Biden Plans to Slash Planet-Warming Pollution from Power Plants

(Bloomberg) -- The Biden administration is preparing to propose limits on greenhouse gas emissions from coal- and gas-fired power plants that are so stringent they could almost wipe out the US electricity sector’s planet-warming pollution by 2040.

The White House is in the final stages of reviewing a draft proposal from the Environmental Protection Agency, which would target both new and existing power plants — the second-biggest source of greenhouse gas emissions in the US today. Details of the measure, some of which were previously reported by the New York Times, were described by people briefed on the plan. 

The proposal, which could be unveiled in coming days, is the EPA’s second attempt to clamp down on carbon dioxide released from power-plant smokestacks. The Supreme Court last year tossed out a sweeping Obama-era rule that sought to shift electricity generation from fossil fuels toward renewable sources.

The new draft is smaller in scope, with a foundation built on changes that can be employed directly at power plants, including through efficiency gains known as heat-rate improvements, carbon-capture systems and the substitution of cleaner hydrogen for natural gas as a combustion source.

The proposal would establish rate-based limits on pollution, built on the EPA’s assessment of the best system of emission reductions that can be employed at sites, the people said. To meet the requirements at existing facilities, many plant owners would be compelled to add carbon-capture systems or substitute hydrogen for some of their fuel. Plant closures also could help satisfy the limits. 

States and power plant owners would have flexibility in how they meet the requirements and time to employ the strategies — including many years for existing facilities, the people said.

The measure would accelerate a power-sector shift toward renewable sources that’s already propelled by hundreds of billions of dollars in clean-energy incentives from the Inflation Reduction Act. It comes alongside newly proposed limits on carbon dioxide from car and truck tailpipes — and dovetails with other Biden administration efforts to meet a US promise to pare the country’s greenhouse gas emissions by at least 50% by 2030.

The EPA declined to comment on the details, citing a pending interagency review of the proposal. 

“We have been clear from the start that we will use all of our legally upheld tools, grounded in decades-old bipartisan laws, to address dangerous air pollution and protect the air our children breathe today and for generations to come,” the agency said in an emailed statement.

Changing the Economics

The electricity sector can now take advantage of expanded tax credits for renewable and nuclear power, hydrogen and carbon-capture operations. 

“We are going to set standards for greenhouse gas emissions in the power sector that reinforce the market trajectory and that reinforce our desire to get pole position on the shift to clean energy,” White House National Climate Advisor Ali Zaidi said in a recent interview.  

“What’s possible in the power sector has changed dramatically as a result of technology cost curves and as a result of manufacturing availability,” Zaidi said. Paired with expanded tax credits, “that fundamentally, I think, changes the economics of what’s possible in the power sector.”

It wasn’t immediately clear how the EPA intends to treat coal-fired power plants that are slated for retirement or what standard the agency might require for infrequently used facilities that can be summoned to generate electricity during demand spikes just a few days each year. 

Power utilities have lobbied the administration for compliance flexibility, arguing new rules should seek to preserve reliability. The Edison Electric Institute, which represents investor-owned electric companies, stressed in a filing that approach is necessary to drive cost-effective emission reductions.

The EPA should “design standards for both new and existing units that achieve emissions reductions goals, are consistent with electric company clean energy commitments and support affordable and reliable electricity, which will be essential for customers and for larger economy-wide decarbonization efforts,” EEI said.

Environmental advocates have encouraged the EPA to set a stringent standard based on very high carbon capture, utilization and sequestration systems — equivalent to a 90% emission reduction from combined-cycle gas power plants.

“Emissions reductions of 90% are achievable for both coal-fired and gas-fired power plants,” the advocacy group Evergreen Action told the EPA in public comments. Even without new EPA rules, “many power companies are already considering installing CCUS.”

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