An Environmental Protection Agency proposal to adopt rules that would limit carbon emissions from fossil-fired power plants could come within days. But the process to craft those rules has been underway for more than a decade, and involves multiple challenges to the agency’s assumed authority to regulate greenhouse gas emissions (GHGs)
What’s more, the Biden administration and congressional allies have earmarked billions of dollars to stand up the sort of carbon capture industry the EPA rules are likely to rely on.
Published reports said the rules are likely to make use of recent Supreme Court decisions. Last June, the U.S. Supreme Court limited the EPA’s authority to set standards on GHGs for existing power plants.
In its 6-3 ruling, the court said that only Congress has the power to create a system of cap-and-trade rules to limit emissions from existing power plants.
The case stemmed from the EPA’s 2015 directive to coal power plant operators either to cut production or subsidize alternate forms of energy. That order was never implemented because it was immediately challenged.
Chief Justice John Roberts wrote the majority opinion in West Virginia v. the Environmental Protection Agency and was joined by the court’s other five conservative members.
The decision marked the first time a majority opinion explicitly cited the so-called “major questions doctrine” to justify a ruling. That doctrine holds that with issues of major national significance, a regulatory agency must have clear statutory authorization from Congress to take certain actions and not rely on its general agency authority.
Roberts wrote, “There is little reason to think Congress assigned such decisions” about the EPA regulations, despite the agency’s belief that “Congress implicitly tasked it, and it alone, with balancing the many vital considerations of national policy implicated in deciding how Americans will get their energy.”
The Court rules that capping carbon dioxide emissions to force a nationwide transition away from the use of coal to generate electricity may be a sensible “solution to the crisis of the day,” but that it was “not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme.”
No CPP 2.0
The legal fight over the EPA’s authority can be traced back to a move by the Obama administration to set strict carbon limits for each state. It also urged states to meet limits by shifting to cleaner energy alternatives such as wind and solar.
The so-called Clean Power Plan was temporarily blocked in 2016 by the Supreme Court and then repealed in 2019 by the Trump administration, which argued that the plan exceeded EPA’s authority under the Clean Air Act. It argued that the act allowed the agency to set standards only within the physical premises of a power plant.
The Trump administration proposed to regulate emissions only from existing coal-fired steam plants, a policy called the Affordable Clean Energy Rule. The revision was challenged by states and environmental groups and ultimately was struck down by the U.S. Court of Appeals for the District of Columbia Circuit.
Since then, there hasn’t been an EPA standard with respect to carbon pollution from existing power plants.
Under the Biden administration, the EPA has indicated that it will not attempt to resurrect the Clean Power Plan but rather create its own rules based on Supreme Court decisions in 2007 and 2022 to regulate power plant emissions.
Laying the groundwork
The White House and congressional allies already are working to lay the groundwork needed to stand up the carbon-capture industry that the expected EPA rules may rely on.
In December, the Department of Energy launched four programs seeded with $3.7 billion in infrastructure funding aimed at helping to build a commercially viable carbon dioxide removal industry.
The programs are intended to help accelerate private-sector investment, spur advancements in monitoring and reporting practices for carbon management technologies, and provide grants to state and local governments to procure and use products developed from captured carbon emissions.
In addition, the Inflation Reduction Act aimed to improve the federal Section 45Q tax credit for the capture and geologic storage of CO2, which are intended to provide complementary incentives.
The new efforts include a $115 million Direct Air Capture Prize to promote diverse approaches to direct air capture; $3.5 billion to develop four domestic regional direct air capture hubs, each of which will demonstrate a direct air capture technology or suite of technologies at commercial scale with the potential for capturing at least 1 million metric tons of CO2 annually from the atmosphere and storing that CO2 permanently in a geologic formation or through its conversion into products; the Carbon Utilization Procurement Grants Program, which will provide up to $100 million in grants to states, local governments, and public utilities to support the commercialization of technologies that reduce carbon emissions while also procuring and using commercial or industrial products developed from captured carbon emissions; and $15 million to projects led by DOE National Laboratories, plants, and sites, and supported by diverse industry partnerships spanning the emerging carbon dioxide removal sector.
In September, DOE announced a nearly $4.9 billion set of funding opportunities aimed at bolstering investments in the carbon management industry and to reduce carbon dioxide (CO2) emissions.
The funding from the Bipartisan Infrastructure Law is intended to support three programs to demonstrate and deploy carbon capture systems, along with carbon transport and storage infrastructure.
The funding announcements include up to $2.25 billion to support the development of new and expanded large-scale, commercial carbon storage projects with capacities to store 50 or more million metric tons of CO2, along with associated CO2 transport infrastructure; up to $2.54 billion to develop six integrated carbon capture, transport, and storage demonstration projects that can be replicated and deployed at fossil energy power plants and major industrial sources of CO2; up to $100 million to design regional CO2 pipeline networks to safely transport captured CO2 from sources to centralized locations.
The Biden administration’s more aggressive actions are in contrast to the Trump administration. In the summer of 2018, the Environmental Protection Agency unveiled its proposed replacement for the Obama-era Clean Power Plan, saying its approach would give states more regulatory power on curbing greenhouse gas emissions.
The Affordable Clean Energy (ACE) rule challenged the Clean Power Plan, which set carbon reduction targets for every state. Trump and many states argued that the Clean Power Plan overstepped boundaries for federal regulatory power and put burdensome rules on many coal-power states.
The ACE included four main courses of action to reduce greenhouse gas emissions. Those included finding best on-site power plant efficiencies, calling for lists of technologies that ciould be used in state plans, an updated New Source Review permitting program and regulations giving states flexibility in developing response plans.
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