Element VI Consulting - Element VI Consulting

EPA AND THE CCS OOPS

We have previously aired our concerns about EPA relying on CCS as the legal justification for its proposed power plant CO2 rule , but we never saw this one coming.  More to the point, neither, apparently, did EPA.

On November 15, House Energy and Commerce Chair Fred Upton and others sent EPA a letter pointing out that two separate laws limited using federally-assisted CCS projects as evidence that CCS meet a variety of Clean Air Act criteria.  EPA’s proposed rule relies on four coal-fired power plants with CCS (two proposed and two under construction) as justification for finding that CCS is the “best system of emissions reductions adequately demonstrated”, the applicable standard in Section 111 of the Clean Air Act.  Three of those plants (Kemper, the Texas Clean Energy Project, and the Hydrogen Energy California project) are subject to both of those laws (the fourth plant is in Canada) and, in short, EPA just lost ¾ of its factual basis for mandating CCS for new coal-fired power plants.

Both of these restrictions were enacted as part of the Energy Policy Act of 2005. The first applies to plants that get “Section 48A” tax credits for CCS, and provides that:

“No use of technology (or level of emission reduction solely by reason of the use of the technology), and no achievement of any emission reduction by the demonstration of any technology or performance level, by or at one or more facilities with respect to which a credit is allowed under this section, shall be considered to indicate that the technology or performance level is . . . adequately demonstrated for purposes of section 111 of the Clean Air Act.”  Energy Policy Act of 2005 (Public Law 109-58) §1307(b); codified at 26 U.S.C. §48A(g).

Uh-oh.

The second provision applies to plants that get Clean Coal Power Initiative funding from DOE:

“No technology, or level of emission reduction, solely by reason of the use of the technology, or the achievement of the emission reduction, by 1 or more facilities receiving assistance under this Act, shall be considered to be . . . adequately demonstrated for purposes of section 7411 of this title.”  Energy Policy Act of 2005 (Public Law 109-58) §402(i); codified at 42 U.S.C. §15962(i).

Phrased differently, this provision is less restrictive in that it says EPA may not rely “solely” on such plants as justification for deeming CCS to be “adequately demonstrated”.  Given the fourth plant in Canada, EPA does not rely “solely” on these three plants (just “mostly”).

Our previous commentary noted that the only reason that EPA withdrew its first proposal for these standards was to replace its original legal justification for them with its “CCS is the “best system of emissions reductions adequately demonstrated” rationale.  Most CAA aficionados thought EPA’s original rationale (a highly technical issue dealing with “source categories”) was more likely to survive judicial review than trying to persuade the D.C. Circuit that CCS was “adequately demonstrated”.  Now that EPA has apparently lost most of the factual basis for that determination, we think it has two choices: concede error, abandon the CCS rationale and return to the original justification, or double down and try to brazen this out.  Interestingly, at the time of writing this (November 20) neither the notice withdrawing EPA’s first version of the proposed rule (published back in April 2012), nor the CCS version has yet appeared in the Federal Register, despite the latter being signed on September 20.

More to come, undoubtedly.

 

 

 

 

 

 

Categories