On May 11, 2023, USEPA announced proposed rules to further limit the emission of carbon dioxide (CO2) from power plants and other electric generating units (EGUs). Industry trade associations assert that these regulations are a not-so-subtle attempt to eliminate fossil fuel use in the electricity generation industry.

The proposed rules would establish standards based on EPA’s determination of the Best System of Emission Reductions (BSER) for new and existing fossil fuel fired EGUs.  Initially, the proposed rules set numeric emission limits, but then require the use of carbon capture and sequestration (CCS) or co-firing with “clean hydrogen” for the later compliance periods. EPA defines “clean hydrogen” in a manner that would exclude hydrogen produced from natural gas.

Existing fossil fuel-fired combustion turbines are subject to the new rules only if they have a 300-megawatt capacity or greater. Those facilities must either achieve 30% co-firing with clean hydrogen by 2032 or achieve 90% CCS by 2035. According to EPA this portion of the rules will primarily apply to gas-fired units. New fossil fuel-fired combustion turbines (again mostly gas-fired) must initially meet a numeric standard and then achieve 30% clean hydrogen co-firing by 2032. In addition, by 2038 they must also achieve 90% clean hydrogen co-firing. Alternatively, base load units have the option of achieving 90% CCS by 2035 instead of co-firing with hydrogen.

Existing fossil fuel-fired steam generation units (primarily coal-fired units) that commit to close by specific dates have varied requirements ranging from routine operation, if committing to close by 2032, to 90% CCS if committing to close in 2040 or later. The rules to do not alter the existing requirements for new coal-fired units as EPA notes that none are being proposed.

The proposed rules also make some adjustments to the exclusions that have historically been applicable to industrial EGUs. Industrial EGUs that limit their electric output to the grid are still exempt, but EPA has clarified that this exemption applies only if the annual sales to the grid have never exceeded one-third of total electricity output, or 219,000 MWh AND the unit is subject to a federally enforceable permit containing those limitations.

In addition, EPA is proposing to amend the applicability provisions to exempt EGUs where greater than 50 percent of the heat input is derived from an industrial process that does not produce any electrical or mechanical output or useful thermal output that is used outside the affected EGU.

Critics generally see these proposed rules as being unrealistically reliant upon unproven and speculative technology. Whether there will be adequate CCS capacity and/or an adequate supply of “clean hydrogen” by 2032 is certainly an open question.

Once the proposed regulations are published in the Federal Register, interested parties will have sixty (60) days to submit comments. EPAs summary presentation of the proposed rules can be found here.

If you have any questions about this post, please contact a member of the McNees Energy and Environmental Law Group.