EPA’s ‘Carbon Pollution Standard’: Bait-and-Fuel-Switch

by Marlo Lewis on April 13, 2012

in Blog, Features

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Bait-and-switch is one of the oldest tricks of deceptive advertising. The used-car dealer “baits” you onto the lot with an ad promising low interest payments on the car of your dreams. When you get there, the dealer regretfully informs you the car has already been sold. But, no, you haven’t wasted your time, because he’s got this other great car – the “switch” — which has so many superior features and it will only cost you a little more per month.

An even less ethical variant of this tactic is employed in politics. Party A in a negotiation gives an assurance or promise to obtain Party B’s support for a law or regulation. Party A then reneges on the deal once the policy is on the books. EPA’s recently proposed “Carbon Pollution Standard” Rule is a posterchild for this tactic.

EPA is proposing a carbon dioxide (CO2) “new source performance standard” (NSPS) for fossil-fuel power plants under section 111 of the Clean Air Act (CAA). EPA has developed NSPS for numerous industrial source categories such as municipal waste combustors, solid waste landfills, medical waste incinerators, cement plants, nitric oxide plants, copper smelters, steel plants, pulp mills, coal utility boilers, auto and truck surface coating operations, and natural gas turbines.

For each source category, the NSPS ”reflects the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.”

Okay, what does this have to do with bait and switch?

In general, NSPS are less stringent than “best available control technology” (BACT) standards — the individually-tailored emission control requirements owners or operators must meet to obtain a CAA permit to build or modify a major emitting facility. NSPS establishes the minimum emission control standard or “floor” for determining a facility’s BACT requirements. Under CAA sec. 169(3), application of BACT may not result in emissions that exceed those allowed by the applicable NSPS. The point of BACT is to push individual sources to make deeper emission reductions than the category-wide performance standard requires. In EPA’s words:

The NSPS are established after long and careful consideration of a standard that can be reasonably achieved by new source anywhere in the nation. This means that even a very recent NSPS does not represent the best technology available; it instead represents the best technology available nationwide, regardless of climate, water availability, and many other highly variable case-specific factors. The NSPS is the least common denominator and must be met; there are no variances. The BACT requirement, on the other hand, is the greatest degree of emissions control that can be achieved at a specific source and accounts for site-specific variables on a case-by-case basis.

Since an applicable NSPS must always be met, it provides a legal “floor” for the BACT, which cannot be less stringent. A BACT determination should nearly always be more stringent than the NSPS because the NSPS establishes what every source can achieve, not the best that a source could do.

As EPA interprets the CAA, new and modified major emitting facilities became subject to BACT for CO2 on Jan. 2, 2011 — the day EPA’s motor vehicle greenhouse gas emission standards took effect, making CO2 a “regulated air pollutant.” A big concern of the electric power industry was whether EPA might define BACT so stringently that a coal-fired power plant seeking to build a new unit or modify an existing unit would have to switch from coal to natural gas. (Natural gas power plants emit only about half as much CO2 per megawatt hour as coal power plants do.)

There was much angst and speculation about this in 2009 and 2010 but no definitive statement from EPA until March 2011, when the agency published a guidance document for ‘stakeholders.’ The document states that BACT for CO2 will not require fuel switching, nor will EPA ”redefine the source” such that coal boilers are held to the same standard as gas turbines:

The CAA includes “clean fuels” in the definition of BACT. Thus, clean fuels which would reduce GHG emissions should be considered, but EPA has recognized that the initial list of control options for a BACT analysis does not need to include “clean fuel” options that would fundamentally redefine the source. Such options include those that would require a permit applicant to switch to a primary fuel type (i.e., coal, natural gas, or biomass) other than the type of fuel that an applicant proposes to use for its primary combustion process. For example, when an applicant proposes to construct a coal-fired steam electric generating unit, EPA continues to believe that permitting authorities can show in most cases that the option of using natural gas as a primary fuel would fundamentally redefine a coal-fired electric generating unit.

EPA reiterates this assurance in a Q&A document accompanying the guidance:

12. Does this guidance say that fuel switching (coal to natural gas) should be selected as BACT for a power plant?

  • No.
  • BACT should consider the most energy efficient design and control options for a proposed source.
  • BACT should also include consideration of “clean fuels” that may produce fewer emissions but does not necessarily require a different type of fuel from the one proposed, particularly when it can be shown that using another type of fuel would be inconsistent with the fundamental purpose of the facility.

Yet despite EPA’s assurance that BACT, which usually is more stringent than NSPS, will not require fuel switching or redefine coal power plants into the same source category as natural gas power plants, EPA’s “carbon pollution standard” does exactly that.

Under the proposed standard, new fossil-fuel power plants may emit no more than 1,000 lbs of carbon dioxide (CO2) per megawatt hour. About 95% of all natural gas combined cycle power plants already meet the standard (p. 115). No existing coal power plants come close; even the most efficient, on average, emit 1,800 lbs CO2/MWh (p. 134). Because carbon capture and storage (CCS) is prohibitively expensive, raising the cost of a conventional coal plant by 80% (p. 124), the only feasible way for a new coal power plant to comply is to be something other than what it is — a natural gas power plant.

As noted previously, EPA is pretending that natural gas combined cycle — a type of power plant — is a “system of emission reduction” that has been “adequately demonstrated” for coal power plants. That is absurd.

To make the “carbon pollution standard” seem reasonable, EPA proposes to redefine source categories so that coal boilers and gas turbines are both equally “fossil-fuel electric generating units.” But redefining coal power plants is exactly what EPA said it would not do in the BACT guidance document.

As should go without saying, Congress never voted to ban new coal generation. Indeed, Congress declined to adopt similar CO2 performance standards for coal power plants when Senate leaders pulled the plug on cap-and-trade. Section 116 of the Waxman-Markey bill (the American Clean Energy and Security Act) would have established NSPS requiring new coal power plants to reduce CO2 emissions by 50% during 2009-2020 and 65% after 2020. Congress did not adopt this agenda because the public rejected it. Waxman-Markey became politically radioactive soon after it narrowly passed in the House. In the November 2010 elections, 29 Democrats who voted for Waxman-Markey got the boot.

Congressional efforts to rein in EPA — particularly Sen. Lisa Murkowski’s Congressional Review Act resolution of disapproval to overturn EPA’s Greenhouse Gas Endangerment Rule and Sen. James Inhofe’s Energy Tax Prevention Act – would have gained more traction had EPA fessed up in 2009, 2010, or even 2011 that, come 2012, it would promulgate CO2 performance standards that no commercially viable coal plant could meet.

It’s an old story, but one that can’t be told too often. EPA is legislating climate policy – implementing an agenda the people’s representatives have not approved and would reject if put to a vote.

Sen. James Inhofe (R-Okla.) has vowed to kill the “carbon pollution standard” via a Congressional Review Act resolution of disapproval (Greenwire, subscription required). For those of us who still respect the separation of powers, ’tis a consummation devoutly to be wished.



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