On Tuesday, March 27, 2012, EPA proposed greenhouse gas (“GHG”) New Source Performance Standards (“NSPS”) for coal and natural gas combined cycle (“NGCC”) electric generation units (”EGUs”). The proposal applies to new units only. It does not apply to modifications or to existing units.
All new coal and NGCC units greater than 25 MW must meet an output-based standard of 1,000 pounds of CO2 per MWh based on the performance of NGCC technology. In the past, EPA has always had separate NSPS for NGCC and coal units, and it continues to have separate categories for those units for non-GHG emissions. EPA is proposing, however, to consolidate NGCC and coal into a single source category for purposes of the NSPS for GHGs. Single cycle gas units would also remain in a separate source category. With NGCC and coal in the same source category for purposes of GHG NSPS, EPA says that the “best demonstrated technology,” or “BDT,” for this source category is the performance of an NGCC. BDT is the standard for setting NSPS.
EPA states that it is not concluding that carbon capture and sequestration (“CCS”) is BDT for a new coal plant. It says it does not conclude that CCS is commercially available at this time. EPA does propose, however, that a coal unit committing to install CCS would have the option of meeting the CO2 performance standard over a 30-year averaging period rather than immediately, providing it meets an 1,800 lb CO2/MWh standard for the first ten years, which is the performance EPA thinks a new efficient coal plant can achieve.
While disclaiming that it is relying on CCS as BDT, EPA concludes that CCS is technically feasible now. EPA says that “although the costs of CCS are presently high, we have reason to expect that the costs of CCS will decline over time.”
EPA also proposes to carve out of the new NGCC-coal source category what it calls transitional sources. These are defined as units that have air permits — or units looking to renew permits that are part of a Department of Energy demonstration project – provided that these units start construction within 12 months of publication of the proposal in the Federal Register. EPA says it believes there are 15 such units.
EPA says the proposal will have little impact, either economically or in terms of reducing GHGs, because the agency’s baseline analysis shows that no new coal units will be built for 20 years anyway. On the other hand, EPA says the reason it is proceeding with this rule is because existing coal generation is among the largest sources of GHG emissions in the country.
Although the proposal applies only to new units, EPA states that it will propose standards for existing units “at the appropriate time” in the future. EPA has entered into a settlement agreement with environmental groups committing to propose and finalize GHG NSPS for new, modified and existing coal generators, and Tuesday’s proposal fulfills part of that commitment (the settlement agreement date for proposal of all three standards is long overdue). As to when EPA will proposed standards for existing units, EPA Administrator Lisa Jackson stated in her press conference announcing the proposal that “[w]e have no plans to address existing plants and in the future, if we were to propose a standard, it would be informed by an extensive public process with all the stakeholders involved,” and Assistant Administrator for Air and Radiation Gina McCarthy carried that message in previously scheduled testimony n Capital Hill on Wednesday. Environmental parties did not seem to be overly disturbed at the delay on proposing GHG standards for existing units and were quoted in press reports as stating that they did not interpret Jackson’s statement as indicating that EPA was not moving ahead on existing source standards.