Proposed Carbon Regulations For New Sources Continue To Meet Resistance

From: Jones Day

Article by Jennifer M. Hayes

Pursuant to new source performance standards proposed by the Environmental Protection Agency (“EPA”) on January 8, any new fossil fuel-fired power plants commencing construction after that date will be required to meet new carbon emissions standards. The agency proposed one set of standards for gas-fired units and second pair of alternative standards for coal-fired units. Most new combined cycle gas-fired units already meet the proposed standard. By contrast, neither recently built nor recently proposed coal-fired units can meet the EPA’s proposed standard without using carbon capture and sequestration (“CCS”), a technology that some electric utilities are likely to assert has not yet been deployed cost-effectively on a commercial basis.

The agency’s proposed rule has met significant resistance within the administration, Congress, industry, and the public at large. Central to the critiques of the agency’s proposed regulation is the charge that the agency has improperly concluded that CCS is “adequately demonstrated.” Although EPA relied on literature reviews, pilot projects, and projects under construction to justify its finding, groups like EPA’s Scientific Advisory Board have questioned whether peer review of the literature reviews was sufficient. While the Scientific Advisory Board has distanced itselffrom its initial critiques, other agencies have voiced skepticism about the merits of EPA’s determination and the need for the regulation in an interagency review drafted by the Office of Management and Budget (“OMB”).

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