EPA took another step last month toward encouraging less
reliance on the use of coal as a domestic energy source by
proposing the first ever Clean Air Act ("CAA") new source
performance standards for emissions of carbon dioxide (CO2), a
greenhouse gas, from fossil fired electricity generating
units. 77 Fed. Reg. 22,392 (Apr. 13, 2012). The
proposal would limit CO2 emissions from new fossil fuel-fired
electricity generating units greater than 25 megawatt electric to
1,000 pounds per megawatt-hour, a level based on the CO2 emissions
from natural gas-fired combined cycle units
("NGCC"). Comments on the proposal must be
submitted on or before June 12, 2012.
The proposal is predicated on an important assumption that
fossil-fuel-fired units – including coal-fired units in
particular – can meet the lower CO2 emission standards
using carbon capture and sequestration ("CCS")
technology. This is a significant assumption, given that the
economic viability of the large-scale commercial application of CCS
technology is still an open question. A proposed 30-year
averaging compliance option for coal and pet coke-fired units would
allow facilities that burn fuel that emits relatively higher
amounts of CO2 to take steps over a period of years to come into
compliance using CCS technology. EPA also assumes that
"very few new coal-fired power plants will be constructed in
the foreseeable future" because lower natural gas prices will
lead electricity-generating companies to choose to construct NGCC
power plants rather than coal-burning power plants.
The proposed standards would apply only to new facilities and
not to existing facilities that are modified or
reconstructed. EPA asserts that existing facilities are most
likely to undertake projects to install pollution controls,
required under other CAA regulations, that may emit CO2 as a
byproduct; therefore, these projects would be exempt under the EPA
regulations that exclude pollution control projects from being
considered "modifications." EPA's position may
be the subject of legal debate. Despite EPA's assertions,
if the rule is finalized as proposed, it could have major impacts
on existing coal-burning power plants, particularly if a court were
to decide that modified existing power plants are subject to the
standards.
There have even been reports that some groups may take the
unusual step of challenging the proposal because it already is
having the practical effect of delaying or blocking altogether
plans for the construction of new coal-fired power plants.
The significance of the proposal is not limited to coal-fired power
products, but could impact any company involved in coal production
or transportation, as it is likely that this proposed rule is the
first of many proposals targeting CO2 emissions.
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