Its new power-plant rule mandates emission-reduction goals that will be virtually impossible for fossil-fuel power plants to attain.
Its new power-plant rule mandates emission-reduction goals that will be virtually impossible for fossil-fuel power plants to attain.
I n last summer’s West Virginia v. EPA decision, the Supreme Court held that the EPA’s claims of vast new powers to reorganize America’s electricity sector raised a “major question,” requiring Congress to have spoken with much greater clarity than it had in an obscure provision of the Clean Air Act. The EPA’s proposed power-plant rule relies on the same provision, raising the same problem — and others besides.
Just as Obama’s Clean Power Plan did for coal plants, the EPA’s new rule mandates emission-reduction goals that will be virtually impossible for fossil-fuel power plants to attain. This time, the main targets are the natural-gas plants responsible for a 40 percent reduction in carbon emissions from America’s power sector since 2010. Many will shutter, and the remainder will pass the rule’s exorbitant compliance costs onto consumers.
Electricity will become scarce and much more expensive, but not anytime soon. The rule’s stringent limitations kick in after 2030. That’s another page from the Obama playbook: Enact ruinous regulations that industry has to start complying with today and let the major political impact fall on a future president.
Under the proposed rule — which President Biden hopes to finalize next year — most new and existing fossil-fuel power plants would be required to achieve emissions reductions that might be possible using, among other exotic technologies, carbon capture and storage (CCS) and hydrogen produced from renewable sources for “co-firing” with natural gas.
Under Section 111 of the Clean Air Act, the EPA can mandate emissions limits that are achievable using the “best system of emissions reduction” that has been “adequately demonstrated,” taking into account cost, environmental impact, and energy requirements. That is a high standard to meet, and despite the EPA’s claims to the contrary, its proposed rule fails to meet it. The EPA cites multiple examples of facilities in which carbon capture and hydrogen co-firing have been “demonstrated.” But none of the examples are large natural-gas power plants, which its new rule is mainly targeting. As a Wall Street Journal editorial points out, “only one commercial-scale coal plant in the world uses carbon capture to reduce emissions, and no gas-fired plants do.” And as for hydrogen co-firing:
Natural gas plants might be able to comply with the rule by blending hydrogen into fuel. But almost all hydrogen today is produced from natural gas, so this wouldn’t result in a net reduction in CO2. Hence, EPA wants to make gas plants use “low-greenhouse gas” hydrogen produced from renewable electricity, which is three to four times more expensive.
Blending more hydrogen into gas also increases NOx emissions and puts plants out of compliance with other EPA regulation. To reduce NOx, power plants would have to install new turbines and other equipment, some of which is only now being developed.
Simply put, neither technology has been “adequately demonstrated” in the configuration and at the scale necessary to comply with the rule. And technologies that are merely theoretical don’t count as being “adequately demonstrated” under Section 111. The D.C. Circuit Court of Appeals held in Sierra Club v. Costle (1981) that the EPA may “hold the industry to a standard of improved design and operational advances, so long as there is substantial evidence that such improvements are feasible.” The EPA faces a fearsome uphill climb to convince federal courts of its rule’s feasibility.
Indeed, according to a recent report, the rule goes far beyond what the EPA originally intended. The draft rule that the EPA sent to the White House just a few weeks ago for final regulatory review applied only to new power plants (not existing ones), didn’t mention coal plants at all, and set a slower timetable for phasing in the new technologies. The White House reportedly sent the draft back to the EPA with instructions to add existing coal and natural-gas plants to the rule and accelerate the phase-in timeline. It had already been clear that EPA administrator Michael Regan didn’t see the point of proposing a power-plant rule that would get blown up on first contact with a federal court, but the White House was pushing him to swing for the fences. Now the White House has forced the EPA to propose a rule that its leadership doubts can survive court review.
Especially given these last-minute changes from the White House, the EPA’s estimate of costs and benefits ($85 billion in net climate and health benefits) are pure speculation. The EPA really has no idea how much the rule would cost and can only guess how utilities will react to it, which means that it doesn’t know how the rule will impact electricity requirements or the environment. Indeed, the EPA admits that over the next year it will have to “complete additional advanced modeling . . . considering real-world scenarios within the power sector to best understand how components of the rule impact each other.” Even its calculations of cost-effectiveness amount to an accounting trick, relying on the Inflation Reduction Act’s exorbitant subsidies for CCS and hydrogen power to make mandating these technologies seem “cost-effective.”
