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“We’ll always have Boundary Dam”…….. the EPA and CCS, part 3…

We have previously written (link) about the serious flaws with EPA’s proposed CO2 standards for new power plants, and also specifically about the problems posed by provisions of the Energy Policy Act of 2005 (“EP Act 2005”; link).  EP Act 2005 restricts EPA from using plants that received various forms of federal funding for CCS as evidence allowing EPA to mandate such technology.

On February 6, EPA released a Technical Support Document (TSD) explaining why these provisions do not prevent it from using three such CCS projects (Kemper, the Texas Clean Energy Project and Hydrogen Energy California) as evidence supporting their proposal to mandate CCS for new coal-fired EGUs.  EPA cites these three projects throughout the proposed rule, and its need to do so is understandable given the at best shaky evidence showing that CCS is technologically and economically feasible today.  Aside from “an extensive literature record” (79 FR 1471) EPA has only limited real-world evidence that CCS is technically feasible, and virtually none that it is economically so.

EPA claims technical feasibility based first on three “small-scale capture projects operated commercially at coal-fired power plants”; according to EPA, “While those projects entail relatively small amounts of CO2 removal (the two largest projects are designed to capture about 800 tons CO2 per day, about 13% of the amount a 500 MW coal plant would need to achieve a limit of 1,100 lb CO2/MWh), the technology used can be scaled up.”  (TSD pp. 17-18).  In addition, EPA points to two “slip stream” CCS demonstration projects of 20 and 25 MW, at Mountaineer in West Virginia and Plant Barry in Alabama, respectively.  (TSD p. 19).  Without the three plants excluded under EP Act 2005, EPA is left with only one real-life coal-fired EGU being built with CCS, the Boundary Dam project in Saskatchewan, Canada.  (TSD p. 19).

Moreover, every one of those examples involves “post-combustion” CCS; the excluded plants are EPA’s only examples of EGUs with “precombustion” CCS (i.e, IGCC technology).  Thus to show that CCS is technically feasible with IGCC, EPA must instead rely on a combination of technologies used at a synfuels plant and two actual IGCC EGUs to conclude that “[c]ollectively, these projects demonstrate the operation and integration of all of the major components of an IGCC with CCS.”  (TSD p. 21).

Thus while EPA may be able to cobble together enough evidence to show that CCS is technically feasible, without the excluded plants it has zero evidence as to actual IGCC CCS costs, and only one – non US  – example — Boundary Dam – as to the costs of a conventional coal-fired EGU with CCS.

Nothing shows EPA’s fervent desire to use the excluded plants to “corroborate” all of these bits and pieces more than the two rationales it gives as to why it can rely on these plants despite the most problematic of the EP Act 2005 restrictions.  The Act’s amendment of Internal Revenue Code 48A(g) provides:

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….”

This language could hardly be clearer: EPA may not use these plants in considering whether a technology is “adequately demonstrated” for purposes of § 111.  But EPA reads this provision to really mean only that it may not rely “solely” on these plants; it may still use them as evidence together with other information: “EPA’s proposed interpretation of this provision is . . . that use of technology, or emission performance, from a facility for which the credit is allowed cannot, by itself, support a finding that the technology or performance level is adequately demonstrated, but the information can corroborate an otherwise supported determination or otherwise provide part of the basis for such a determination.”  (TSD p. 13).

EPA gets there by first interpreting a separate EP Act 2005 restriction (relating to grant funds) that uses the word “solely” in this context, and then concluding that the 48(A) restriction must mean the same thing:  “Since all of these provisions were part of the same legislation and address the same issue, and since there is no legislative history indicating that they were meant to have different meanings, this interpretation is reasonable.”  (TSD p. 13).

“Reasonable” . . . except for the actual language Congress used.  This interpretation is a dead loser, but nothing compared to EPA’s fallback position: After noting that some information concerning these tax credits is confidential, EPA wonders whether this restriction should apply “only if EPA has sufficient information concerning such technology or emission reduction for which the §48A tax credit was allocated, and that the §48A tax credit has been ‘allowed’.”  (TSD p. 16).  In other words, EPA contemplates simply ignoring this provision by claiming that it doesn’t have “sufficient information” about who got the credits and for what purposes (and apparently can’t obtain it just by asking DOE for the relevant documents).  Enough said.

The idea that CCS meets the technical and economic criteria of Section 111 was far-fetched when this process started, and the fact that EPA may not use the only three U.S. power plants that plan to employ it as evidence that CCS does so appears to doom this proposal.  Given that, plus the fact that EPA says that no one is going to build any coal-fired EGUs for the forseeable future anyway (which means that there won’t be any plants for the standard to apply to) and the fact that a new plant standard must be in place in order to regulate existing plants (the largest source of US CO2 emissions), we believe that the only rational course open to EPA is a final rule that opts for a standard for new coal-fired EGUs based on the most efficient operation of ultrasupercritical or IGCC facilities without CCS.