Biden's EPA proposes first-ever restrictions on greenhouse gases from power plants

By Rachel Koning Beals

Proposed regulations would promote carbon capture for existing power plants, responsible for 25% of U.S. emissions. The oil and gas sector, plus many Republicans, object.

The Biden administration on Thursday made official its push for tougher regulations of greenhouse gas emissions from existing and newly built electric-power plants, the second-most polluting sector driving global warming.

It's a step that widens previous stalled intentions to clamp down on the emissions from any new power plant to come on line but that would have let most operational coal- and natural gas-burning plants to be grandfathered in, as has been reported in recent weeks in the lead-up to Thursday's Environmental Protection Agency announcement.

If finalized, the proposed regulation would mark the first time the federal government has restricted carbon dioxide emissions from existing power plants, which generate about 25% of U.S. greenhouse gas pollution, second only to the transportation sector. The rule also would apply to future electric plants and would avoid up to 617 million metric tons of carbon dioxide especially from coal and gas-fired through 2042, equivalent to annual emissions of 137 million passenger vehicles, the EPA said.

The EPA's move would force more of the energy and power industries to quickly bring up to scale carbon- and methane-capturing technology, a nascent field that has champions in both the private and public sector and across the political spectrum, but which some environmental groups say doesn't do enough to slow demand for fossil fuels at the outset.

Currently, carbon capture, sequestration and storage, or CSS as it's known, is believed to be used at only a dozen-plus of the nation's 3,400 coal and gas-fired electricity plants. It's a different process than other technology currently being tested, which captures emissions not at the point of combustion, but from the air.

If implemented, the proposed EPA regulation, which would be advanced by executive order and not require congressional approval.

Almost all the coal plants -- along with large, frequently used gas-fired power plants -- would have to cut or capture nearly all their carbon dioxide emissions by 2038, the EPA said. Plants that cannot meet the new standards would be forced to retire.

The rules face a comment period and can be rewritten. For sure, objections are likely from the fossil-fuel industry (CVX)(XOM), power plant operators (SO)(NEE), states that rely on energy revenue, and the industry's allies in Congress, where energy lobbying contributions are significant. The rules are likely to draw an immediate legal challenge from a group of Republican attorneys general that has already sued the Biden administration to stop other climate policies. Plus, a future White House could also weaken the regulation.

Coal provides about 20% of U.S. electricity, down from about 45% in 2010. Natural gas provides about 40% of U.S. electricity. The remainder comes from nuclear energy and renewables such as wind, solar(ICLN) and hydropower.

"EPA is delivering on its mission to reduce harmful pollution that threatens people's health and well-being," EPA head Michael Regan said. He said the proposal "relies on proven, readily available technologies to limit carbon pollution" and builds on industry practices already underway to move toward clean energy.

The power plant rule is one of at least a half-dozen EPA rules limiting power plant emissions and wastewater treatment.

About 60% of the electricity generated in the U.S. last year was derived from burning fossil fuels like coal, natural gas and oil, according to figures from the U.S. Energy Information Administration. Natural gas over recent years has replaced the bulk of coal, and proponents of gas say it has been a much cleaner alternative. There is also a push from that industry to include green hydrogen blends with gas for a yet-cleaner option that can use existing pipelines, but it too is a young industry.

Plants currently operating in the U.S. are responsible for about 25% of the atmosphere-warming pollution emitted by the U.S., warming that has intensified rising, acidic oceans and extreme weather that is costly in economic growth and health and safety. The rules would also apply to future plants.

Biden, whose Inflation Reduction Act spending bill passed last year sweetens electric adoption through tax breaks for solar, electric vehicles and more, has made adapting to and mitigating climate change a priority of his first administration. He is widely expected to rerun for president in 2024 but has not made his plans official.

Biden has said he is steering the country toward a 100% clean electrical grid by 2035 and reaching net-zero carbon emissions throughout the economy by 2050.

The planet has already warmed by an average of 1.1 degrees Celsius, scientists say and major world economies are largely in agreement that warming must be capped at 1.5 degrees to better the chances for a safe future.

Notably, Biden's plans have been tweaked from the Obama's administration's efforts for similar climate-change regulations. During the Obama era, the EPA put forward a broad-reaching power-plant rule that the Supreme Court later threw out.

The Biden administration is now trying to balance strengthening the country's pollution standards with regulations that might better stand up to further legal challenges from Republican-led states and the fossil-fuel industry. That's in part because rewritten rules are suggesting that carbon capture is more advanced and can play a role. Further, recent legislation provides tax credits to power plant operators that capture their carbon.

Most wealthy and developing nations that agree to cut emissions intend to use technologies like carbon capture, hydrogen and nuclear energy to meet their climate goals. The Clean Air Task Force (CATF) for one points to analyzed findings of interest in this technology to push the importance of increasing funding and advancing research, government support and international collaboration to commercialize these technologies quickly.

The expected new EPA proposal comes on the heels of three other Biden administration plans. One aims to cut tailpipe emissions dramatically by speeding up the country's transition to electric vehicles, and another to curb methane leaks from oil and gas wells.

Political watchers have said energy, electricity and climate change is shaping up to be a key talking point of the 2024 election, with Republicans arguing that U.S. generated oil and gas must be in the mix.

Officials with the Natural Resources Defense Council's Climate & Clean Energy Program have said that targeting emissions from vehicles and from power plants are the two most important sectors that a climate-minded Biden should target.

But the EPA's power-plant focus would also follow a controversial decision by the Biden administration earlier this year to allow drilling in part of Alaska's pristine Arctic territory to proceed.

Related: Biden approves Willow oil-drilling permit in Alaska. It's a 'carbon bomb,' one group says

The Biden administration approved, although with conditions, ConocoPhillips'(COP) large-scale Willow drilling project on Alaska's oil-rich North Slope, saying the approval process was already too far along to rescind.

It's a blemish, say environmental groups, on a record that so far has included major emissions-reduction pledges and a sweeping spending bill that rewards American households and businesses for switching to electric vehicles(TSLA)(GM) and replacing oil- and gas-powered operations with solar, wind and other greener options.

Read: Americans baffled by 'climate law' and energy tax breaks. Al Gore wants to teach them

Earlier, Biden's climate-change agenda hit a major hurdle when the Supreme Court last June ruled to restrict federal reach in controlling emissions at power plants and beyond.

The court, whose conservative majority has already shown reluctance in broadening federal agency scope, considered the EPA's authority to regulate greenhouse gas emissions from existing coal- and gas-fired power plants under the landmark 50-year-old Clean Air Act.

In a 6-3 ruling, the court sided with mostly conservative, energy-producing states and fossil-fuel companies in adopting a narrow reading of the Clean Air Act. The decision prevents the EPA from enforcing climate-friendly, industrywide changes, limiting it to actions targeting individual plants. The majority opinion was written by Chief Justice John Roberts.

The impact of that decision, the Biden administration and environmental groups say, is much wider. It could limit much of the regulatory reach for climate action, and regulation in general.

"Climate is literally the tip of the iceberg. The [ruling] attacks the very foundation of modern regulation," said Steven Cohen at the time, writing in an opinion piece for the Columbia University Climate School.

The new EPA push, given the carbon-capture incentives and what the Biden administration reportedly says will be more flexibility for power plants, is intended to give the court a tougher case proving overreach.

-Rachel Koning Beals

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-11-23 1056ET

Copyright (c) 2023 Dow Jones & Company, Inc.