Greenhouse Gas Emissions from Power Plants: What’s in Store for New and Existing Plants?

Among the various Clean Air Act programs, it has been suggested that the New Source Performance Standards program provides the best vehicle for a manageable and effective reduction in greenhouse gas emissions. On June 25 President Barack Obama issued a memorandum directing the U.S. Environmental Protection Agency to issue final "standards, regulations or guidelines, as appropriate," under Sections 111(b) and 111(d) of the CAA (i.e., the NSPS) to regulate GHG emissions from new and existing power plants.1 To implement this broad directive in the timeframe ordered by the president, the EPA has proposed performance standards for new sources and has begun the process of devising a regulatory plan for existing plants. This article discusses these forthcoming regulations and the kinks that will probably be ironed out through litigation.

The EPA's Current Regulation of Greenhouse Gases

Carbon dioxide is an air pollutant that can be regulated under the CAA. The Supreme Court settled this issue six years ago in Massachusetts v. EPA.2 Since that decision, the EPA now has on the books a handful of regulations curtailing GHG emissions. The most significant of these regulations are those pertaining to motor vehicles (in a regulation referred to as its "tailpipe rule")3 monitoring requirements for GHG emissions from stationary sources4 and the GHG "tailoring rule" identifying stationary sources that will have to install best available control technology under the CAA's Prevention of Significant Deterioration program and obtain Title V operating permits according to their GHG emissions.5

The EPA continues to move forward with its regulation of GHGs from stationary sources according to the timelines in the president's directive. On Sept. 20 it announced its proposal to regulate CO2 emissions from new power plants.6 On the heels of the EPA's proposal, the U.S. Supreme Court issued a significant victory for the EPA via an order denying certiorari to challengers of the EPA's tailpipe rule and solidifying the EPA's endangerment finding for mobile-source GHG emissions.7 Thus, the question going forward should be how should the EPA regulate GHGs, not can it regulate them.

Statutory Background for Regulating Greenhouse Gases under CAA Section 111

New and existing emissions sources are subject to rules crafted under two distinct but related provisions of Section 111 of the CAA. Regulation of GHG emissions from new, modified or reconstructed sources is governed by Section 111(b), whereas Section 111(d) allows the EPA to set existing source performance standards, or ESPS for power plants but authorizes states to develop plans to implement those standards.8 The president's June 25 memorandum directed the EPA to prepare flexible standards, regulations or guidelines, as appropriate, for existing power plants, and the EPA is currently soliciting input from states as to the best approaches for ESPS.9 The ESPS cannot be finalized until a final standard is in place for new power plants.10

The contrast between Sections 111(b) and 111(d) is significant. Section 111(b) vests more authority in the EPA and allows it to set numerical performance standards regulating GHG emissions — a more straightforward approach than Section 111(d). In order to establish these specific emission caps, the EPA must identify emission-reduction technology that has been adequately demonstrated.11 Similarly, the EPA must identify a "best system of emission reduction," or BSER, in preparing guidelines for state implementation of ESPSs, although the identified system may be different from that identified for the new source performance standards. Section 111(b) standards are implemented by the states, but states have little, if any, flexibility to alter the standards set by the EPA.

The EPA's NSPS Proposal Regarding Power Plants

In lockstep with the president's deadlines for EPA GHG regulation, on Sept. 20 the agency proposed an NSPS that limits CO2 emissions from new power plants.12 Briefly, the proposal suggests adoption of separate limits for five subcategories of power plants, with more lenient standards for three...