Carbon Capture, Coal’s Demise Face Scrutiny in Power Plant Rule

The EPA’s new power plant rules released on Thursday rely largely on carbon capture control technology for emissions reduction, a point of contention that some observers see as fodder for future challenges.

Where complaints over previous efforts to regulate greenhouse gas emissions from power plants centered on the stringency levels of the rules and grid-wide authority, lawsuits this time around may hinge on claims that the relevant technology pushed by the proposal isn’t ready yet.

Environmental Protection Agency Administrator Michael Regan said this week that the benefits of the new rule will outweigh the costs for facilities, which would be required under the new mandate to add expensive technology to capture nearly all their carbon output by 2040.

“When finalized, these technology standards are expected to avoid 617 million metric tons of carbon dioxide by the year 2042,” Regan said at a Thursday press conference announcing the proposal. “That’s equivalent to the annual emissions of 137 million cars and passenger vehicles.”

But critics say that retrofitting existing plants with adequate carbon capture technology is prohibitively costly, despite a mountain of incentives for the tech under last year’s climate-and-tax law, the Inflation Reduction Act.

The Biden administration will also still need to tread carefully around parameters put in place after West Virginia v. EPA, which established that EPA can’t regulate with sweeping, grid-wide rulemaking and instead needs to keep its rules focused on individual plants.

Despite the inevitable legal challenges ahead, the EPA appeared to keep the rule within those facility fencelines, according to Syracuse University environmental systems professor Charles Driscoll.

“I think they walked the line pretty well,” Driscoll said in an interview.

Lagging Tech

Under the EPA’s proposal, carbon cuts would be achieved through control technology installation requirements, which the agency identifies as the “best system of emission reduction” under Section 111 of the Clean Air Act.

Plants would also be regulated based on their assigned subcategory, which would be set based on capacity and other operation parameters.

But Driscoll and others are skeptical about the proposal’s designation of carbon capture technology as the best system of emission reduction, which could underlie future lawsuits.

The proposed carbon standards for coal and natural gas-fired power plants rely on technology that isn’t yet widely used commercially, and the adoption of this technology will likely be fodder for stakeholders looking to take the EPA to court over the standards.

Under Section 111, where the rule derives authority, the best system of emission reduction must be “adequately demonstrated.”

Carbon capture and hydrogen control technologies aren’t in wide enough use at this point to prove viability, according to McGuireWoods LLP partner Allison Wood.

“The rule is vulnerable in that it seems to tacitly acknowledge that these things aren’t ready by pushing out their deployment into the 2030s or 2040, and the appropriate approach would be to wait until these technologies are in fact adequately demonstrated,” Wood said.

Closing Coal

The rule’s projected effects on coal plant longevity is another avenue for legal vulnerability, Wood said.

“The end result of what they are proposing is the same as the Clean Power Plan,” Wood said, referring to the Obama-era power plant rule that was previously scuttled by the courts. “First, coal plants will close, then gas plants will close, and renewables will be favored.”

That prospect has already drawn promises for action.

Sen. Shelley Moore Capito (R-W.Va.), ranking member of the Environment and Public Works Committee, pledged on Thursday to quash the new rule that her office called “Clean Power Plan 2.0.”

“I plan to introduce a Congressional Review Act resolution of disapproval to protect workers and families from the disastrous impacts of these latest job-killing regulations,” Capito said in a statement.

The attorney general from Capito’s state, who successfully led the legal charge to overturn previous power plant regulations, indicated similar legal scrutiny over the new proposal, which “seems designed to scare more coal-fired power plants into retirement.”

“The U.S. Supreme Court has placed significant limits on what the EPA can do—we plan on ensuring that those limits are upheld, and we expect that we would once again prevail in court against this out-of-control agency,” West Virginia Attorney General Patrick Morrisey said in a statement.

Unless more federal support and grants are provided, “most” coal-fired power plants will shutter, rather than adopt the necessary tech, according to a statement from Bracewell LLP partner Jeff Holmstead.

“This may look like a subterfuge for the type of generation shifting that the Supreme Court struck down in the West Virginia case,” Holmstead said. “Based on what has been reported about the proposed rule, EPA will face some pretty stiff legal challenges.”