The EPA Strikes Back

In last summer’s West Virginia v. EPA decision, the Supreme Court held that the EPA’s claims of vast new powers to reorganize America’s electricity sector raised a “major question,” requiring Congress to clarify an obscure provision of the Clean Air Act. The EPA’s proposed power-plant rule relies on the same provision, raising the same problem — and others besides.

Just as Obama’s Clean Power Plan did for coal plants, the EPA’s new rule mandates emission-reduction goals that will be virtually impossible for fossil-fuel power plants to attain. This time, the main targets are the natural-gas plants responsible for a 40 percent reduction in carbon emissions from America’s power sector since 2010. Many will shutter, and the remainder will pass the rule’s exorbitant compliance costs onto consumers.

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Electricity will become scarce and much more expensive, but not anytime soon. The rule’s stringent limitations kick in after 2030. That’s another page from the Obama playbook: Enact ruinous regulations that industry has to start complying with today and let the major political impact fall on a future president.

Under the proposed rule — which President Biden hopes to finalize next year — most new and existing fossil-fuel power plants would be required to achieve emissions reductions that might be possible using, among other exotic technologies, carbon capture and storage (CCS) and hydrogen produced from renewable sources for “co-firing” with natural gas.

Under Section 111 of the Clean Air Act, the EPA can mandate emissions limits that are achievable using the “best system of emissions reduction” that has been “adequately demonstrated,” taking into account cost, environmental impact, and energy requirements. That is a high standard to meet, and despite the EPA’s claims to the contrary, its proposed rule fails to meet it. The EPA cites multiple examples of facilities in which carbon capture and hydrogen co-firing have been “demonstrated.” But none of the examples are large natural-gas power plants, which its new rule is mainly targeting. As a Wall Street Journal editorial points out, “only one commercial-scale coal plant in the world uses carbon capture to reduce emissions, and no gas-fired plants do.” And as for hydrogen co-firing:

Natural gas plants might be able to comply with the rule by blending hydrogen into fuel. But almost all hydrogen today is produced from natural gas, so this wouldn’t result in a net reduction in CO2. Hence, EPA wants to make gas plants use “low-greenhouse gas” hydrogen produced from renewable electricity, which is three to four times more expensive.

Blending more hydrogen into gas also increases NOx emissions and puts plants out of compliance with other EPA regulation. To reduce NOx, power plants would have to install new turbines and other equipment, some of which is only now being developed.

Simply put, neither technology has been “adequately demonstrated” in the configuration and at the scale necessary to comply with the rule. And technologies that are merely theoretical don’t count as being “adequately demonstrated” under Section 111. The D.C. Circuit Court of Appeals held in Sierra Club v. Costle (1981) that the EPA may “hold the industry to a standard of improved design and operational advances, so long as there is substantial evidence that such improvements are feasible.” The EPA faces a fearsome uphill climb to convince federal courts of its rule’s feasibility.

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Indeed, according to a recent report, the rule goes far beyond what the EPA originally intended. The draft rule that the EPA sent to the White House just a few weeks ago for final regulatory review applied only to new power plants (not existing ones), didn’t mention coal plants at all, and set a slower timetable for phasing in the new technologies. The White House reportedly sent the draft back to the EPA with instructions to add existing coal and natural-gas plants to the rule and accelerate the phase-in timeline. It had already been clear that EPA administrator Michael Regan didn’t see the point of proposing a power-plant rule that would get blown up on first contact with a federal court, but the White House was pushing him to swing for the fences. Now the White House has forced the EPA to propose a rule that its leadership doubts can survive court review.

Especially given these last-minute changes from the White House, the EPA’s estimate of costs and benefits ($85 billion in net climate and health benefits) are pure speculation. The EPA really has no idea how much the rule would cost and can only guess how utilities will react to it, which means that it doesn’t know how the rule will impact electricity requirements or the environment. Indeed, the EPA admits that over the next year it will have to “complete additional advanced modeling . . . considering real-world scenarios within the power sector to best understand how components of the rule impact each other.” Even its calculations of cost-effectiveness amount to an accounting trick, relying on the Inflation Reduction Act’s exorbitant subsidies for CCS and hydrogen power to make mandating these technologies seem “cost-effective.”

Read the full article on the National Review.