EPA Proposes to Repeal Biden Power Plant Rule

As demand for electricity continues to rise, a pragmatic energy policy wins out. 

EPA Administrator Lee Zeldin just announced the proposed repeal of a Biden EPA rule that pushed the premature closure of reliable electricity producers. This rule, the Clean Power Plan 2.0, would regulate greenhouse gas emissions from power plants, pushing most coal out of the generation mix and effectively precluding the construction of new natural gas generation. Repealing this rule will be a positive step toward meeting rising power demand. 

Power demand in the United States has been largely stagnant since the early 2000s, fluctuating only slightly between years. Last year, that trend changed. With the advent of generative artificial intelligence, and the concomitant energy demand from data centers, come large power demand increases accompanied by the impetus to build new power plants. 

Technology companies that own or utilize data centers are looking for ways to power them reliably. Sometimes this comes through regular connection to the power grid, and other times it involves co-location with new or existing power plants where the data center is connected to the power plant “behind the meter,” before the plant’s connection to the broader power grid. 

Nuclear power and natural gas have been favorites of the technology companies looking to strike power provision deals, largely because of their reliability. 

Just as important to meeting demand is keeping existing reliable power plants online as long as possible. The Clean Power Plan 2.0 was a direct threat to that. 

According to the North American Electric Reliability Corporation’s 2024 reliability assessment, generators of nearly 79 GW of thermal units (coal, gas, and nuclear power plants) are scheduled to retire by 2034, and another 43 GW of coal- and natural gas–fired generators have announced plans to retire but have not yet scheduled these retirements with planning authorities. 

The power plant rule was almost certainly a driver of coal power plant closures, and it very well could have affected closures of natural gas power plants. These standards apply to all new or substantially modified gas power plants, meaning that if a plant requires serious updates it may make sense to close it rather than comply with the new standards. The initial rule proposed by the EPA would have resulted in far broader closures than the final rule eventually did. Taking plants off the grid as demand is increasing without replacing them with new thermal units is a recipe for disaster. 

In a paper that came out earlier this year, James Broughel and I argued that one of the most important steps to meet rising demand would be to repeal this rule:

Another component of being ready to meet rising demand is the stewardship of existing thermal capacity. This means reassessing the Environmental Protection Agency’s power plant rule that would result in coal and natural gas plants being pushed offline. At a time of growing demand, these plants will play an essential role in the power grid. 

Now that the repeal of this rule has been proposed and will likely be finalized, our energy policy is one step closer to being ready to meet the coming demand. 

In recent months, as the future of US gas plants looked far more promising (and the repeal of this rule was looking more likely), the demand for new gas plants shot up. The rule likely had a cooling effect on the construction of new natural gas power plants and the manufacturing of new components for those plants. There are now significant delays for many gas plant components including turbines, which have wait times between one and seven years right now. 

This new construction is a positive sign that markets are reacting to new demand for power. Officially repealing the power plant rule will allow companies to have confidence investing in power production to meet this challenge.

A version of this article first appeared on the Independent Institute.