The U.S. Environmental Protection Agency proposed the first
greenhouse gas emission limits applicable to new electric
generating units, or "EGUs," on March 27, 2012. The
proposal—described by EPA as a "Carbon Pollution
Standard"—would effectively prohibit the
construction of most new coal-fired generating units, unless they
utilize
carbon capture and storage either upon construction or no later
than the 11th year following construction.
The proposed rule is in the form of a "new source
performance standard" under the Clean Air Act that applies to
EGUs with a base load rating of more than 73 megawatts that
commence construction after April 13, 2012. Certain municipal waste
combustor units, solid waste incineration units,
biomass-fired units, and units in noncontinental portions of
the U.S. are exempt. In addition, "transitional sources"
that received Prevention of Significant Deterioration permits prior
to April 13, 2012 (the date the proposed rule was formally
published in the Federal Register) and start construction within
the next 12 months would also be exempt from the standards. EPA
estimates that there are about 15 projects that will qualify as
transitional sources.
The emission standard in the proposed rule is 1,000 pounds of
carbon dioxide ("CO2") per gross output in
megawatt-hours ("MWh") on a 12-operating-month annual
average basis. Alternatively, an EGU that uses coal or petroleum
coke for fuel and is designed to allow for the future installation
of carbon capture and storage may emit up to 1,800 lbs/MWh of
CO2 on a 12-month annual average basis for the first 10
years of operation, but no more than 600 lbs/MWh of CO2
on a 12-month annual average basis for the next 20 years. EPA
estimates that the average emission rate from a coal-fired EGU is
2,249 lbs/MWh of CO2.
EPA based the new emission limit for new EGUs on the performance
of natural gas combined cycle units, which EPA believes will likely
be the predominant fossil-fuel-fired technology for new EGUs, based
on economic factors such as the significantly lower price of
natural gas and energy industry modeling forecasts. The 1,800
lbs/MWh limit can be met, EPA claims, if a new EGU uses
supercritical steam. EPA recognizes that carbon capture and storage
("CCS") technology is currently very expensive but
predicts that the technology will become less costly in the future.
The proposed rule does not, however, contain any proposals to
modify or streamline the permitting burdens associated with
CCS.
Although the proposed rule does not apply to existing or
reconstructed units, EPA has requested comment on how greenhouse
gas emission limits should apply to such units. Criticisms of the
proposed rule include assertions that it is based on faulty
predictions regarding both the price of natural gas (making
natural-gas-fired EGUs economically attractive) and the development
of technologically and economically viable CCS options.
EPA will accept comments on the proposed rule until June 12,
2012.
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