Biden’s Plan to Cut Power Emissions Hinges on Little-Used Carbon Capture

(Bloomberg) -- One of the Biden administration’s most important efforts to flight climate change, slashing greenhouse gases from the electricity sector, hinges on carbon capture technology that’s barely in commercial use at power plants and faces daunting legal and logistical hurdles.

The approach, set to be unveiled this week, is already butting up against obstacles. Delays are mounting to dig wells and build pipelines and other infrastructure necessary for a wave of projects to capture and store greenhouse gases from coal and natural-gas plants. Skeptics, meanwhile, say the technology hasn’t yet been “adequately demonstrated” — a legal threshold for the government’s embrace of it under the Clean Air Act. 

The US Environmental Protection Agency is putting the final touches on its proposal to stifle planet-warming pollution from coal and natural gas power plants, set to be unveiled this week. The plan will establish rate-based limits on carbon dioxide emissions from coal- and gas-fired power plants, based on the agency’s assessment of the “best system of emission reduction” under the Clean Air Act. 

The measure is critical to achieving President Joe Biden’s climate goals and fulfilling his Paris Agreement commitment to halve US climate emissions by the end of the decade. 

“The stakes in addressing smokestack pollution are enormous,” said Vickie Patton, general counsel of the Environmental Defense Fund. “Smokestacks are one of the single largest sources of climate pollution in the United States and in the world.” 

But even as the EPA seeks to prod deep cuts, it must stay within the bounds of a Supreme Court decision that limited its latitude. Its plan would put the onus on states and plant owners to install carbon-capture systems at affected facilities or find other ways to stay below stringent limits, such as by shuttering sites or adopting more zero-emission renewable resources. 

Carbon-capture systems already have been considered the best option for new coal plants since 2015. And the technology is far from new. The first large-scale project was commissioned in 1972, and it’s increasingly used at industrial facilities. But carbon capture, utilization and storage systems are still uncommon in the power sector. 

Only two commercial coal plants now supplying US grids employ carbon capture on a commercial basis, and no gas-fired power plants do, though a Massachusetts gas plant ran the technology at the turn of the century and there are plans to restart the Texas Petra Nova coal unit that trapped CO2 before its 2020 closure. 

Supporters of the administration’s strategy, including major environmental groups, say limited deployment of the technology so far reflects a lack of policy support. “Without adequate incentives or regulations, carbon dioxide capture on power plants only occurs in niche markets where CO2 can be sold,” typically for the food industry or to help oil companies coax more crude from the ground, said John Thompson, a director at the Clean Air Task Force. 

A regulatory nudge is critical, said Lissa Lynch, a senior attorney at the Natural Resources Defense Council. Though it’s been used for decades, “the reason that you haven’t seen a lot of CCS used in the power sector to this point is because power plants have not faced any requirements to reduce their CO2,” Lynch said. 

Yet critics on the right argue carbon-capture systems fail the “adequately demonstrated” test and are still too expensive — a factor the EPA is legally required to consider in setting new pollution-control standards. 

“The technology itself is not proven on the scale to where you could, with a straight face, say it has been adequately demonstrated” and commercially viable, said Mandy Gunasekara, former EPA chief of staff and a director at the Independent Women’s Forum. And, she added, it’s still often constrained by proximity to storage sites and pipelines. 

That could be a legal vulnerability. Litigation over the Obama-era Clean Power Plan turned on how broad the “best system of emission reduction” could be. In last year’s ruling on the matter, the Supreme Court effectively limited the EPA’s emission-curbing power to what happens at individual facilities. 

Successful carbon capture depends on more than deploying the technology at plants themselves, since trapped gas must also be transported and stored off-site, said former EPA assistant air administrator Jeff Holmstead, a Bracewell LLP partner who has represented energy industry clients. 

This presents logistical problems. The 5,000 miles of CO2 pipelines crisscrossing the country today aren’t enough to support a national scale-up, and developers have encountered steep opposition in the Midwest. Meanwhile, dozens of applications for wells to store carbon dioxide underground are piling up at the EPA. The agency just advanced Louisiana’s bid to take over permitting the state’s wells nearly two years after it asked for the job. 

“How can you say that there’s a system in place to do this and it’s been adequately demonstrated, when the system relies on all sorts of things that have not yet been permitted and to which there is all this opposition?” asked Holmstead. 

Carbon capture equipment has never been cheaper to use, thanks to the Inflation Reduction Act, which gave a 70% boost to a tax credit for using it at smokestacks. But it’s still costly — and even with the federal incentives, power plant retrofits may not pencil out. 

“It is still uneconomical for coal and natural gas power,” said BloombergNEF carbon capture analyst Brenna Casey. Even with the expanded tax credit, “retrofitting a coal plant is more expensive than just building a new coal plant with CCUS,” and on its own, the incentive isn’t enough to spur coal and gas plants to adopt the technology. 

Environmentalists seeking strict limits stress that last year’s climate law bolsters the EPA’s authority by compelling the agency to “ensure” greenhouse gas reductions in the electric sector. They say the EPA can provide flexible compliance options — especially at plants seen as critical to grid reliability. For instance, it could opt against requiring CCS at so-called “peaker” plants summoned to run just a few hours or days each year, said Jay Duffy, litigation director at the Clean Air Task Force. 

CCS doesn’t “need to be on every street corner before it can be the basis of regulations,” Duffy said, noting the Clean Air Act is designed to propel action. “This is the regulation that is going to pull along industry.” 

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