Friday, April 06, 2012

Live blogging the new EPA coal plant rule - this'll be exciting

The rule discussed by Eli will require new coal plants in the US to emit no more CO2 than natural gas plants do.  Thought I'd take a closer look at it, so here it is.  Below are a few topline comments, then after the jump are specific callouts and leg-shivering quotes from the doc.

  • If you want to see our existing coal plants required to either install carbon capture and storage, do offsets that hopefully work, or get shut down, then you should hope that this proposed rule results in new coal/coke plants get constructed and use CCS.  Given the economics favoring natural gas over coal for new plants after the next few years finish coal plants that are already in the pipeline for construction, then the only way this will happen is through subsidies for CCS.
  • This is a regulated utility market we’re talking about, not a regulated free market.  Don't expect classic economic principles to work here.
  • This proposal is meant to help get carbon capture and storage going. The way it does that is that it requires CCS for new coal plants, and because CCS is required, utilities can add it and then pass on the costs/risks to customers. Absent the requirement, then the utility might not be allowed by regulators to pass on the costs. Consider this proposed rule to be a “permission slip” to do carbon sequestration.
  • Big implication: if CCS gets off the ground for new plants and proves to be not too expensive, then it may be required for old plants.  See for example, discussion of plant modifications on p. 42-44.
  • Treating new coal plants as having to meet natural gas emission standards, rather than establish special standards for coal, is important precedent for future attempts to regulate existing coal plants.
  • I think I may submit actual comments to the EPA, see discussion of pages 48 and 62.  Anyone want to join in?

Specific comments/excerpts after the jump.

BTW, the page numbers link to the temporary placeholder link above.  I just realized they might go away when this gets officially published.  Oh well.

page 1:
remember, just a proposed rule, this puppy could change

applies to all new fossil fuel plants.  Comment: In practice that might just mean coal and petroleum coke, but just in case something weird happens, it's ready for the kerosene plants.

p. 2:
"In its base case analysis, the EPA does not project any new coal-fired EGUs without CCS to be built in the absence of this proposal through 2030."

Comment:  A Dept of Energy doc from January anticipates new coal plants up to 2017 at least (slide 8).  I guess they don't have to agree with each other.

Coal/coke plants can achieve compliance by using CCS for 50% of all emissions, or 100% of second half of lifetime emissions.

They expressly rule out regulating new plants that begin construction within a year of rule finalization.  On p 15 they rule out regulating increased capacity at existing plants       

p. 14:
"we expect the difference  [between coal with CCS v natural gas without] to decrease over time as CCS becomes more mature and less expensive."

Comment:  I'm probably friendlier to CCS than many other climate hawks, but I have trouble buying this statement.

`New coal plants putting off compliance into the future will still have some immediate compliance requirements, so that's good.

p. 16-17:
Comment:  Fifteen proposed plants - no regulation if they start construction within a year - this might explain what DOE anticipated.  I'll bet not all 15 get going in time.  I'll further bet this proposed rule will soften before finalization.

p. 24:
Comment:  fossil fuel plants are 40% of US CO2 emissions.  that's a lot.

"New coal-fired power plants with CCS are being permitted and built today, albeit usually with considerable financial assistance from the federal government."

Comment:   had to look this up.  There actually is some activity with CCS, but it's mostly to enhance oil recovery, spewing still more CO2 in the air.  That should hardly count.

[One utility decided on a] recent deferral of a large-scale CCS retrofit demonstration project on one of its coal-fired power plants because the State’s utility regulators would not approve CCS without a regulatory requirement to reduce CO2.

Comment: demonstrates we have to remember this is not a free market that we’re talking about, and the relevance of a regulated utility here – the utility couldn’t pass onto consumers the cost of CCS because regulators said the utility didn’t have to undertake CCS.

Comment:  Doesn’t affect biomass boilers that cofire with fossil fuel – implicit recognition that the CO2 from biomass is at least partially recycled.

p. 42:
“For purposes of today’s action, the EPA does not have a sufficient base of information to develop a proposal for the affected sources that may be expected to take actions that would constitute “modifications” (as defined under the EPA’s NSPS regulations) for GHGs and therefore be subject to requirements for new sources. As a result, the EPA is not proposing requirements for NSPS modifications for GHGs.”

Comment:  this process could show CCS is sufficiently feasible that it should be required for modifications.

p. 44:
“In today’s action, we solicit comment on the types of modifications power plants may undertake and the appropriate control measures. Depending on the information we develop, we may issue proposed standards of performance in the future.”

“in today’s action, the EPA is not including a proposal for reconstructed units for GHGs. Instead, we solicit comment on how we should approach reconstructions and, depending on the information we receive, we may propose and finalize a standard for reconstructions at a later time.”

Comment:  this is a significant loophole.  Instead of constructing a new plant subject to CCS, utilities can just reconstruct old ones.  This should be eliminated.  They’re soliciting comments, so I might actually write something.  EPA's reasons for this discussed more extensively starting at p. 186.

p. 60:
Comment: CO2 sinks from land use and forestry make up for one-sixth of our CO2 emissions.  I should probably know more about this.

p. 62:
Comment: Coal plants also emit nitrous oxide and methane, but they’re not proposing controls due to lack of info.  They should include these.

p. 64:
Comment:  EPA promised in a settlement “(1) a rule under CAA section 111(b)that includes standards of performance for GHGs for new and modified EGUs that are subject to 40 CFR part 60, subpart Da; and (2) a rule under CAA section 111(d) that includes emission guidelines for GHGs from existing EGUs that would have been subject to 40 CFR part 60, subpart Da if they were new sources.”

Comment: looks like this proposed rule omits part of part 1 and all of part 2.  I don’t get it.

p. 73:
“Under this proposal, no averaging or emissions trading among affected sources would be allowed.”

p. 76-77:
Comment:  Considering whether to eliminate option in 2020 of allowing compliance via 100% CCS in second half of a coal plant’s life.  Probably a good idea too.  If they start with 50%, they can later be required to do 100%.

p. 109-110:
On EPA’s legal authority to do this, they say “Second alternative interpretation: Rational Basis Prerequisite. As a second alternative interpretation, the lack of any requirement in CAA section 111 addressing whether and how the EPA is to evaluate emissions of particular pollutants from sources in the listed source category as a prerequisite for regulation may be viewed as a statutory gap that requires a Chevron step 2 interpretation. In this case, the EPA is authorized to develop an interpretation that reasonably effectuates the purposes of CAA section 111.”

Comment:  Look up Chevron.  This is an attempt to bullet-proof the rule, although it could also then be reversed via the same reasoning by a Romney Administration.

p. 119:
“Currently available CO2 capture and compression processes are estimated to represent seventy to ninety percent of the overall CCS costs”

p. 143:
“we note that recently, several owner/operators have announced that they do not intend to construct coal-fired power plants without CCS. They have explained that they anticipate more widespread CO2 control requirements in the future, so that constructing coal-fired plants at this time without CCS could leave them subject to liability for high retrofit control costs in the future.”

Comment: Remaining 110 pages:  Combo of pretty technical stuff and paperwork.  The actual proposed rule starts at p. 231.  Think I'm done here.