The rule will be a policy train wreck. Its burdens fall mainly on the most efficient gas plants that use the exhaust from combustion turbines to power steam turbines, and whose carbon emissions per unit of electricity produced are 65 percent lower than those of coal plants. These plants would be required to achieve close to zero carbon emissions either by using CCS to capture 90 percent of emissions by 2035 or by switching from natural gas to 96 percent hydrogen fuel by 2038.
Because such “combined-cycle” plants take a long time to ramp up and down, they are ideally suited for “base-load generation”: staying on all the time. But because CCS technologies also take a long time to ramp up and down, they are incompatible with the less efficient single-cycle plants that are used to provide intermediate and “peaker” generation quickly when the grid might be overwhelmed, as in the evenings when demand soars and solar power wanes or during sudden peaks in demand caused by severe weather.
The EPA is therefore proposing to apply the new standards mostly to combined-cycle plants, essentially punishing the most efficient and least carbon-intensive source of base-load generation except for nuclear. And as Robert Bryce pointed out when the first carbon-capture incentives were introduced in 2010, the immediate impact would be to reduce the electricity produced by such power plants by about 28 percent, making them much less efficient and requiring them to burn far more natural gas to produce the same amount of electricity.
In a concession to reality, the EPA is proposing less stringent standards for the less efficient single-cycle plants, and it would in effect exempt “peaker” plants from the rule altogether. Ironically, renewable-energy mandates are making such plants more important because the more solar and wind power is added to a grid, the more intermediate and peaker power is required to maintain grid stability, as Californians learned in August 2020 when the lack of sufficient peak capacity led to rolling blackouts for 800,000 customers.
That crisis, and a near-repeat in 2022 when Californians were asked not to charge their electric vehicles and to conserve power for several weeks, were purely the results of too much solar power thrown onto the grid without enough “dispatchable” gas capacity to back it up. Hence, the EPA rule will reinforce a broader unintended consequence of the renewables push, which is to force utilities to switch to less efficient, more expensive, more carbon-intensive gas plants.
Ironies abound. As Bryce writes in a recent newsletter, sequestering 600 million tons of CO2 per year (the EPA’s estimate of the rule’s impact) “would require creating an industry capable of handling a mass of CO2 that’s equal to about 12 million barrels of oil per day.” The prominent “Net-Zero America” study led by Princeton University estimates that sequestering 900 million tons of CO2 (its estimated requirement to achieve net zero) would require perhaps 68,000 miles of new pipelines and thousands of injection wells. As the Congressional Research Service points out, safety concerns are already a major problem for the roughly 4,000 miles of pipeline projects currently being developed to transport CO2 from ethanol plants in the Midwest to injection wells in the region. Local opposition has been both fierce and effective, given that CO2 pipeline permits and the relevant landowner rights and eminent-domain laws are all subject to state jurisdiction.
Moreover, the EPA is once again coercing state regulators into implementing its rules. To comply with the new Section 111 standards, many states will have to develop implementation plans that ignore the preferences of their residents, contradict their policies and programs for delivering affordable electricity, and force the same generation-shifting that was struck down in West Virginia v. EPA.
By stretching every statutory requirement of Section 111 to its breaking point, the EPA is in effect once again claiming vast new powers that check every box of the “major questions doctrine”: The proposed rule has great political significance, seeks to regulate a significant portion of the American economy, and upsets the federal–state balance.
The rule would reshape America’s power sector, but it almost certainly cannot be implemented. If the EPA’s goal is to end the use of fossil fuels for electricity and pave the way for renewables, this rule would not accomplish that. Like so many other misguided climate policies, the main effect would be to deprive Americans of affordable energy until, squeezed to their breaking point, they cry out for relief and the rule is repealed. The main question is how much pain and suffering the rule would inflict in the meanwhile.
Hence the final irony. The EPA’s new rule is more likely to impede a net-zero transition than to facilitate it. As French president Emmanuel Macron learned from the monthslong “yellow vest” protests, and as President Biden learned when gasoline rose above $5 per gallon, once people’s energy bills go through the roof, the last thing they want to hear about is the danger of climate change. Environmental protection is something that only rich societies can afford, and the EPA’s new rule would impoverish everyone.