From Science Matters
By Ron Clutz
Mario Loyola explains at Real Clear Wire EPA’s Illegal Power Play. Excerpts in italics with my bolds and added images.
EPA’s Ambitious Gambit to Reorganize America’s Electricity
The U.S. Supreme Court’s ruling in West Virginia v. EPA last year was a historic defeat for the Environmental Protection Agency. Not only did the Court rule that the 2015 Clean Power Plan, President Obama’s signature climate regulation, was unconstitutional; it also dramatically limited EPA’s power to regulate carbon emissions under the Clean Air Act (CAA) moving forward.
That left the agency with two courses of action. It could take its lumps and focus on proposing regulations with a high chance of surviving federal court review. Or it could stake everything on a final desperate attempt to decarbonize America’s power sector, and go for the win in keeping with President Biden’s commitment to net zero carbon emissions.
On May 23, 2023, EPA chose the latter, proposing carbon emissions standards
for power plants far more ambitious than those
struck down by the Supreme Court last year.
Like other EPA climate regulations, the proposed emissions standards under Section 111 of CAA are not designed to reduce emissions from standard power plants, but rather to force a rapid transition away from reliable and affordable sources of dispatchable power—natural gas and coal—to intermittent renewables and new kinds of power plants that don’t even exist yet. Together with EPA’s electric vehicle mandates, the proposed rule would be a train wreck for the American electricity grid and society as a whole, endangering economic competitiveness and energy security while yielding no measurable climate benefit.
Those hoping for a dramatic finish to Biden’s climate action will not be disappointed: the proposal has so many legal vulnerabilities that it would be a
miracle nightmare if the rule survives federal court review.
Under the proposed rule, which President Biden hopes to finalize by next summer, large new or modified natural gas plants and existing coal plants would be required to virtually eliminate carbon emissions by 2038, at the latest. Under Section 111(a) “New Source Performance Standards” (NSPS), large new or modified combined-cycle natural gas plants, which currently supply roughly 30% of the nation’s electricity, would be required to achieve close to zero carbon emissions, either by implementing carbon capture and storage (CCS) to capture 90% of carbon emissions by 2035, or by switching from natural gas to 98% “green” hydrogen co-firing by 2038. In addition, under Section 111(d) emissions guidelines, existing coal plants, which currently supply more than 20% of America’s electricity, would be required to virtually eliminate carbon emissions by implementing CCS by 2035.
Interestingly, EPA declined to promulgate NSPS for coal plants because, as it explains, there are no plans to build any new coal plants in the U.S. It declined to promulgate emissions guidelines for existing natural gas plants out of concern for feasibility. Even more interesting, when EPA sent the proposed rule to the White House for regulatory review under E.O. 12866, it contained no emissions guidelines for existing plants at all, and therefore would not have applied to coal plants at all. The White House reportedly sent it back to EPA with orders to put a Section 111(d) rule for existing coal plants in the proposal. This suggests that EPA itself is not very confident in the ability of the Section 111(d) rule to survive court review.
Section 111 of CAA, the same provision at issue in West Virginia v. EPA, authorizes EPA to mandate “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.”
Section 111 sets a high bar, especially after West Virginia v. EPA. The proposed rule falls woefully short. It has at least three major legal vulnerabilities, any one of which would be sufficient for a court to strike the rule down.
First, neither CCS nor green hydrogen is anywhere near “adequately demonstrated” within the meaning of Section 111.
Second, EPA has systematically ignored crucial costs and impacts that it is required to take into account in setting emissions standards under Section 111.
Third, like the “best system of emission reduction” struck down in West Virginia v. EPA, the new rule would require sweeping regulatory action and infrastructure investments entirely outside the fence line of the regulated facilities, thereby raising the “major question” doctrine’s presumption against the agency’s interpretation of the law.
The Mandated Technologies Have Not Been “Adequately Demonstrated”
Contrary to the unambiguous pronouncements of the D.C. Circuit, EPA treats Section 111 as if it were a technology-forcing provision throughout the proposed rule. For example, EPA claims that CCS has been “adequately demonstrated” for natural gas plants based on small-scale demonstrations at coal plants. But the coal demonstrations cited involve only small slipstreams (carbon captured from a small percentage of the plant’s total emissions) for use in the food industry. Moreover, the coal plant demonstrations do not involve the sophisticated combined-cycle configurations of large natural gas plants—in which the exhaust from the primary combustion cycle is used to heat the steam generator of the second cycle—that the new standards focus on.
In the several hundred pages laying out the proposed rule, EPA provides just two examples of demonstrations at natural gas plants. One, at Bellingham, Massachusetts, captured only a 10% slipstream and closed in 2005 because it was not economical. That was a decade before the Obama-era Clean Power Plan, in which EPA correctly rejected CCS as inadequately demonstrated and too costly. The other, a project at Peterhead, Scotland, is still in planning and may not even be built. Neither can be used as the basis for an adequately demonstrated BSER.
