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EPA Proposes Limits on Greenhouse Gas Emissions from Power Plants

On April 13, 2012, the US Environmental Protection Agency (EPA) published its proposed a draft New Source Performance Standard (NSPS) regulation under Section 111 of the Clean Air Act (CAA) that will cover carbon dioxide (CO2) emissions from new sources in the category defined as new "electric utility generating units," or EGUs.

"New EGUs" are defined by the proposed NSPS regulation to include "any steam electric generating unit or stationary combustion turbine that is constructed for the purpose of supplying more than one-third of its potential electric output capacity and more than 25 MW net electrical output to any utility power distribution system for sale," (with some exceptions) which is built (or modified) after the date of publication of the proposed regulations, e.g., April 13, 2012. However, EPA has provided a one year extension of the effective date, which, for example, would allow a new coal-fired EGU with an approved pre-construction permit that has begun construction before April 13, 2013 to not be subject to the new NSPS standard. And although the definition of EGUs includes modifications to exiting units, in the proposed regulation EPA stated that it does not have enough information to regulate modifications or reconstructions of existing EGUs and, consequently, will instead regulate only brand new units; this decision takes the issue of what level of work constitutes a "modification" - a highly litigated issue between EPA and industry - off the table for this proposed NSPS.

These regulated new EGUs must meet an emissions rate of "454 kilograms (kg) of CO2 per gross output in Megawatt hours (MWh) (454 kg/MWh) (1,000 lb/MWh) on a 12-operating month annual average basis," except for new coal or petroleum coke units, which are designed to allow installation and operation of a carbon capture and storage system. For those units, the applicable standards are:

  • For the first 10 years of operation, an emissions rate of 816 kg/MWh (1,800 lb/MWh) gross output on a 12-operating month annual average basis; and
  • Beginning in the 11th year of operation, an emissions rate of 272 kg/MWh (600 lb/MWh) gross output on a 12-operating month annual average basis; and
  • Over the entire 30-year average period, an emissions rate of 454 kg/MWh gross output (1,000 lb/MWh) on a 30-year average basis.

Applicable emissions rates are in force at all times of operation, including startup and shutdown.

The proposed emissions rate is a technology-based standard based on measured performance of natural gas combined cycle plants, which EPA finds to be the system that yields the least greenhouse gas emissions and which EPA has stated will be "the facilities of choice until at least 2020." Because compliance is at the unit level, there is no alternative to meeting this standard, for example, by procuring credits under a cap and trade system; regulated EGUs cannot comply by averaging their emissions with other EGUs or through trading programs.

The proposed rule is now open for public comment until June 12, 2012.

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