|By Russell Ray, Managing Editor|
Last month, President Barack Obama officially announced plans to use his executive powers to establish greenhouse gas limits for new and existing power plants in the U.S. The long-awaited announcement contained few details, but it marked the beginning of what will surely be intense negotiations between regulators, environmental groups and utilities.
There will be lawsuits, bi-partisan wrangling and a lot of pontificating.
Already, the power generation industry has announced plans to retire more than 60 GW of coal-fired generation by 2020. That’s about 19 percent of the nation’s coal-fired capacity. Some of these closures stem from the benefits of low-priced natural gas. But a significant number of these closures stem from a bevy of new rules and standards for mercury emissions, coal ash storage, wastewater treatment and cooling water technology. Establishing the first-ever limits on CO2 for new and existing plants will inflate the number of shuttered coal plants in the U.S.
But the actual impact of Obama’s climate-change plan is almost impossible to measure at this point. It depends on the standard the Environmental Protection Agency (EPA) sets and how the plan is rolled out, said Mac McFarland, chief executive officer of Luminant, Texas’ largest power provider.
“The devil is in the details and those details will need to be practical and actionable,” McFarland told the Dallas Morning News. “It’s not just the number, but how the reductions over time are achieved.”
If the CO2 standards for coal plants are based on proven and available technology and the industry is given enough time and flexibility to comply, the vast majority of U.S. coal-fired generation can remain online under Obama’s climate-change plan.
The Obama-run EPA is expected to release final CO2 limits for new power plants by Sept. 20. A proposal to limit CO2 from existing plants is expected to be issued in June 2014 and finalized by June 2015.
The Clean Air Act allows the EPA to set separate standards for each fuel type – coal, oil and natural gas. What’s more, the law allows a separate standard based on the best emission reduction technology for each fuel type. Right now, the proposed GHG rule for new plants would establish one standard – 1,000 pounds per MWh – for gas and coal plants. But this standard can only be met by using one type of fuel – natural gas – and one type of generating technology – combined cycle.
“It was written more for a gas plant than a coal plant,” said Tim Curran, president of Alstom Power. “We believe they’re working on correcting the rule. Something has to change there in order to keep coal in the mix.”
The rule, in its current form, would likely be tossed out by an appeals court because it fails to provide the flexibility proffered under the Clean Air Act. The EPA is rewriting the rule so it can withstand a legal challenge from coal-fired power producers. By law, the EPA cannot finalize CO2 standards for existing plants until it finalizes the proposed standard for new plants. One is inextricably tied to the other under the Clean Air Act.
A coal plant would not be able to meet the proposed standard without installing a carbon capture and storage (CCS) system, a risky undertaking due to the cost, liability and questions about CCS technology.
“The proposed rule seemed to prohibit new coal without any kind of CCS technology. That’s concerning,” said Jim Heilbron, senior vice president of Alabama Power. “We were happy to participate in those 2 million or so comments that were received. We would suggest that you separate out standards for gas and for coal. That only seems to be appropriate.”
Obama’s climate-change plan will be widely discussed at COAL-GEN 2013, Aug. 14-16, in Charlotte, N.C. To register online, visit http://www.coal-gen.com. If you have a question or a comment, please contact me at [email protected].
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