EPA rule against power plants – bad for energy reliability and prices, bad for rule of law

The EPA today announced its final rule establishing carbon dioxide (CO2) emission guidelines for existing coal power plants and CO2 performance standards for new natural gas power plants. CEI energy policy experts explain how the rule will drive up energy prices, make energy less reliable, and undermine constitutional constraints on unaccountable government power.

Statement by Daren Bakst, director of CEI’s Center on Energy & Environment:

“The EPA is once again trying to play the role of the nation’s electricity grid manager. It has finalized requirements that will lead to a major shift from reliable sources of electricity (coal and natural gas) to unreliable sources of electricity, such as wind and solar. When Americans flick on the switch, they want and rightfully expect the lights to come on. If the EPA gets its way, then Americans may need to change that expectation. This rule will also likely drive up electricity prices, which will hurt all Americans, especially the poor.

“The agency absurdly thinks its authority to regulate means it has the authority to shut down businesses. Establishing new regulations for power plants does not mean the agency can effectively force them out of business. This is Clean Power Plan Part II, but like with many sequels, it is worse.”

Statement by Marlo Lewis, CEI senior fellow:

“The final rule differs from the EPA’s May 2023 proposed rule in minor ways; but the big picture remains the same—the rule establishes 90 percent carbon capture and storage requirements that will drive coal and gas generation out of the nation’s electricity mix.

“This is the Clean Power Plan on steroids. The rule defies the Supreme Court’s ruling in West Virginia v. EPA. It is an unlawful assault on affordable energy and grid reliability. “

Key points about the EPA CO2 rule:

• The proposed rule would require baseload coal power plants that don’t choose to close early (before 2039) to capture 90 percent of their CO2 emissions by 2030. The final rule extends the 90 percent CCS deadline until 2032. That does not change any utility’s bottom line. It just means existing baseload coal power plants have two more years to sell the furniture and pack their boxes.
• The proposed rule would require new natural gas power plants to capture 90 percent of their CO2 emissions 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. Apparently, even the EPA now recognizes its “adequately demonstrated” determination could not pass the laugh test.
• In the proposed rule, the 90 percent CCS/96 percent co-firing requirement applied to existing baseload natural gas power plants as well as new facilities. The final rule defers existing source requirements to a future rulemaking. How stringent those requirements prove to be is anyone’s guess.
• On balance, the final rule is more stringent than the proposed rule in some respects, less stringent in others. Both are far more aggressive than the Clean Power Plan, which the Supreme Court vacated in West Virginia.
• Whether coal and gas power plants should be forced out of the nation’s electricity supply system is obviously a major question of national policy. The EPA may not decide that question absent a clear statement of congressional authorization. As the Supreme Court ruled in West Virginia, Section 111 of the Clean Air Act does not come “close to the sort of clear authorization required” to “delegate authority of this breadth to regulate a fundamental sector of the economy.”