The Environmental Protection Agency has finally proposed a suite of new regulations targeting carbon pollution from most of the nation’s 3,400 natural gas and coal plants, which are responsible for about 25 percent of the country’s greenhouse gas emissions.
Power plants are the second-largest source of the country’s climate pollution, but also a sector whose emissions shrunk by more than a third since 2005. President Joe Biden has promised an even more dramatic shift in the next 12 years to reach 100 percent “clean” electricity by 2035. The Inflation Reduction Act’s renewable investments help some, and these new rules nudge it along further.
The EPA expects the regulation would slash carbon dioxide emissions by at least 617 million metric tons through 2042, equivalent to halving the total number of cars on the road for a year. It also expects other benefits: the agency projects the rule will cut sulfur and nitrogen emissions along with particulate matter, so the US will avert 1,300 deaths, 2,000 asthma cases, and more than 100,000 lost days of work and school in 2030 alone.
The EPA is attempting to shift a fossil fuel power sector made up of complex parts: Some coal plants are already expected to retire by 2032. Some plants run regularly to provide basic electricity needs, while others only operate some of the time, when electricity demand peaks. Some plants are smaller and may be less equipped to handle the costs of upgrades.
The EPA accounts for all these competing interests by breaking down requirements in a number of categories. Utilities, working with states, would ultimately decide how to meet the EPA’s emissions rates by choosing among available technologies. Coal plants, for instance, could fire less carbon-intensive fuels such as hydrogen and gas, to supplement coal. Coal and gas plants can also install carbon capture and storage or sequestration, a technology that removes carbon dioxide at the smokestack to eventually store it underground. Or a plant could bypass all this if it sets a retirement date in the medium term.
Natural gas plants also emit carbon, just less than coal. The EPA’s proposal only covers the largest of the existing gas plants, leaving out a potentially large category of polluters. Another new regulation targets gas plants that have yet to be built, and will phase in immediately once the EPA finalizes its rules.
It’s been 14 years since the agency published its analysis that greenhouse gases pose a threat to public health and welfare, a decision that triggered its Clean Air Act obligation to take action on the largest sources of emissions. At the time, the biggest climate threat was coal in the power sector, followed by transportation. Now transportation is a bigger source of emissions, but there’s also more riding on clean electricity than ever before. Technologies like electric vehicles and heat pumps help move the economy away from oil and gas, but they will need to plug into a grid that’s powered by renewables, not coal or natural gas, to truly be clean alternatives.
Regulating power plant pollution is easier said than done. The rule’s most controversial part is how it treats carbon capture and storage — a process that pulls CO2 from the smokestack and buries it underground — as a viable option for both coal and gas plants. It reignites a debate about whether carbon capture and storage is ready for prime time, or just a way of stalling an inevitable transition to cleaner energy.
The EPA has had climate rules for cars and trucks and oil and gas infrastructure for over a decade. The coal and gas sector will face their own overdue regulations if these rules withstand the legal challenges.
The Biden EPA is walking a tightrope between Supreme Court limits and its climate mandate
The delays weren’t for lack of trying. The Obama administration first issued regulations under its Clean Power Plan, which gave states a blueprint to meet their emissions reduction goals, whether that meant more renewables, greater energy efficiency, or switching from coal to gas. The Supreme Court stayed the regulation before it ever took effect (one of Justice Antonin Scalia’s last acts on the bench). Trump reversed the Obama rule and issued a replacement, one that made an infinitesimal cut to carbon emissions. In fact, it was structured in a way that would require improvements in the plant’s efficiency, effectively leading it to pollute even more. The DC circuit court knocked down that rule too.
Then, before the Biden administration could issue its own version, the Supreme Court in West Virginia v. EPA, in 2022, narrowed the Biden administration’s toolkit considerably. It ruled 6-3 that the EPA exceeded its powers when the Clean Power Plan prescribed statewide performance averages that shifted how much states would rely on coal. The Supreme Court ruled that the Clean Air Act only allows the EPA to propose changes within the plant itself to slash carbon emissions.
This led the EPA back to the drawing board, with fewer options to choose from. Despite its narrower powers, it has some things working for it too. The economy is already transitioning off of coal, and renewables can beat out both coal and gas on price alone. And the Inflation Reduction Act gives renewables an even bigger boost.
The power sector has changed dramatically during the long wait for regulations, so Biden is in a different position than Obama was: he simultaneously has less legal bandwidth to work with and more leeway in the economy.
While limited legally, Biden can go bigger because he has a few advantages, namely a utility sector that’s already undergone a transformation: Coal today is at about 20 percent of electricity production, down by almost half from 2014 when Obama issued his Clean Power Plan. Natural gas is now the dominant energy source, at 40 percent.
The EPA couldn’t reprise its earlier strategy of having states meet a certain minimum of renewables in their energy mix. The Clean Air Act requires the EPA to consider the “best system of emission reduction,” and the Supreme Court says that’s only limited to upgrades at the plant itself.
Any EPA standards would have to target technology that can be installed inside the fenceline, like installing carbon capture and storage or converting the plant to run on hydrogen. Utilities aren’t mandated to do one or the other, but get longer to comply if they choose to make these changes (or they can sidestep the rules entirely by retiring the plant).
Even if the EPA can’t force a transition away from coal and natural gas, some utility operators and states still see the writing on the wall. Renewables are even cheaper than both coal and gas, and now have added incentives because of the Inflation Reduction Act. Some of these plants might just close anyway, not necessarily because of this rule, but taking into account the costs of upgrades (there are other, non-climate EPA rules that require coal plant cleanup) and economic realities.
