Biden Power Plant Plan Gives Industry Time, Options for Cutting Climate Pollution

President Joe Biden’s administration on Thursday unveiled its long-awaited plan for tackling power plant carbon pollution—a complex and politically fraught effort that is the foundation for all other efforts to quell the climate crisis.

Without carbon-free power, it won’t be possible to cut greenhouse gas pollution from vehicles, buildings or industry.

But fossil fuel industry allies in both Congress and the states are ready to push back, using essentially the same argument they have used for years: the technology is not ready. They have the advantage of a Supreme Court dominated by Republican-appointed justices who favor limiting the historical role of regulatory agencies like the Environmental Protection Agency.

Clearly cognizant of these challenges, the Biden EPA produced a highly customized set of rules designed to give the power industry both time and options for cutting their greenhouse gas emissions. Large categories of coal and natural gas power plants—those that are going to close soon, or are small, or only run intermittently—will not face new requirements at all. And clean-up of the electricity sector will rely on two technologies—carbon capture and storage, or CCS, and clean hydrogen—that are receiving billions of dollars of federal subsidies approved by Congress over the past two years.

Moreover, no fossil fuel plant will be forced to install those technologies before 2030. Large natural gas plants have until 2035 or 2038 to equip themselves with carbon capture and other technology to cut emissions 90 percent. That suggests the U.S. won’t make it to Biden’s goal of 100 percent carbon-free electricity by 2035 on this rule alone, even if it survives all of the challenges that the industry and states are preparing to launch.

A preliminary analysis by the Center for Global Sustainability at the University of Maryland suggests the rule would help drive an 82 percent reduction in greenhouse gas levels from the power sector by 2040 from their 2005 peak. But that analysis concludes the rule is a “major step” toward the U.S. meeting its goal under the Paris agreement of cutting economy-wide carbon emissions 50 percent by 2030 and 100 percent by 2050.

Biden administration officials portray the new rule as just one component of a suite of policies—including the unprecedented $370 billion federal investment in clean energy from last year’s Inflation Reduction Act—that together will drive the U.S. to a net-zero carbon economy.

“The president’s 100 percent by 2035 goal for the power sector is his goal,” said Ali Zaidi, White House climate advisor in a briefing with reporters. “It’s been the North Star that’s guided policy as we’ve worked to modernize the grid, to accelerate innovation on clean energy technologies, to build out our capabilities here in the United States to manufacture clean energy technologies.”

The new proposed regulations are “part of that approach,” Zaidi said, calling them, “rules of the road standards that can help facilitate and reinforce that shift.”

Said EPA Administrator Michael Regan, “When you look at what is in this rule and has been proposed, we are absolutely in line with the president’s goal.”

Back to the Drawing Board

Power plants account for 25 percent of U.S. greenhouse gas emissions, making them second to vehicles as a carbon polluter. But their importance is far greater than those numbers suggest. Cleaning up power plants will enable carbon reduction in the transportation sector through electric vehicles, and in homes and businesses, through electric appliances. 

President Barack Obama’s previous effort to control power plant emissions, the Clean Power Plan, was stayed by the Supreme Court in 2016. Since then, it’s been a long walk back to the drawing board. 

The high court became reinforced with appointees of President Donald Trump who take a dim view on federal agency authority. Then, last year, in an unusual case led by West Virginia, the justices ruled that the EPA could not enact an Obama-style, system-wide give-and-take program for reducing greenhouse gas emissions from the power sector without explicit authority from Congress.

The Obama administration tried to offer industry flexibility through use of market mechanisms like emissions trading among power plants to achieve greenhouse gas reductions. Biden’s plan, authored by some of the same environmental lawyers who served Obama, still seeks to provide flexibility, but only “within the fenceline” of each individual power plant, as the Supreme Court signaled was necessary to pass legal muster.

The Biden team made other breaks from the Obama approach. No announcement in the White House Rose Garden (one Trump-appointed appeals court judge remarked during litigation that the fanfare was a sure sign it was a major policy that only Congress, not the administration, had authority to decide.) 

Instead, Regan talked briefly on the rule at a University of Maryland event devoted to greater youth engagement on environmental issues. There’s no catchy name like the “Clean Power Plan.” The name of the 681-page regulation, more than three lines long in small print, begins, “New Source Performance Standards for Greenhouse Gas Emissions from New, Modified, and Reconstructed Fossil Fuel-Fired Electric Generating Units….”

Supporters of the plan argue the Biden administration is better positioned than Obama to put its plan in place in part because of the precipitous drop in renewable energy prices and the billions in dollars of federal support for deployment of CCS and clean hydrogen technologies.

CCS has had a tumultuous history. Although the technology has been proven in oil fields and other industries globally as a means of capturing carbon emissions, efforts to equip power plants in the United States with the technology to capture emissions from plant smokestacks have failed. Currently there are just two commercial-scale power plants operating in the world equipped with CCS—one in Canada and one in China, according to the Global CCS Institute.

Cost remains a serious hurdle. In a recent report, the Energy Department estimated a wide range of costs for capturing carbon emissions from gas power plants and determined that even the cheapest remain unprofitable, despite newly expanded tax credits that provide $85 per ton of carbon dioxide captured and stored. Putting carbon capture on coal plants is cheaper, but only slightly so.

Wyoming has been trying to compel utilities to install carbon capture equipment on some of their coal plants in that state, driven by a law enacted in 2020. So far, the utilities have balked, telling regulators that the technology remains too expensive.

