Cadwalader Friends & Clients Memo: EPA Proposes CO2 Emissions Standards for New Fossil Fuel-Fired Power Generators

Cadwalader Friends & Clients Memo: EPA Proposes CO2 Emissions Standards for New Fossil Fuel-Fired Power Generators

By Gregory Lawrence, Athena Eastwood, Joseph Williams and Tory Lauterbach

On March 27, 2012 the Environmental Protection Agency ("EPA") submitted for publication in the Federal Register a notice of proposed rulemaking that would set standards of performance for CO2 gas emissions for new fossil fuel-fired electric utility generating units ("EGUs") with a base load rating of more than 73 MW (the "proposed rule").1 In 2009 the EPA concluded that "by causing or contributing to climate change, [greenhouse gases] endanger both the public health and the public welfare of current and future generations," and on this basis proposes to require new EGUs to limit their CO2 emissions pursuant to the EPA's authority under Section 111 of the Clean Air Act.

The EPA's proposed CO2 emissions output standard is based on the demonstrated CO2 emissions of natural gas combined cycle generation units. The standard is designed to reflect the emissions capture and storage capabilities of coal and petroleum coke-fired power plants that incorporate carbon capture and storage ("CCS") technologies.

Under the proposed rule, new EGUs must not discharge in excess of 454 kilograms of CO2 per gross output in megawatt-hours (454 kg CO2/MWh) on a 12-operating month annual average basis. New EGUs fired by coal or petroleum coke would have the choice of an alternative compliance standard designed to take into account the time needed to ensure that their CCS equipment is installed and fully operational. These EGUs would have a 30-year compliance period based on the following schedule: For each of the first ten years of operation, the EGU must not discharge any gases that contain in excess of 816 kg CO2/MWh per gross output on a 12-operating month annual average basis. Beginning with the eleventh year of operation, the EGU must have a functioning CCS system in place and the EGU must not discharge any gases that contain CO2 in excess of 272 kg CO2/MWh gross output on a 12-operating month annual average basis. Further, the EGU must not discharge any gases that contain CO2 in excess of 454 kg CO2/MWh gross output on a 30-year average basis.

The proposed rule only applies to new EGUs with a base load rating of more than 73 MW. The new standards would not apply to existing EGUs, or to proposed EGUs that (1) have completed the preconstruction permitting process by the date the proposed rule is published in the Federal Register, and (2) commence construction within one year from such date. Further, this proposed rule would apply only to the EGUs located on the North American continent (i.e., excluding Hawaii and Alaska), and would not apply to simple cycle combustion turbines or steam-powered EGUs that are regulated as "municipal waste combustor units" or "commercial or industrial solid waste incineration units" under Part 60 of the EPA's regulations.

The EPA currently is accepting comments on this proposed rule. Comments must be submitted within 60 days after the date of publication in the Federal Register.

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Please contact any of the following Cadwalader attorneys if you have any questions about this

memorandum.

Gregory K. Lawrence +1 212 504 6171 greg.lawrence@cwt.com

Athena Eastwood +1 202 862 2294 athena.eastwood@cwt.com

Joseph B. Williams +1 202 862 2480 joseph.williams@cwt.com

Victoria M. Lauterbach +1 202 862 2215 tory.lauterbach@cwt.com 

 

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1 Standards of Performance for Greenhouse Gas Emissions for New Stationary Sources: Electric Utility Generating Units, RIN 2060-AQ91 (submitted for publication in the Federal Register on March 27, 2012) (to be codified at 40 C.F.R. Part 60).

The proposed rule defines an EGU as:

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 netelectrical output to any utility power distribution system for sale. Also, any steam supplied to a steam distribution system for the purpose of providing steam to a steam-electric generator that would produce electrical energy for sale is considered in determining the electrical energy output capacity of the affected EGU.

Id. at 250.

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This memorandum has been prepared by Cadwalader, Wickersham & Taft LLP for informational purposes only and does not constitute advertising or solicitation and should not be used or taken as legal advice. Those seeking legal advice should contact a member of the Firm or legal counsel licensed in their state. Transmission of this information is not intended to create, and receipt does not constitute, an attorney-client relationship. Confidential information should not be sent to Cadwalader, Wickersham & Taft LLP without first communicating directly with a member of the Firm about establishing an attorney-client relationship.

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