All this time, the power sector hasn’t faced federal climate regulation but has been getting cleaner anyway. It’s just not moving at the pace necessary to meet US and global climate goals. Getting the rules nailed down matters not just for the climate, but also because utilities need to start planning and building their next generation of plants. Many of them slowed such building over the past decade while waiting for the dust to settle on power plant rules.
The EPA makes a big bet on carbon capture and storage: “There’s great uncertainty about how well it will work.”
The Biden administration’s most daring ploy is relying on newer, more expensive technology to get around its obstacles. If a coal plant doesn’t add low-carbon hydrogen and remains open, then it will eventually have to capture its pollution emitted at the smokestack.
Carbon capture and storage involves removing carbon before it escapes the smokestack, transporting it by pipelines, chemically converting it, and burying it deep underground where it hopefully stays put.
In a brief published ahead of the rule, the Natural Resources Defense Council likened carbon capture and storage to many of the technologies power plants have handled before, like “sulfur dioxide scrubbers and other pollution controls on which EPA has been basing standards for decades.” NRDC’s senior attorney David Doniger wrote, “While community safeguards are needed to ensure the plants, pipelines, and storage sites don’t leak, each part of this technology is well demonstrated and has been used for years in a variety of industries.”
But capturing carbon dioxide at the plant, transporting, and storing it safely is harder than that. “There’s great uncertainty about how well it will work,” said Institute for Energy Economics and Financial Analysis expert David Schlissel. There are only around 40 instances of its use worldwide, often for industrial operations.
Capturing carbon is energy-intensive, and certainly more expensive to operate than letting the carbon escape into the atmosphere. In fact, the only large-scale CCS plant in the country, Petra Nova, closed in 2020 because of shaky economic conditions.
Skeptics of CCS point to other problems. Schlissel wonders how well the carbon capture will work, and how often. To keep the carbon emissions down, the federal government estimates a power plant must capture over 95 percent of CO2 — that’s year-round, for decades. In the real world, Schlissel says the technology doesn’t reach that efficiency around the clock.
Installing and running the units is one thing, but carbon capture isn’t effective without storage. Storing it means changing it chemically so it turns into a solid when injected into appropriate geological formations. These conditions don’t just happen to exist next to a coal plant, but require a network of pipelines to be built to carry the gas, introducing another set of problems. CCS is also energy-intensive. A plant needs equipment to actually capture, compress, and transport the carbon.
It’s likelier that more gas plants take up carbon capture than coal. The proposed rule only covers the largest gas plants, those over 300 megawatts and that operate over half of the time. These plants face a 2035 deadline either for 90 percent carbon capture or to reach 30 percent use of hydrogen.
Evergreen Action, an environmental policy think tank, said they intend to push the EPA to extend the requirements to cover more plants in their final version. But if they succeed in getting a broader rule, the EPA has to contend with another set of unique challenges. Coal has been used to fill intermittent gaps in grid usage, like when energy use peaks in the summertime, but gas plants are more likely to work year-round. That makes running CCS a requirement at gas plants, but even more expensive.
Even if all this works, some environmentalists are concerned CCS will prolong the life of coal and gas, leaving communities around them facing the consequences of the other kinds of pollution that coal generates, like sulfur and nitrogen emissions.
The EPA will have to contend with many of these criticisms as it considers feedback on its draft proposal. When the rules are finalized, they will likely kick in immediately for new plants, but existing plants will have much longer to comply. A final plan for existing plants probably wouldn’t take effect until at least 2026, and then they have another few years to determine what option they will take.
The EPA has one extra card to play: the Inflation Reduction Act
The skepticism of CCS doesn’t completely undercut the EPA rule or Biden’s plans for a cleaner power sector.
The US is already about halfway to Biden’s renewable goals. As of 2021, the US had 40 percent carbon-free electricity — the largest share (19 percent) made up by nuclear power. Hydro accounts for some of that electricity as well, with wind, solar, and biomass energy at just 14 percent.
The Inflation Reduction Act will help speed that transition along. Without the IRA, the EPA modeled that the US was on track for 55 percent reduction in carbon emissions by 2040 before the IRA passed. Now, with billions of dollars incentivizing renewable production tax credits, EPA expects an 80 percent reduction in emissions by 2040.
Renewables will be even cheaper for utilities because of production tax credits in the IRA. There are also incentives for carbon capture and storage, and hydrogen, making the expensive alternatives more attractive.
The IRA plays an important part in making the new rules viable. The EPA expects that tax credits for hydrogen and carbon capture and storage will keep the costs of these technologies reasonable for utilities. Meanwhile, consumers have more options than ever to reduce their energy bills through other IRA incentives.
“This rule doesn’t operate in a vacuum,” White House climate adviser Ali Zaidi said in a press call. “It operates in a country where the president has secured a suite of incentives and rebates, aimed at helping consumers cut their energy consumption.”
Legally, the EPA is on even stronger footing than before the Supreme Court ruling. That’s because Congress has only strengthened the EPA’s position with the Inflation Reduction Act. The law states plainly that carbon emissions are within the EPA’s ability to regulate under the Clean Air Act, the first law to crystallize the endangerment finding.
The IRA does ensure there will be less coal and natural gas than would otherwise be around in 2040. It doesn’t eliminate these sources by any means. But the EPA regulation tries to make up for that, by setting an expectation that what does stick around is polluting a lot less.