GHG Regulations for the Electric Sector

EM – April 2024: This month, EM focuses on key issues for regulating electric sector greenhouse gas (GHG) emissions to coincide with new rules from the U.S. Environmental Protection Agency (EPA).
by John Kinsman and Justin Walters

In May 2023, EPA proposed to set CO2 emissions limits for the electric sector, including new gas-fired combustion turbines; existing coal-, oil-, and gas-fired steam generating units; and certain existing gas-fired combustion turbines. On February 29, 2024, EPA Administrator Michael S. Regan announced that the final 111 rules would not include existing natural gas-fired turbines. EPA, instead, plans to take a more comprehensive approach for regulating natural gas-fired combustion turbines that will cover hazardous and criteria air pollutants, in addition to GHGs. This is EPA's third attempt to regulate existing EGU CO2 emissions using section 111(d) of the U.S. Clean Air Act (CAA), following the Clean Power Plan and the Affordable Clean Energy rules, neither of which survived legal review. EPA's proposed standards are based on technologies such as carbon capture and storage (CCS) and low-GHG hydrogen co-firing, which in the future are expected to be capable of application to fossil-based power plants.

This issue of EM presents three articles on key issues related to the proposed regulation: “EPA's Plan to Regulate CO2 Emissions from New Power Plants Expected to Face a Hostile Supreme Court” by Thomas Lorenzen and Elizabeth Dawson (Crowell & Moring LLP); “Carbon Capture, Utilization, and Storage (CCUS) and Hydrogen: The Potential to Contribute to Low Greenhouse Gas Power Generation in the United States” by J. Edward Cichanowicz (J.E. Cichanowicz, Inc.); and “GHG Regulations for Electric Power Companies, Reliability Considerations” by M. Gary Helm (PJM).

In their article on legal issues, Thomas Lorenzen and Elizabeth Dawson discuss the legal tightrope EPA walks as it focuses on facility-specific measures that new fossil fuel-fired power plants can implement to lower their CO2 emissions. EPA proposes to require the power industry to implement technologies—specifically, CCS and firing combustion turbines with low-GHG hydrogen—that are not yet available at scale or in all parts of the nation. The authors discuss the rule's legal vulnerabilities and suggest alternatives that could be explored.

The second article, by J. Edward Cichanowicz, addresses technology considerations for deploying CCS and the use of hydrogen in combustion turbines. Both CCS and hydrogen offer potential and are the subject of targeted research, development, and demonstration projects to enable deploying these technologies at the scale necessary to significantly impact CO2 emissions in the power sector while maintaining a reliable electric grid. The author discusses barriers and uncertainties, such as reducing capital and operating cost, while achieving high CO2 removal and reliability.

The third and final article, by M. Gary Helm, discusses the PJM regional transmission organization (RTO), which serves 65 million customers by coordinating the movement of wholesale electricity in a 13-state area in the Eastern United States. The author discusses concerns of PJM and other Independent System Operators (ISOs) with EPA's proposed GHG rules for the power sector, particularly regarding grid reliability, and presents options to mitigate those concerns.

Finally, because of the broad reach and complexity of EPA's power sector GHG rules, several key issues are not discussed in the three expert articles. First, it is important that rules include flexibility mechanisms to help create effective and efficient regulations, facilitating continued reliable and affordable electricity generation. Key flexibilities include establishing adequate timelines for new infrastructure and technology deployment, and aligning timelines for new GHG regulations with those of other federal actions—such as air pollution, water, and waste rules. Further, flexible CAA regulatory approaches (e.g., using subcategories, trading, and averaging, and considering remaining useful life and other factors) can increase optionality.

A second key issue for the power sector GHG rules is the continued need for existing natural gas-based electricity generation. Natural gas is crucial to future reliable and affordable electricity generation, especially when it is used to integrate increasing amounts of renewable energy.

The three articles provide useful background information to help readers understand some of the complex issues EPA must address in its forthcoming GHG rules for the electric sector.
Continue reading the full April 2024 issue of EM.


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