EPA’s Clean Power Plan (CCP) would set carbon dioxide (CO2) performance standards for state electric power sectors. The standards are calibrated in pounds CO2 per megawatt hour. They translate into statewide emission-reduction mandates or caps. On average, states would have to reduce their power-sector CO2 emissions 30% below 2005 levels by 2030.
Under §111 of the Clean Air Act (CAA), a performance standard, whether for new or existing sources, must reflect the “best system of emission reduction” (BSER) that has been “adequately demonstrated,” taking “cost” into account.
Performance standards must also be “achievable,” defined by the D.C. Circuit Court of Appeals to mean achievable by the regulated industry as a whole (National Lime Association V. EPA, 627 F. 2d 416 at 443 ).
Finally, before EPA may promulgate “existing source performance standards” (ESPS), as it proposes to do through the CPP, the agency must first promulgate new source performance standards (NSPS), as it proposes to do through the Carbon Pollution Standards rule.
State policymakers should have no legal qualms about refusing to comply with the CPP. EPA’s proposal is unlawful on at least 10 counts.
(1) CAA § 111(d) prohibits EPA from requiring ESPS for sources already regulated under §112. EPA has been regulating power plants under §112 since December 2011, when the agency finalized the Mercury Air Toxics Standards (MATS) rule. Therefore, the very provision under which EPA proposes to establish performance standards for existing power plants prohibits the agency from doing so.
(2) A state’s electric-power sector is not a “source” to which a performance standard may lawfully be assigned. Unlike all previous §111 performance standards, which, pursuant to the statute, apply to “particular sources,” CPP proposes to cap emissions from each state’s entire electric-power sector. CAA §111(a)(3) defines “stationary source” (whether new or existing) as “any building, structure, facility, or installation which emits or may emit any air pollutant.” Obviously, a state’s power sector is not any such individual physical object.
(3) A “best system of emission reduction” (BSER) is a technology or set of technology options “adequately demonstrated” for “designated facilities,” not a green wish-list of market-restructuring energy policies Congress has repeatedly declined to approve. Nothing in the statutory text, EPA’s implementing regulations, or past practice indicates that EPA may control state policies regarding renewable energy, electricity dispatch, or demand management.
(4) A BSER for CO2 emissions from existing power plants does not exist. Commercial technology to capture or filter CO2 emissions from existing power plants has not yet been developed, as EPA admits. Hence there is no “best system of emission reduction” on the basis of which EPA or states could set CO2 performance standards for existing power plants.
(5) Congress intended for §111(d) to regulate “highly localized” pollutants, as EPA’s 1975 implementing regulation acknowledges, not ubiquitous air pollutants like those regulated under the NAAQS program. Carbon dioxide emissions are the most pervasive emission byproduct of industrial civilization.
(6) Curbing production is not a “best system of emission reduction.” A performance standard calibrated in pounds per megawatt hour purports to improve the environmental performance of a designated facility by reducing its emissions per unit of output. In contrast, the CPP’s core strategy is to decrease output (electric generation) from one source type (coal power plants). Decreasing output does not improve a source’s performance and, thus, is not a BSER.
(7) An ESPS cannot be more stringent than the corresponding NSPS, nor can it regulate entities not covered by the NSPS. The CPP requires many states to adopt CO2 performance standards for existing power plants that are more stringent than EPA’s proposed standards for new coal and natural gas combined cycle power plants. The CPP also requires states to regulate power plants (nuclear, renewable) that are not sources, as well as households and firms that don’t produce power. This defies the logic and intent of §111(d), which is to use the experience gained from regulating new sources to develop performance standards appropriate for the corresponding existing sources.
(8) EPA may not command states to do what it has no power to do. CAA §111(d)(2)(A) requires EPA to impose a federal plan to regulate existing sources when a state fails to adopt an EPA-approved plan. By clear implication, EPA may only require standards that it can administer if a state can’t or won’t submit a satisfactory plan. EPA unquestionably has authority to set an emission performance standard for a designated facility if state regulators fail to do so. However, EPA has no authority to enact state renewable energy mandates, fleet dispatch policies, or demand management incentives such as rebates for programmable thermostats. Hence ordering states to adopt or revise such policies is beyond EPA’s authority as well.
(9) The CPP conflicts with EPA’s 1974 and 1975 implementing regulations. The implementing regulations authorize EPA to subdivide source categories initially promulgated for new sources to better match the more varied and limited performance capabilities of existing sources. In contrast, the CPP aggregates sources from different categories and mixes in non-sources outside of any category to maintain the fiction that a state’s electric-power sector is an existing source. Because the implementing regulations that mandate “sub-categorization” are in the code of federal regulations and have the force of law, EPA would have to amend them with a legislative rule before the agency could permissibly pursue its CPP strategy of combining categories. Until the agency does so, the CPP will remain impermissibly inconsistent with its underlying regulations.
(10) EPA’s Carbon Pollution Standards Rule – the legal prerequisite for the CPP – is itself unlawful.
The Carbon Pollution Standards Rule would require new coal power plants to emit no more than 1,100 lbs. CO2/MWh. New coal power plants can meet that standard only by installing carbon capture and storage (CCS) technology. EPA claims the standard is “achievable” because CCS is the “adequately demonstrated” BSER for new coal plants. That is incorrect.
- The commercial viability of CCS power plants has not been demonstrated. Indeed, CCS is so expensive that no utility will build a CSS power plant without generous subsidies.
- Even with subsidies, CCS is uneconomic unless the plant can sell its captured CO2 for use in enhanced oil recovery operations (EOR). But that means the standard is not “achievable” for the utility industry as a whole, because most electric load centers are not located near oil fields.
- Moreover, the CO2 emitted when recovered oil is combusted exceeds the CO2 injected underground. Consequently, the most economic (or least uneconomic) application of CCS is not a “best” system of emission reduction because it increases rather than reduces emissions.*
- Bottom line: Even if the CPP contained no internal legal flaws, it would still be unlawful because its statutory prerequisite – the Carbon Pollution Standards Rule – is unlawful.
* According to the National Energy Technology Laboratory (DOE/NETL-2011/1504), injecting 20 billion metric tons of CO2 underground in EOR operations would increase oil production by 67 billion barrels. According to EPA, combusting one barrel of oil emits, on average, 0.43 metric tons of CO2. Combining that conversion factor with NETL’s analysis, injection of 20 billion metric tons of CO2 produces 67 billion barrels of oil that, when combusted, emit 28.81 billion metric tons of CO2. In other words, EOR produces 1.41 tons of CO2 for every ton injected underground.