EPA to Make Costly New Standards

The Environmental Protection Agency (EPA) recently proposed new regulations limiting carbon dioxide emissions from power plants. If finalized, this regulation will, in effect, bar the construction of new coal-fired power plants unless they use costly carbon-capture technology. It is the latest in a series of EPA regulations governing greenhouse gases that the Supreme Court triggered with its decision in Massachusetts v. EPA. Still more regulations are on the way, says Jonathan H. Adler, director of the Center for Business Law & Regulation at the Case Western Reserve University School of Law.

The EPA’s proposed rule would require both natural-gas and coal-fired power plants to meet stringent new limits — limits that most new natural-gas plants can meet, but that are not (yet) met by any coal-fired plant in regular operation.

– Specifically, the regulation would limit carbon dioxide (CO2) emissions from power plants to between 1,100 and 1,000 pounds per megawatt-hour (lbs/MWh), depending on the size of the plant and method of emission monitoring. This is an easy standard for state-of-the-art gas plants to meet; coal, not so much.

– Right now, the average U.S. coal plant emits over 1,700 lbs CO2/MWh.

– The average natural-gas plant, on the other hand, emits around 850 lbs CO2/MWh.

If finalized, the EPA’s rule is likely to be challenged in court. At issue will be whether the new standards comply with the relevant statutory requirements, particularly as applied to coal plants.

– Under Section 111 of the Clean Air Act, the EPA is to set an emission limit “achievable through the application of the best system of emission reduction” that, accounting for the economic costs, “the Administrator determines has been adequately demonstrated.”

– This awkward statutory language about the “best” emissions-reduction system that is “adequately demonstrated” means that the EPA cannot set new emission standards based on the hypothetical performance of unproven technologies, as such technologies have not been “adequately demonstrated.”

Whether or not this rule is finalized and survives court challenge, more greenhouse gas (GHG) regulations are coming our way. Under the Supreme Court’s Massachusetts v. EPA decision, the EPA is effectively required to adopt GHG emission rules under the Clean Air Act.

Even those who don’t accept that climate change is a serious problem should recognize that many policies are preferable to letting the EPA use the Clean Air Act to regulate GHGs.

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