EPA Should Strengthen Proposed Power Plant Emissions Standards to Increase Climate and Environmental Justice Benefits

On May 23, the U.S. Environmental Protection Agency (EPA) released a proposed rule to regulate greenhouse gas emissions from power plants that run on fossil fuels. While these proposed standards are a good step forward and a much better approach to cutting climate pollution than the Trump administration’s misnamed "Affordable Clean Energy Rule," the EPA has room to strengthen them and greatly increase their climate and environmental justice benefits.

The need for these standards is clear. Fossil-fueled power plants are responsible for 31 percent of total U.S. carbon dioxide emissions and 24 percent of total U.S. greenhouse gas emissions, making it one of the most consequential tools toward achieving decarbonization.

EPA’s proposal, authorized under the authority of Section 111 of the Clean Air Act, is long overdue, and it builds on the agency’s historic pollution control practices. If finalized, it would help guide the current transition the energy sector is already experiencing, thanks to falling prices for renewable energy, rapidly evolving technology, and historic investments included in the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA).

Recommendation: Strengthen the Rule

However, the current rule does not go far enough. The effects of fossil fuel power plants are not felt equally across communities. When talking about energy generation, stationary sources of air pollution — such as power plants — are disproportionately located in structurally marginalized communities and communities of color.

It is imperative that the EPA expands power plant coverage in the final rule to address these unintended effects and ensure that all communities will benefit from these rules. The recent comments I submitted with Senior Policy Analyst James Goodwin provide specific feedback on how the agency can implement tighter restrictions (in terms of plant coverage and proposed emission reduction pathways) and still achieve system-wide financial, environmental, and health benefits.

In the current draft, EPA is proposing a threshold of 300 megawatts and a capacity factor of 50 percent for existing combustion turbines (base-load plants) to determine the most stringent category in need of compliance. This threshold is overly generous toward fossil-fired electricity generating units in the plants, and it doesn’t reflect the administration’s aims regarding carbon-free electricity. The rule also sets looser standards for an intermediate subcategory of plants that operate less frequently, and even less stringent standards for plants that operate only a small percentage of the time.

Under these conditions, we could see large base-load plants reducing their operations and shifting their loads to smaller, intermittent plants (like "peaker" plants, which are plants that are fired up only when demand is very high, i.e., when it "peaks"). Smaller power plants tend to be more polluting and less efficient than base-load plants, and they tend to be located closer to population centers given their smaller size and general function in the grid. This would actually push pollution into underserved communities and structurally marginalized groups.

As our comments recommend, the EPA should also establish earlier timelines for compliance, which can be achieved without impacting costs or reliability of the electric power supply. The current proposal means that, in many cases, affected units will not need to achieve significant emission rate reductions before 2032. These timelines are overly generous and do not reflect the responsibility or the tools available to the power sector to achieve much more aggressive goals.

Recommendation: Reduce Reliance on Unproven Carbon Capture, Hydrogen Strategies

The rule also proposes carbon capture and sequestration (CCS) and co-firing with low-greenhouse gas hydrogen as a so-called Best System of Emission Reduction (BSER). As applied to base-load power plants that aim to continue long-term operation, the agency claims that CCS with a 90 percent carbon dioxide capture rate is adequately demonstrated, has reasonable costs, and achieves substantial emissions reductions from these units.

These claims merit further scrutiny and study. A recent Center for Progressive Reform policy brief reviewing the existing literature on CCS and carbon capture and utilization highlights the uncertainties that still exist in this field. In addition, our comments highlight two additional issues that the EPA must consider related to carbon capture.

The first relates to the structure of financial benefits for CCS deployment (known as 45Q credits), with incentives placed on "storing" more carbon dioxide but not necessarily reducing overall emissions. This would increase the attractiveness of using the CCS retrofit to extend a power plant's lifespan, delaying retirement and extending carbon emissions and climate pollution.

The second issue is the role of CCS in what’s known as enhanced oil recovery. Currently, about 70 percent of captured carbon is used to retrieve more fossil fuels in the form of enhanced oil recovery, which undermines the point of having a carbon capture and storage system in place. Relying on CCS can become an indirect fossil fuel subsidy for an industry that already enjoys ample financial assistance.

For base-load plants that plan to co-fire low-greenhouse gas hydrogen to produce electricity (instead of using CCS to lower their emissions), the IRA includes a tax credit for clean hydrogen production (under section 45V of the tax code). Crucially, those who seek to benefit from this credit must demonstrate that the carbon emissions associated with their hydrogen production are low enough to qualify for the tax benefits. Thus, calculating life-cycle emissions from electricity consumption becomes critical. A methodology that fails to consider all the emissions across the entire hydrogen production cycle would undermine the EPA’s goals.

In order to ensure that emissions reductions are achieved and that the federal government sets up the right conditions for a thriving hydrogen industry, our comments highlight that the standard must comply with three principles: additionality, deliverability, and hourly-matching, ensuring that generation is able to account for grid power emissions.

EPA has taken a valuable and long overdue step in regulating climate pollution from fossil-fueled power plants. However, in order for the rule to deliver meaningful and just emissions reductions, it must be strengthened, and it must be more attentive to environmental justice implications.

You can see our full set of recommendations here.