Third Time’s the Charm? EPA Again Proposes to Regulate Greenhouse Gas Emissions from Power Plants
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Third Time’s the Charm? EPA Again Proposes to Regulate Greenhouse Gas Emissions from Power Plants

Brownstein Client Alert, May 23, 2023

Today, the Environmental Protection Agency (EPA) published new proposed rules in the Federal Register to regulate greenhouse gas (GHG) emissions from coal- and gas-fired power plants under sections 111(b) and (d) of the Clean Air Act (the “Proposed Rules”). EPA estimates if finalized, the Proposed Rules would avoid 617 million metric tons of CO2 emissions through 2042 while precluding tens of thousands of tons of PM2.5, SO2 and NOx emissions, and “deliver up to $85 billion in climate and public health benefits over the next two decades.” EPA’s proposal seeks to impose technology-based standards to reduce GHG emissions from:

  • New and reconstructed gas-fired combustion turbines by improving efficiency, enabling co-firing with low-GHG hydrogen, and/or installing carbon capture and sequestration (CCS) technology;

  • Existing and modified coal, oil/gas-fired steam generating units by natural gas co-firing and/or installing CCS technology; and
  • Large existing gas-fired combustion turbines (300 MW and frequently used with capacity greater than 50%) by low-GHG hydrogen co-firing and/or installing CCS technology.

The Proposed Rules are EPA’s third attempt to regulate GHGs from fossil-fuel power plants. To recap where we’ve been and how we got here:

First Attempt: The Obama administration’s 2015 Clean Power Plan (CPP) established a best system of emissions reduction (BSER) for new and modified power plants under section 111(b), which were relatively uncontroversial. However, its three-step BSER for existing power plants under section 111(d) was highly controversial because EPA required power plants to: (1) improve efficiency through heat rate improvements; then (2) to shift electricity production from coal to gas; and finally, (3) to shift electricity production from gas to zero- or low-carbon energy by replacing fossil-fuel generation with renewable generation or by purchasing emission allowances. This 111(d) framework was and is often referred to as “generation-shifting.” Industry parties and several states immediately challenged the CPP in federal court and it never took effect. In June 2022, the U.S. Supreme Court ruled in West Virginia v. EPA that EPA exceeded its authority under section 111 of the Clean Air Act and struck the rule down.

Second Attempt: After the Supreme Court invalidated the Clean Power Plan, EPA finalized the Affordable Clean Energy Rule (ACE) in 2019 during the Trump administration. The ACE Rule also required existing power plants to make heat rate improvements under section 111(d) and recommended six candidate technologies to make those improvements, but stopped there. Because the Proposed Rules will replace the ACE, EPA is simultaneously proposing to repeal it.

Third Attempt – The Proposed Rules: EPA argues that the Proposed Rules avoid many of the faults the Supreme Court identified in West Virginia v. EPA. Instead of requiring generation switching, EPA proposes to require efficiency improvements and fuel-switching (e.g., gas and low-GHG hydrogen co-firing). The Supreme Court acknowledged in West Virginia that fuel-switching, additional controls and efficiency improvements fit within Congress’ intended meaning of BSER.

The more controversial parts of the proposal will likely center on CCS and low-GHG hydrogen, both of which EPA relies on heavily for certain power plants, including those that intend to operate long-term. Whether either technology has been adequately demonstrated and is technically feasible and cost-effective has already been the subject of dissent from Wyoming’s Gov. Gordon, who believes the plan is unreasonable and unworkable despite his strong support for Wyoming’s CCS and hydrogen industries. We anticipate the viability of both CCS and low-GHG hydrogen will be a large focus of the comments.

EPA is requesting comments on several specific aspects of the Proposed Rules, as well as general comments on the agency’s approach and will accept public comments on the Proposed Rule until July 24, 2023.

This document is intended to provide you with general information regarding the EPA's proposed rules to regulate greenhouse gas (GHG) emissions from coal- and gas-fired power plants under sections 111(b) and (d) of the Clean Air Act. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.

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