NGI The Weekly Gas Market Report / NGI All News Access

Natgas Clear Winner in EPA's Power Plant Emissions Proposals

April 2, 2012
/ Print
| Share More
/ Text Size+

Emissions limits for new power plants detailed in proposed New Source Performance Standards issued last week by the U.S. Environmental Protection Agency (EPA) are achievable and "in line with investments already being made," according to EPA, but those claims were quickly disputed by some industry representatives.

The first-ever carbon pollution standard for future power plants proposed by EPA would establish a limit of 1,000 pounds of carbon per megawatt hour for all future units.

The proposed rules, which concern only new generating units, "reflect the ongoing trend in the power sector to build cleaner plants that take advantage of American-made technologies, including new, clean-burning, efficient natural gas generation, which is already the technology of choice for new and planned power plants," EPA said. "At the same time, the rule creates a path forward for new technologies to be deployed at future facilities that will allow companies to burn coal while emitting less carbon pollution." Generating units already operating or that will begin construction over the next 12 months are not covered by the proposed rule.

"Right now there are no limits to the amount of carbon pollution that future power plants will be able to put into our skies -- and the health and economic threats of a changing climate continue to grow," said EPA Administrator Lisa Jackson. There are 15 plants already in the permitting process that may be affected by the proposed rule, Jackson said.

"While it will impose no costs on our existing energy infrastructure, it is in line with investments already being made throughout the utility industry," she said. The rules have been under discussion for a number of years and companies already have shut down some of their older plants that have more emissions and are less efficient, or have plans in the works to do so.

Hardest hit by EPA's rules are the prospects of any new coal-burning plants.

"This is another in a series of new regulations written by EPA to prevent the U.S. from taking advantage of our vast coal resources that are responsible for providing affordable electricity for America's families and businesses," said American Coalition for Clean Coal Electricity CEO Steve Miller. "This latest rule will make it impossible to build any new coal-fueled power plants and could cause the premature closure of many more coal-fueled power plants operating today.

"So far, other EPA regulations are responsible for the announced closure of more than 140 electricity generating units in 19 states. The regulation EPA proposed today could raise the number of closures even higher and put more workers out of jobs."

"While I am still reviewing the full rule, it's clear that the administration has decided to try to outlaw coal -- one of America's most abundant, affordable and secure energy resources," said Sen. Lisa Murkowski (R-AK). "The administration is using this new rule to accomplish what Congress refused to impose on the economy when it rejected cap-and-trade legislation...It's imperative that Congress continue working to rein in an agency that is so clearly overreaching it's congressionally granted authority."

But Jackson said she believes coal will remain a significant part of the nation's electricity-generating fuel portfolio.

"Analysis by the Department of Energy's Energy Information Administration shows that for the foreseeable future coal will remain the largest single source of electricity in our country. This proposed rule is meant to provide a path forward for those new coal-fired power plants that choose to minimize their carbon emissions," Jackson said.

While natural gas is benefiting by taking some power generation away from coal (see NGI, March 19), there are indications that EPA's proposed standard could hurt the gas market. A recent study funded by the American Petroleum Institute found that natural gas and oil drilling could be slowed by EPA's New Source Performance Standards, resulting in less production and royalties (see NGI, March 26). Results of the study indicated that the proposed regulations would reduce drilling using hydraulic fracturing well stimulation by up to 52%, reduce natural gas production by up to 11% and reduce oil production by up to 37%.

While natural gas prices have been quite low for some time, EPA took higher prices into consideration when writing the proposed standard, Jackson said.

"We looked at what happens if the price of natural gas goes up, and I think it's fair to say that the price of natural gas has to rise dramatically -- far in excess of any projections that we're seeing from any source, quite frankly -- for the economics of this rule, which of course are very, very good, to change," she said.

Some environmental groups embraced the new rules.

"The EPA is taking a historic step to trim carbon emissions and help create a cleaner, healthier and more modern energy future...This rule, while not perfect, signals that more of our future energy needs will be met by clean, affordable and reliable sources of energy," said Union of Concerned Scientists President Kevin Knobloch. "At the same time, EPA also must focus on the main source of power plant carbon emissions -- existing coal-fired plants, many of them more than 50 years old, which are responsible for nearly 40% of U.S. carbon emissions."

EPA's previously released Cross-State Air Pollution Rule, which affects major electric generation plants, was stayed in December by the U.S. Court of Appeals for the District of Columbia Circuit while legal challenges play out (see NGI, Jan. 9). Some states and major power generators, such as Ohio-based American Electric Power (AEP), filed lawsuits alleging that the 2012-2014 timeline for implementing the EPA rule was too short. AEP said the rule would force it to close a number of coal-fired generation plants, including ones in Ohio and West Virginia (see NGI, July 8, 2011). A public comment period on the latest proposal is to be open for 60 days after being published in the Federal Register.

©Copyright 2012 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus