By David Iaconangelo, Niina H. Farah, Carlos Anchado
E&E News, Jul 5, 2022
As the smoke clears from the Supreme Court’s major climate ruling last week, legal experts and clean energy groups say the country still has many options for achieving a dramatic reduction of greenhouse gas emissions.
Last week, the high court’s conservative majority rejected the Obama administration’s systemic approach to power plant regulation in the Clean Power Plan that it had blocked from going into effect in 2016.
The 6-3 decision found that EPA didn’t have clear direction from Congress in the Clean Air Act to craft a rule based on power plants shifting their energy sources from fossil fuels to renewables (Energywire, July 1). The decision does not block EPA from regulating greenhouse gases, but it does mean the agency must prioritize a different set of tools to do it.
“It prevents EPA from trying to solve the problem of climate change as a primary role of regulation,” said Kevin Minoli, a former senior EPA official, who is now a partner at the law firm Alston & Bird.
“Because there’s not a statutory provision that they have that says, ‘Go solve climate change,’” Minoli said.
That interpretation of federal law is placing some new but anticipated restrictions on an agency seeking to address greenhouse gases from the electricity sector, which makes up a quarter of all U.S. emissions, and 32 percent of all U.S. energy-related carbon dioxide emissions last year, according to the U.S. Energy Information Administration.
Yet technologies like hydrogen and changes to existing EPA rules may provide pathways to still sharply cut greenhouse gas emissions, despite limitations imposed by the court.
Here’s three areas to watch that could influence the emissions trajectory of the power sector:
Revamp of EPA rules
EPA had projected at the start of the year it would release a proposal for replacing the 2019 Affordable Clean Energy rule, but the agency’s timeline has now shifted to next March, according to the Biden administration’s unified agenda (Climatewire, June 22).
The court’s ruling “takes a particular approach, and possibly the best approach, off the table,” Michael Burger, executive director of Columbia University’s Sabin School for Climate Change Law, said of the court decision.
Still, EPA could apply technological fixes that are better than the types of efficiency improvements favored under the Trump-era Affordable Clean Energy rule, said David Doniger, senior strategic director of the Natural Resources Defense Council’s climate and clean energy program.
Those could include using carbon capture and storage technology, an approach that had been barred under the 2019 rule. Carbon capture traps CO2 from point-sources like power plants before emissions can enter the atmosphere.
Luke Bolar, chief external affairs officer at the clean energy nonprofit ClearPath, said the court’s ruling last week makes carbon capture, utilization and storage “more important than ever, and it also demonstrates the importance of congressional action.”
It’s possible EPA could use carbon capture as the basis of “best system of emission reduction,” said Jonathan Adler, a law professor at Case Western Reserve University of Law.
“Whether CCS is adequately demonstrated considering cost will be the challenge,” Adler said in an email.
Other more novel readings of the Clean Air Act to regulate greenhouse gas emissions, however, seem more untenable after the court’s opinion by Chief Justice John Roberts.
Trying to draft a rule under Section 115, which governs international pollutants and has been suggested for years as a potential alternative to Section 111, could be a “particularly high-risk strategy if the EPA used it to try and do anything ambitious,” Adler wrote.
Another option is tightening power plant regulations such as the Mercury and Air Toxics Standards, Cross-State Air Pollution Rule and effluent limitation guidelines, which could have an added benefit of slashing carbon emissions as a byproduct of requiring plants to adopt more pollution controls.
“The challenge here is for EPA to make clear [to the courts] that it is pursuing these reductions on their own merits, and not as a workaround,” Adler wrote, referring to the Supreme Court ruling.
Tightening existing EPA rules is the most likely path for the agency, said Kevin Cromar, program director at the Marron Institute of Urban Management at New York University.
He noted that compliance with EPA standards for regional haze, the ozone transport rule and National Ambient Air Quality Standards will require cleaner operation for coal-fired power plants in particular.
“There will also be less opportunity for successful legal challenges given [the regulations’] long-standing use and previous judicial support under the Clean Air Act,” said Cromar in an email.
In a note to clients, ClearView Energy Partners LLC suggested that last week’s Supreme Court ruling could mean EPA “may be well served to downplay any potential climate ‘co-benefits’ associated with incremental tightening of those regulations and clearly articulate the wisdom and affordability of tightening each for their own sake.”
EPA has already taken some steps toward updating power plant rules to set tighter limits on non-greenhouse gas pollutants, including taking public comment on the possibility of strengthening MATS.
In March, EPA proposed a new “good neighbor” ozone rule that would tighten state caps on overall emissions of nitrogen oxides. Coal-fired power plants are a significant source of this pollutant (Greenwire, March 11).
The same month, an EPA advisory panel recommended changes to the agency’s standards for soot or fine particulate (PM 2.5) standards. While EPA has not yet proposed a rule, power plants are likely targets for controls since they emit both NOx and sulfur dioxide, precursors to soot (E&E News PM, March 4).
The agency is also working to clean up water contamination from power plants.
In June, E&E News obtained a list of more than 160 unlined coal-ash lagoons the agency is considering closing due to their potential to contaminate groundwater (Greenwire, June 14).
EPA also has said it plans to unveil a legacy coal combustion residual surface impoundment rule and to finalize a federal permitting rule for CCR, but it’s not clear when the agency will take those actions. The most recent unified agenda, which lays out the administration’s regulatory goals, said the timing of a final CCR rule has not yet been determined.
CCS and hydrogen
EPA could also offer blending fuels like natural gas or even hydrogen as a form of compliance for coal-fired power plants, said Doniger during a press call last week.
“Now if the original design is off the table, it’s time to go back to the more traditional design and look at control measures that can be applied to these plants to cut their emissions,” said Doniger.
For hydrogen, analysts at BloombergNEF said they believed the EPA may still have room to craft specific regulations that would encourage a shift to hydrogen blends in gas-fired power plants — one of the likely early uses for lower-carbon hydrogen.
“We don’t know whether they’re going to do that, but there’s certainly been progress on hydrogen technology,” said Ethan Zindler, head of Americas research at BNEF. “That at least raises the possibility that when thinking about what standards to set, they’ll take hydrogen into account.”
Turbine manufacturers are already getting ready for hydrogen blends, introducing gas turbines that can often handle a mix of natural gas and hydrogen, noted Matthew Bravante, a BNEF analyst for industrial decarbonization.
Yet Zindler said he thought it plausible that the court’s ruling might slow the pace of low-carbon hydrogen development.
“The background music, for 10 year or more, has ultimately been: there’s more regulation coming on the U.S. energy industry to decarbonize. And to be candid, I think one of the very worst things about the decision is [that] it sends a very strong signal that that might not be the case,” Zindler said.
One advocacy group, the Clean Hydrogen Future Coalition, offered a different reading of the ruling’s effects.
“I don’t expect that this development will either discourage or encourage hydrogen development, or rather in this case, use of hydrogen in the electric power sector,” wrote Shannon Angielski, president of the CHFC, in an email. Her group’s members include oil and gas majors like Chevron Corp. and Shell PLC, gas utilities like Southern Co. and advocates for policies that would support lower-carbon hydrogen, including the “blue” kind made with natural gas and paired with carbon capture.
For carbon capture and storage, while EPA likely will consider the technology as the agency develops power plant regulations, there also is an existing EPA rule requiring new coal-fired power plants to use partial carbon capture to limit emissions.
Lesley Jantarasami, managing director of the Bipartisan Policy Center’s energy program, said EPA will have to think about technology options like the “implementation of CCS at an individual facility in order to meet whatever they decide is the appropriate standard of emissions.”
Carbon removal, where CO2 emissions are captured from the air, is another form of technology deployment that could be used at an individual facility, added Jantarasami, who has previously worked at the Oregon Department of Energy and EPA.
“I think [carbon removal] does meet … this new criteria for if we’re thinking about what can individual power plants deploy in order to reduce their emissions,” Jantarasami said.
Jay Duffy, an attorney with the Clean Air Task Force, said with generation shifting pulled from the table by the court ruling as the basis of EPA standards, carbon capture and co-firing “are the natural option.”
“The current standards for new coal-fired power plants are based on partial-[carbon capture and storage] and were underpinned by a 2014 finding that CCS meets all the Section 111 criteria,” Duffy said in an email, referring to the section of the Clean Air Act.
“Since 2014, CCS has only become more demonstrated and less costly and the climate crisis has only escalated,” Duffy continued. “EPA must move forward swiftly to establish stringent CCS and co-firing-based standards.”
A draft white paper released by EPA in May said the Petra Nova plant in Texas and the Boundary Dam plant in Canada are “projects that have demonstrated the separation and capture, transport, and geologic storage components of post-combustion carbon capture” (Energywire, May 9).
However, the Petra Nova plant went offline in mid-2020 due to low oil prices, leaving the coal-fired Boundary Dam as the world’s only coal-fired power plant with carbon capture.
Released late last year, a report from the think tank Global CCS Institute shows multiple carbon capture projects on power generation that are either under construction or in advanced development.
But Patrick Parenteau, a professor at the Vermont Law School, said in a post last week that carbon capture costs are “prohibitive, and utilities would surely challenge the technology as not ‘adequately demonstrated,’ as required by section 111(d).”