The US Environmental Protection Agency issued its first ever proposed source-specific limits on CO2 emissions on March 27, 2012. The proposed rule establishes new source performance standards under Section 111 of the Clean Air Act that would limit emissions from new fossil fuel-fired power plants to 1,000 pounds of carbon dioxide (CO2) per megawatt-hour. The proposed standards would apply to new fossil fuel-fired power plants of greater than 25 megawatts only, and does not cover existing power plants.
EPA believes the impact will be limited because the low price of natural gas has already pushed most new non-renewable based power plant development to choose natural gas over coal and oil. Most natural gas plants in the US already meet the standard because they generally emit approximately 800 to 850 pounds of CO2 per megawatt, while coal plants, for example, tend to emit more than twice that amount per megawatt. According to EPA, the technology-based emissions limits can be met by a variety of fossil fuel burning power facilities, including not only combined-cycle natural gas-fired generation, but also coal plants that install carbon capture and sequestration (CCS) technology.
The rule exempts coal plants that are already permitted and beginning construction within a year. It also allows for some flexibility by judging compliance with the rule over thirty years, exempting highly efficient coal facilities for the first decade of operation before requiring them to reduce their CO2 emissions by more than half. This alternate compliance plan would allow new coal generation to come online without CCS technology at a limit of 1,800 pounds of CO2 per megawatt hour if the developer commits to an enforceable limit of 1,000 pounds averaged over the entire 30-year span. This means a new coal plant could begin operating without CCS technology, but it would be required to add it within the first ten years of operation to achieve greater than 50 percent reductions.
In December of 2010, the EPA agreed to issue the new rule as part of a legal settlement with environmental groups and some states in New York v. EPA. In a March 27, 2012 conference call, EPA Administrator Lisa Jackson stated that EPA does not have current plans to address existing plants, though some speculate that such a proposal could come after the November election. The December 2010 settlement requires new source performance standards for both new and existing sources. Jackson also said the proposed rule does not apply to existing facilities that undergo major modifications, even if those modifications increase CO2 emissions.
The rule is open for public comment for 60 days from publication in the Federal Register