U.S. EPA Proposes CO2 Emissions Standard For New Emissions Power Plants

On March 27, 2012, the United States Environmental Protection Agency (EPA) proposed for the first time a New Source Performance Standards (NSPS) for emissions of carbon dioxide (CO2) from new electric utility generating units (EGUs) of greater than 25 megawatts (MW) capacity. The proposed standard, which would not apply to existing plants, would be set at what is achievable by the best performing natural gas-fired combined-cycle power plants today. As such, it would essentially preclude construction of new coal-fired power plants, unless, within the first 10 years of operation, they could be equipped with costly carbon capture and storage (CCS) technology, which is far from commercialization.

The proposed rule, only the latest in a series of EPA rulemakings affecting power sector emissions, would mark another step in the long slide of coal from its position as the primary fuel source for baseload power in the U.S. Although the electric sector's steady migration towards natural gas has been precipitated by market forces, including the abundance and low price of natural gas and the costs of compliance with other pollution regulations, this proposal is nevertheless significant because if finalized and not overturned by an act of Congress, it would provide regulatory certainty that coal can play no role in meeting new demand in the U.S. prior to advancements in CCS technology.

EPA will accept comments on the proposal for 60 days after publication in the Federal Register and will hold public hearings at dates, times, and locations to be determined. The proposed rule is available at: http://www.epa.gov/carbonpollutionstandard/actions.html.

Greenhouse Gas NSPS for EGUs

The EPA's proposed standards would require new fossil fuel-fired EGUs greater than 25 megawatt electric output (MWe) (including fossil fuel-fired boilers, integrated gasification combined-cycle (IGCC) units and stationary combined-cycle turbine units) to meet a "standard of performance" of no more than 1,000 pounds of CO2 emitted per megawatt-hour (lb CO2/MWh). This standard, promulgated pursuant to section 111 of the Clean Air Act (CAA), is based on the performance of natural gas combined-cycle (NGCC) technology, which is currently in wide use throughout the United States.

EPA expects that new coal-, coal refuse-, oil- and petroleum coke-fired boilers and IGCC units will, if constructed, be able to meet this standard by employing carbon capture and storage (CCS) technology. The...