U.S. PROPOSES NEW GREENHOUSE GAS STANDARDS FOR POWER PLANTS
Last summer, the U.S. Supreme Court ruled that the U.S. Environmental Protection Agency (EPA) exceeded its authority to require existing power plants to shift away from fossil fuels to lower-carbon sources of energy, such as nuclear, hydrogen, and renewables (West Virginia v. EPA), and limited the authority of the EPA to regulate greenhouse gas emissions. The Court did, however, make it clear that EPA has authority under the Clean Air Act (CAA) to regulate greenhouse gas emissions from power plants.
Proposed New Standards
Following the Court’s ruling, EPA was expected to promulgate a new rule to set specific greenhouse gas emission limits for power plants based on existing emission control technologies. On May 11, EPA announced comprehensive proposed greenhouse gas standards for power plants to drastically reduce emissions based on the use of carbon capture and storage (CCS) and hydrogen co-firing technologies. EPA estimates that the new standards could eliminate up to one billion metric tons of carbon emissions by 2042 and deliver up to $85 billion in climate and public health benefits.
The proposed standards vary significantly depending on whether power plants are new or existing, whether they are fueled by coal or natural gas, how frequently they operate, and whether they are scheduled to retire in the near future. For example, coal-fired power plants that have committed to retiring before 2040 would not have to install CCS technology to control greenhouse gas emissions.
According to EPA, the proposal is based on more traditional authorities to regulate emissions under the CAA. Specifically, EPA states that the standards are based on proven and cost-effective technologies that can be installed at power plants and reduce greenhouse gas emissions significantly. EPA has identified CCS and hydrogen co-firing as the “best system of emission reduction.” In addition, EPA claims that the draft rule provides flexible options to meet the standards, allows time needed to plan and invest for compliance, and supports a reliable source of affordable energy.
Once EPA finalizes the rule, states will have 24 months to develop implementation plans with specific emission standards for power plants to meet EPA’s emissions guidelines. Under these state plans, power plants will have until 2030, 2032, or 2035 to comply. Environmental advocacy groups have been critical of the extended compliance timeframe, claiming that existing fossil fuel power plants can avoid greenhouse gas emissions reductions for a decade.
Implementation of New Standards
Some of the biggest issues to resolve will center on compliance costs and potential energy consumer price increases. EPA asserts that the price increases will be negligible, and that the tax incentives in the Inflation Reduction Act would ensure that the installation of CCS and hydrogen co-firing technologies could pay for themselves. Industry sources disagree, arguing the technologies that EPA identified as best system of emission reduction have not been adequately demonstrated and are not cost effective.
In addition, the new standards could put an additional strain on the nation’s already burdened energy grid.
Possible Legal Challenges
When the rule is published in the Federal Register, there will be a 60-day comment period. Given the significance of this rule and EPA’s controversial history in trying to regulate greenhouse gas emissions from power plants, legal challenges to the final rule are likely.
For example, in overturning EPA’s previous attempt to regulate greenhouse gases from power plants in West Virginia v. EPA, the Supreme Court relied on the “major questions doctrine” that requires explicit congressional authorization for action on issues of broad importance and societal impact. Some legal experts suggest that this doctrine could be used to challenge EPA’s new standards for power plants. Critics of the use of the “major questions doctrine” in this case argue the Supreme Court has stated that the CAA gives EPA authority to regulate greenhouse gas emissions from power plants, and the legal doctrine would take regulatory decisions out of the hands of experts in federal agencies and rely too much on the general knowledge of Congress.
In addition, the Supreme Court is considering a new case that could overturn the so-called Chevron doctrine, giving EPA and other federal agencies broad discretion to reasonably interpreted ambiguous statutory language. EPA officials have stated that they believe the Chevron doctrine would not impact this rule because it does not involve a novel interpretation of EPA’s authority under the CAA.
Outlook on Climate Policy
The metalcasting industry could be significantly impacted by this rule with increased energy prices and energy supply challenges. In addition, this proposed rule could signal how EPA may attempt to control greenhouse gas emissions from industrial sources like metalcasting operations, i.e., forcing the switch to zero- or low-carbon fuel sources, as well as the implementation of energy conservation measures at metalcasting facilities.
The momentum to reduce carbon emissions from the power and industrial sectors, and the transition to lower-carbon fuel sources, renewable energy, and electric vehicles appears too firmly established to ignore. As a result, the metalcasting industry should continue its efforts to reduce carbon emissions, consider innovative technologies to address climate change, and produce castings to support renewable energy technologies, electric vehicles, and other green economy initiatives.