Furthermore, EPA’s CCS mandate would require a massive buildout of carbon transport and storage infrastructure, which has not been adequately demonstrated and would require sweeping investments and regulatory changes by developers and government authorities unrelated to the entities subject to regulation under Section 111 of CAA. Like the measures “beyond the fence line” of regulated entities that were struck down in West Virginia v. EPA, this massive infrastructure buildout would be beyond the ability of EPA-regulated entities to implement.
Co-firing with low-carbon hydrogen is even further from being adequately demonstrated. Nearly all hydrogen today is produced using carbon-intensive methods. Indeed, electrolysis from renewable and nuclear power produces only trivial quantities, and EPA doesn’t even bother to estimate the cost, feasibility, or time it would take to build out the vast amount of new renewable and nuclear power capacity that would be needed to make the low-GHG hydrogen a practicable option for power plants.
In short, neither CCS nor “green” hydrogen co-firing meets the Section 111 legal standards of “adequately demonstrated” BSER.
EPA Has Ignored the Proposed Rule’s Costs, as well as Its Health, Environment, and Energy Impacts
In determining that a technology is “adequately demonstrated” under Section 111, EPA must take into account the costs of the rule, as well as the health, environment, and energy impacts of the rule. Courts have interpreted this as requiring that costs be reasonable. That poses a threshold problem for EPA’s proposed rule because EPA can point to no measurable environmental benefit that would result from compliance. EPA has based all its greenhouse gas regulations on the same original 2010 Endangerment Finding, which has serious problems of its own, as William Happer and Richard Lindzen note in their July 2023 comment letter to the proposed rule. It has not been demonstrated that the sources subject to the rule make a significant contribution to a condition of air pollution that endangers human health, and the finding mentions the 2021 Technical Support Document on Social Cost of Carbon only in connection with a regulatory impact analysis that is unrelated to the requirements of CAA. Under such circumstances, there is a threshold question of whether any significant costs could be reasonable.
There are other problems with EPA’s estimate of costs and impacts.
First, its estimate of costs is highly speculative. The rule would affect a host of entities and government authorities across the whole society, the vast majority of them not subject to regulation under CAA, and EPA has little clue as to how they will adjust to the rule. If its cost estimates are off by any significant amount, regulated entities could well react by shuttering, rather than attempting to comply, which would create a situation of dangerous energy scarcity with skyrocketing prices. In parts of the country where fossil energy is restricted as a matter of policy, such as California, the electricity grid is on the verge of dangerous blackouts almost every evening in the summer.
And those restrictions are modest, compared with those now contemplated by EPA.
EPA’s most egregious failure to properly account for costs is that it subtracts the amount of federal subsidies from the cost estimate, a nominal reduction of $369 billion based on CBO’s score. That figure will likely turn out to be much greater, given the subsidies’ lack of date-certain sunset.
As for the impact on electricity prices, EPA estimates that the rule would lead to a price increase of 13%. That is almost certainly a woeful underestimate. In California, where a much milder form of renewable energy mandate has been in place for years, end-user electricity costs are twice the national average. The costs of compliance with the new rules could be far more exorbitant. As further explained below, CCS would reduce the power output of the relevant plants by at least 30%, while green hydrogen would likely be three to four times more expensive to produce and deliver as current demonstrations using natural gas.
Given the number of factors outside EPA’s expertise and jurisdiction that would
determine how much time and money all that infrastructure would cost,
EPA’s estimates are little more than conjecture.
The Power Plant Rule Raises the Same “Major Question” as in West Virginia v. EPA
The Court held that EPA’s interpretation raised a “major question” and that, in the absence of clear congressional authorization, the claimed power exceeded EPA’s statutory authority. The Court noted that EPA’s approach to BSER allowed it to set emissions standards at whatever level the agency wanted, regardless of whether any regulated entity could feasibly comply with the new standards. The Court noted that the Clean Power Plan would result “in numerical emissions ceilings so strict that no existing coal plant would have been able to achieve them without engaging in [generation-shifting].”
EPA’s new power plant rule relies on a similarly expansive definition
of BSER to establish standards that can be met only
by shifting generation away from fossil sources.
The only way that regulated sources could comply with the rule would be if states or utilities (or other developers) would build a major interstate infrastructure for CCS and “green” hydrogen, including tens of thousands of miles of specialized pipelines, massive underground storage facilities for CO2, and large-scale facilities for the production and transport of hydrogen gas from renewable sources. Whether to develop such infrastructure is a decision totally beyond the control of regulated entities.