On 13 April 2012, the US Environmental Protection Agency (EPA) published a proposed rule, Carbon Pollution Standard for New Power Plants (the rule), in the Federal Register, which would set the first nationwide limits on carbon emissions from certain new power plants. If promulgated, the rule would be a New Source Performance Standard pursuant to Section 111 of the Clean Air Act (CAA).

Currently there are no national limits on carbon dioxide (CO2) emissions from power plants, which, according to the EPA, are responsible for up to one-third of greenhouse gas (GHG) emissions nationwide. In late 2009, the EPA made a finding that GHGs endanger public health and welfare, and in late 2010 announced a settlement agreement with certain states and environmental organisations requiring it to promulgate rules addressing GHG emissions from fossil fuel-fired power plants. While the settlement required the EPA to establish guidelines for CO2 emissions from new and existing fossil fuel power plants, the proposed rule does not address, and the EPA has not yet proposed, standards for existing plants.

The rule would apply only to new electric utility generating units (EGUs) powered by fossil fuels, including fossil fuel-fired boilers, integrated gasification combined cycle units and stationary combined cycle turbine units, constructed to supply more than one-third of their potential electric output capacity and more than 25 megawatts net-electrical output to any utility power distribution system for sale. The rule would not apply to existing EGUs, “transitional” EGUs (facilities that have pre-construction air permits and begin construction by 13 April 2013), new EGUs constructed outside the continental United States, “modifications” to existing plants or reconstructed sources.

The rule would require covered EGUs to meet an emissions standard of 1,000 pounds of CO2 per megawatt-hour (lbs CO2/ MWh). The proposed standard is premised on the EPA’s position that a natural gas combined cycle facility is the best system of emission reduction. According to the EPA, new natural gas-fired EGUs will probably be able to meet the standard without difficulty; 95 per cent of such plants that have begun operations since 2005 would meet the proposed standard. In contrast, coal-fired EGUs would probably not be able to meet the proposed standard without implementing carbon capture and storage (CCS) technology, which is currently very costly and still under development. The rule would, however, give new coal- and petroleum coke-fired EGUs the option to average their emissions over a 30-year period, permitting them to meet a higher annual standard (1,800 lbs CO2/MWh proposed) for the first 10 years, provided that average emissions over the 30 years do not exceed the 1,000 lbs CO2/MWh limit. This would allow such units to install CCS technology during initial construction, with time to optimise the system or install CCS technology in the future—perhaps at a lower cost—as long as installation occurs within 10 years.

The EPA asserts the rule will not affect the supply, distribution or use of energy because current market conditions would drive power companies to build new EGUs that comply with the rule even in its absence, a statement that seems subject to question.