EPA Proposes Stringent GHG Limits for New Power Plants

Today EPA issued its long-awaited greenhouse gas (GHG) new source performance standards for new fossil fuel-fired electric generating units (EGUs). The proposed rule sets a stringent limit of 1,000 lb carbon dioxide/MWh for new fossil fuel-fired EGUs of more than 25 MW net electrical output. (Coal-fired power plants typically emit an average of 1,768 lb carbon dioxide/MWh.) The proposed carbon dioxide limit is based on the performance of natural gas combined cycle technology. Coal-fired power plants would therefore only be able to comply with the standard by using the carbon capture and sequestration (CCS), currently an unproven and infeasible technology. The proposed rule does not include limits that apply to existing power plants, or "transitional sources," which are proposed plants that already have a complete preconstruction permit and commence construction within 12 months of the issuance of the proposed rule.

EPA has attempted to address the infeasibility of implementing CCS by proposing a 30-year averaging compliance option that would allow coal-fired EGUs to delay the installation of CCS by 10 years. For the first 10 years, the source would be required to comply with a limit of 1,800 lb carbon dioxide/MWh on a 12-month annual average basis, which EPA indicates can be met by supercritical steam conditions, IGCC facilities, and pressurized CFB boilers. By the 11th year, the emission limit would be reduced to 600 lb carbon dioxide/MWh for the remaining 30 years of the compliance period, which would be met through the use of CCS. The idea is that over the 30-year time period, the weighted average carbon dioxide emissions would be equivalent to 1,000 lb carbon dioxide/MWh.

Many observers within the industry believe that if finalized, the proposed rule will spell the end for future coal-fired electrical generation in the United States and poses a very significant risk to existing coal and gas generation that triggers PSD under the GHG Tailoring Rule. The rule has not yet been published in the Federal Register. Upon publication, EPA will accept public comment for 60 days.