Unrealistic Assumptions Yield Unrealistic Results

A new paper that claims to analyze EPA's proposed rules for fossil-fueled power plants is not that at all. Instead, it analyzes imagined compliance paths that the rules neither require nor make plausible. The analysis from the EFI Foundation ignores key aspects of the rule, creating improbable scenarios, and then warning of the woes that will follow.  

EPA’s proposed standards are centered on flexibility, offering states and power plant multiple tools and compliance pathways to meet the proposal’s carbon emission performance levels. The report assumes away these flexible tools and instead assesses three separate, rigid approaches to meeting those emission limits.  If you make extreme assumptions, you will get extreme results. But that’s not how these regulations would work in the real world.  

Here’s what happened.  

In May 2023, EPA proposed carbon emissions limits for coal and gas power plants based on the reductions possible using carbon capture and sequestration (CCS) or clean hydrogen co-firing. EPA offered more modest standards for plants that are planning to retire before 2040 or that will run less frequently. For existing gas power, the proposed rules apply to only the largest generating units that run most of the time. Under the Clean Air Act as interpreted by the Supreme Court last year, EPA sets emissions limits based on the reductions that can be achieved by the best system of emissions reductions (BSER) -- technologies and practices that improve sources’ pollution performance and make them operate more cleanly.  The Act, however. does not require companies to use any specific technology. Instead, the emission limit is a performance standard – a benchmark that companies and states may meet using other available technological or operational strategies. 

Thanks to underlying market trends and the incentives for clean energy provided by the Inflation Reduction Act, the power sector is expected to cut its carbon footprint substantially over the next two decades. As the EFI report notes, carbon emissions from the power sector are already dropping because of the transition away from coal; they are down by a third from their peak levels in 2005 according to the Energy Information Administration. EPA projects that its proposed standards will reinforce those trends and modestly increase the emission reductions achieved through the early 2040s. Thus, the proposed standards build on the market trends, capitalizing on new and growing economic opportunities to clean up the power sector at minimal – and often no – cost to customers in EPA’s modeling of the rule.  

The EFI report analyzes three separate approaches to meet the standards:  

1. all baseload power plants all install CCS; 

2. all regulated gas plants adopt hydrogen co-firing; or  

3. all baseload plants reduce their utilization so as not to be covered.  

If the whole industry relied exclusively on only one of these inflexible paths, it could be expensive or face other implementation difficulties. The report concludes: “EPA’s current proposal faces major implementation challenges, considering the amount of infrastructure that could be needed in the next decade.” 

In fact, power plant operators can and will choose a mixture of compliance pathways. They can use a mix of the three strategies only individually assessed in the report. EPA’s modeling shows that the U.S. power fleet takes a mix of every option, based on what makes the most sense for each individual plant given its age, costs, and the available alternatives. For example, EPA’s modeling of the rules projected that 6 gigawatts (GWs) of existing gas-fired generation would install CCS by 2040, 5 GW would select co-firing hydrogen, 84 GW would reduce operation, and 162 GWs of existing combined cycle plants were not affected to begin with. EPA’s model shows similar compliance diversity on the coal side, with a mix of retirement, reduced utilization, co-firing with gas, and installing CCS being selected.   

In other words, the report has ignored what the rule actually allows and has assumed the power industry will adopt rigid, unrealistic pathways to compliance. 

Each of the three scenarios is extreme and does not reflect likely or reasonable outcomes. Sure, there could be infrastructure bottlenecks if every single plant chooses CCS or chooses hydrogen, but that’s not what will happen with these rules. As EFI notes, not every region is as well suited for each approach – that is why the proposal gives power plants and states the flexibility to choose from an array of options. Some older coal plants will close; some gas plants will install CCS; some will run less often; and some will use hydrogen. Compliance will not be through any single approach. This is why EPA’s and others’ modeling that recognize the flexibility inherent in these rules find them to be feasible and cost-effective.    

Unfortunately, this report is providing fuel to opponents who are trying to argue that meeting these reasonable EPA standards would just be too hard. This kind of industry obstructionism is a well-worn path, as my colleague David Hawkins noted in a recent article in Scientific American. But just as in every case in the past, industry will find reasonable pathways to compliance if they put their engineers to work on the best ways to comply.