In a filing last year, Black Hills Energy said operating carbon capture equipment would consume more than a third of the electricity produced by the coal plants and could require increasing electricity rates by as much as 16 percent. The company also said the equipment could lead to an increase in certain air pollutants and “would apply stress on existing aquifers in the area” because of higher water demand.

“There were issues about water, there were issues about other pollution controls,” said Shannon Anderson, staff attorney at the Powder River Basin Resource Council, a Wyoming environmental group. “So cost is definitely a barrier, but there are other barriers that are not talked about as much.”

John Thompson, markets and technology director at the Clean Air Task Force, an environmental advocacy group that is supportive of carbon capture, said the EPA rules could eventually lead companies to overcome these barriers.

“You don’t install pollution control equipment unless you have a reason to,” he said, with the rule finally providing that reason. Thompson argued that carbon capture would now be an appealing option for fossil fueled power plants that provide base-load power—running the vast majority of the time—and are expected to operate past the 2030s.

“That’s where I think you’re going to see the uptake,” he said. “And frankly that’s a great place to be putting it.”

Nevertheless, many experts and advocates say the rules are unlikely to lead to widespread use of carbon capture on the nation’s coal plants—most are already expected to close by 2040, and only plants staying open beyond that year would be required to install CCS.

The Carbon Capture Coalition, which includes utilities, fossil fuel producers, unions and a few environmental groups including the Clean Air Task Force, was happy that the Biden administration sought to elevate CCS by using it as a basis for its proposed standard.

“Natural gas power will be in the domestic energy mix for decades,” said Jessie Stolark, executive director of the coalition. “Even with aggressive, high penetration renewable scenarios, which show significant deployment of renewable resources in the next decade, we’ll need firm, dispatchable power, which may be provided by carbon capture at fossil fuel-fired power plants.”

The Choices: Equip, Switch or Fight

Climate advocates believe the Biden proposal will achieve a result that is not spelled out in the language of the proposed regulation: It will catalyze a faster transition to wind, solar and other carbon-free and renewable energy. Such switching could not be the basis for the standards, last year’s Supreme Court decision made clear.

“But it is certainly an option for compliance,” said Lissa Lynch, director of the Natural Resources Defense Council’s federal legal group, climate and energy program. 

“When you’re looking across all these standards and deciding what to do with your existing fossil fuel-fired power plants,” she said, “one of your options is to just retire it and replace it with something cleaner, which the Inflation Reduction Act incentives make economically a very rational choice.”

Steven Hamburg, chief scientist at the Environmental Defense Fund, believes that hydrogen, the other clean fuel option open to big natural gas plant operators under the new rule, will not be a first-line choice but will “naturally settle into filling gaps.”

No matter how hydrogen is produced, be it from water or natural gas, significant amounts of energy are used and lost in the process, he said. That means that most of the time, it would be cheaper and simpler to generate electricity directly either from renewable sources or from natural gas with carbon capture, rather than converting it into hydrogen and then burning that in a turbine.

But at times, hydrogen could act like a battery, evening out fluctuations of the electric grid, Hamburg said. When demand is low, companies could use excess renewably-generated power to produce hydrogen from water and then burn that later on when demand peaks. Clean hydrogen could also be produced using natural gas combined with carbon capture technology, though there are questions on whether that technology can adequately reduce emissions to qualify as “clean.”

But the biggest questions for EPA, from a legal standpoint, will be whether carbon capture and clean hydrogen technologies are ready for prime time in the energy system. Scott Segal, of the lobbying and law firm Bracewell, which represents electric utilities, natural gas and other energy industry clients, said emissions control benchmarks in Clean Air Act regulations must be  adequately demonstrated, not merely technically possible. Also, he notes Congress has previously stated that subsidized technology should not be the basis for regulatory standards.

Segal also argues that CCS may not be a technology within the plant fence line, as the Supreme Court said was required in last year’s West Virginia case. “Carbon capture to be effective as a control system must be attached to a pipeline and ultimately to a sequestration site, both of which are well outside the fence line,” Segal said.

West Virginia, which relies on coal for more than 90 percent of its electricity, has already signaled it will launch a legal challenge against any new climate rules for power plants. “EPA may have its work cut for it in front of an increasingly skeptical judiciary,” Segal said.

But Jay Duffy, litigation director at the Clean Air Task Force, argued that the reliance on carbon capture is well positioned to withstand legal challenges. The disposal of carbon dioxide through pipeline and sequestration is no different than the removal of sulfur dioxide pollution from plants with scrubbers under the acid rain program that has been in place since the Clean Air Act Amendments of 1990, he said. 

Duffy said carbon capture is, in fact, just as developed and widely available today as were scrubbers for limiting sulfur pollution when the EPA required their installation. “Pollution controls will sit on dusty shelves until there is an incentive or a standard that drives their deployment,” he said.

Some environmentalists said that they will be pushing EPA to strengthen the standards during the 60-day public comment period that will begin as soon as the rules are published in the Federal Register. 

Currently, the proposal only covers large natural gas plants that run more than 50 percent of the time. That means the smaller plants, which account for 75 percent of natural gas emissions in the power sector, face no new requirements. The EPA has asked for public comment on how to meet its obligation to regulate greenhouse gas emissions from smaller or intermittent-running facilities.

But for the larger plants, many environmentalists agree that power plant standards to control greenhouse gas emissions—which EPA determined were a threat to human health and the environment in 2009—are long overdue.

“It will be up to the plants to determine how to comply with these emissions limits,” Duffy said, “but the option of doing nothing is no longer viable.”