EPA climate rule has safety valves. Here’s what that means.

By Jean Chemnick | 05/01/2024 06:56 AM EDT

The industry-proposed exceptions to the new pollution standards are aimed at ensuring grid reliability in emergencies.

The coal-fired Plant Scherer stands in the distance.

A coal-fired plant stands in the distance in Juliette, Georgia. Branden Camp/AP

EPA added several new reliability provisions to its power plant carbon rule that appear to come directly from the Edison Electric Institute — a major utility trade group that has been broadly critical of the pollution standards.

The agency’s marquee climate rule gives the nation’s coal fleet — and major new natural gas plants — the choice between capturing most of their carbon emissions by 2032 or retiring soon after. That has led to concerns about electricity reliability, with industry groups warning of blackouts and rate hikes as coal plants retire en masse in the late 2030s.

EPA’s final rule includes two new provisions to add reliability protection: one that temporarily exempts fossil fuel power plants from the standards during grid emergencies, and another that allows a facility an extra year to retrofit with carbon capture or remain in operation if grid operators can’t line up replacement power generation in time.


States would have to ask for both flexibilities when they turn in implementation plans for the rule in two years.

Both ideas were in EEI’s response to EPA’s call for input last year on how to tweak the rule to avoid potential grid reliability problems.

Most other industry groups used the comment period, which closed in December, to insist that EPA go back to the drawing board.

The National Rural Electric Cooperative Association filed comments charging that the proposal and other rules in EPA’s regulatory pipeline “aimed at driving the retirement of baseload fossil fuel by using ‘all of the tools in our toolbox.’”

“It should come as no surprise to EPA that NRECA maintains its position … that the only way to ensure grid reliability is to withdraw the Proposed Rules in their entirety,” the group wrote.

But EEI proposed that EPA use Clean Air Act authorities to temporarily exempt fossil fuel facilities from the rules to allow them to produce more power in an emergency — like during a natural disaster, when supply is lost or demand spikes unexpectedly.

The trade group — which represents investor-owned utilities — also proposed ways that states could request permission to give power plants an extra year to either install carbon capture and storage (CCS) systems or to retire. That extension would kick in if a plant hit unexpected delays in permitting or building out CCS or if grid regulators determined a plant needed to stay in operation longer to allow replacement generation to come online.

“EPA can build upon previous efforts to provide compliance pathways to units that need to operate beyond compliance deadlines,” EEI stated in comments filed in December.

The group noted that EPA had done something similar under former President Barack Obama, when it offered an extra year in certain cases for power plants to comply with a rule for mercury and air toxics, or MATs.

“There are valuable elements to the MATS approach that EPA should use here, particularly the documentation and administrative process needed to access any reliability mechanism,” EEI wrote.

In case of emergency

The final rule includes both the so-called short-term reliability mechanism to address grid emergencies and the longer-term “reliability assurance mechanism.”

In qualifying emergencies — when demand for power gets close to exceeding supply — the rule allows new gas plants and existing coal units to run at higher capacities than usual without having to comply with the pollution standards.

“They can basically revert to the emissions rates that were allowed before the rule was promulgated during those hours and not have it count against them,” said Mike O’Boyle, director of electricity at Energy Innovation: Policy and Technology.

That means a plant that usually needs to run its CCS equipment to comply with the EPA rules can switch off the systems to supply more power to the grid. Carbon capture uses approximately 20 percent of a plant’s power to run.

New gas plants that run infrequently and thus aren’t required to capture emissions can ramp up capacity temporarily without triggering those requirements. The rule for new gas turbines requires units that produce at least 40 percent of their maximum capacity to capture 90 percent of their carbon by 2032.

“So it essentially sort of holds units harmless when they’re providing service to the grid during these defined emergencies,” said a senior administration official on a call last week with reporters.

The long-term mechanism becomes available, the official said, when the “state demonstrates that the unit, if it were to retire, would result in a violation of reliability standards.”

EPA’s final rule also specified that states — which do the work of translating federal guidelines into plans for their existing sources — will have some scope to consider reliability when weighing the “remaining useful life” of their existing coal plants. That provision allows them to minimize costly upgrades for assets that are slated for retirement in the very near term.

EPA points explicitly in the final rule to the Department of Energy’s rarely exercised authority to keep plants from being decommissioned if shutting them down would undermine reliability.

In a statement, EEI praised EPA for the final rule’s “additional compliance flexibilities that will help EEI’s members address reliability concerns in the years ahead.”

Dan Brouillette, the trade group’s president, blasted EPA for continuing to use CCS as the basis of its final rule — though in more muted tones than the group did last year when EPA was proposing to require existing gas plants to capture their emissions.

“While we appreciate and support EPA’s work to develop a clear, continued path for the transition to cleaner resources, we are disappointed that the agency did not address the concerns we raised about carbon capture and storage,” said Brouillette, who was Energy secretary under former President Donald Trump.

“CCS is not yet ready for full-scale, economy-wide deployment, nor is there sufficient time to permit, finance, and build the CCS infrastructure needed for compliance by 2032,” he said.

‘Carefully cabined’ exceptions

A senior administration official told E&E News that the agency consulted closely with grid reliability authorities — especially regional transmission organizations (RTOs) and independent system operators (ITOs) — when considering ways to shore up the rule’s reliability safeguards. Senior EPA officials were in touch with ISOs and RTOs in the weeks that lead up to the rule’s April 25 release, the official said, ironing out the details.

In a statement to E&E News, EPA said it “engaged extensively” with power companies and reliability experts, as well as federal authorities like North American Electric Reliability and Federal Energy Regulatory Commission. The agency also touted its “exemplary and decades-long track record of addressing air pollution in the power sector while enabling reliability authorities to maintain reliable and affordable electricity.”

Environmentalists argued last year that additional reliability safeguards were unnecessary because EPA was proposing long lead times for retrofitting power plants. But green groups didn’t object to the provisions EPA added, saying last week that they don’t weaken the rule.

“These two pretty limited exceptions for short-term and long-term reliability issues are very carefully cabined,” Meredith Hankins, senior attorney for energy and climate at the Natural Resources Defense Council, told reporters after the rule was released. “They are not automatic. Operators need to apply for them. Some of them have to be run by both EPA and FERC.

“So they provide that safety valve,” she added. “The EPA has made sure that it’s only when that safety valve is needed.”

The National Mining Association, the coal industry’s trade group, called the reliability provisions “minor exceptions” that don’t change the rule’s broad impact.

“Utilities are being faced with overwhelming pressure from this administration to shut down coal capacity,” said spokesperson Ashley Burke. “These provisions should be seen for what they are: thinly veiled cover for the EPA in the face of overwhelming evidence that removing this much dispatchable baseload capacity from the grid at a time of significant demand growth is a recipe for disaster.”