Biden EPA issues final carbon dioxide rules for existing coal and new natural gas plants

Today the U.S. Environmental Protection Agency (EPA) finalized four rules on the nation’s power plants that will have massive implications for the reliability of the nation’s electricity grid. Chief among these rules is the agency’s regulations on carbon dioxide emission from existing coal-fired power generators and new natural gas plants.

Last summer, American Experiment modeled the EPA’s proposed power plant rule and found that it would lead to massive blackouts in the Midcontinent Independent Systems Operator (MISO) region, which is the regional electric grid to which Minnesota belongs.

About the final rules

The EPA has made changes to the final rule that address some of the concerns we raised in our extensive public comments, but the problem with their changes to increase the flexibility of certain power generators is that they are still too little and the mandated emissions reductions still too soon.

The Competitive Enterprise Institute issued a helpful summary of the changes and offered their opinion of how they will impact grid reliability. The biggest changes are as follows:

• The agency is no longer requiring existing natural gas plants to meet the greenhouse gas reduction targets that it established in the proposed rules, but it will be crafting new regulations on them soon. How strict these new regulations will be is anyone’s guess.
• The proposed rule would require baseload coal power plants that don’t choose to close early (before 2039) to capture 90 percent of their carbon dioxide emissions using carbon capture and sequestration (CCS) technology by 2030. The final rule extends the 90 percent CCS deadline until 2032.
• The proposed rule would require new natural gas power plants to capture 90 percent of their CO2 emissions with CCS by 2035. The final rule moves up the deadline to 2032. So, even fewer new natural gas power plants will be built.
• The 90 percent CCS requirement now applies to gas plants that run only 40 percent of the time rather than the proposed rule’s 50 percent threshold. In other words, the EPA redefines baseload generation to impose prohibitive compliance costs on a larger number of new natural gas power plants.
• In the proposed rule, the EPA determined that co-firing with 96 percent “green” hydrogen was an “adequately demonstrated” best system of emission reduction (BSER) for new natural gas power plants, which they could use as an alternative compliance option instead of 90 percent CCS. The final rule drops that alternative, suggesting EPA now acknowledges that this compliance pathway was never feasible.

Reliability concerns persist

While environmental groups cheered the rules, Senator Joe Manchin (D-WV) issued a scathing analysis of the regulations that are worth quoting in their entirety:

“It is obvious that the ultimate goal of these EPA regulations is to stop the use of fossil fuels to produce reliable energy in the United States by forcing the premature closure of coal plants and blocking new natural gas plants. The Administration is more frightened by political threats from climate activists than by the warnings from our nation’s electricity reliability regulators and grid operators that these rules will further strain our already at-risk power grid. It is unfortunate, though no longer unexpected, that in an election year they are trying to score short term political points rather than prioritizing long term reliability. This approach comes at the expense of ratepayers across the country and energy communities, like those in West Virginia that have powered our nation for generations. Let me be clear: American taxpayers will be forced to pay for these rules by purchasing unaffordable and unreliable energy. That makes no sense at all when America is producing record amounts of energy cleaner than ever.

“Their goal is simple: death by a thousand cuts to America’s fossil fuel industry, especially coal. If the goal was truly to reduce emissions, the Administration would be doing everything it can to deploy carbon capture and hydrogen and help the fossil industry continue to produce cleaner energy. But instead, the radical climate advisors at the White House and EPA have allowed over 120 permits for carbon sequestration wells to sit idle and put up roadblocks to deploying clean hydrogen which can help plants reduce emissions. In fact, they have even gone so far as to remove hydrogen blending from the final rule.

“This comes against the backdrop of the Bipartisan Infrastructure Law, the Inflation Reduction Act, and the Chips and Science Act bringing manufacturing back to America and causing a significant growth in electricity demand forecasts for the first time in two decades. We can’t be open for business if we can’t keep the lights on. When the Administration is playing favorites with the law and blocking all of the opportunities to include fossil fuels in a low carbon future, these regulations are neither feasible nor reasonable. All Americans should be concerned about their impact,” said Chairman Manchin.

Senator Manchin’s concerns were echoed by Todd Snitchler, the President and CEO of the Electric Power Supply Association (EPSA):

We hear rhetoric from regulators and policymakers about their commitment to reliability, but rulemaking is where the rubber meets the road. While EPSA welcomed the EPA’s announcement that it had removed existing gas plants from its proposed emissions regulations, the final rule released today is still a painful example of aspirational policy outpacing physical and operational realities (emphasis original).

The rule will place significant restrictions on new natural gas power plants at a time when reliability experts including the Federal Energy Regulatory Commission, the North American Electric Reliability Corporation, and nearly all of the grid operators, are flashing warning signs about the loss of dispatchable capacity during a time of surging electric demand. The almost certain result will be higher prices, diminished reliability, and even increased emissions, by stymying investment in new, highly efficient natural gas facilities to displace older, higher emitting, and/or more expensive resources.

The EPA’s final rules will undermine the reliability of America’s electricity supply by forcing the premature retirement of the nation’s coal fleet and placing onerous restrictions on the new natural gas plants needed to replace them. This situation will increase our dependence upon unreliable wind and solar generators, leaving grid reliability to the whims of the weather.