s authority to regulate greenhouse gas emissions from power plants under section 111(d) of the Clean Air Act (CAA). The states contend power plant emissions are already regulated under section 112 of the CAA.  The CAA prohibits the EPA from regulating power plant emissions under more than one section of the law.

    What’s more, opponents of the plan argue the EPA is already regulating power plant emissions under the MATS rule and, thus, does not have the authority to regulate such emissions under section 111(d) of the CAA.  However, if the MATS rule is vacated by the D.C. Circuit Court, that legal argument will vanish.

    “That may undermine one of the key legal challenges to the EPA’s Clean Power Plan,” said Andy Byers, associate vice president at Black & Veatch. “A lot of folks are speculating the EPA may go back to the circuit court and ask them to overturn their (MATS) rule.”

    In another bizarre twist, the CO2 limit for existing plants is 1,307 pounds per megawatt-hour while the CO2 limit for new plants is 1,400 pounds per MWh. Under the final rule, the standard for an existing plant is more stringent than the standard for a brand new plant. What gives?

    The new standards can’t be achieved without installing a carbon capture and storage system, an expensive and questionable technology. 

    “We just commissioned the most efficient coal-fired power plant in the country in Arkansas and its CO2 emissions are just under 1,800 pounds per megawatt-hour,” said Mark McCullough, executive vice president of Generation at American Electric Power.

    The new CO2 standards are among a host of new, costly requirements faced by coal-fired power plants. The new rules mean as much as 90,000 MW of coal-fired generation will be retired between now and 2040. Most of those retirements are expected to be achieved by 2020.

    The only real option for replacing that dispatchable output is power fueled with natural gas. “The risk profile of coal and nuclear, from a utility perspective, is just too high,” McCullough said. But too much reliance on natural gas could lead to serious economic and security issues for the nation’s power sector, McCullough said.

    “Absence of diversity is a recipe for a big problem,” he said.

    If you have a question or a comment, contact me at russellr@pennwell.com. Follow me on Twitter @RussellRay1. 

Russell Ray

The Power Points blog, written by Russell Ray, Editor-in-Chief of Power Engineering, covers all forms of power generation, including coal, gas, nuclear and renewable. It examines a wide range of issues and advancements in pricing, policy and technology. You can follow Russell on Twitter @RussellRay1.

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